China UnionPay Targets Cross-provincial New Rural Cooperative Medical Scheme Settlement, Signed 8 Provinces to Tap into $100 Billion Mobile Healthcare Market

China UnionPay has breached the barrier in medical insurance payments, having signed agreements with eight provinces—including Sichuan, Guizhou, Hainan, Shaanxi, and Gansu—to enable cross-provincial settlement and reimbursement for the New Rural Cooperative Medical Scheme.

Due to the scarcity of medical resources, it is common for hospitals in large cities to experience long wait times for registration, medication dispensing and testing, and payment and reimbursement, while consultation times remain short. Mobile payment offers a solution to this “three longs and one short” problem, saving patients significant amounts of time.

According to a Boston Consulting Group report, the healthcare market size is projected to reach RMB 700 billion by 2020. A plethora of healthcare service apps have emerged, sparking intense activity in the mobile healthcare payment sector, where a subtle rivalry among major players such as Alipay, WeChat Pay, and China UnionPay is quietly intensifying.

Alipay’s “Future Hospital” initiative centers on mobile payments throughout the medical care process, having integrated with the payment systems of 100 hospitals across China by the end of last year. Not to be outdone, WeChat has also onboarded numerous hospitals. In most cases, both Alipay and WeChat Pay are accepted at the same hospital.

As Alipay and WeChat Pay engage in a fierce battle for dominance in medical services, China UnionPay, the payment giant, is refusing to be left behind. From large hospitals to rural clinics, and from non-insurance payments to signing agreements for cross-provincial reimbursement under the New Rural Cooperative Medical Scheme, it is gradually expanding its share of the mobile healthcare payment market.

On November 18, the National Health and Family Planning Commission held a signing ceremony in Beijing for the inter-provincial networked settlement of medical expenses under the New Rural Cooperative Medical Scheme (now integrated into the Urban and Rural Resident Basic Medical Insurance). Representatives from eight provinces, including Liaoning, Jilin, and Heilongjiang, signed service agreements for inter-provincial networked settlement of medical costs. The Institute of Medical Information, Chinese Academy of Medical Sciences, acting on behalf of the National Health and Family Planning Commission’s agency for cross-regional medical expense settlement, separately entered into strategic cooperation agreements with China Life Insurance Company Limited and China UnionPay Co., Ltd.

It is understood that the agreements signed between provinces designate each participating province as both Party A and Party B, clarifying the responsibilities and obligations of the province of enrollment and the province where medical care is received. These agreements standardize operational processes such as referral, designated medical treatment, advance payment, audit, and reimbursement. In the future, patients enrolled in the New Rural Cooperative Medical Scheme (NRCMS) who are referred to designated medical institutions in partner provinces will be able to access direct settlement services at the hospital discharge window. Patients will only need to pay their out-of-pocket expenses upon discharge. The portion reimbursable by the NRCMS fund will be settled between the medical institution and the provincial-level NRCMS settlement center in the place where treatment was received, with final reconciliation conducted between the provincial-level NRCMS settlement centers.

Meanwhile, to actively leverage social forces in the implementation of cross-regional reimbursement, the National Health and Family Planning Commission has also guided China Life Insurance and China UnionPay to explore a Public-Private Partnership (PPP) model. Under the signed agreement, China Life Insurance will provide funding to establish a reserve fund for cross-provincial settlements, while China UnionPay will set up a capital settlement channel, jointly optimizing the cash flow process for cross-provincial medical expense settlements.

In June this year, the National Health and Family Planning Commission, in conjunction with the Ministry of Finance, formulated the "Implementation Plan for Nationwide Networked Settlement of Cross-Regional Medical Expenses under the New Rural Cooperative Medical Scheme." The plan explicitly stated that by 2016, the national and provincial information platforms for the New Rural Cooperative Medical Scheme (NRCMS) would be improved, the NRCMS cross-regional medical care information system would be basically established, direct settlement for intra-provincial cross-regional medical care would be realized, and pilot programs for cross-provincial designated hospital settlement for referred NRCMS inpatients would be launched. By 2017, cross-provincial designated hospital settlement for referred NRCMS inpatients would be basically achieved.

This signing marks the official launch of the pilot program for cross-provincial online settlement of medical expenses under the New Rural Cooperative Medical Scheme (NRCMS), and represents a significant milestone in China UnionPay’s entry into the health insurance payment sector.

China UnionPay’s layout in mobile medical payments also includes Grade 3A hospitals. In fact, since announcing a strategic partnership with Zhongshan Hospital of Fudan University in Shanghai and launching the Modern Hospital Initiative this February, China UnionPay has accelerated its expansion in the mobile medical payment sector.

In addition to Guangdong, China UnionPay is also promoting the expansion of Modern Hospital’s scale in Shanghai, Zhejiang, Hebei, Beijing, and other regions. According to China UnionPay’s plan, 20 Grade A tertiary hospitals in Guangzhou will join Modern Hospital this year. By the end of the year, the network is expected to expand to 50 hospitals in Guangdong Province and reach 100 hospitals nationwide.

In terms of the demographic profile of mobile healthcare payment users, Alipay and WeChat Pay are predominantly used by young and middle-aged individuals. Leveraging years of accumulated expertise in payment services, China UnionPay has established a ubiquitous infrastructure where payments can be completed at any point-of-sale (POS) terminal accepting bank cards bearing the UnionPay logo. Although the post-80s and post-90s generations favor WeChat Pay and Alipay for mobile transactions, traditional payment methods remain deeply entrenched in the healthcare sector. Consequently, the majority of individuals aged 40 to 70 prefer UnionPay, underscoring its broader user reach and current lead over WeChat Pay and Alipay.

According to Li Feng, Assistant to the President of Zhongshan Hospital Affiliated to Fudan University, “Currently, all hospitals are promoting their diagnosis and treatment apps, which mainly fall into two categories: those offering only appointment scheduling functions and those including payment features. Although some payment methods may be more convenient than UnionPay, we still chose to partner with UnionPay after careful comparison, primarily due to considerations of fund security. Moreover, any card bearing the UnionPay logo can be linked to the hospital’s app, as UnionPay does not collect any of our data.”

“Partner hospitals may use their own apps or operate under the unified app, Yichengtong. Throughout the collaboration, UnionPay does not provide financial support to hospitals, nor does it collect hospital data; it focuses solely on payment services,” Chen Peng, Industry Application Product Manager at UnionPay’s Product Department, told reporters.

Industry insiders have stated that hospitals are becoming increasingly reluctant to use Alipay and WeChat for appointment registration, as these platforms gain access to extensive patient personal information, including medical conditions.

Top-tier (Grade 3A) hospitals have always been a fiercely contested battleground for payment giants, bustling with activity; in stark contrast, rural healthcare payments remain notably desolate. Despite China’s vast rural population and robust demand for medical services, the enormous grassroots healthcare payment market in rural areas has already seen China UnionPay seize the first-mover advantage.

China UnionPay is the bank card association of China. Through its interbank transaction clearing system, it enables interconnectivity and resource sharing among commercial banks, ensuring the use of bank cards across different banks, regions, and borders. China UnionPay has established extensive cooperation with hundreds of institutions both domestically and internationally. Its network covers urban and rural areas throughout China and has expanded to 160 countries and regions across Asia, Europe, the Americas, Oceania, and Africa.

China UnionPay, previously inThe advantages in the payment sector are primarily concentrated in offline channels, and the current expansion of mobile healthcare payments in rural areas remains predominantly offline.

Recently, UnionPay Merchant Services, a subsidiary of China UnionPay, customized a mobile internet-based payment acceptance solution for the remote mountainous areas of Daye in Huangshi City, Hubei Province. This initiative has completely bridged the “last mile” of rural healthcare informatization, enabling villagers to use their New Rural Cooperative Medical Scheme (NRCMS) insurance cards anytime and anywhere, free from geographical and temporal constraints.

In remote mountainous areas, medical care generally follows the principle of proximity, with village doctors providing house-call diagnosis and treatment. Due to challenges such as poor internet connectivity and the inconvenience of carrying laptops, village doctors typically collect consultation and medication fees in cash, issue handwritten invoices, and allow villagers to seek reimbursement under the New Rural Cooperative Medical Scheme (NRCMS) using these invoices. This process is not only cumbersome but also poses significant security risks.

China UnionPay Merchant Services (UMS) Prescribes Targeted Solutions: Leveraging Mobile Communication Technology, UMS Combines the “YiPOS” Mini Card Reader with TabletsWhen village doctors make house calls to treat villagers, they open the “Village Clinic Mobile Platform” app on their tablets. The villager’s medical insurance card is swiped on the “YiPOS” device, which is connected to the tablet via Bluetooth, for identity verification. After the consultation, the platform automatically calculates and generates the consultation fee based on the medical and medication information entered by the doctor. It then prompts the villager to sequentially swipe their medical insurance card and bank card on the “YiPOS” device to complete the payment, according to the respective proportions covered by medical insurance and out-of-pocket expenses. The corresponding consultation funds are then directly transferred to the designated receiving account.

In addition to paid features, the platform also offers inquiry and payment services. Farmers no longer need to travel long distances to urban areas; they can check their bank card balances and even pay premiums for their New Rural Cooperative Medical Scheme (NRCMS) insurance within seconds from home.

“Compared with Alipay and WeChat Pay, China UnionPay’s mobile payment advantages lie in the following aspects: First, UnionPay cards have the broadest user coverage, with over 5 billion cards issued. Second, thanks to prior capital preparations through industry collaborations, UnionPay holds an advantage in social security premium payments. Third, it has introduced the concept of family accounts to address the usage habits of children and the elderly. Fourth, beyond in-clinic hospital payments, China UnionPay can collaborate with hospitals to build a comprehensive service ecosystem, encompassing future telemedicine, doctor-patient interactions, and ancillary services such as dining and parking,” Chen Peng told reporters.

In the healthcare payment sector, China UnionPay has lagged behind WeChat Pay and Alipay. However, backed by years of deep cultivation in offline payments, UnionPay is far from a paper tiger. Its resurgence from offline to online dominance may well be just around the corner.