Top Ten Healthcare Policies of 2016: Annual Review by VCBear

2016 was a year of sweeping changes in healthcare reform. The state introduced multifaceted policies and regulations centered on internet-based healthcare, serving as a catalyst for the orderly development, rational allocation, and structural optimization of the medical and health sector. VCBeat (WeChat ID: vcbeat) has compiled and interpreted the key policies and regulations issued in 2016 that are relevant to the medical and health field.

The internet has given rise to new healthcare models through technological means; however, the unique characteristics of the healthcare industry necessitate urgent policy-based regulation and management. At times, rapid technological advancements and innovations in service models have outpaced regulatory oversight, leaving macro-level policies fraught with uncertainty like a Sword of Damocles hanging over entrepreneurs. On the other hand, the state needs to reform policies governing traditional healthcare, continuously advancing reforms in primary care, health insurance payment mechanisms, market-based drug pricing, and pharmaceutical sector restructuring. These reforms also require the participation of internet healthcare companies to drive innovation through technology.

Release Date: October 25

Issuing Authorities: The Central Committee of the Communist Party of China and the State Council

The Outline states that by 2020, a basic medical and health system with Chinese characteristics covering both urban and rural residents shall be established; the health service system shall be sound and efficient; everyone shall have access to basic medical and health services and basic sports and fitness services; and major health indicators shall rank among the forefront of upper-middle-income countries. By 2030, a three-tier public sports facility network at the county, township, and village levels shall be basically completed; the per capita area of sports venues shall be no less than 2.3 square meters; and full coverage of 15-minute fitness circles shall be achieved in urban communities. Public sports facilities shall be opened free of charge or at low fees. By 2030, the compliance rate for the configuration of sports venues, facilities, and equipment in schools shall reach 100%; adolescent students shall participate in moderate-intensity physical activities at least three times per week; and the excellence rate in meeting the National Student Physical Health Standard shall exceed 25%. By 2050, a Healthy China commensurate with a modern socialist country shall be built.

VCBeat Commentary: As the overarching action plan for advancing Healthy China, the Outline of the “Healthy China 2030” Plan provides clear direction for the layout and development of China’s healthcare industry over the next decade. Serving as a goal-oriented framework, the Outline offers strong guidance, systematic structure, and practical operability. First, it highlights the concept of comprehensive health, recognizing that human behaviors and environmental factors have an increasingly prominent impact on health. The Outline establishes a “comprehensive health perspective” and a “comprehensive hygiene perspective,” both centered on health promotion, and proposes integrating this philosophy throughout the entire process of public policy formulation and implementation. It aims to address a wide range of health determinants in a coordinated manner, safeguarding the health of the population across all dimensions and throughout the entire life course.

Secondly, the Outline integrates a long-term perspective with immediate priorities. It fully considers alignment with the objectives of various stages of economic and social development, while also addressing prominent current issues by innovating systems and mechanisms. From a holistic standpoint, it coordinates policy measures across fields such as health and family planning, physical fitness, environmental protection, food and drug safety, public safety, and health education.

Finally, the Outline sets forth various clear and actionable objectives, rendering target tasks specific and work processes operable, measurable, and assessable. The Outline proposes a “three-step” strategy for Healthy China, namely the strategic goals of “by 2020, major health indicators ranking among the forefront of upper-middle-income countries” and “by 2030, major health indicators reaching the level of high-income countries,” while looking ahead to 2050 with the long-term goal of “building a healthy China commensurate with a modern socialist country.”

Publication Date: January 2016

Issuing Authority: State Council

The “Opinions” call for the merger of the Urban Resident Basic Medical Insurance and the New Rural Cooperative Medical Scheme into a single system, with a rational allocation of funding responsibilities between the government and individuals. While increasing government subsidies, the proportion of individual contributions should be appropriately raised. The “Opinions” set forth the “Six Unifications” for policy integration: unified coverage scope, unified financing policies, unified benefit packages, unified medical insurance catalogs, unified designated provider management, and unified fund management.

VCBeat Analysis: In 2003 and 2007, China established the Basic Medical Insurance for Urban Residents and the New Rural Cooperative Medical Scheme, targeting non-employed urban populations and rural residents, respectively. Since their inception, rapid economic and social development has revealed the negative consequences of the urban-rural segmentation inherent in these two systems, including issues such as duplicate enrollment, redundant funding, and inadequate benefit levels. Building on a review of the operational performance of both schemes and local pilot experiences, the Central Committee of the Communist Party of China and the State Council explicitly called for the integration of the Basic Medical Insurance for Urban Residents and the New Rural Cooperative Medical Scheme into a unified Basic Medical Insurance System for Urban and Rural Residents. This integration represents a significant step forward in advancing healthcare system reform, ensuring equitable access to basic medical insurance benefits for all urban and rural residents, promoting social fairness and justice, and enhancing public well-being.

Release Time:June 2016

Issuing Agency: Ministry of Human Resources and Social Security

The “Opinions” propose actively exploring and leveraging the foundational role of health insurance in healthcare reform, exerting its external regulatory influence on medical services, and promoting institutional reforms in both healthcare delivery and pharmaceutical sectors. Regarding health insurance payment, the “Opinions” explicitly state that payment method reform should be prioritized in healthcare reform to harness its positive role in standardizing medical service practices and curbing unreasonable growth in medical expenses. It emphasizes strengthening coordination with public hospital reforms, price reforms, and other related initiatives, thereby utilizing health insurance payments to incentivize and constrain medical institutions and healthcare professionals. Furthermore, concerning the health insurance payment system, the “Opinions” advocate comprehensively implementing global budgeting in conjunction with health insurance fund budget management, accelerating the adoption of diagnosis-related group (DRG) and capitation-based payment methods, exploring the combined application of global budgets with the point-value method, and establishing a composite payment mechanism.

VCBeat Analysis: In this "Opinion," regarding the "three-medical-linkage" reform, the National Development and Reform Commission explicitly proposed consolidating and improving the comprehensive reform plan for county-level public hospitals, increasing the number of pilot cities for comprehensive public hospital reform to 200; advancing the reform of the compensation system for medical staff in public hospitals; accelerating the establishment of a tiered diagnosis and treatment system, with pilots launched in approximately 70% of prefecture-level cities. The reform requirements outlined in the "Opinion" largely revolve around medical insurance payment mechanisms and drug price reductions. It is anticipated that the long-awaited medical insurance payment standards may be introduced more rapidly following the release of the "Opinion."

Publication Date: April 2016

Issuing Agency: State Council

The Document specified seven key areas for healthcare reform in 2016: comprehensively deepening public hospital reform, accelerating the establishment of a tiered diagnosis and treatment system, consolidating and improving the universal health insurance system, enhancing the drug supply and guarantee mechanism, establishing and improving a comprehensive supervision system, strengthening the development of the health workforce, and consolidating and improving the equalization of basic public health services. The year 2016 marked the beginning of the 13th Five-Year Plan period, served as a critical year for achieving the phased objectives of deepening healthcare system reform by 2017, and was pivotal for realizing the goal of ensuring access to basic medical and health services for all by 2020. Therefore, it is of utmost importance to effectively advance the work of deepening healthcare system reform in 2016.

VCBeat Analysis: The Document explicitly requires pilot provinces for healthcare reform to promote the “two-invoice system” nationwide and encourage the adoption of a “single-invoice system.” It mandates that hospitals settle payments directly with pharmaceutical manufacturers, while pharmaceutical companies and distribution enterprises separately calculate distribution fees. The policy comprehensively advances centralized procurement of pharmaceuticals in public hospitals, initiates the establishment of a traceability mechanism for ex-factory drug pricing information, and implements the “two-invoice system,” under which one invoice is issued from production to circulation and another from circulation to medical institutions, thereby making markups in intermediate links transparent.

Publication Date: February 2016

Issuing Agency: The State Council

The Outline is a programmatic document for advancing the development of Traditional Chinese Medicine (TCM) in China during the new era, clarifying the direction and key priorities for TCM development over the next fifteen years. This national-level strategic outline for TCM proposes that by 2020, basic access to TCM services will be universally available, and the TCM industry will become one of the important pillars of the national economy; by 2030, TCM services will achieve full coverage, the capacity of TCM health services will be significantly enhanced, and TCM will make greater contributions to economic and social development.

VCBeat Analysis: This year has seen numerous policy documents related to Traditional Chinese Medicine (TCM). In addition to the aforementioned Outline, documents such as the Notice on Issuing the 13th Five-Year Plan for the Development of Traditional Chinese Medicine have elevated the TCM industry to the status of a “key pillar industry of the national economy” for the first time. The Plan states that during the 12th Five-Year Plan period, the main business revenue of TCM enterprises above designated size grew from RMB 317.2 billion to RMB 786.7 billion, representing an average annual growth rate of 19.92%. It is projected that during the 13th Five-Year Plan period, these enterprises will continue to maintain rapid growth, with their scale of revenue expected to reach RMB 1.5823 trillion by 2020, surpassing the trillion-yuan mark, and achieving an average annual growth rate of 15%. The strategic importance of TCM has been significantly enhanced.

Release Date: March 2016

Issuing Authority: The State Council

The healthcare industry is a critically important sector for enhancing public services under the framework of the 13th Five-Year Plan. Therefore, the "Opinions" specifically set forth development goals for the pharmaceutical industry during this period: by 2020, generic versions of more than 90% of major off-patent drugs will be launched on the market, and the supply shortage of clinically essential medicines will be effectively alleviated. The scale of the pharmaceutical industry will continue to expand, with the average annual growth rate of main business revenue exceeding 10%, and the growth rate of industrial value-added consistently ranking among the top across all industrial sectors. The "Opinions" outline development guidelines for upgrading categories such as originator drugs and traditional Chinese medicines, providing directives on R&D, production, quality inspection, international clinical trials, and registration. Furthermore, it sets requirements for the R&D and transformation/upgrading of medical devices, as well as for mergers and reorganizations among medical device manufacturers.

VCBeat Analysis: The "Opinions" emphasize that the pharmaceutical industry serves as a crucial foundation for supporting the development of healthcare and health services. As a sunrise industry with strong growth potential, interconnectedness, and driving force, it has played a positive role in improving public welfare and stabilizing economic growth. In addition to pharmaceuticals, the document specifically highlights the development of intelligent medical services. It calls for leveraging the leading role of high-quality medical resources, encouraging participation from social forces, integrating online and offline resources, and standardizing the management of the Medical Internet of Things (IoMT) and health-related mobile applications (APPs). The document advocates for actively providing convenient internet-based services, including online health consultations, appointment scheduling, wait-time notifications, price estimation and payment, and access to diagnostic reports. Furthermore, it stresses strengthening the integration of regional healthcare resources, encouraging healthcare institutions to establish health information service platforms, and actively delivering internet-based healthcare information services. Guidance is also provided for medical institutions to utilize informatization and intelligent technologies to offer telemedicine services—such as remote pathological diagnosis, imaging diagnosis, expert consultations, monitoring guidance, and surgical guidance—to grassroots, remote, and underdeveloped areas.

Publication Date: June 2016

Issuing Authority: State Council

The “Opinions” outline 14 key tasks and major projects across four areas: strengthening the foundation for application, comprehensively deepening application, standardizing and promoting “Internet+ Health and Medical” services, and enhancing the support system. Key initiatives include: establishing a unified, authoritative, and interoperable population health information platform; promoting the sharing and open access of health and medical big data resources; advancing big data applications in health and medical industry governance, clinical practice and research, and public health; fostering new business models in health and medical big data applications; researching and promoting digital smart devices for health and medical care; developing convenient and beneficial smart health and medical services for the public; comprehensively establishing a telemedicine application system; promoting the application of health and medical education and training; advancing the construction of a trusted network infrastructure; strengthening security safeguards for health and medical data; and enhancing the regulatory and standards framework as well as building a team of interdisciplinary professionals in health and medical informatization.

VCBeat Analysis: Medical big data serves as the foundation for the application of medical informatization and for establishing population health information platforms. Encompassing the entire human life cycle, medical big data involves the aggregation and integration of diverse datasets, including personal health, pharmaceutical services, disease prevention and control, health security, food safety, and wellness care. The utilization of health and medical big data not only facilitates improvements in healthcare service models but also significantly promotes economic and social development, making it a crucial foundational strategic resource for the nation. The series of policy measures outlined in the "Guiding Opinions" will further enhance health and medical services for the public, accelerate the formation of a product ecosystem for health and medical big data, stimulate technological enterprises to participate in innovation related to medical big data, and further explore models for the centralized storage, collection, and mining-based application of big data.

Release Date: August 2016

Issuing Agency: Guizhou Provincial Department of Human Resources and Social Security

The “Notice” states that, in order to accelerate the development of telemedicine in Guizhou Province and further meet the healthcare needs of insured individuals, it has been decided to include telemedicine services within the scope of reimbursement from the Basic Medical Insurance Fund. This decision took effect on August 1, 2016, with a one-year trial period. According to the “Notice on Issues Concerning the Inclusion of Telemedicine Services in the Reimbursement Scope of the Basic Medical Insurance Fund” issued by the Provincial Department of Human Resources and Social Security, the services now covered include nine items such as single-specialty remote consultation, multidisciplinary remote consultation, remote Traditional Chinese Medicine syndrome differentiation and treatment consultation, and synchronous remote pathology consultation.

VCBeat Analysis: Although this is not a national-level document and remains in the pilot phase, its impact on the entire healthcare industry—particularly the industrial sector—could be milestone-making. The year 2016 marked the inaugural year for the development of internet hospitals. Including telemedicine services within the coverage of the basic medical insurance fund not only represents a beacon of hope for internet healthcare companies but also helps facilitate the implementation of tiered diagnosis and treatment.

Publication Date: September 2016

Issuing Agencies: Ministry of Industry and Information Technology, National Development and Reform Commission

The “Special Action Plan” centers on enhancing the innovation capabilities of key technologies and products in smart hardware, as well as strengthening the industrial foundation. Guided by the optimization of the policy environment, the flourishing of the industrial ecosystem, and the enhancement of public services, it outlines three-year development goals, five key focus areas, six categories of core critical technologies, and four priority application domains. The plan aims to achieve a global market share of over 30% for China’s smart hardware industry and an industrial scale exceeding RMB 500 billion by 2018. A primary objective of this policy in the healthcare sector is to promote the development and construction of medical informatization. Smart health and medical devices are primarily targeted at the healthcare industry, focusing on the development and large-scale commercial deployment of medical-grade smart hardware that meets the stringent requirements for data credibility, product quality, and safety in medical applications.

VCBeat Analysis: Following the intelligent transformation of terminal products such as smartphones and televisions, next-generation information technology is accelerating its integration with personal wearables, transportation, healthcare, and manufacturing. This convergence is fueling the robust growth of the smart hardware industry, driving model innovation and efficiency gains. Healthcare represents one of the most accessible and promising sectors for intelligent applications; however, a lack of product standards and innovative elements has led to severe homogenization. In response, the Chinese government has introduced policies aiming to foster diversified development in the smart hardware sector over the next two years, moving away from mere imitation.

Release Date: October 2016

Issuing Authority: State Council

The “Opinions” point out that the development of the rehabilitation assistive devices industry shall adhere to the basic principles of “market-led and government-guided, independent innovation and open cooperation, problem-oriented with focus on key areas, and overall planning for coordinated development.” By 2020, the industry scale is expected to exceed RMB 700 billion, basically forming an industrial pattern with rational layout, complete categories, and diverse products; a number of well-known independent brands and competitive industrial clusters will emerge, and the market share of mid-to-high-end products will increase significantly.

VCBeat Analysis: With over 200 million elderly individuals and 85 million people with disabilities, China has the largest population in need of rehabilitation assistive devices and boasts the greatest market potential worldwide. However, the development of the rehabilitation assistive device industry faces challenges such as insufficient independent innovation capabilities, an incomplete industrial system, and irregular market order, urgently requiring government policy support and guidance. The Opinion proposes encouraging eligible regions to study the gradual inclusion of basic therapeutic rehabilitation assistive devices into the coverage of basic medical insurance. This is highly favorable news for both users of rehabilitation assistive devices, such as the elderly and people with disabilities, and manufacturers of rehabilitation equipment.