China's State Council Unveils 2016 Healthcare Reform Plan with Ten Key Initiatives

On April 26, the State Council officially released the “Key Tasks for Deepening the Reform of the Medical and Healthcare System in 2016” (hereinafter referred to as the “Tasks”). The “Tasks” clearly state that direct settlement of inpatient expenses for retirees residing in other provinces is to be basically achieved this year, and by 2017, direct settlement of inpatient expenses for cross-regional medical treatment in accordance with referral regulations is to be basically realized.

Meanwhile, to address the issue of artificially inflated drug prices, the "Task Plan" proposes that a variety of measures will be implemented this year to promote the separation of prescribing and dispensing. Hospitals are prohibited from restricting the outflow of prescriptions, allowing patients to freely choose whether to purchase medications at hospital outpatient pharmacies or at retail pharmacies with a prescription.

“The Tasks” also proposes further new initiatives for healthcare reform, primarily encompassing the following ten areas:

1. Consolidate and improve the systems for critical illness insurance and medical assistance
Achieve full coverage of critical illness insurance to alleviate the financial burden on more patients with serious diseases. The central government has allocated RMB 16 billion in subsidy funds for urban and rural medical assistance. Comprehensively implement medical assistance for major and catastrophic diseases, and actively encourage social forces to participate in medical assistance programs.

2. Accelerate the Launch of Pilot Programs for Tiered Diagnosis and Treatment
In pilot regions, the rate of standardized diagnosis, treatment, and management for patients with hypertension and diabetes reached over 30%.

3. Expand the family doctor contract service
Implement family doctor contract services in 200 pilot cities for comprehensive public hospital reform. By the end of 2016, the coverage rate of family doctor contract services in urban areas shall reach over 15%, and the coverage rate for key populations shall exceed 30%.

4. Improve the mechanism for adjusting healthcare insurance funding and benefit levels
The enrollment rate in basic medical insurance has remained stable at over 95%. The per capita government subsidy standard for urban and rural resident medical insurance has been raised to RMB 420, with a corresponding increase in per capita individual contributions. By 2017, direct settlement of hospitalization expenses for cross-regional medical care in accordance with referral regulations was basically achieved.

5. Expand the pilot program for comprehensive reform of urban public hospitals
An additional 100 pilot cities have been added, bringing the total number of pilot cities nationwide to 200. The central government will provide a one-time subsidy of RMB 20 million for each newly added pilot city, and a subsidy of RMB 1 million for each urban district with public hospitals in all pilot cities.

6. Consolidate and improve the equalization of basic public health services
The fiscal subsidy standard for per capita basic public health service funding has been raised to 45 yuan. Comprehensive prevention and control of birth defects will be further strengthened, and the national free pre-pregnancy eugenics health examination program will continue to be implemented.

7. Promote the Development of Commercial Health Insurance
Launch pilot programs for preferential individual income tax policies on health insurance, and continuously improve and optimize the pilot schemes.

8. Deepen the Reform of Medical Insurance Payment Methods
Gradually extend the supervision of medical insurance over healthcare institutions to cover the clinical practices of medical personnel. Support the implementation of day surgery and other services.

9. Strictly control the unreasonable growth of medical expenses
By the end of June 2016, all regions shall reasonably determine and quantify the growth rate of regional medical expenses in light of local conditions. Pilot cities for public hospital reform shall compile specific lists to implement focused monitoring on the irrational use of high-priced drugs, such as adjuvant and nutritional agents, thereby initially curbing the trend of unreasonable growth in medical expenses.

10. Improve the Compensation System in the Medical and Health Industry
Improve the pilot program for reforming the compensation system in public hospitals. It is strictly prohibited to set revenue-generation targets for medical personnel, and their compensation must not be linked to the hospital’s business income from pharmaceuticals, consumables, diagnostic tests, laboratory analyses, and other services.

Source: The Central People's Government of the People's Republic of China