China to Merge Urban Resident Basic Medical Insurance and New Rural Cooperative Medical Scheme into a Unified Rural-Urban Resident Medical Insurance System

On January 12, the State Council issued the “Opinions on Integrating the Basic Medical Insurance Systems for Urban and Rural Residents,” explicitly proposing to integrate the two systems—Basic Medical Insurance for Urban Residents (hereinafter referred to as “Urban Resident Medical Insurance”) and the New Rural Cooperative Medical Scheme (hereinafter referred to as “New Rural Coop”)—and to establish a unified Basic Medical Insurance System for Urban and Rural Residents (hereinafter referred to as “Urban and Rural Resident Medical Insurance”).

The Opinion states that in regions where there is a significant disparity between the individual contribution standards for the existing Urban Resident Basic Medical Insurance and the New Rural Cooperative Medical Scheme, differential contribution rates may be adopted to facilitate a gradual transition over a period of two to three years. The actual per capita funding and individual contributions after integration shall not be lower than the current levels.

All provinces (autonomous regions and municipalities directly under the Central Government) shall formulate plans and deploy tasks for the integration of urban and rural resident basic medical insurance by the end of June 2016, clearly defining timelines and roadmaps, improving mechanisms for work promotion and performance evaluation, strictly implementing the accountability system, and ensuring that all policy measures are fully implemented. All pooling areas shall issue specific implementation plans by the end of December 2016. Pilot provinces for comprehensive healthcare reform shall prioritize the integration of urban and rural resident basic medical insurance as a key reform component, strengthen coordination with other healthcare reform initiatives, and accelerate progress.

The full text is as follows:

Opinions of the State Council on Integrating the Basic Medical Insurance Systems for Urban and Rural Residents

Guo Fa [2016] No. 3

To the People's Governments of all provinces, autonomous regions, and municipalities directly under the Central Government, and to all ministries and commissions of the State Council and all institutions directly under the State Council:

Integrating the Basic Medical Insurance for Urban Residents (hereinafter referred to as “Urban Resident Medical Insurance”) and the New Rural Cooperative Medical Scheme (hereinafter referred to as “New Rural Cooperative Medical Care”), and establishing a unified Basic Medical Insurance System for Urban and Rural Residents (hereinafter referred to as “Urban and Rural Resident Medical Insurance”), is a significant measure to advance the reform of the medical and health care system, ensure that urban and rural residents have equitable access to basic medical insurance benefits, promote social fairness and justice, and enhance people’s well-being. It holds great significance for promoting the coordinated economic and social development of urban and rural areas and for building a moderately prosperous society in all respects. Based on a review of the operation of Urban Resident Medical Insurance and New Rural Cooperative Medical Care, as well as practical experience from local explorations, the following opinions are hereby proposed regarding the integration and establishment of the Urban and Rural Resident Medical Insurance System.

I. General Requirements and Basic Principles

(I) General Requirements.

Guided by Deng Xiaoping Theory, the important thought of Three Represents, and the Scientific Outlook on Development, we shall earnestly implement the spirit of the 18th National Congress of the Communist Party of China (CPC), the Second, Third, Fourth, and Fifth Plenary Sessions of the 18th CPC Central Committee, and the series of important speeches delivered by General Secretary Xi Jinping. In accordance with the requirements of the CPC Central Committee and the State Council for deepening the reform of the medical and healthcare system, and adhering to the principles of universal coverage, basic protection, multi-tiered structure, and sustainability, we shall strengthen overall coordination and top-level design. Following the principle of addressing easier tasks before difficult ones and proceeding step by step, we shall start by improving policies to promote the integration of the basic medical insurance system for urban residents and the New Rural Cooperative Medical Scheme (NRCMS). We aim to gradually establish a unified basic medical insurance system for both urban and rural residents nationwide, thereby fostering greater equity in coverage, more standardized management and services, and more efficient utilization of medical resources, so as to promote the sustained and healthy development of the universal medical insurance system.

(II) Basic Principles.

1. Comprehensive Planning and Coordinated Development. The integration of the urban and rural resident basic medical insurance systems should be incorporated into the overall framework of developing a universal health coverage system and deepening healthcare reform. This requires coordinated arrangements and rational planning, with an emphasis on the linkage among medical insurance, healthcare services, and pharmaceuticals. Efforts should be made to strengthen the coordination between basic medical insurance, critical illness insurance, medical assistance, emergency disease relief, and commercial health insurance, thereby enhancing the systematic, holistic, and synergistic nature of the system.

2. Grounded in fundamentals and ensuring equity. Accurate positioning and scientific design are required, taking into account the level of economic and social development, the financial burden on urban and rural residents, and the affordability of the insurance fund. Full consideration should be given to gradually narrowing the urban-rural gap and regional disparities, ensuring that urban and rural residents have equitable access to basic medical insurance benefits, and achieving the sustainable development of the urban and rural resident medical insurance system.

3. Adapt measures to local conditions and advance in an orderly manner. Based on actual circumstances, conduct comprehensive analysis and assessment, formulate detailed implementation plans, strengthen coordination before and after integration, ensure smooth continuity and orderly transition of operations, guarantee that basic medical insurance benefits for the public remain unaffected, and safeguard the security of medical insurance funds and the stable operation of the system.

4. Innovate mechanisms and enhance efficiency. We must adhere to the separation of administration and operation, fulfill government responsibilities, improve management and operational mechanisms, deepen reforms in payment methods, and enhance the efficiency of healthcare security fund utilization as well as the effectiveness of administrative and management services. Fully leverage the role of market mechanisms and mobilize social forces to participate in the provision of basic healthcare security administrative services.

II. Integrating Basic Institutional Policies

(I) Unified Coverage Scope.

The coverage of the urban and rural resident basic medical insurance scheme includes all individuals eligible for enrollment in the existing urban resident basic medical insurance and the New Rural Cooperative Medical Scheme (NRCMS), thereby covering all urban and rural residents except those who are required to enroll in the employee basic medical insurance. Migrant workers and flexibly employed persons shall enroll in the employee basic medical insurance in accordance with the law; those experiencing difficulties may enroll in the urban and rural resident basic medical insurance as stipulated by local regulations. All localities shall improve enrollment procedures to ensure universal coverage among eligible individuals and avoid duplicate enrollment.

(II) Unify fundraising policies.

Adhere to multi-channel financing and continue to implement a financing model primarily based on a combination of individual contributions and government subsidies, while encouraging collectives, employers, or other socio-economic organizations to provide support or funding. All localities should comprehensively consider the coverage needs of both basic medical insurance for urban and rural residents and critical illness insurance, and reasonably determine unified financing standards for urban and rural areas in accordance with the principle of balancing fund revenues and expenditures. In regions where there is a significant disparity between the current individual contribution standards for urban resident basic medical insurance and the New Rural Cooperative Medical Scheme (NRCMS), differential contribution rates may be adopted to facilitate a gradual transition over a period of two to three years. The actual per capita financing and individual contributions after integration shall not be lower than the existing levels.

Improve the dynamic adjustment mechanism for fund raising. On the basis of actuarial balance, gradually establish a stable fund-raising mechanism that is adapted to the level of economic and social development and the affordability of all parties. Gradually establish a mechanism that aligns individual contribution standards with the per capita disposable income of urban and rural residents. Rationally allocate the fund-raising responsibilities between the government and individuals; while increasing government subsidy standards, appropriately raise the proportion of individual contributions.

(3) Unify benefit coverage.

Adhering to the principles of appropriate coverage and fiscal balance, we will equalize urban and rural benefit levels, gradually unify the scope of coverage and payment standards, and provide equitable basic medical insurance coverage for all enrollees. Special coverage policies implemented prior to integration shall be properly addressed to ensure a smooth transition and effective linkage.

The basic medical insurance fund for urban and rural residents is primarily used to cover inpatient and outpatient medical expenses incurred by insured individuals. The level of inpatient coverage will be stabilized, with the reimbursement rate for inpatient expenses within the policy scope maintained at approximately 75%. Outpatient pooling mechanisms will be further improved, and the level of outpatient coverage will be gradually enhanced. The gap between the policy-specified reimbursement rate and the actual reimbursement rate will be progressively narrowed.

(4) Unify the medical insurance catalog.

Unify the drug catalogs and medical service item catalogs for urban and rural resident basic medical insurance, and clearly define the scope of reimbursement for drugs and medical services. All provinces (autonomous regions, and municipalities directly under the Central Government) shall, in accordance with national regulations on the management of basic medical insurance drugs and the national essential medicines system, adhere to the principles of clinical necessity, safety and efficacy, reasonable pricing, technological appropriateness, and fund affordability. Based on the existing catalogs for urban resident basic medical insurance and the New Rural Cooperative Medical Scheme, adjustments should be made with due consideration given to changes in insured persons’ needs, incorporating additions and reductions as well as controls and expansions, so as to ensure comprehensive coverage and an overall rational structure. Improve the administrative measures for the medical insurance catalog by implementing tiered management and dynamic adjustments.

(V) Unified designated institution management.

Unify the administrative measures for designated institutions under the urban and rural resident basic medical insurance program, strengthen the management of service agreements with designated institutions, and establish sound assessment and evaluation mechanisms as well as dynamic admission and exit mechanisms. Implement equal policies for the management of designated status for both non-public and public medical institutions. In principle, the administrative agencies at the pooling region level shall be responsible for the admission, exit, and supervision of designated institutions, while provincial-level administrative agencies shall formulate principles and administrative measures for the admission of designated institutions, and focus on strengthening guidance and oversight of provincial- and municipal-level designated medical institutions outside their own pooling regions.

(6) Unified Fund Management.

Urban and Rural Resident Basic Medical Insurance implements the nationally unified financial accounting system, accounting system, and fund budgeting and final accounts management system. The Urban and Rural Resident Basic Medical Insurance Fund is deposited into special fiscal accounts and managed under a “separate lines for revenue and expenditure” framework. The fund is accounted for independently and managed through dedicated accounts; no entity or individual may misappropriate or divert these funds.

Comprehensively advance global payment caps in conjunction with fund budget management. Fund utilization shall adhere to the principles of determining expenditures based on revenues, maintaining a balance between income and outgo, and retaining a modest surplus, thereby ensuring the timely and full disbursement of payable expenses while reasonably controlling the annual and cumulative surplus ratios of the fund. Establish and improve an early-warning mechanism for fund operational risks to mitigate fund risks and enhance utilization efficiency.

Strengthen internal audits and external oversight of the fund, adhere to the systems for public disclosure of fund revenue and expenditure operations and for the publication of medical treatment and settlement information for insured individuals, and enhance social, democratic, and media supervision.

III. Streamline the Management System

(1) Integrate handling agencies.

Encourage regions with the necessary conditions to streamline the management system of medical insurance and unify the administrative functions for basic medical insurance. Make full use of the existing operational resources of the Urban Resident Basic Medical Insurance (URBMI) and the New Rural Cooperative Medical Scheme (NRCMS), integrate the operating agencies, personnel, and information systems for urban and rural resident medical insurance, standardize operational processes, and provide integrated operational services. Improve internal and external oversight and constraint mechanisms within operating agencies, and strengthen training and performance appraisal.

(II) Innovating operational management.

Improve management and operational mechanisms, enhance service delivery methods and management practices, optimize administrative processes, and increase management efficiency and service quality. Encourage regions with appropriate conditions to innovate administrative service models, promote the separation of administration from operations, and introduce competitive mechanisms. Under the premise of ensuring fund security and effective supervision, entrust qualified commercial insurance institutions and other social entities to participate in the administration of basic medical insurance through government procurement of services, thereby stimulating administrative vitality.

IV. Enhancing Service Efficiency

(I) Enhance the level of overall planning.

The basic medical insurance system for urban and rural residents shall, in principle, implement pooling at the municipal (prefectural) level. All localities shall steadily advance municipal-level pooling, focusing on key areas such as the unification of benefit policies, fund management, information systems, and medical service settlement. Efforts shall be made to ensure the smooth transfer and continuation of medical insurance relations and to improve settlement services for cross-regional medical care. Based on the economic development and medical service levels of various counties (cities, districts) within the pooling area, tiered fund management shall be strengthened to fully mobilize the initiative and proactivity of county-level governments and administrative agencies in fund management. Regions with appropriate conditions are encouraged to implement provincial-level pooling.

(II) Improve the information system.

Integrate existing information systems to support the operation and functional expansion of the basic medical insurance system for urban and rural residents. Promote business collaboration and information sharing between the information system for basic medical insurance for urban and rural residents and the information systems of designated institutions and medical assistance programs. Ensure necessary information exchange and data sharing with the information systems of commercial insurance institutions involved in handling services. Strengthen information security and protect patient privacy.

(3) Improve payment methods.

Systematically advance the reform of a composite payment system that combines various methods, including capitation, diagnosis-related group (DRG) based payment, per-diem payment, and global budgeting. Establish and improve negotiation and consultation mechanisms, as well as risk-sharing mechanisms, between medical insurance agencies, healthcare institutions, and pharmaceutical suppliers. Promote the formation of reasonable medical insurance payment standards, guide designated healthcare institutions to standardize their service practices, and control the unreasonable growth of medical expenses.

By supporting insured residents in signing up for services with primary healthcare institutions and general practitioners, and by implementing differentiated payment policies, we will advance the development of a tiered diagnosis and treatment system, gradually establishing a new medical care order characterized by initial consultations at the primary level, two-way referrals, separate management of acute and chronic conditions, and coordinated care between upper- and lower-level facilities.

(4) Strengthen the supervision of medical services.

Improve the regulatory framework for urban and rural resident basic medical insurance services, fully leverage agreement-based management, and strengthen oversight of healthcare delivery. Medical insurance agencies at all levels shall utilize information technology to advance intelligent claim review and real-time monitoring, thereby promoting appropriate diagnosis and treatment as well as rational drug use. Health and family planning administrative departments shall enhance supervision of healthcare services and standardize healthcare practices.

V. Meticulously Organize and Implement to Ensure the Smooth Advancement of Integration Work

(I) Strengthen organizational leadership.

Integrating the basic medical insurance systems for urban and rural residents is a key task in deepening healthcare reform. It directly affects the vital interests of urban and rural residents, covers a wide range of areas, and is highly policy-driven. All localities and relevant departments must, in accordance with the strategic layout requirements for comprehensively deepening reforms, fully recognize the significant importance of this work, strengthen leadership, carefully organize implementation, and ensure that the integration proceeds smoothly and in an orderly manner. Provincial-level healthcare reform leading groups shall enhance overall coordination and promptly study and resolve issues arising during the integration process.

(2) Clarify work progress and division of responsibilities.

All provinces (autonomous regions, and municipalities directly under the Central Government) shall formulate plans and deploy tasks for the integration of urban and rural resident basic medical insurance by the end of June 2016, clearly defining timelines and roadmaps, improving mechanisms for work promotion and performance evaluation, strictly implementing the accountability system, and ensuring that all policy measures are effectively implemented. All pooling areas shall issue specific implementation plans by the end of December 2016. Pilot provinces for comprehensive healthcare reform shall prioritize the integration of urban and rural resident basic medical insurance as a key component of their reforms, strengthen coordination with other healthcare reform initiatives, and accelerate progress.

Human resources and social security departments, as well as health and family planning departments at all levels, shall improve relevant policies and measures to strengthen the coordination before and after the integration of the basic medical insurance system for urban and rural residents; finance departments shall improve the financial accounting system for funds and work with relevant departments to ensure effective fund supervision; insurance regulatory authorities shall strengthen the qualification review, service quality oversight, and market conduct regulation of commercial insurance institutions participating in the administration of services; development and reform departments shall incorporate the integration of the basic medical insurance system for urban and rural residents into national economic and social development plans; institutional organization departments shall fulfill their functional roles in the integration of administrative resources and management systems; and offices responsible for healthcare reform shall coordinate with relevant departments to carry out follow-up evaluations, summarize experiences, and promote best practices.

(3) Conduct effective publicity and outreach.

Strengthen positive publicity and public opinion guidance, provide timely and accurate policy interpretations, promote local best practices and highlights, appropriately address public concerns, reasonably guide social expectations, and strive to create a favorable environment for the integration of urban and rural resident basic medical insurance systems.

State Council

January 3, 2016