IDEAS home Printed from https://ideas.repec.org/a/eee/socmed/v289y2021ics0277953621007474.html
   My bibliography  Save this article

The pilot of a new patient classification-based payment system in China: The impact on costs, length of stay and quality

Author

Listed:
  • Qian, Mengcen
  • Zhang, Xinyu
  • Chen, Yajing
  • Xu, Su
  • Ying, Xiaohua

Abstract

With the urgent need to regulate provider behaviors, China developed a novel patient classification with global budget payment system, expecting to achieve both easy implementation and cost containment. The new system, called “diagnosis-intervention packet (DIP)” payment, is based on a deterministic patient classification approach, which groups patients according to the combination of principal diagnosis ICD-10 (International Classification of Diseases, 10th Revision) codes and procedure ICD-9-CM3 (International Classification of Diseases, 9th Revision, Clinical Modification) codes and links each group to relative historical costs market-wide. This study investigated the impact of the DIP-based payment on inpatient costs, length of stay, and quality of care in the largest DIP pilot city of China. In 2018, the city changed from the “fixed rate per admission with a cap on annual total compensation” policy to DIP with global budget for all insured inpatients. A difference-in-differences approach was employed to identify changes in outcome variables before and after the DIP policy among insured relative to uninsured patients. We found an average of 8.5% (p = 0.000) increase in inpatient costs per case (as intended), trivial changes in length of stay, and a 3.6% (p = 0.046) reduction in postoperative complication rate in response to DIP adoption among patients with high severity. Our findings suggested that the DIP-based payment helped regulate provider behaviors when treating high-risk patients. And the new payment has the potential for rapid rollout in resource-limited areas where lack a uniform coding practice or high-quality historical data.

Suggested Citation

  • Qian, Mengcen & Zhang, Xinyu & Chen, Yajing & Xu, Su & Ying, Xiaohua, 2021. "The pilot of a new patient classification-based payment system in China: The impact on costs, length of stay and quality," Social Science & Medicine, Elsevier, vol. 289(C).
    • Handle: RePEc:eee:socmed:v:289:y:2021:i:c:s0277953621007474
    DOI: 10.1016/j.socscimed.2021.114415
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0277953621007474
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.socscimed.2021.114415?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Chan, Marc K. & Zeng, Guohua, 2018. "Unintended consequences of supply-side cost control? Evidence from China's new cooperative medical scheme," Journal of Health Economics, Elsevier, vol. 61(C), pages 27-46.
    2. Richard Blundell & Monica Costa Dias, 2009. "Alternative Approaches to Evaluation in Empirical Microeconomics," Journal of Human Resources, University of Wisconsin Press, vol. 44(3).
    3. Margit Sommersguter-Reichmann, 2000. "The impact of the Austrian hospital financing reform on hospital productivity: empirical evidence on efficiency and technology changes using a non-parametric input-based Malmquist approach," Health Care Management Science, Springer, vol. 3(4), pages 309-321, September.
    4. Magnussen, Jon & Hagen, Terje P. & Kaarboe, Oddvar M., 2007. "Centralized or decentralized? A case study of Norwegian hospital reform," Social Science & Medicine, Elsevier, vol. 64(10), pages 2129-2137, May.
    5. Mikkola, Hennamari & Keskimaki, Ilmo & Hakkinen, Unto, 2002. "DRG-related prices applied in a public health care system--can Finland learn from Norway and Sweden?," Health Policy, Elsevier, vol. 59(1), pages 37-51, January.
    6. Melberg, Hans Olav & Beck Olsen, Camilla & Pedersen, Kine, 2016. "Did hospitals respond to changes in weights of Diagnosis Related Groups in Norway between 2006 and 2013?," Health Policy, Elsevier, vol. 120(9), pages 992-1000.
    7. Jian, Weiyan & Lu, Ming & Liu, Guofeng & Chan, Kit Yee & Poon, Adrienne N., 2019. "Beijing's diagnosis-related group payment reform pilot: Impact on quality of acute myocardial infarction care," Social Science & Medicine, Elsevier, vol. 243(C).
    8. Bertoli, Paola & Grembi, Veronica, 2017. "The political economy of diagnosis-related groups," Social Science & Medicine, Elsevier, vol. 190(C), pages 38-47.
    9. Reinhard Busse & Jonas Schreyögg & Peter Smith, 2006. "Editorial: Hospital case payment systems in Europe," Health Care Management Science, Springer, vol. 9(3), pages 211-213, August.
    10. Pedro Barros & Gisele Braun, 2017. "Upcoding in a National Health Service: the evidence from Portugal," Health Economics, John Wiley & Sons, Ltd., vol. 26(5), pages 600-618, May.
    11. Cook, Amanda & Averett, Susan, 2020. "Do hospitals respond to changing incentive structures? Evidence from Medicare’s 2007 DRG restructuring," Journal of Health Economics, Elsevier, vol. 73(C).
    12. Philip Hochuli, 2020. "Losing body weight for money: How provider‐side financial incentives cause weight loss in Swiss low‐birth‐weight newborns," Health Economics, John Wiley & Sons, Ltd., vol. 29(4), pages 406-418, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lai, Yi & Fu, Hongqiao & Li, Ling & Yip, Winnie, 2022. "Hospital response to a case-based payment scheme under regional global budget: The case of Guangzhou in China," Social Science & Medicine, Elsevier, vol. 292(C).
    2. van de Vijsel, Aart R. & Engelfriet, Peter M. & Westert, Gert P., 2011. "Rendering hospital budgets volume based and open ended to reduce waiting lists: Does it work?," Health Policy, Elsevier, vol. 100(1), pages 60-70, April.
    3. Milstein, Ricarda & Schreyögg, Jonas, 2024. "The end of an era? Activity-based funding based on diagnosis-related groups: A review of payment reforms in the inpatient sector in 10 high-income countries," Health Policy, Elsevier, vol. 141(C).
    4. Cook, Amanda & Averett, Susan, 2020. "Do hospitals respond to changing incentive structures? Evidence from Medicare’s 2007 DRG restructuring," Journal of Health Economics, Elsevier, vol. 73(C).
    5. Camilleri, Carl & Jofre-Bonet, Mireia & Serra-Sastre, Victoria, 2018. "The suitability of a DRG casemix system in the Maltese hospital setting," Health Policy, Elsevier, vol. 122(11), pages 1183-1189.
    6. András Kiss & Norbert Kiss & Balázs Váradi, 2023. "Do budget constraints limit access to health care? Evidence from PCI treatments in Hungary," International Journal of Health Economics and Management, Springer, vol. 23(2), pages 281-302, June.
    7. Damrongplasit, Kannika & Atalay, Kadir, 2021. "Payment mechanism and hospital admission: New evidence from Thailand healthcare reform," Social Science & Medicine, Elsevier, vol. 291(C).
    8. Kjartan Sarheim Anthun & Johan Håkon Bjørngaard & Jon Magnussen, 2017. "Economic incentives and diagnostic coding in a public health care system," International Journal of Health Economics and Management, Springer, vol. 17(1), pages 83-101, March.
    9. Mona Groß & Hendrik Jürges & Daniel Wiesen, 2021. "The effects of audits and fines on upcoding in neonatology," Health Economics, John Wiley & Sons, Ltd., vol. 30(8), pages 1978-1986, August.
    10. Lingli Zhang & Lihua Sun, 2022. "Impacts of case‐based payments reform on healthcare providers' behaviour on cataract surgery in a tertiary hospital in China: An eight‐year retrospective study," International Journal of Health Planning and Management, Wiley Blackwell, vol. 37(1), pages 504-512, January.
    11. Foliano, Francesca & Tonei, Valentina & Sevilla, Almudena, 2024. "Social restrictions, leisure and well-being," Labour Economics, Elsevier, vol. 87(C).
    12. Alexander Hijzen & Sébastien Jean & Thierry Mayer, 2011. "The effects at home of initiating production abroad: evidence from matched French firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(3), pages 457-483, September.
    13. Jan Fałkowski & Maciej Jakubowski & Paweł Strawiński, 2014. "Returns from income strategies in rural Poland," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 22(1), pages 139-178, January.
    14. Barili, Emilia & Bertoli, Paola & Grembi, Veronica, 2021. "Fee equalization and appropriate health care," Economics & Human Biology, Elsevier, vol. 41(C).
    15. Annette Bergemann & Marco Caliendo & Gerard J. van den Berg & Klaus F. Zimmermann, 2011. "The threat effect of participation in active labor market programs on job search behavior of migrants in Germany," International Journal of Manpower, Emerald Group Publishing Limited, vol. 32(7), pages 777-795, October.
    16. Li, Linjie & Liu, Xiaming & Yuan, Dong & Yu, Miaojie, 2017. "Does outward FDI generate higher productivity for emerging economy MNEs? – Micro-level evidence from Chinese manufacturing firms," International Business Review, Elsevier, vol. 26(5), pages 839-854.
    17. Carrieri, Vincenzo & Madio, Leonardo & Principe, Francesco, 2019. "Light cannabis and organized crime: Evidence from (unintended) liberalization in Italy," European Economic Review, Elsevier, vol. 113(C), pages 63-76.
    18. Magda Iga & Kiełczewska Aneta & Brandt Nicola, 2020. "The effect of child benefit on female labor supply," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 10(1), pages 1-18, March.
    19. Michael Pfaffermayr & Michael Wild & Christian Bellak, 2005. "Effekte ausländischer Übernahmen," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 31(1), pages 113-124.
    20. Cain Polidano & Justin van de Ven & Sarah Voitchovsky, 2017. "The Power of Self-Interest: Effects of Education and Training Entitlements in Later-Life," Melbourne Institute Working Paper Series wp2017n12, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:socmed:v:289:y:2021:i:c:s0277953621007474. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/315/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.