• ThetechnicalassistancesupportedtheMinistryofHealthtoadoptpolicyrecommendationsforreforminghealthproviderpaymentmethodstohelpaddressthehighcostofcareinthePeople’sRepublicofChina.

• Asystematicandevidence-basedapproachtoreformpaymentmechanismsforhealth careprovidersisnecessary.

• Sufficientfinancialandhumanresourcesneedtobeallocatedinimpactassessmentswhendesigningandproposingpolicyreforms.

Background

In2003,thePeople’sRepublicofChina(PRC)launchedtheNewRuralCooperativeMedicalScheme(NRCMS).Anationalhealthinsurancescheme,theNRCMSaimstoaddressthehighout-of-pocketexpendituresforhealthcareinruralareas.Withitsrapidprogressduringimplementationin2008,theNRCMSwasabletocover100%ofthePRC’scountiesandenrolledatotalof833millionpeople(94%ofthetargetpopulation)in2009.Thisachievementmadeitthelargestinsuranceschemeintheworld.Byreducingout-of-pocketexpendituresforhealthcare,theNRCMSrepresentedamajorsteptowardamoreequitableandefficientruralhealthfinancingsystem.Increasedfundingforthisschemehastranslatedintoahigherleveloffinancialprotectionfortheinsuredruralresidents.Actualreimbursementrateincreasedfrom25%in2004to41%in2009.

However,theNRCMSfacedseveralchallenges.First,therisingmedicalcostsledtolessfinancialprotectionespeciallywhenpatientssufferfromcatastrophicillnessesthatrequireexpensivemedicaltreatment.Second,thedesignofthescheme,whichreimbursesprimarilyinpatientcare,hascreatedanincentivefortheinsuredtoavailofcostlyinpatientcareratherthanlow-costoutpatientcare.Third,sincehealthcareproviderswerepaidprimarilyonafee-for-servicebasis,therewasanincreaseinexcessiveandexpensivetreatmentswithprovidershavingatendencytoincreasetheirincomebysellingmedicinesandprovidinghigh-techcare.Additionalfundingmadeavailabletohealthcareprovidersputsanupwardpressureonthecostofhealthcarewithoutnecessarilyimprovingthequalityofhealthservices.

Toaddressthehighcostofhealthcare,countieswererequiredbythegovernmenttoreformtheirproviderpaymentmethods(PPM).Althoughsomecountieshadpiloteddifferentpaymentmethods,therewasnosystematicandevidence-basedapproachtoreformpaymentmechanismsforhealthcareproviders.

ADBBRIEFSno. 40

JULY 2015

kEY PoInTS SocIaL ProTEcTIon BrIEFStrengthening Provider Payment Methods for rural Health Insurance in the People’s republic of china

ISBN978-92-9257-040-8(Print)ISBN978-92-9257-041-5(e-ISBN)ISSN2071-7202(Print)ISSN2218-2675(e-ISSN)PublicationStockNo.ABF157519

2

ADBBRIEFSNO.40

TheTAbenefitedfromregularparticipationandinputsofotherdevelopmentagenciesalsoinvolvedinsimilaractivitiesinthePRCsuchastheWorldHealthOrganizationandtheWorldBank.

Major LESSonS and rEcoMMEndaTIonS

Policyreforms,withfar-reachingimpactsonboththegovernmentandthebeneficiary,shouldbeaccompaniedbyrigorousevaluationtomeasuretheeffectsofthereforms.Thisimpliestheneedforsufficientresources,bothfinancialandhuman,tobeallocatedinmakingimpactassessmentswhendesigningandproposingpolicyreforms.

TheTArecommendsthesettingupoftechnicalcommitteesinvolvingkeystakeholdersfromgovernments,theprivatesector,anddevelopmentpartnersforsimilarstudies.Itisexpectedthatinthefuturetherewillbegreaterdemandfromgovernmentsandinternationaldonorstoprovideevidenceontheefficiencyofinterventions.

THE TEcHnIcaL aSSISTancE

Thetechnicalassistance(TA)wasdesignedtohelpidentifyappropriatehealthPPMtostrengthenthehealthservicespurchasingcapacityoftheNRCMS.1TheintendedoutcomewasfortheMinistryofHealthtoadoptpolicyrecommendationsonreformingPPMfortheNRCMS.TheTAhas(i)supportedthescopingofinternationalexperienceandbestpracticesinPPMforbothruralandremoteareas;(ii)assessedthePPMusedundertheNRCMS;(iii)conductedfieldinvestigationsinseveralcountiesconsideredofparticularinterestforthefuturereformofPPM;(iv)distilledlessonsfrompilottestsintwocounties;and(v)producedareportontheNRCMSPPMthatwassharedwithkeystakeholders.2

Inaddition,theTA(i)facilitatedthedevelopmentandpilot-testingoftrainingmaterialsonPPM;(ii)conductedthetrainingforhealthcareproviders,NRCMSmanagers,andhealthauthorities;and(iii)organizedaninternationalstudytouronPPMforkeydecisionmakersandimplementerstolearnfromsuccessfulmodelsinmoredevelopedeconomies.Disseminationandknowledge-sharingworkshopswerealsosupportedbytheTA.

About the Asian Development BankADB’svisionisanAsiaandPacificregionfreeofpoverty.Itsmissionis tohelpitsdevelopingmembercountriesreducepovertyandimprovethequalityoflifeoftheirpeople.Despitetheregion’smanysuccesses,itremainshometothemajorityoftheworld’spoor.ADBiscommittedtoreducingpovertythroughinclusiveeconomicgrowth,environmentallysustainablegrowth,andregionalintegration.

BasedinManila,ADBisownedby67members,including48fromtheregion.Itsmaininstrumentsforhelpingitsdevelopingmembercountriesarepolicydialogue,loans,equityinvestments,guarantees,grants,andtechnicalassistance.

ADBBriefsarebasedonpapersornotespreparedbyADBstaffandtheirresourcepersons.Theseriesisdesignedtoprovideconcise,nontechnicalaccountsofpolicyissuesoftopicalinterest,withaviewtofacilitatinginformeddebate.TheDepartmentofExternalRelationsadministersthe series.

TheviewsexpressedinthispublicationarethoseoftheauthorsanddonotnecessarilyreflecttheviewsandpoliciesofADBoritsBoardofGovernorsorthegovernmentstheyrepresent.ADBencouragesprintingorcopyinginformationexclusivelyforpersonalandnoncommercialusewithproperacknowledgmentofADB.Usersarerestrictedfromreselling,redistributing,orcreatingderivativeworksforcommercialpurposeswithouttheexpress,writtenconsentofADB.AsianDevelopmentBank6ADBAvenue,MandaluyongCity1550MetroManila,PhilippinesTel+6326324444Fax+6326362444

www.adb.org/publications/series/adb-briefs

Inthispublication,“$”referstoUSdollars.

ADBSocialProtectionBriefsaimtohighlightachievementsofADBprojectsthatsupportsocialprotectioninitiativesindevelopingmembercountries.

ProjectOfficer:ClaudeBodart(TA7592-PRC)

BriefpreparedbyADBSocialProtectionTeamSriWeningHandayani

Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO)©2015ADB.TheCClicensedoesnotapplytonon-ADBcopyrightmaterialsinthispublication.

1 ADB.2010.Technical Assistance Report for People’s Republic of China on Rural Health Insurance: Improving Provider Payment Methods.Manila.2 ADB.2013.Technical Assistance Completion Report. TA 7592-PRC:Rural Health Insurance: Improving Provider Payment Methods. Manila.