Part IV: Achievements of China's medical security system

An examination of the accomplishments of China's medical security system serving a population of 1.4 billion.

This is the second-to-last installment in a series on China's medical security system. Three previous articles delved into the historical landscape of medical care in China.

Following today's piece, which focuses on China's achievements in medical security, the next one will shift to the major difficulties and challenges faced by the current system.

Cai Haiqing, the author, is the former Director of Treatment Insurance, Jiangxi Province Healthcare Security Administration. This article was originally published in Chinese on the WeChat account Hailiao Qingtan 海聊清谈. It was then reposted by China Health Insurance 中国医疗保险, a magazine affiliated with the National Healthcare Security Administration of China.

---

Notable Achievements in Medical Insurance System Reform

The National Healthcare Security Administration (NHSA), since its establishment, has resolutely implemented the decisions and plans of the CPC Central Committee and the State Council. Adhering to the people-centered philosophy and continuous reform, it has exerted its full effort to protect the basic medical rights and interests of the people. In doing so, it has built upon its previous achievements, yielding notable progress encapsulated in the following five key positive developments.

Greater Equality

1) Greater Coverage

In the five years since NHSA's inception, with strong support from party committees, governments, and proactive efforts of medical insurance departments nationwide, the national population insurance rate consistently exceeds 95%. Moreover, the insurance rates for low-income rural populations and individuals lifted out of poverty have steadfastly surpassed 99%. This achievement marks a major step toward universal healthcare coverage, ensuring that most people can access essential medical services and easing concerns about healthcare access during illness.

2) Broader Benefits

In the last five years, medical insurance drug list adjustments have sped up, leading to a continuous increase in the number of drugs included. The waiting time for new drugs to make it onto the list has gone from nearly 5 years to under 2 years, with some added within just six months of their launch. In 2022, 111 new drugs were added to the medical insurance list, bringing the total to 2,967 drugs, up from 1,535 in the initial list. Furthermore, A nationwide unified medical insurance drug list is now in place.

Currently, medical insurance for urban employees covers 80% of hospitalization expenses, while Urban and Rural Residents' Basic Medical Insurance (URRBMI) covers 70%. In 2022, Grade-A, Grade-B, and Grade-C-and-below medical institutions had reimbursement rates of 79.8%, 87.2%, and 89.2% for urban employees' inpatient expenses. For URRBMI, these rates were 63.7%, 71.9%, and 80.1%. Compared to 2021, there's been a slight improvement in benefits, reducing the gap in inpatient medical insurance between employees and residents at the same medical institution.

3) More Equal System

The nationwide Basic Medical Insurance (BMI) system is now universally implemented, with variations in policy parameters among regions and demographics. But extensive integration at city and provincial levels has led to uniform policies, fund management, and services, promoting equitable medical insurance benefits distribution.

Increased Efficiency

1) Continuous advancement of centralized procurement of drugs and medical supplies

Over the last five years, national centralized drug procurement has reduced prices for 333 drugs by over 50%, and 8 types of high-value medical supplies, such as cardiac stents and artificial joints, by over 80%, saving around 500 billion yuan (6.845 billion U.S. dollars). In 2022, the seventh round of centralized drug procurement included 61 drugs with an average price drop of 48%, and orthopedic spinal supplies with an 84% price reduction. This ongoing centralized volume-based procurement has cut costs, eased the public's financial burden, improved the industry ecosystem, and standardized medical services.

2) Diligently conducting drug access negotiations

Since the establishment of NHSA in 2018, medical insurance negotiations have accelerated. In five years, 341 drugs were added to the catalog at an average price reduction of over 50%, including exclusive anticancer and rare disease medications like Camrelizumab and Nusinersen, making "effective" and "life-saving" drugs more accessible. Patients have saved over 500 billion yuan ($68.45 billion U.S. dollars) cumulatively. In 2022, 275 negotiated drugs benefited 180 million individuals, leading to annual patient savings of over 210 billion yuan (28.744 billion U.S. dollars) through negotiated price reductions and insurance reimbursements.

3) Broad implementation of medical insurance payment reform

The diagnosis-related group (DRG) and diagnosis-intervention packet (DIP) payment reform has been effectively implemented, enhancing the strategic role of the medical insurance fund. Medical fund utilization efficiency is improving, providing cost-effective services. By the end of 2022, 30 national pilot cities for DRG payment and 71 former national pilot cities for point-of-service (POS) plan and DIP payment were running smoothly. Many regions are extending this reform to 40% of planning areas through a three-year action plan, with 206 coordinated areas having successfully implemented DRG/DIP payments.

Enhanced Sustainability

1) Continuous strengthening of the medical insurance fund's supporting capacity

From 2018 to 2022, the annual income of the BMI fund (maternity insurance included) increased from 2.14 trillion yuan (292.686 billion U.S. dollars) to 3.09 trillion yuan (422.481 billion U.S. dollars), while annual expenditure grew from 1.78 trillion yuan (243.986 billion U.S. dollars) to 2.46 trillion yuan (336.964 billion U.S. dollars). The current balance is 632.493 billion yuan (86.617 billion U.S. dollars), with an accumulated balance of 4,263.989 billion yuan (583.903 billion U.S. dollars). The income growth rate exceeded expenditure growth, maintaining a "balanced income and expenditure with a slight surplus" status, ensuring the financial health of the medical insurance system for sustainable development.

2) Comprehensive launch and operation of the medical insurance information platform

After nearly four years of continuous work, the national medical insurance system achieved the nationwide launch of the comprehensive medical insurance information system in March 2022. This ended the historical fragmentation of systems, regional closures, and the existence of multiple parallel systems developed independently by different regions and departments. A medical insurance service "network highway" now connects the entire country, integrating 800,000 designated medical and pharmaceutical institutions, serving 1.34 billion insured individuals, and establishing a solid technical foundation for the stable operation of the medical insurance system.

Enhanced Security

Over the past five years, medical insurance departments at all levels have proactively supervised the medical insurance fund through a comprehensive "point, line, and plane" strategy.

1) "Spot-checking" through random inspections, achieving "breakthroughs at specific points"

Using a "no prior notice, top-down inspection, and cross-checking" mechanism, the challenge of "peer supervision in a society based on social relations" was effectively addressed. Strict actions were taken against identified illegal and irregular activities, maximizing the impact of surprise inspections. Since 2019, the NHSA has sent out 184 random inspection teams, examined 384 designated medical institutions, and uncovered 4.35 billion yuan (595.915 million U.S. dollars) related to suspected illegal and irregular fund use.

2) Special rectification through "penetrative" inspection, achieving "line progression"

Medical insurance departments collaborated with public security agencies, health departments, and other relevant authorities to focus on critical areas like orthopedics, hemodialysis, cardiology, and issues such as the resale of medical insurance drugs and fraudulent medical records. Their supervision aimed to eliminate the misuse of funds from the public's "life-saving money." In 2022, they cracked 2,682 cases, apprehended 7,261 suspects, and recovered 1.07 billion yuan (146.293 million U.S. dollars) from the medical insurance fund.

3) Regular supervision empowered by data, achieving "net coverage across the board"

Modern information technologies, including intelligent monitoring and big data, are being fully leveraged to establish a comprehensive, multi-layered, and three-dimensional regulatory system. In 2022, intelligent monitoring helped withhold and reclaim 38.5 billion yuan (5.271 billion U.S. dollars), constituting approximately 26% of the total reclaimed funds. A single big data model targeting fake hospitalizations led to the arrest of nearly 500 individuals and an investigation into almost 1 billion yuan (136.9 million U.S. dollars) in related funds.

Enhanced Convenience

1) Improved efficiency in the management and services of medical insurance

The unified national medical insurance information platform, now fully operational, has reduced the average response time for settlements on the medical insurance platform to just 0.8 seconds. This is a 3-5 times improvement on average and allows for the daily processing of settlements for 18 million people. These advancements have greatly enhanced service efficiency. Additionally, real-time data aggregation has established a strong technical foundation for improving the quality of medical insurance management.

2) Significant breakthroughs in direct settlements for out-of-province medical treatments

Settling hospitalization expenses when seeking medical treatment outside of one's registered province has become more convenient. There are now 68,800 networked medical institutions across provinces for inpatient expense settlements, a sevenfold increase since 2017. The direct settlement rate for out-of-province inpatient expenses has surged from under 5% in 2017 to approximately 65% in 2022, benefiting around 20.3876 million individuals.

There has been a breakthrough in direct settlement of outpatient fees across provinces. Every county now has at least one designated medical institution capable of directly reimbursing out-of-province outpatient expenses. Across the nation, 382,100 medical institutions are connected for general outpatient fee settlements, benefiting a total of 69.5991 million individuals.

Significant progress has been achieved in the direct settlement of outpatient expenses for chronic and special diseases across provinces. Each pooling area now has at least one designated medical institution capable of directly reimbursing outpatient expenses for five specific conditions: hypertension, diabetes, outpatient radiotherapy, and chemotherapy for malignant tumors, renal dialysis for uremia, and post-organ transplant anti-rejection treatments. Nationally, 24,600 medical institutions are interconnected across provinces for these outpatient treatments, benefiting a total of 730,200 individuals.

The process for recording out-of-province medical treatments has been improved over time. Medical insurance departments at all levels have expanded the eligibility criteria and simplified the documentation required for such records. Additionally, they've introduced online and mobile recording channels for out-of-province medical treatments through the national medical insurance service platform APP and the NHSA's official WeChat account.