A critical analysis of purchasing mechanism in China’s Rural Health Insurance SchemeProfessor Qingyue Meng China Center for Health Development Studies, Peking UniversityiHEA, Milan; 15 July, 2015

China Rural Health Financing Scheme (NCMS)

Meng and Xu, WHO Bull, 2014

• Government-financed (80% of total fund);

• Covering all rural population;

• County is a unit of fund pooling

• Covering both outpatient and inpatient care

Overview of the key actors

Citizens (The rural population

covered by NCMS)

Ensure NCMS to be well organized and operated according to the government policies

Decide NCMS benefit packages considering the requirements from government

Decide NCMS benefit packages considering the needs of he NCMS insured

Ensure needs and preferences of insured are reflected

Purchasers (County NCMS Office)

Providers (Hospitals, township

health centers, village clinics)

Decide contractual arrangements and payment system

Deliver appropriate health care services

Government(at national, provincial,

and county levels)

Overview of findings Relatively stronger area •Establish clear frameworks for purchaser(s) and providers (P-G)•Ensure adequate resources mobilised to meet service entitlements (P-G)•Ensure accountability of purchaser(s) (P-G)•Establish service agreements/contracts, guidelines(P-P)•Secure information on services provided (P-P)•Monitor provider performance and act on poor performance (P-P)•Assess the service needs, preferences and values of the population and use to specify service entitlements/benefits (P-C)•Publicly report on use of resources and other measures of performance (P-C)Relatively weaker areas•Develop formularies (of generic drugs, surgical supplies, prostheses etc.) and standard treatment (P-P)•Design, implement and modify provider payment methods to encourage efficiency and service quality (P-P)

Purchaser - Government relationshipIdeal Design Practice Clear policy and regulatory frameworks for purchasers and providers to operate

Central government designs the overall framework of NCMS policies and regulations; local governments develop implementation plans

1. Guidelines for NCMS Management System and Regulations issued by the central government 2. Operational plans at provincial and county level governments

Mechanisms for making resources available to purchase needed services

1. Transfer payment mechanisms at both national and provincial governments for low-income areas; and 2. Specific subsidies for supporting enrollment and co-payment of the poor

1.NCMS fund in poor counties come from transfer payments2. Medical Assistance Fund (MAF) is available for supporting the poor

Mechanisms to ensure the accountability of purchasers to government

NCMS purchasers are fully financed by the government budget

NCMS office staffed 5-10 people is established in each county with regular budget from government

Purchaser - Provider relationshipIdeal Design Practice Take active decisions on which providers to purchase services from (quality, equity)

Criteria available at county NCMS offices for selecting and contracting health providers

Due to the monopolistic positions of county general hospital in a county and township health centers in a town, the stated criteria are usually not used

By means of gate keeping and referral, provider payment methods, use of essential drug lists and standard treatment guidelines

1. Community health providers as the gatekeepers2. Adopt alternative payments methods 3. Support implementation of clinical pathways

1. Gatekeeping and referral systems are not effective 2. Many pilots of payment systems, few are successful3. Clinical pathways for selected health conditions are developed, but not well implemented

Monitor provider performance (quality of care)

1. NCMS monitoring expert panels at county level2. NCMS Information Management System

1. Quality monitoring by medical panels is not well operated2. NCMS IMS has technically well developed

Purchaser - Citizen relationshipIdeal Design Practice Actively engage with citizens on their health needs, preferences, values, and update this information regularly

1. Needs assessments by surveys, analysis of secondary data, and interviews with community people2. Individual-base health information system

1. Better in early stage of NCMS (2003-2005)2. The application of system varies by counties

Develop and update service entitlements reflecting health needs of the population and protecting against financial catastrophe

Update benefit package annually according to fund availability with considerations of health needs, cost-effectiveness of the services, and extent of financial protection

The benefit package is updated annually, but some principles of were not well followed

Report publicly on purchaser performance to promote transparency and accountability

1. NCMS fund income and expenditure needs to be publically announced regularly2. Updated NCMS benefit packages needs to be publicly announced

Internet, local news paper, local TV program, and posters are widely used for the public reporting

NCMS performance

Year Henan   Qinghai  Xixian Yiyang   Hualong Huangzhon

g2009 51.9 55.1   57.7 58.502010 57.6 55.1   59.0 59.22011 59.5 51.0   54.7 54.62012 48.0 39.9   38.9 44.02013 49.1 49.2   40.3 38.3

The NCMS copayment rates in study counties (%)

“NCMS has become one of the most important strategies the government can do in rural area to improve access and increase financial protection. A good framework for addressing the three relationships are very helpful.” – A county health director

“How to deal with the providers, NCMS insured, and government NCMS is a key for success of the NCMS. We have done a lot, but still many things need to be done. Strategic purchasing is a useful concept for us to improve our work.” – A county NCMS Officer

Factors contributing to strategic purchasing

• Political context: Strong political support to NCMS and top government priority in

rural health system• Resources: Resources available for capacity building and regular operation of

the NCMS offices (purchasers)• Incentives: Government would show achievements in establishing a financial

protection system; NCMS offices have incentives to keep fund balance, keep the high population coverage, and attain public satisfactions.

• Information: Overall development of information system provides good

foundation for linking the parties• Accountability: Accountabilities and responsibilities of each of the relevant

government authorities, NCMS offices, and providers are clearly defined and regulated.

Factors undermining strategic purchasing

• Institutional arrangements: Fragmented schemes (NCMS risk pool in 2800+

rural counties; separation of rural and urban health insurance schemes); monopolistic positions of health providers

• Incentives: Lack of incentives for NCMS offices to improve

quality of care; pricing policies based on fee-items are not supportive to payment system reform

• Monitoring: Indicators related to strategic purchasing need to be

added in to the NCMS monitoring system • Accountability: Accountabilities of government and NCMS Offices

are not clearly defined

Conclusions

• Strategic purchasing mechanisms would support NCMS to be operated more efficiently and equitably

• Active use of strategic purchasing in NCMS can be enhanced by increasing awareness of the significance and key elements in the strategic purchasing

• To consolidate the NCMS and urban health insurance schemes at system, to improve incentives for purchasers to pay attention to health care quality by adding quality indicator in monitoring, and to change the current fee-for-service pricing policies to alternatives ones, are the major areas for improving the performance of NCMS purchasing

www.wpro.who.int/asia_pacific_observatoryhttp://resyst.lshtm.ac.uk@RESYSTresearch

The research is a collaboration between RESYST and the Asia Pacific Observatory on Health Systems and Policies.

RESYST is funded by UK aid from the UK Department for International Development (DFID). However, the views expressed do not necessarily reflect the Department’s official policies.

More information: http://resyst.lshtm.ac.uk/research-projects/multi-country-purchasing-study

Major researchers in this study is Fu Peipei and Wang Haipeng from Shaodong University