Empirical Research On Improving Financing And Payment System Of The New Cooperative Medical Scheme

[Background]During 1960s to 1970s, Cooperative Medical Scheme in China has covered more than 90% of rural residents. However, as economic reform deepened in rural areas, Cooperative Medical Scheme has collapsed. In 2003, 79.1% of rural residents were not covered by any form of health insurance. Many of them had no access to health care services because of economic reason and impoverished due to disease.In order to solve this problem, the central government determined to build up a New Cooperative Medical Scheme (NCMS). The aim is to effectively relieve rural residents' burden of disease, solve the problem of impoverishment due to disease and improve health. Since 2003, NCMS has been implemented in pilot counties. By the end of 2004, NCMS had covered 80 million rural residents, with coverage rate of 75.20%. As NCMS in pilot counties developed, some problems emerged. For example, some rural residents were unwilling to participate, vulnerable population had difficulties in paying premium, premium collection was costly, benefit package was not well designed, the reimbursement rate was low and so on. The sustainable development of NCMS depends on reasonable financing and payment system. As the development of NCMS in China is still in pilot period, financing and payment system is not perfect. How to improve financing and payment system in NCMS to ensure sustainable development is a great challenge.Previous studies on NCMS financing and payment were less concerning the criteria of financing and payment and the overall evaluation of NCMS. The research related to improve financing and payment system in NCMS was less reported. Therefore, in order to explore a reasonable financing and payment system in NCMS, this study chooses NCMS piloted counties as objects, tries to design revised financing and payment scheme and implement them, then evaluates the effect of revised scheme, which may provide an evidence for improve financing and payment in NCMS and promote the development of NCMS.[Objectives]The aim of this study is to explore a reasonable financing and payment system in NCMS, which may provide an evidence for improve financing and payment in NCMS and promote the development of NCMS.Detailed objectives are as follows.1. Finding out problems in NCMS financing and payment.2. Exploring determinants and influencing factors of NCMS financing and payment.3. Designing a revised financing and payment scheme.4. Evaluating outcomes of revised scheme implementation in piloted counties.5. Providing political suggestion for NCMS improvement.[Methodology]Data sources1. Study sites. According to geographic and economic situation, two provinces Shandong and Ningxia were chosen. Then, three counties were selected from each province in accordance with economic situation. As a result, Zhangqiu. Changle and Dong'e were chosen in Shandong, Qingtongx, Yongning and Zhongning were chosen in Ningxia.2. Data collection. Two large-scaled field investigations were conducted in 2006 and 2008. Data were collected in four ways as follows.2.1 Institution investigation. Firstly, NCMS administration. A questionnaire was designed by researchers and filled out by NCMS officials in NCMS administration to know about the implementation of NCMS. Meanwhile, database related to inpatient reimbursement were provided either. Secondly, healthcare providers. A questionnaire was designed by researchers and filled out by healthcare providers to know about their revenue and expenditure and subsidies from NCMS.2.2 Second-hand materials collection. Academic references, policy documents about NCMS in the central government and sampled counties were collect in order to understand research frontiers and policies concerning NCMS.2.3 Interview. To know about the implementation, problems in NCMS and stakeholders' attitudes, key-informant interviews and focus-group interviews were conducted.2.4 Household Survey. To know about health demand and utilization, NCMS reimbursement and attitude towards NCMS among rural residents, household surveys were conducted in 2006 and 2008, with sample size as 6147 and 3288 households respectively.Analysis in this dissertation is mainly based on data from the first two sources.Analysis Methods1. References reviews. Summarizing second hand materials collected.2. Diagnosis tree. Finding out problems in NCMS financing and payment and their causes by using diagnosis tree in health sector.3. Premium calculation. To calculation NCMS premium in different benefit packages.4. PETS. Analyzing feasibility of a scheme from political, economical, technical and social perspectives.5. Evaluation framework of 'structure-process-outcome'. Evaluating NCMS from three perspectives of structure, process and outcome.6. Catastrophic health expenditure measurement. To know about the effect of NCMS on reducing burden of disease by measuring the frequency and severity of Catastrophic health expenditure.7. Chain replacement analysis. To analyze influencing factors and their contributions to financing by chain replacement analysis.8. Analysis tool. Data from institutions were input and analyzed by Excel 2003. NCMS inpatient reimbursement database were analyzed through SPSS 11.5. Interviews were recorded with informant consent and analyzed by Maxqda2. Data concerning household survey were double input to Epi Data 2.1 and analyzed by SPSS 11.5.[Results]Results of this study are as follows.1. The status quo of NCMS implementation in 2005According to the investigation results, in 2005 NCMS implemented smoothly in six sampled counties. The premium was 20 to 30 Chinese yuan (CNY) and the participation rate in Shandong and Ningxia was 91.08% and 63.44% respectively. NCMS reimbursement was mainly on inpatient service in six counties. The unified fund was set to reimburse inpatient expenditure, medical saving account in four counties and unified fund in two counties was set to reimburse outpatient expenditure. In 2005, 1.83-5.07% of enrollees obtained NCMS reimbursement on hospitalization expenditure and the effective reimbursement rate was 13.11-26.63%. In five counties except Zhangqiu, the surplus rate of NCMS fund was 30.38-58.09%. However, in Zhangqiu, NCMS fund has deficit in unified fund concerning outpatient reimbursement. NCMS in six counties had some effect in reduce enrollees' burden of disease. It could protect 0.43% of enrollees off the occurrence of catastrophic health expenditure and reduce the severity of catastrophic health expenditure off 1.49-6.65 percentages. Moreover, 78.30% of enrollees satisfied with NCMS.2. Problems in NCMS implementation and causation analysisMeanwhile, there were some problems in NCMS financing and payment system. Firstly, the premium was low, not in accordance with economic situation. Secondly, coverage rate varied among counties, with lower coverage in some counties. Thirdly, financial subsidies from government could not be allocated adequately and in time. Fourthly, the effective reimbursement rate was low and enrollees still had heavy burden of disease. Fifthly, NCMS fund in six counties either had excessive surplus or deficit, which might undermine the sustainability of NCMS.Trough diagnosis tree, causes for previous problems could be summarized as follows. Firstly, NCMS office lacked knowledge on health insurance so that could not design rational premium and payment scheme. Secondly, political consideration constrained premium increase. Thirdly, limited financial capacity of the government at county level and the bottom-up mechanism of allocating match fund by government at all levels caused inadequate subsidies. Fourthly, enrollees' economic difficulty, low concept of health risk, misunderstanding of NCMS and problems in premium collection procedure resulted in low coverage rate in some counties. Fifthly, complicated procedures to obtain reimbursement caused some enrollees could not acquire reimbursement. Sixthly, health cost escalation undermined the effect of NCMS.3. Improvement design on financing and payment system in NCMSThe author proposed some suggestions to improve financing and payment in sampled counties. The premium should be increased, and the way of premium collection should gradually be changed from door-to-door collection to voluntarily pay. The reimbursement rate should be raised and the procedure to get reimbursed should be simplified. More effort should also be made to control irrational growth of health expenditure. Meanwhile, the author calculated NCMS premiums in different benefit packages taking Yongning and Changle as examples and proposed suggestion to adjust financing and payment scheme in six counties as follows. Individual premium could be raised to 15-20 CNY and subsidies from government at all levels could be raised to 30-50 CNY. It is suggested that three counties in Shandong should set deductible, reduce health expenditure segment in reimbursement, elevate reimbursement rat and set ceiling as four times of annual income. For Ningxia, it is suggested that counties employ the similar payment scheme, set deductible and reimbursement rate in township hospital as 100 CNY and 50%. in county level hospital as 200-250 CNY and 45%, in hospital above county level as 500 CNY and 15%, cancel health expenditure segment in reimbursement, set ceiling as 10000 CNY.4. Evaluation on the implementation of improved financing and payment system in NCMSThese proposals to adjust financing and payment scheme in NCMS have almost been accepted and implemented in six counties. This study has evaluated the effect of adjusted financing and payment scheme in NCMS after implementing for 2 years. In general, adjusted scheme has had positive effects.Firstly, the premium has been raised, up to 70-100 CNY per capita in 2008, almost 3 times of that in 2005. The increase of government subsidies became the main source of premium increase. In four counties, individual premium also rose.Secondly, NCMS coverage expanded. In 2008, NCMS coverage rate in Shandong and Ningxia was 96.84% and 94.56% respectively. Individual premium increase had no effect on coverage.Thirdly, enrollees used healthcare services more rationally than before. Enrollees' most healthcare demand could be met within county.Fourthly, reimbursement level has been raised. The percentage of enrollees that obtained NCMS reimbursement in 2008 was more than that in 2008. Meanwhile, the effective reimbursement rate also increased in 2008.Fifthly, case-based payment had good effect on cost containment, which may also help to reduce enrollees' burden of disease.Sixthly, the effect of reducing financial risk was strengthened.Seventhly, satisfaction rate increased from 78.3% in 2005 to 84.5% in 2008. Although gained achievement, NCMS in six sampled counties was also confronted with challenges. The premium and payment was not rationally determined. Government subsidies were still not allocated adequately and in time. Individual premium was low. The NCMS fund was not stable and faced risk. Medical saving account had limited effect on reimbursement to outpatient expenditure. Health cost escalation aggravated enrollees' burden of disease in some counties. Health cost containment lacked of internal motivation.5. Analysis on the key influencing factors of financing and payment system in NCMSMoreover, this study also analyzed the key influencing factors of financing and payment system in NCMS. As for financing, premium was the most important factors with contribution rate as 61-79%. The following factors were coverage rate and actually financing rate. As for payment, raising reimbursement rate, reducing health expenditure segment, lowering deductible could effectively elevate effective reimbursement rate. These three factors should be given priority when adjusting payment scheme.[Conclusion and political recommendation]1. Keeping the stability of NCMS. At present stage, NCMS has achieved a broad coverage. To further develop NCMS, it is suggested to keep certain stability in policy, avoiding adjusting policy frequently.2. Government at all levels should further support the development of NCMS. Government especially the central and provincial government should take the responsibility and subsidize NCMS in time and in full amount.3. Rationally adjusting the financing and payment scheme to improve enrollees' benefits. When adjusting financing scheme, it is suggested that individual contribution to premium should be raised. When adjusting payment scheme, it is supposed to give priority to reimbursement policy in county level hospitals.4. Setting a unified fund at a higher level. Some piloted counties have employed similar schemes with other counties. It provides a good basis for setting a unified fund at a prefectual level which can strengthen NCMS capacity of risk protection.5. Canceling medical saving account, employing unified fund in outpatient reimbursement. The effect of medical saving account has been proved to be limited. Employing unified fund in outpatient reimbursement has been demonstrated to be effective, which can increase enrollees' benefits. More attention should be given to solve the problems in transition period.6. Developing and improving case-based payment system. In this study, case-based payment has been proved to be effective in cost containment. It is suggested to developing case-based payment system in other counties under the precondition of rationally choosing diseases and setting payment criteria.7. Strengthening cost containment. It is proposed to strictly control the irrational growth of health expenditure in order to effectively reduce enrollees' burden of disease.8. Intensifying the capacity building in NCMS administration. Health bureau should take overhead expenditure of NCMS office into consideration, add equipment, network and position in NCMS office to ensure routine work. Meanwhile. NCMS administration officials should have more knowledge on health insurance to be more professional in daily work.9. Promoting reforms in health sector to ensure sustainable development of NCMS. Reforms in health sector should be deepened and the development of healthcare providers in rural areas should be sped up so as to solve the problems such as irrational growth of health expenditure, unreasonable use of health resources from the root to promote the development of NCMS.