Provider Payment Reform in China: Evidence from the Diagnosis Related Group (DRG) Implementation

Provider Payment Reform in China: Evidence from the Diagnosis Related Group (DRG) Implementation

Thursday, October 28, 2021
5:30 PM - 7:00 PM

Via Zoom Webinar

  • Julie Shi

Asia Health Policy Program (AHPP) 2021-22 Colloquium series "Aligning Incentives for Better Health and More Resilient Health Systems in Asia”

Friday, October 29, 2021, 8:30am - 9:30am (Beijing time)

This paper investigates the impact of China’s reform of the system for medical payments from traditional fee-for-service to prospective payment in the form of diagnosis-related group. The paper explores comprehensive aspects of the reform, taking advantage of a large-scale administrative data set from a pilot city in China. It finds that medical expenditure per admission dropped by 7.3 percent, with greater impact on patients who spent a larger amount. To better understand the changes, further decompositions find that the expenditure reduction is fully explained by reduction in the quantity of services instead of using cheaper ones, and by reduction in the use of drugs but not reduction in other types of services, including examination, treatment, and nursing care. In addition, no evidence is found on quality deterioration or behavioral responses, including upcoding and cream skimming. Hospitals maintained their revenue through attracting more patients to contend with cost containment induced by the payment reform.

Julie Shi 4X4
Julie Shi is Associate Professor of Health Economics in the School of Economics and the School of Global Health Development at Peking University. Dr. Shi’s research focuses on the design and impact of health care payment systems, the economics of health insurance coverage, drug regulations, and the trend of medical expenditures. Shi’s work has contributed to the theory and practice of China’s payment system reform. Her research on health insurance includes the impact of insurance on medical utilization. She has conducted academic and policy research on government regulations on prescription drugs. She also works on the trend of expenditures for patients with catastrophic diseases.

Dr. Shi’s undergraduate degree is from Tsinghua university and her PhD is from Boston University, both in economics. Before joining Peking University, she was a post-doctoral fellow at Harvard Medical School. Her work has published on leading academic journals including Journal of Public Economics, Journal of Health Economics, and Health Economics. She received awards for paper of the year in 2014 from the National Institute of Health Care Management (NIHCM) in the United States. She has conducted multiple projects for central and local governments in China for policy recommendation.