This seminar will present the results of the recently completed randomized impact evaluation of a provider payment project carried out in county hospitals in the rural areas of Guizhou province in China. This project switched the local rural health insurance - the New Rural Cooperative Medical Scheme (NCMS) - from fee-for-service payments for county hospitals to a global budget scheme in order to incentivize hospitals to act as gatekeepers, minimize out-of-county (OOC) referrals and reduce unnecessary expenditures for county hospital-based treatment. The intervention was implemented in two waves.
Results indicate variable impact. For one set of intervention counties/hospitals, the results show that the provider payment intervention led to reduced OOC admissions. This finding is consistent with the government’s objective to build a “tiered delivery” system in China, that is, less complicated cases should be shifted from tertiary hospitals to secondary hospitals as a way to improve allocative efficiency. There is also some evidence to suggest that faced with a global budget, hospitals cost shift by prescribing more services/drugs that are not eligible for NCMS reimbursement, thus leading to increased out-of-pocket spending. This effect is weaker for hospitals of which NCMS payment represents a significant share of the hospitals’ revenue. We did not find evidence that the payment intervention led hospitals to improve their managerial capability, as measured by the World Management Survey instrument.
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Photo credit: UNICEF/UNI315089/Yuwei