China, People's Republic of: Rural Health Insurance: Improving Provider Payment Methods

Sovereign Project | 44030-012

Summary

In 2003, the PRC launched the New Rural Cooperative Medical Scheme (NRCMS), a health insurance scheme run by counties, to address the high out-of-pocket expenditures for health care in rural areas. Funding for NRCMS is provided by central and local governments on a per capita basis (CNY20 in 2003, CNY80 in 2009) and rural residents contribute a fixed amount on a voluntary basis (CNY10 in 2003, CNY20 in 2009). NRCMS has made great progress; in 2008, it covered 100% of counties, and in 2009, it enrolled 833 million people, resulting in an enrollment rate of 94%. NRCMS represents a major step toward a rural health financing system that is more equitable, through reducing out-of-pocket expenditures for health care, and also more efficient.

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Project Name Rural Health Insurance: Improving Provider Payment Methods
Project Number 44030-012
Country China, People's Republic of
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7592-PRC: Rural Health Insurance: Improving Provider Payment Methods
Technical Assistance Special Fund US$ 300,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change
Sector / Subsector

Health - Health insurance and subsidized health programs

Gender Equity and Mainstreaming
Description

In 2003, the PRC launched the New Rural Cooperative Medical Scheme (NRCMS), a health insurance scheme run by counties, to address the high out-of-pocket expenditures for health care in rural areas. Funding for NRCMS is provided by central and local governments on a per capita basis (CNY20 in 2003, CNY80 in 2009) and rural residents contribute a fixed amount on a voluntary basis (CNY10 in 2003, CNY20 in 2009). NRCMS has made great progress; in 2008, it covered 100% of counties, and in 2009, it enrolled 833 million people, resulting in an enrollment rate of 94%. NRCMS represents a major step toward a rural health financing system that is more equitable, through reducing out-of-pocket expenditures for health care, and also more efficient.

The level of financial protection provided by NRCMS has risen along with increases in the funding available for NRCMS, with the true reimbursement rate increasing from 25% in 2004 to 41% in 2009. However, rising medical costs are reducing the financial protection of the insured, especially when patients suffer from catastrophic illnesses. Furthermore, NRCMS reimburses primarily in-patient care, thereby creating an incentive to shift from low-cost out-patient to costly in-patient care.

In the PRC, providers are paid primarily on a fee-for-service basis, which encourages excessive and expensive treatments. Providers have a tendency to increase their income by selling drugs and providing high-tech care. The additional funding available to health providers exerts an upward pressure on the cost of care without necessarily improving the quality of services. The 2009 Health System Reform in the PRC requires NRCMS to become more efficient in reducing the economic burden of illnesses for rural residents. A recent decision of the government requires at least 10% of counties to reform their provider payment methods under NRCMS by the end of 2010.

Project Rationale and Linkage to Country/Regional Strategy Although some counties have piloted different payment methods, there is no systematic approach in reforming payment mechanisms to providers. The TA will provide international experience on provider payment methods, summarize the overall experience of provider payment methods used by NRCMS, observe the implementation of a number of typical payment methods, document the successful experiences of counties that have carried out payment method reforms, and pilot selected payment methods. The TA will explore provider payment methods suitable for rural areas, which could be widely used by NRCMS after validation to better control the cost of care, ensure the quality of health services, and minimize transaction costs. This would entail improving the way in which NRCMS purchases health services from hospitals on behalf of their members, including capacity building to improve contracting and negotiating skills, and improving monitoring of the quality of the services provided.
Impact New Rural Cooperative Medical Scheme (NRCMS) capacity to purchase health services from providers has improved.
Project Outcome
Description of Outcome Policy recommendations for MOH on reforming provider payment methods for NRCMS have been adopted.
Progress Toward Outcome Recommendations on reforming provider payment methods have been prepared and submitted to the MOH. The recommendations are based on the results and lessons learned from a one year implementation of an experiement of payment reform in Changsu county, Jiangsu province and Nanning County, An'hui province.
Implementation Progress
Description of Project Outputs

1. Study report on international and national experience

2. Capacity-building material and study tour on payment methods for health providers, NRCMS managers, and health authorities

3. Dissemination of findings and recommendations

Status of Implementation Progress (Outputs, Activities, and Issues)

The inception mission took place in January 2011. The advance payment facility has been approved and released to the EA. A launching workshop was held on 26-28 May 2011. The consultants were mobilized in June 2011. A brief review mission was fielded on 16 May 2011 (back to back with another project), and a more detailed review mission was again fielded on 16-18 August 2011. The pilot experiments on provider payment reforms are well prepared and actual implementation will start in January 2012. Total ADB contribution is $300,000, of which $179,530 are awarded and $20,130 are disbursed, as of 29 August 2011.

A short review mission was conducted between 9-11 November 2011, during which the IA requested extension of the TA up to 2013 to provide sufficient time for the implementation of the pilot and preparation of recommendations. The Inception report was submitted on 14 November 2011.

Implementation at midterm of the pilot has been evaluated by the consultants and CCMS, and the midterm report for the pilot is in translation and will be submitted soon. The training manual has been developed and will be used in the Changshu and Nanling training workshops (scheduled in September to October 2012). The international study tour to France and Italy to learn about the experience in provider payment system reform of medical security schemes has been completed and a report is written. This report will be added into the final TA report.

During the ADB review mission on 4-6 March 2013, the ADB mission and CCMS agreed on the following schedule for the preparation and submission of the outputs per the DMF:

Output 1: Study Report by June 2013: the specific topics of the study report will be part of the TA final report under output 3. This includes (i) best national and international practices for PPR, (ii) survey of PPR initiatives in the PRC, and (iii) the report on the pilot study on PPR in Nanling and Changshu counties.

Output 2: Capacity Building Material by May 2013: an attractive manual will be prepared which will include training material developed and pilot tested under the TA to serve other PPR initiatives. The manual will be translated in English and disseminated essentially in Mandarin.

Output 3: Dissemination of Findings in the form of (i) a final TA dissemination conference on 1 3 April 2013 in Changshu, (ii) a knowledge product on reforming provider payment methods (by June 2013), (iii) policy recommendations for the MOH based on the pilots (on time for the dissemination workshop on 1 3 April 2013), and (iv) a final TA report, which will include the topics under output 1 and items (ii) and (iii) of output 3 by June 2013.

The TA was physically completed in June 2013 and is in the process of being financially closed.

Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design The proposed TA has been identified and conceptualized through the domestic processing procedure of the PRC Government and through direct discussion with MOH and relevant stakeholders. Participatory consultation will be incorporated during TA implementation.
During Project Implementation A national survey on best practices on provider payment mechanisms was conducted and a questionnaire was sent to about 2,700 counties and 2,126 counties submitted their responses. Seventy percent of counties have initiated some form of provider payment reform but preliminary findings show that reforms were, in general, not well understood. This shows the need to provide technical support to counties in reforming their provider payment systems.
Business Opportunities
Consulting Services

A total of 12 person-months of consulting services will be required. The team leader/senior health economist (national, 6 person-months), a PhD, will have strong expertise in health financing and health insurance, and practical experience with the New Rural Cooperative Medical Scheme (NRCMS). He or she will demonstrate knowledge and skills in capacity needs assessment, development of training materials, and conduct of training and awareness programs.

The national senior policy and evaluation specialist (national, 4 person-months), a health economist, with at least a masters level qualification, will have expertise in health financing and health insurance, as well as practical experience in conducting field investigations and pilot tests, and in evaluating the results. The national senior health financing specialist (national, 2 person-months), with at least a masters level qualification, will have strong expertise in health financing and health insurance, and practical experience with NRCMS.

Responsible ADB Officer Claude Bodart
Responsible ADB Department East Asia Department
Responsible ADB Division Urban and Social Sectors Division, EARD
Executing Agencies
Department of Rural Health Mgt, Ministry of HealthPRC
Timetable
Concept Clearance 25 Feb 2010
Fact Finding 15 Mar 2010 to 19 Mar 2010
MRM -
Approval 03 Sep 2010
Last Review Mission -
PDS Creation Date 24 Mar 2010
Last PDS Update 18 Sep 2013

TA 7592-PRC

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
03 Sep 2010 08 Nov 2010 08 Nov 2010 31 Jul 2012 30 Jun 2013 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
300,000.00 0.00 80,000.00 0.00 0.00 0.00 380,000.00 03 Sep 2010 298,035.61

Safeguard Documents

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Evaluation Documents

See also: Independent Evaluation

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