Shenmu pilots medical reform plan
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Control costs
Before instituting comprehensive free medicare, the Rehabilitation Work Committee published and distributed pamphlets among villagers to familiarize them with the pilot medical reforms.
As expected, the free medicare program brought a sharp increase in hospital patients. Local residents that wanted to go into one of the county's better equipped hospitals needed to make an appointment and wait for weeks or even months. Beds in other designated hospitals, meanwhile, were soon fully occupied. The amount of hospitalization fees reimbursed in March 2009 was RMB 9.6 million, and in April the figure jumped to RMB 12.70 million. Prior to 2009 monthly hospitalization expenditures remained around RMB 7 million.
Finding a balance between cost control and medical quality was a tall order for the county government. To avoid the risk of either local inhabitants or hospital staff taking advantage of their access to medical resources for personal gain, certain new rules controlling the cost of medications were stipulated in conjunction with the reimbursement benchmark. For example, doctors are forbidden to dispense excessive prescriptions, and the proportion of drugs not covered by the free medicare program should not exceed 10 percent of a prescription. Another stipulation was that the cost of medication during hospitalization be no higher than 50 percent of the total cost of hospital treatment, and that the cost per day of a hospitalized patient should not exceed RMB 400. These restrictions effectively controlled medical costs. Shenmu has also laid out reimbursement quotas for 30 common diseases.
Three months after the pilot medicare program had been in operation, however, almost all designated hospitals had exceeded quotas in indexes such as per person per day hospitalization cost. The county government hence took punitive action. The top three hospitals to have exceeded quotas were respectively fined RMB 15,000, RMB 10,000 and RMB 5,000. Those that continued to flout the program stipulations had their status as designated hospitals either suspended or canceled. Daxing Hospital of Shenmu County was first to be taken off the list. The hospital president Li Zenghou has since admitted that losing this status has affected hospital income by 30 to 40 percent.
Shenmu County Hospital also incurred fines for failure to control costs. Its president Ma Baoyu reasoned that cost control was more difficult a task for bigger hospitals with superior medical apparatus and skills because they receive more seriously ill patients than others do. However, he assured that his hospital had tightened up on the control of medication costs, "Mainly through rational medication to avoid waste," as he said.
Since controlling costs by avoiding unnecessary checks and cutting back on prescriptions of costly drugs, Daxing Hospital has regained its designated medicare status. President Li Zenghou believes that controlling costs is as important as ensuring medical quality and safety.
The Shenmu county government has also strengthened its supervisory efforts. Self-auditing in these designated hospitals is now the first line of defense, the second being regular hospital tours by inspectors to make sure that funds are appropriately spent.
After peaking in April 2009, medical costs in Shenmu declined and stabilized.
Wider applicatioin possible
Visitors come from all over the country to learn from the Shenmu experiment. Among them is Wang Zhenyao, director general of the Department of Social Welfare and Promotion of Charities, Ministry of Civil Affairs. The purpose of his visit to Shenmu was to find a way of treating impoverished children with serious illness.
Wang Zhenyao has since said in an interview, "Shenmu stands out in that it has adjusted many people's concept of reform, my own included." Wang sees the medicare experiment as a public welfare concept. "The Shenmu reforms have shown us a good way of thinking, whereby action starts with the needs of the people."
Wang moreover believes that instituting the free medicare program at an annual cost level of RMB 300-400 per capita presents no problem in at least half of the country.
The actual expenditure of Shenmu's free medicare program totaled RMB 149 million in 2009. Excluding the RMB 30 million medical insurance funds from national, provincial and municipal allocations, the actual local financial investment was RMB 120 million. The budgeted RMB 150 million was hence still in surplus.
This latest medical reform also increased the reimbursed proportion of hospitalization fees from 40 percent to 84 percent. Moreover 93.36 percent of the hospitalized patients in 2009 were rural residents. Zhang Bo was particularly excited about this last fact. "Farmers have benefited most from this program. Many impoverished rural families now have the solution to their greatest problem," he said.
Guo Baocheng believes that the Shenmu government has also benefited from the pilot program. County revenue in 2008 stood at RMB 6.7 billion, and had jumped to RMB 9.3 billion in 2009. Guo thinks this rise is either directly or indirectly related to policies that benefit the people, because when the people have no health worries, the wealth they create exceeds by far the cost to the county of free medicare. The purchasing power of Shenmu residents' has indeed increased 22 percent over what it was in 2008, according to statistics.
On April 1, 2010, Shenmu County revised the unified mean cost ceiling for hospitalization from the RMB 4,000 it put on all hospitals to a differentiated scale of RMB 4,600, RMB 4,000, RMB 3,600 and RMB 1,200, depending on the expertise level of a hospital. The restriction on the duration of hospitalization was also classified into 11, 8 and 5 days. Meanwhile, the cost ceiling for drugs was raised from within 30 percent to within 50 percent and in some cases 78 percent of total hospitalization fees.
The national standard for government subsidies of urban medical insurance and new-type rural cooperative medical care has increased in 2010 to RMB 120 per person per year as compared to the RMB 400 in Shenmu County. Many people, including officials from the Ministry of Health, believe that half or more of China's counties and cities should have no difficulty in following Shenmu County's lead.
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