Does the Diagnosis-Intervention Packet Payment Reform Impact Medical Costs, Quality, and Medical Service Capacity in Secondary and Tertiary Hospitals? A Difference-in-Differences Analysis Based on a Province in Northwest China.

Abstract

Purpose: To control medical costs and regulate the behavior of providers, China has formed an original widely piloted case-based payment under the regional global budget, called the Diagnosis-Intervention Packet (DIP). This study aimed to evaluated the impact of the DIP payment reform on medical costs, quality of care, and medical service capacity in a less-developed pilot city in Northwest China.

Patients and methods: We used the de-identified case-level discharge data of hospitalized patients from January 2021 to June 2022 in pilot and control cities located in the same province. We performed difference-in-differences (DID) analysis to examine the differential impact of the DIP reform for the entire sample and between secondary and tertiary hospitals.

Results: The DIP payment reform resulted in a significant decrease of total expenditure per case in the entire sample (5.5%, P < 0.01) and tertiary hospitals (9.3%, P < 0.01). In-hospital mortality rate decreased significantly in tertiary hospitals (negligible in size, P < 0.05), as did all-cause readmission rate within 30 days in the entire sample (1.1 percentage points, P < 0.01) and secondary hospitals (1.4 percentage points, P < 0.01). Proportion of severe patients increased significantly in the entire sample (1.2 percentage points, P < 0.05) and tertiary hospitals (2.5 percentage points, P < 0.01). We did not find the DIP reform was associated with a significant change in relative weight per case.

Conclusion: The DIP payment reform in the less-developed pilot city achieved short-term success in controlling medical costs without sacrificing the quality of care for the entire sample. Compared with secondary hospitals, tertiary hospitals experienced a greater decline in medical costs and received more severe patients. These findings hold lessons for less developed countries or areas to implement case-based payments and remind them of the variations between different levels of hospitals.