Provider Payment Reform for Chinese Hospitals: Policy Transfer and Internal Diffusion of International Models

A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Müller, Armin; Ten Brink, Tobias Working Paper Provider payment reform for Chinese hospitals: Policy transfer and internal diffusion of international models Working Papers on East Asian Studies, No. 129/2021 Provided in Cooperation with: University of Duisburg-Essen, Institute of East Asian Studies IN-EAST Suggested Citation: Müller, Armin; Ten Brink, Tobias (2021) : Provider payment reform for Chinese hospitals: Policy transfer and internal diffusion of international models, Working Papers on East Asian Studies, No. 129/2021, University of Duisburg-Essen, Institute of East Asian Studies (IN-EAST), Duisburg This Version is available at: http://hdl.handle.net/10419/232291 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu ARMIN MÜLLER TOBIASARMIN TENMÜLLER BRINK TOBIAS TEN BRINK NO. Provider Payment Reform 129 forProvider Chinese Payment Hospitals: Reform Policyfor Chinese Transfer Hospitals: and Internal Diffusion ofPolicy International Transfer Models and Internal Diffusion of International Models WORKING PAPERS 129 WORKINGWORKING PAPERS PAPERS ONON EAST EAST ASIAN ASIAN STUDIES STUDIES MARCHMARCH 2021 2021 ARMIN MÜLLER Postdoctoral Researcher, Jacobs University Bremen W https://www.jacobs-university.de/directory/armmüller E [email protected] TOBIAS TEN BRINK Professor of Chinese Economy and Society, Jacobs University Bremen W https://www.jacobs-university.de/directory/ttenbrink E [email protected] Institute of East Asian Studies / Institut für Ostasienwissenschaften University of Duisburg-Essen Duisburg Campus, Forsthausweg 47057 Duisburg, Germany T +49(0) 203 37-94191 F +49(0) 203 37-94157 E [email protected] ISSN: 1865-8571 (Printed version) / 1865-858X (Internet version) Download: https://www.uni-due.de/in-east/news/green_series.php © by the authors, March 2021 CONTENT 1 Introduction 5 2 Conceptual Framework and Working Hypotheses 6 3 International Models and Degree of Transfer 8 4 Internal Diffusion and the Scope of Change 10 4.1 The UEBMI 11 4.2 The NRCMS 12 4.3 The Scope of Change 13 5 Conclusion 15 References 16 Appendix: Data Report 18 1 How Did We Collect the Data? 18 2 How Did We Define a Case? 20 3 How Did We Code the Data? 20 4 How Did We Guarantee the Quality of Measurement 25 References 26 3 MÜLLER / TEN BRINK: Provider Payment Reform for Chinese Hospitals ARMIN MÜLLER / TOBIAS TEN BRINK Provider Payment Reform for Chinese Hospitals: Policy Transfer and Internal Diffusion of International Models WORKING PAPERS ON EAST ASIAN STUDIES, NO. 129, DUISBURG 2021 Abstract There are opposing views in the literature regarding the degree to which China’s public administration adopted international models of administrative reform. Prospective payment systems constitute a formidable case for examining this question in the field of public hospital funding. In China’s decentralized and fragmented health insurance system, different localities have chosen different approaches to replace retrospective with prospective payment models. Based on a relational case database, we analyzed how international payment reforms were introduced in a Chinese context as models with varying degrees of transfer and scopes of change. Furthermore, we reconstructed the process of diffusion, which was driven more by horizontal learning in the Urban Employees’ Basic Medical In- surance (UEBMI), and more by hierarchical delegation in the New Rural Cooperative Medical Scheme (NRCMS). The two insurances were administered by different ministries, whose preferences facilitated the spread of different models of provider payment. Overall, the mainstream of reforms only achieved a limited displacement of retrospective payment: local governments often dropped the prospective payment aspect altogether or limited its application. In the NRCMS, more ambitious reforms were limited by state capacity, whereas the use of Medical Savings Accounts (MSAs) limited the potential of reforms in the UEBMI. Working Paper presented at the International Conference on Policy Diffusion and Development Co- operation, January–March 2021, Centro Brasileiro de Análise e Planejamento (CEBRAP), São Paulo, Brazil. This working paper is a product of the new Collaborative Research Center 1342 Global Dynamics of Social Policy, funded by the German Research Foundation (DFG) at the University of Bremen (https:// www.socialpolicydynamics.de/en/), which pioneers research on the diffusion of public social protection beyond the OECD world. Specifically, the focus of our project is on the interaction of international and domestic factors in social and administrative reforms in China, a largely understudied topic (https://www.socialpolicydynamics.de/projects/project-area-b-transregional-dynamics/project-b05). We welcome feedback and comments, please contact the first author with queries and suggestions. Funded by the Deutsche Forschungsgemeinschaft (DFG, German Research Foundation) – Project No. 374666841 – SFB 1342 4 1 Introduction 1 INTRODUCTION The question whether and to what extent China dustrialized countries introduced provider pay- has adopted administrative reforms inspired by ment reforms to restrain hospitals’ and doctors’ international practices since 1979 is subject to cost-driving behavior. Traditional fee-for-service no small debate. Much of it has focused on New (FFS) payment facilitates such induced demand, Public Management (NPM) practices in the public for every service item is priced and paid for in- administration proper. Many studies focusing on dependently, and the information asymmetries the management of civil servants find a strong inherent to medical markets prevent simple influence of NPM approaches with far-reaching and effective monitoring of doctors’ treatment consequences, but also distinct limitations (Gao behavior. Provider payment reforms aim at giv- 2015; Heberer & Trappel 2013; Mei & Pearson ing hospitals incentives to raise the efficiency of 2017). Others see NPM and other foreign ideas treatment by changing the basis of accounting merely as a symbolic legitimation for de-facto from individual service items to more aggregat- domestic policy options (Dong, Christensen & ed units, such as bed-days; and by shifting from Painter 2010; Lim & Horesh 2016). retrospective reimbursement of patients’ expen- ditures to prospective payment of lump sums Beyond the core of public administration, the to hospitals. As those lump sums are oriented health sector has been particularly affected to average costs of treatment, they remove in- by state retrenchment and commercialization centives for hospitals to add expensive service (Duckett 2011). Budgetary support for public items. However, they may also have adverse ef- hospitals declined massively (Wong 2009; Wu, fects on access and treatment quality, for exam- Ramesh & Yu 2017), and hospitals primarily re- ple if hospitals refuse to treat complicated cas- lied on profits from user fees (Allen, Cao & Wang es or keep patients in the hospital longer than 2014). As a result, health costs have continued necessary. to grow rapidly (Tang, Tao & Bekedam 2012). Since the late 1990s, the central government es- Since the introduction of health insurance in tablished three new health insurance programs the late 1990s, several localities were reported (Zheng, Jong & Koppenjan 2010), which provide to engage in provider payment reforms (Jian et a decentralized patchwork of basic protection (Li al. 2015; Yip & Eggleston 2004; Yip, Hsiao, Meng, 2014; Qian & Mok 2016). The Urban Employees’ Chen & Sun 2010), as well as more idiosyncratic Basic Medical Insurance (UEBMI) covers employ- measures of cost control (He & Qian 2013; Hus- ees in the formal sector and is funded by con- sain 2016). The reports are however ambigu- tributions from employers and employees. The ous regarding the degree to which supply-side New Rural Cooperative Medical System (NRCMS) reforms are inspired by international models, and the new Urban and Rural Residents’ Basic as opposed to indigenous public administration Medical Insurance (URRBMI) cover citizens not practices; the degree to which they really dis- employed in the urban formal sector and are place FFS payment; and the degree to which mostly funded through tax revenues. The com- they have been implemented across China (Cf.: bination of public budgets and user fees typical Bali & Ramesh 2017; Milcent 2018, 63–65). for

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