As the reform of payment methods progresses, it has almost become a recognized rule among hospitals that the fee rate/point value must depreciate in the second year for those implementing the DRG/DIP point-based method.
"Another 10% drop this year." "Our point value has dropped from over 90 to over 70." "The final settlement fee rate is more than 1000 yuan less than the budget at the beginning of the year."
The so-called point value is the "unit price." Typically, a point value corresponds to a range of several tens to hundreds of yuan, and the annual service volume of a tertiary hospital is approximately between 10 million to 20 million points.
Over the years, the anxiety of hospital directors over point values has not dissipated at all. At every industry conference, anxiety permeates the venues, with directors straining to hear and exchange news about how much their point values have dropped this year, silently comparing their own situations.
Advertisement
Nowadays, due to the extremely widespread situation, the "continuous depreciation" of DRG/DIP fee rates/point values has even become a key factor affecting the profit and loss of hospitals, and it is no longer a taboo secret.
A person in charge of a hospital in a coastal area said frankly at a conference at the end of May: "The biggest problem we are facing now is the depreciation of point values. In our area, the point value for employee medical insurance in 2021 was 105 yuan, and in the last month, it has dropped to 67 yuan; the point value for resident medical insurance, which was originally 89.4 yuan, has now dropped to 46 yuan, which is almost halved. If this continues, I don't know if we can keep going."
Once the point value drops, the hospital's medical insurance revenue is greatly reduced, and the hospital's operations are impacted.
Taking a coastal provincial capital as an example, in 2020, the local medical insurance bureau set the DRG point value at 138 yuan/point, which dropped to around 131 yuan/point in 2021, remained basically unchanged in 2022, and plummeted to about 123 yuan/point in 2023.
An industry insider said, "In 2023, each point value is more than 7 yuan less. Based on the annual service volume of a tertiary hospital of 10 million to 20 million points, the reduction in medical insurance funds due to the depreciation of point values for a single hospital could be tens of millions, or even hundreds of millions of yuan."
Compared to the depreciation of point values itself, hospitals care more about whether the medical insurance bureau can be informed in advance about the depreciation of point values, so that hospitals can respond accordingly.The devaluation of point values is as enigmatic as a puzzle; hospitals cannot discern whether they are making a profit or a loss until the moment the data is "unblinded." The president of a county hospital on the coast spoke about the impact of point value devaluation on the hospital's operations, "The point value of our hospital's staff medical insurance has dropped by 8 yuan. Originally, we were expected to make a profit of over ten million yuan, but now we are suddenly expected to incur a loss of over ten million yuan. Some of our peer hospitals may be more affected than us."
With the medical insurance cost control ceiling looming and the point-based reform triggering a profit-driven inward spiral in hospitals, perhaps the devaluation of DRG/DIP point values has become a foregone conclusion under the excessive expansion of hospital service volumes.
The shadow of point value devaluation lingers, and what the hospital presidents really want to know is: will the devaluation be a bottomless pit?
Anxiety: Devaluation and Losses
The reasons for the shrinkage of point values are twofold: first, the numerator of the medical insurance fund becomes smaller, and second, the denominator of the hospital service volume becomes larger.
When the local medical insurance fund is strained, DRG/DIP payments can only tighten their belts accordingly. The decline in DRG rates in a developed city in the Yangtze River Delta region is a vivid example.
In May of this year, the local medical insurance bureau disclosed the situation of the local medical insurance fund: in 2023, the total income of the city's employee basic medical insurance fund was 40.882 billion yuan, with a total expenditure of 41.387 billion yuan, resulting in a deficit of 505 million yuan for the current period. The total income of the basic medical insurance fund for urban and rural residents in the city was 4.709 billion yuan, with a total expenditure of 5.447 billion yuan, resulting in a deficit of 739 million yuan for the current period.
Under the deficit, the DRG rate has correspondingly decreased.
The budgeted rate for the local area at the beginning of 2023 was originally 9,400 yuan, but by the end of 2023, it had dropped to over 8,300 yuan.A person familiar with the city told Jianwen Consulting, "By the end of the year, when the accounts were settled and it was found that the fund could not be controlled, the fee rate was reduced."
Subsequently, with the new local policy in 2023 separating the medical insurance for employees and residents into the DRG payment system, the decline in the medical insurance fee rate for residents continued to accelerate, once dropping to around 7,300 yuan; the employee medical insurance fee rate remained at over 8,500 yuan.
This means that during the same period, the gap between the medical insurance fee rates for residents and employees widened to around 1,200 yuan.
The real financial difference in the fee rates is reflected in the hospital scenario, which means that for the same disease and the same treatment method, whether the insured person is on employee medical insurance or resident medical insurance will significantly affect the hospital's medical insurance revenue settlement. Patients with resident medical insurance are inevitably "unwelcome."
"If I only have one good medicine, and I can earn more money by curing a patient with employee medical insurance, then who should I give this medicine to?" sighed a hospital president, "Our education was that patients are equal in front of doctors, but now we can't achieve this."
This situation is not unique to the city, and many medical institutions have expressed this concern to Jianwen Consulting in the past year.
In the aforementioned city, the medical insurance fund bears the pressure of losses, and hospitals are just being given a warning. But in many other places, the medical insurance income for hospitals is greatly reduced.
In some ordinary prefecture-level cities, hospitals often suffer from severe losses.
In a certain inland prefecture-level city, the largest local hospital treats about 70% of the local patients, and the hospital's point value still decreases every month. One hospital is in the red, and other hospitals are also living hand to mouth. The local medical insurance bureau is aware of this, but due to the weak medical insurance funding capacity and limited medical insurance fund, the medical insurance bureau is also powerless.
In another inland provincial capital city, the president of a municipal tertiary hospital also mentioned a paradoxical matter, saying, "We have implemented DRG payment for three years. In the first year, our hospital lost a lot, in the second year, we had a surplus, and in the third year, we lost again."The dean of a provincial-level tertiary hospital in Henan also revealed, "Our hospital had a surplus of over 30 million in 2022, but this year we have lost over 20 million."
Hospital management work has not undergone drastic changes, so why is the difference in profit and loss so significant? A person engaged in DRG data analysis explained to "Health News Consultation," it may be related to the adjustment of the total amount of medical insurance funds. Medical insurance funds usually set the proportion of shared overspending and the retention of surpluses.
"There is a very large adjustment space here, which is different from the monthly budget, it's an unfathomable mystery."
Shared overspending refers to when the operating costs of medical institutions exceed the amount settled by medical insurance, and the reasonable part of the overspending is borne by the medical insurance fund and the medical institution in proportion. Retention of surpluses refers to the hospital's determination of the amount of surplus retention at a certain proportion.
"If the total amount of funds is tightened, it can be approached directly from this policy angle, such as requiring the proportion of surplus retention to be reduced from 15% to within 10%, and the part exceeding 10% belongs to the medical insurance fund. For overspending, the hospital is required to bear 100% of its own, and the impact of this part of the amount on the hospital's overall overspending and surplus amount is very significant," the aforementioned person informed.
As the DRG/DIP payment reform continues to deepen, hospitals are also gradually tasting the bitter fruit of internal competition for "earning work points," and some hospitals have started to slow down the pace of "grabbing work points."
Data from a tertiary hospital in the Yangtze River Delta region shows that its service volume in 2020 was over 19 million points. After a year of fierce internal competition, it increased sharply to over 24 million points in 2021, and by 2022, it only increased to over 25 million points.
This may be that the hospital has exhausted the methods of increasing points, or the hospital has realized that internal competition leads to the devaluation of point value and "the more you do, the more you lose," and then returned to normal, which is a retreat of the "grabbing work points" craze. However, some people are pessimistic and believe that the profit-seeking nature of the current payment mechanism is inevitable.
Will devaluation be a bottomless pit? A dean said, "In the end, it may slowly form a balance at a low level."
Some are skinning, some are cutting meat.Even the smallest piece of cake must be shared, "everyone must endure hard times together."
That being said, when it comes to the actual distribution of tangible benefits, each medical institution knows its own situation, with some barely scraping by and others having to make painful sacrifices.
The dean of a county-level hospital sighed, "Hospitals that are rated from second-tier to third-tier, currently, are the most affected by the DRG/DIP payment policies."
In his view, provincial and municipal hospitals have more say and can negotiate more smoothly with health and medical insurance systems, able to secure policy compensation under the guise of key disciplines or support for new technologies.
"Originally, our hospital's rehabilitation department was also quite large, but now it has somewhat shrunk because the more patients we admit, the more we lose, which affects our enthusiasm. Another municipal hospital's rehabilitation department is a provincial key discipline, and its say in negotiations with medical insurance is stronger than ours, allowing it to obtain some special policies and basically achieve a balance between income and expenditure."
From the perspective of adjustment, a greater devaluation of points does not necessarily mean a greater loss.
Large hospitals experience more severe devaluation of points, but because they have various compensation channels, their losses are relatively smaller. On the other hand, small hospitals experience a relatively smaller decline in point value, but since they find it difficult to obtain preferential medical insurance policies, they are more likely to end up in losses.
For example, a hospital in Hangzhou suffered a loss of over 50 million yuan according to the DRG point settlement, but later received policy compensation for the use of new technologies and nationally negotiated drugs, totaling 30 to 40 million yuan, reducing the final loss to over 10 million yuan.
In addition to policy compensation favoring provincial and municipal hospitals, according to national policy guidance, medical insurance funds, out of protection, will also be inclined towards traditional Chinese medicine systems and rural medical and health institutions.
The aforementioned dean stated, "The cake of a unified coordination area is just so big, with a tilt here and there, it makes life even harder for comprehensive hospitals at the county and city level."In fact, one of the adjustment factors in DRG/DIP payment— the institution coefficient— has also exacerbated this differentiation. The existence of the institution coefficient is inherently reasonable, as medical institutions at different levels provide medical services at tiered prices, and the establishment of the institution coefficient can adjust the income disparities among medical institutions at different levels.
However, within a unified coordination zone, some hospital directors believe that there is currently an issue with the institution coefficient being increased too much, meaning that large hospitals receive medical insurance compensation that is higher than the actual medical service price difference.
In response to this issue, Nanjing City, in its 2023 DRG payment reform related documents, has slightly reduced the level coefficients for tertiary, third-level, secondary, and second-level hospitals, with the current coefficients being 1.08, 1.05, 1.03, and 1.01, respectively, compared to the original coefficients of 1.18, 1.15, 1.08, and 1.05.
The reduction in the coefficient difference between hospitals of different levels at least prevents the situation where some hospitals are severely affected while others are only slightly impacted during medical insurance distribution.
The "Face" and "Substance" of Hospital Directors
At an industry conference at the end of May, one hospital director candidly stated, "The pressure of managing a hospital is immense now." He mentioned that on one hand, they are facing the operational pressure during the painful period of medical insurance payment reform, and on the other hand, the national examination system of the health system will not relax its requirements for hospitals.
The directors in the audience nodded in agreement.
Faced with the dilemma between DRG/DIP settlement and the national examination CMI value, should hospitals focus on cost control to stabilize their "substance"? Or should they accept strategic losses to maintain their "face"? Or can they find a balance between the two?
This is a question that directors have to ponder daily under the shadow of the devaluation of point values.
One director confessed that balance must be based on solving the basic needs. "If the hospital operations are very difficult and staff performance bonuses cannot be paid, then certainly the national examination cannot be managed. First, we must ensure that we can survive and retain our people."Cost control has become an inevitable choice for hospitals, especially for those struggling on the critical line of life, where survival is the primary task. Hospitals focus mainly on internal management practices, including the quality control of electronic medical record front pages, personnel cost management, refined analysis of drug and consumable usage, and applying for individual negotiations for cases with excessive expenditures, among others.
However, the strategies that can be adopted within the hospital are limited, and there are too many external variables—against this backdrop of the times, these managers can only do their best and leave the rest to fate.
A deputy dean of a third-class hospital in Xiamen expressed his helplessness, "In addition to refined management, our hospital has also established a day surgery center, which has greatly improved the hospital's efficiency, but the DIP settlement is still far from satisfactory."
For hospitals with more resources, the combined force between DRG/DIP settlement and CMI value outweighs the conflicts.
The core of DRG is cost control, while CMI reflects the level of medical resource consumption; they seem to be incompatible. Industry insiders say that hospitals were initially anxious about this, but in reality, many hospitals have undergone structural adjustments after experiencing DRG/DIP payments.
He stated, "Especially for large hospitals, although they are controlling costs overall, they treat more patients with high CMI values who have complex, critical, and severe illnesses, and admit fewer patients with low CMI values from basic disease groups. The hospital's CMI data may even increase."
A person in charge of a third-class hospital in Wuxi also suggested that combining DRG analysis with CMI analysis is more helpful for assessing the development direction of clinical departments.
His approach is to analyze whether the issue is with drug and consumable usage or efficiency for departments that are losing money and have high CMI values; to re-evaluate the development direction for departments that are profitable and have low CMI values; and to consider downsizing departments that are both losing money and have low CMI values.
There are certain departments and disease types that ambitious hospitals are willing to undertake even at a loss, also known as strategically unprofitable disease types, which are commonly found in the construction of high-precision and new technologies in specialized fields, as well as in the construction of a hospital's critical and severe disease treatment capabilities.
"In the past, it was difficult for our hospital to treat critical and severe cases, and there was resistance in the clinical departments. Later, the hospital provided certain support for the symbolic technologies of critical and severe disease treatment, and even if the cases exceeded the budget, as long as the diagnosis and treatment were reasonable, we would also provide rewards," said a deputy dean of a provincial third-class hospital in Jiangsu. "Looking at the past few years, including DRG indicators, CMI values, and cost consumption indices, our hospital's indicators have shown significant improvement."Hospitals are in the midst of a transition from the "old era" to the "new era." Regardless of the devaluation of point values, hospital losses, or the dilemma between medical insurance settlement and national examinations, the DRG/DIP payment system has created an ecological environment where "only the strong survive in a narrow path encounter," which may already be a foregone conclusion.
The question posed by the hospital directors, "Will devaluation be a bottomless pit?" might actually be asking, "What are the rules, exactly?"
Comments