China’s Prospective Payment System: 3 Ways to Prepare

Published on January 19, 2023

China’s healthcare payment system is undergoing fundamental reform, impacting all stakeholders across the value chain. Experts Bruce Liu, Justinian Liu, and Ivy Jiang outline how pharma and medtech companies can stay ahead of the curve as the reform unfolds.

China has long been exploring reform in its healthcare payment system to cope with rising costs. In particular, the shift from a Fee-for-Service (FFS) to a Prospective Payment System (PPS) model represents a fundamentally different approach that motivates providers to deliver patient care effectively, efficiently, and without over-utilization of products and services.

 

What is the Prospective Payment System?

China started exploring PPS reform in 2003, when it launched its Diagnosis-Related Groups (DRG) pilot in Beijing. However, it wasn’t until 2017 that the national DRG system pilot was expanded to around 30 cities.

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