Effect of the new maternity insurance scheme on medical expenditures for caesarean delivery in Wuxi, China: a retrospective pre/post-reform case study

Abstract

Aiming to control rising medical expenditures and help improve China’s healthcare systems, this study examined whether a cap-based medical insurance scheme with shared financial interest between the insurance and healthcare providers is effective in containing hospitals’ C-section medical expenditures. We used 6547 caesarean delivery case records from a teaching tertiary-level general public hospital located in Wuxi, China (2004–2013), and used the Chow test to investigate the possibility of significant variation in mean medical expenditures for caesarean deliveries pre- and post-reform. We also used paired sample t-tests and linear regression models to compare the mean medical expenditures between insured and uninsured women undergoing caesarean delivery during the post-reform period. After the scheme’s implementation, medical expenditures for caesarean deliveries declined and the medical expenditures of women covered by the scheme were significantly lower than those of uninsured patients. These findings indicated the scheme’s effectiveness in minimizing caesarean delivery expenditures. The cap-based medical insurance scheme with shared financial interest between insurance and healthcare providers would likely steer healthcare providers’ behaviors in a more cost-effective direction.

Keywords

maternity insurance scheme / financial incentive / caesarean delivery / medical expenditure / China

Introduction

Public hospitals in developing countries, such as China, consume more healthcare resources and have observed rising medical care expenditures compared with preventive and primary healthcare facilities [ 1]. Therefore, government agencies at different levels are exploring a feasible public hospital payment method to help reshape the financial incentives of healthcare providers and achieve a cost-effective healthcare system. China, which is undertaking healthcare reform, also formulated health policies to improve public hospitals’ payment methods at both national and regional levels [ 2].

The caesarean section (C-section) is a standard surgical procedure that is performed worldwide and annually consumes billions of dollars of healthcare resources [ 3]. Therefore, C-section medical expenditures have received comprehensive attention from scholars and governments worldwide, including China.

Various factors affect the medical expenditures associated with C-sections, including demographics such as age, income, educational level, insurance status, and clinical conditions [ 4]; institutional factors such as size, geographical location, and type of institution [ 5]; and policy factors such as source of payment, malpractice liability, and financial incentives [ 3].

Additional research on policy factors, such as national or regional insurance schemes, is necessary to reduce financial barriers to obstetric care, particularly in developing or low-income countries [ 6– 9]. China’s national and regional maternity insurance scheme (MIS) is the key policy connecting payment source and financial incentives related to C-section medical expenses. Therefore, more research on the effectiveness of China’s MIS is necessary to control rising medical expenditures and help improve the healthcare systems of other countries or regions.

Chinese MIS

In China, the MIS and basic health insurance schemes are separate yet related, as both are important social insurance schemes and were established through national legislation. However, the MIS has distinct features with regard to the population covered, benefit models, financing sources, and reimbursement modes.

First, the MIS aims to improve the welfare of pregnant and delivering female workers and covers birth allowance, medical care expenditures, birth subsidies, and maternity leave. This scheme differs from basic health insurance, which covers medical care expenditures for both urban and rural populations.

Second, from the 1950s to the present, the Chinese financing sources have undergone three stages of development. In Stage 1 (1949–1965), the MIS was supported by the first Chinese national social security policy, “The Labor Insurance Regulation of the People’s Republic of China.” In this policy, the MIS was financed by social insurance funds. In Stage 2 (1965–1987), the MIS was governed by policies published by China’s Ministry of Finance in 1969 [ 10]. These policies stated that labor insurance funds should not be extracted from state-owned enterprises, and labor insurance spending belongs outside the enterprise’s operation expenses. Since this time, the Chinese social insurance system was interrupted and turned into the enterprise staff insurance system. Influenced by economic and administrative system reforms beginning in the 1980s, the enterprise staff insurance system, including the enterprise staff MIS, has been secured and developed significantly. During this stage, the MIS was financed by each enterprise fund. Finally, in Stage 3 (1988 to present), the Stage 2 enterprise staff MIS generated significant attrition of female workers from enterprises, which treated them as a financial burden. Aiming to defend women’s right to equal employment opportunities, the direction of the Chinese maternity insurance system reform changed the enterprise staff MIS to the social MIS. From 1988 to 1994, Jiangsu, Liaoning, Zhejiang, and other provinces implemented regional maternity insurance reforms, and the “Program for Implementation of Enterprise Staff Birth Insurance” was released by China’s Ministry of Labor in December 2004. This policy outlined how enterprises, rather than individual employees, must directly pay annual maternity insurance premiums up to 1% of payroll to collecting institutions for social insurance. Once again, the MIS is now financed by social insurance funds.

Third, to address continuously increasing medical expenses and the C-section rate, some regional maternity insurance reforms have been implemented. Most reforms aimed to establish some financial incentive measures to change the MIS’s reimbursement mode [ 11]. The 2009 new maternity insurance scheme (NMIS) reform by the Wuxi government in Jiangsu Province is a typical example of MIS reform worth investigating.

Wuxi’s new maternity insurance reform

The Wuxi Bureau of Medical Insurance is the single third-party payer for the maternity services for eligible enrolled women in Wuxi. All the staff from state-owned enterprises, urban collective-owned enterprises, foreign-funded enterprises, urban private-owned enterprises, and other urban enterprises in Wuxi are asked to enroll in maternity insurance. Additionally, the only women eligible for maternity insurance reimbursement are those who abide by existing Chinese family planning policy and their enterprise, those who continuously pay the insurance premium for more than six months, and those who maintain continuous pay status when requesting a payout. The detailed reimbursement mode of MIS in Wuxi: pre- and post-reform (2004–2013) is summarized in Table 1.

Prior to 2009, eligible women first paid the hospital out-of-pocket. Subsequently, each delivering woman was reimbursed via insurance (including vaginal deliveries, C-sections, difficult births, and multiple births) based on a fixed-fee reimbursement scheme (e.g., CNY 2300 (2001–2004) and CNY 3000 (2005–2008)). This demand-side payment scheme might have had some effects on patients’ choice of healthcare provider, especially among poorer individuals who were likely to select less expensive ones. However, given the imbalance of health resource distribution and scarcity of high-quality medical resources for decades, the medical service demands placed on Chinese public hospitals (particularly tertiary-level public hospitals) often exceeded supply. As a result, even inefficient public hospitals can provide services [ 12]. Therefore, this demand-side scheme might only provide indirect and weak incentives for healthcare providers to control their medical expenses [ 13]. This scenario is especially evident in the case of tertiary-level hospitals, which only accounted for 0.69% of all healthcare facilities in Wuxi in 2013 but provided 30.97% of all outpatient services and 49.41% of all inpatient services [ 14].

To control the rapid growth of birth-related medical expenses and increase healthcare providers’ awareness of costs, on January 1, 2009, the Wuxi Bureau of Medical Insurance instituted a reform that changed patients’ reimbursement to hospital’s reimbursement and adopted a cap-based medical insurance scheme. Any eligible insured woman can have multiple birth-related procedures such as diagnoses or treatments. Each procedure is paid through insurance based on the fee schedule set by Jiangsu’s price administrative department. However, the insurance put a cap on the insured women’s birth-related expenses, which might limit the prescription of unnecessary procedures by healthcare providers. If the actual birth-related medical expense exceeded the cap, the NMIS only reimbursed the hospital the expense up to the cap. The excess would not be reimbursed by the Wuxi Bureau of Medical Insurance or the delivering woman, and it was borne by the hospitals themselves. If the actual birth-related medical expenses were below the cap, the savings were rewarded to hospitals either in cash or in budget. Therefore, compared with pre-reform period measures, reform measures created a significant direct incentive for the hospitals to provide cost-effective medical services and reduce unnecessary diagnoses or treatments, which would eventually reduce medical expenses.

The insurance bureau periodically adjusted the per capita cap based on the delivery mode (vaginal delivery and C-section) and hospital tier (first, second, and tertiary). Using tertiary-level hospitals and C-sections as an example, the reimbursement caps per C-section were as follows: January 1, 2009 to September 31, 2010 (CNY 5300); October 1, 2010 to December 31, 2011 (CNY 5400); and January 1, 2012, to December 31, 2013 (CNY 6100). From 2009 to 2011, 60% of the total reimbursement balance of insured deliveries between the total cap and the actual reimbursed amount was distributed by Wuxi’s insurance bureau to the hospitals as cash rebate for their positive performance on cost control. Since 2012, the rewards have been changed from cash rebate to budget reimbursement, which can only be used in the following year.

Study aims and research hypotheses

Hospitals have the incentives under Wuxi’s new maternity insurance reform to control the costs for insured women. Specifically, hospitals can receive cash or budget rebates for positive cost-control behaviors when servicing eligible enrolled women in Wuxi’s new maternity insurance. Compared with insured women, uninsured women may receive more unnecessary care following supplier-induced demand theory, because the medical expenditures of uninsured women are unlikely to be audited. Hospitals can induce patents’ demand for their services especially in situations of lack of oversight and in which the fee-for-service scheme was introduced [ 15, 16]. Therefore, in theory, insured patients might have lower medical expenditures than uninsured ones.

This study examined whether a cap-based medical insurance scheme with shared financial interest between the insurance and healthcare providers is effective in containing hospitals’ C-section medical expenditures. We also explored the possible reasons for the effectiveness of the NMIS.

Our hypotheses were as follows: (1) after the implementation of the NMIS, the medical expenditures for C-sections would decrease; and (2) during the post-NMIS period, eligible women covered by NMIS would have lower medical expenditures than uninsured women. The incentives for the hospitals are to eliminate unnecessary diagnoses and treatments so the cash or budget rebate can be maximized.

Materials and methods

Data source

This retrospective pre/post-reform case study was conducted in a major 1145-bed tertiary-level public teaching hospital in Wuxi, Jiangsu Province. The C-section procedure was selected as an appropriate tracer condition for changes in medical expenses. We selected all C-section cases that occurred in the sample hospital from January 1, 2004 to December 31, 2013. Since the Wuxi government started the NMIS in 2009, the pre-reform period consisted of cases from January 2004 to the end of 2008. The post-reform period cases occurred from the beginning of 2009 until the end of 2013. C-section case records (N = 6547) were selected, including cases in pre-reform (n = 3240, 49.5%) and cases in post-reform (n = 3307, 50.5%).

Data collection

Data were collected from the hospital’s information system from January 2004 to December 2013. Extracted information included patient case number, age, maternity insurance status, condition when admitted, diagnoses, expenditures by item (drug, test, treatment, operation, nursing, bed, and others), and total medical expenditures (including the specific amount paid by insurance and by the patients themselves during the C-section hospitalization). Given that maternity insurance status was unrelated to patients’ medical expenditure settlements prior to 2009, the hospital’s system did not include this information. Thus, data on maternity insurance status were only available and collected after 2009.

In this study, we defined eligible enrolled women in Wuxi’s new maternity insurance as insured women and the others as uninsured women. We also created a “risky age” group (C-section cases involving women aged<18 years and≥35 years) and a “non-risky age” group (C-section cases involving women aged 18–34 years) according to the “The Prenatal Criteria of High-risk Pregnancy” established by the China Ministry of Health [ 17]. We used the Ministry of Health criteria to divide all C-section cases into two categories: “groups with clinical risk factors” and “groups without clinical risk factors.” The former category included abnormal pregnancy/labor history, abnormal cytogenetics, and other abnormal pregnancy conditions.

Data analysis

To investigate how the NMIS’s implementation influences C-section medical expenditures, the Chow test was used to investigate the structural change in mean medical expenditures for caesarean delivery pre-NMIS and post-NMIS implementation. Based on the post-NMIS data, using paired-sample t-test and linear regression models, we compared the differences in the medical expenditures between insured and uninsured patients. The CNY was used in our analysis (1 CNY was approximately equal to 0.161 USD in 2013). In addition, we used the consumer price index (CPI) to adjust for changes in prices over years and made the medical expenditures to reflect the CNY values in 2013. The formula used was as follows: medical expenditures per woman (MEP) undergoing caesarean delivery in 2013= MEP in that year × CPI 2013 / CPI of that year.

Results

Hospital characteristics and expenditure trends

Table 2 summarizes the sample hospital’s characteristics (2004–2013) and demonstrates an increase in the number of hospital beds, outpatients, and inpatients. Additionally, the average medical expenditures for C-sections in this hospital was CNY 6620.96 (approximately 1069.069 USD). Furthermore, a clear ascending trend was found for total revenue and average medical expenditures for outpatients, inpatients, and C-section patients (average annual growth rate of 14.08%, 13.03%, 8.32%, and 3.76%, respectively).

Pre- and post-reform medical expenditures for caesarean delivery

We used the Chow test to investigate the possibility of variation in MEP pre- and post-reform (adjusted for inflation using the CPI to reflect the value of CNY in 2013: 1 CNY is approximately equal to 0.161 USD).

The results of this analysis lead us to accept our hypothesis that the implementation of NMIS had a significant effect on medical expenditures incurred per woman undergoing a caesarean delivery (P< 0.0001; Table 3). The simulation results (Fig. 1) also visually display the significant difference in the medical expenditure growth rate associated with caesarean delivery between pre- and post-reform periods. In the post-NMIS implementation period, the annual increasing rate of medical expenditures per woman undergoing caesarean delivery dropped from 7.06% to 1.95%.

Medical expenditures for caesarean delivery of insured and uninsured patients post-reform

Table 4 summarizes the medical expenditures per caesarean delivery for uninsured and insured patients (2009–2013) post-NMIS implementation. Table 5 shows the results of the pooled and stratified linear regression models.

Tables 4 and 5 demonstrate that the medical expenditures for insured patients were significantly lower than those for uninsured patients during the post-reform period (P< 0.001). Additionally, results of stratified analysis (Table 5) showed a significant relationship between medical expenditures for the uninsured caesarean delivery population and risky age group, which increased consistently over time. However, the medical expenditures of the insured population were relatively stable and did not increase with time.

Discussion

China’s public hospitals, particularly those at the tertiary-level, are the primary care site for outpatient and inpatient care [ 1]. C-section delivery is no exception. This study outlined the trends and status regarding C-section medical expenditures at a tertiary-level public hospital in Wuxi, China.

During the study period, the public hospital had a relatively slow growth rate for C-section medical expenditures. Similar to previous studies, we found an ascending trend for total revenue and average medical expenditures for outpatients and inpatients in this public hospital [ 1, 20]. The average annual growth rate for C-section medical expenditures is 3.76%, which is significantly lower than that for outpatient and inpatient expenditures with annual average rates of 13.03% and 8.32%, respectively. Data for the average annual growth rate for C-section medical expenditures in this hospital were also significantly lower than data from contemporary studies of hospitals in the same level in other Chinese regions [ 21, 22].

Both pre- and post-reform comparisons for C-section medical expenditures and further post-reform comparisons of insured and uninsured patients’ medical expenditures indicated that the implementation of the NMIS achieved its expected goal, which was to control delivery expenditures.

After 2009, the Chinese government implemented a series of health policies, such as increased governmental health investment and improved health insurance coverage and benefit levels. However, simply depending on external policies to transform financing mechanisms and insurance coverage into a cost-effective system is difficult when the healthcare delivery process is inefficient. Studies showed that a traditional fee-for-service payment reimbursement system provides strong incentives to rapidly increase healthcare expenditures [ 8, 23]. Studies also indicated that provider payment policies combined with financial incentive measures to control costs and increase efficient use of healthcare resources can help address the problem [ 2, 23].

Consistent with these studies, Wuxi’s NMIS is an important example of this type of policy. Specifically, its primary role is to change the MIS reimbursement mode from demand-side fixed-fee reimbursement to supply-side cap-based payment reimbursement. Under the NMIS, the government compares the total delivery medical spending per patient with the cap. It then rewards hospitals that perform successfully with cash or budget rebates, or punishes unsuccessful hospitals by not reimbursing excess expenses. With this mechanism in place, C-section medical expenditures can be effectively controlled because hospitals will try to obtain greater net financial gains. In this way, this policy successfully steers healthcare providers’ behaviors in a cost-effective direction.

Study limitations and recommendations for future research

The first study limitation is the use of a case study design. This study consists of analysis of 10 years of medical data from one tertiary-level public hospital. Although the expenses controlled with respect to the NMIS are representative of tertiary-level public hospitals, so they may not be representative of policy effects at the primary and secondary healthcare levels nor of the private sector. Multi-level institutional follow-up studies must explore the relationship between the NMIS and hospitals’ caesarean delivery expenditures. Furthermore, other provinces and regions aiming to control delivery medical expenses such as Beijing, Shandong, and Jilin have also recently formulated new MISs with financial incentive measures. Consequently, the findings in the current study may not be representative of China in general, and this study must be replicated in other areas in China. Therefore, multi-level institutional and multi-regional studies must be conducted to further verify this study’s findings.

Second, regarding data availability, demographic and other policy factors mainly influence C-section medical expenditures in a particular hospital. However, as this was a retrospective study, data about patients’ income and education level were unavailable from the hospital’s information system. Instead, this study focused on policy-related factors and available demographics, including age, insurance status, and clinical conditions. As a result, future research exploring patient-related factors must further verify this study’s findings.

Conclusions

This study was one of the first to examine the exact cost-control effect of an MIS combined with financial incentive measures on C-sections in Wuxi, China. This exploration enhances our understanding of the MIS’s expense control function. Specifically, it suggests that the cap-based medical insurance scheme with shared financial interest between insurance and healthcare providers would likely steer healthcare providers’ behaviors in a more cost-effective direction. Moreover, these types of MIS could potentially play an important role in establishing a cost-effective maternal care system in China.

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