How does the DRG/DIP healthcare payment method "pay the bill" for high-value new drugs and new technologies?

This year, various regions have issued documents encouraging the development of the entire chain of the innovative pharmaceutical and medical device industry. The National Healthcare Security Administration recently released the DRG/DIP 2.0 version grouping plan and documents to promote related work, specifically proposing "to explore the exception payment mechanism, and to support new drugs and new technologies that meet the conditions in the early stages of application through project payment or by adding weight (points) and other methods. After accumulating sufficient data, they will be included in the DRG/DIP payment" and so on.

The payment standards for DRG/DIP are usually calculated based on the cost data of medical records or costs from the past 1 to 3 years, and cannot preset for new drugs and new technologies. At the same time, there are still some existing challenges in including high-value new drugs and new technologies in the DRG/DIP disease group, including high initial cost burden of medical insurance, unclear payment conditions, and low willingness to pay for the disease group. How to carry out related exploration work?

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Multiple Determining Factors

Under the DRG/DIP payment method, the entry of high-value new drugs and new technologies into clinical application has been explored before.

In July 2022, Beijing introduced the first "CHS-DRG Payment Exceptional Payment Management Method for New Drugs and New Technologies (Trial)", which will pay for new drugs and new technologies (including drugs and medical devices and diagnosis and treatment plans) that meet the conditions in the first 3 natural years except for DRG/DIP. Shanghai, Jiangsu, Zhejiang, Shandong, Sichuan, Guangxi and other places have introduced special payment mechanisms for innovative technologies. In addition, Guangdong, Hunan, Hubei, and Jiangsu have adopted separate payments for national negotiation drugs included in the dual-channel.

From the practice, in Shanghai, in 2021, among the 32 medical institutions included in the DRG calculation scope in the whole city, the number of cases using 28 new technologies such as artificial intelligence-assisted treatment technology increased by 98.6% year-on-year; the number of DRG disease groups involved increased by 10.8% year-on-year. In Nanjing, the local government has provided additional compensation for 4 high-tech projects such as intelligent assisted robot surgery, tomotherapy for tumors, transcatheter aortic valve implantation (TAVI), and femtosecond laser surgery. At the end of 2022, 11 medical institutions involved in these 4 high-tech projects had 2164 cases compensated at the lowest unit price, and the medical insurance increased the expenditure by 21.902 million yuan, and the medical insurance settlement rate reached 104.55%.

"In DRG payment, after using new drugs and new technologies, if the cost of the disease group is within the payment range, then it will not be 'excluded'. If the cost of the disease group is higher than the specified range, then a targeted assessment is needed, including the assessment of the exact efficacy of this new drug and new technology in the clinic and the rationality of its use." Zhang Qinghong, director of the medical insurance office of the Drum Tower Hospital affiliated to Nanjing University Medical College, said.

Zhang Qinghong told reporters that the prerequisite for including a new drug and new technology is efficacy and safety, and the price is secondary, but there are still ethical and cost issues to face. From an ethical point of view, every patient should be treated and rescued, but if a high-value new drug can only benefit a small number of patients, or its efficacy is not obvious or there is uncertainty, it will also be a risk for other patients who need treatment (and the efficacy of related drugs is obvious).

"The progress of new technology needs to be improved on the basis of accumulating a certain amount, and there is a realization process in this process. The technical side needs to consider more problems in the clinical application during research and development, and the clinical side also needs to continuously do a good job in efficacy evaluation and feedback work." Zhang Qinghong said.In addition to cost and ethical considerations, the method of operation also needs to be taken seriously. Jin Qianguo, director of the medical insurance management department of the Second Affiliated Hospital of Shandong University of Traditional Chinese Medicine, said that in the payment process of new drugs and new technologies, the hospital's medical insurance management department needs to consult with clinical experts, pharmaceutical personnel, etc., to jointly formulate reasonable clinical pathways, which is very important. Subsequently, based on this, a good profit and loss analysis of DRG/DIP should be conducted.

Jin Qianguo stated that, on the one hand, hospitals need to pay attention to the "fixed loss domain value," an indicator that may fluctuate. Some seemingly normal cases (settled without entering the ambiguity group, not involving special disease single discussion or supplementary payment, and still having a surplus at the end) may have some factors behind them, such as incorrect uploading. After adjusting the diagnosis or operation method, the surplus may be more. On the other hand, some high-value new drugs and new technologies may apply different payment methods. Not all high costs must enter the special disease single discussion mechanism, and the actuarial method is also very important.

Jin Qianguo also mentioned that, referring to the practices of other countries around the world, for high-value new drugs and new technologies, the United States has not only a short-term payment model but also a "green channel (for anti-infective drugs for the treatment of epidemics)". In Germany, high-priced new technologies are included in the new technology payment catalog (with a payment period of 1 year, and can continue to apply the following year). After 2 to 5 years, they will be included in the supplementary payment catalog.

A senior industry insider told the reporter that the current implementation of the transition from item payment to package payment, and from retrospective payment to prepayment, is actually transferring part of the responsibility of medical insurance fund management to medical institutions. Medical institutions need to make specific adjustments according to the medical insurance payment rate, which is also in line with the direction of China's medical insurance payment reform. In the future, the goal of medical insurance fund supervision, in addition to simply controlling costs, is to promote the rationalization of medical services, optimize the allocation of medical resources, etc. At the same time, the medical insurance fund will pay more for value-based medical care, to encourage and drive industry innovation.

Three-year exploration period

Can the international experience of the exception payment mechanism provide some inspiration?

The team of Professor Chen Wen from the School of Public Health of Fudan University published an article in August 2023 titled "Research on the Additional Payment Mechanism for Innovative Medical Technology under DRG Payment - Based on International Experience and Enlightenment". The article analyzed the different practices and effects of the United States, Germany, and France. Among them, significant clinical benefits, high costs, and innovation (mainly reflected in aspects such as market launch time, heterogeneity, and usage frequency) are the common focus indicators for inclusion.

"The United States will supplement the payment for high-value innovative technologies based on cost; Germany and France will conduct economic evaluations for each high-value innovative technology, and a special third-party evaluation committee will operate," said Zhang Luying, one of the authors of the article and an associate professor at the School of Public Health of Fudan University. China's payment model for high-value new drugs and new technologies is still in the exploratory stage. "For example, Hangzhou, Zhejiang, adopts a 'gradual decline mechanism', supplementing most of the costs in the first year, and then gradually reducing the supplementary payment costs year by year, and finally including high-value new drugs and new technologies in DRG/DIP after about 3 years."

Regarding the establishment of the exception payment mechanism, Zhang Luying said that, on the one hand, it is necessary to set clear payment conditions and inclusion standards for high-value new drugs and new technologies, and standardized application approval processes to ensure the rationality and standardization of exception payments. On the other hand, it is necessary to fully consider the dynamic adjustment and connection of the exception payment mechanism with the DRG/DIP payment method, pay attention to collecting additional payment period data on the cost and usage of innovative medical technology, and analyze and evaluate the data in a timely manner, gradually including innovative medical technology in the DRG payment.

"For truly breakthrough new technologies with clinical innovation value, it is possible to consider the negotiation access method for innovative drugs, but there are still some challenges," said Chen Yingyao, deputy dean of the School of Public Health of Fudan University. The comprehensive value evaluation of drugs is usually based on RCT (randomized controlled clinical trial) data, and even if there is no RCT data, there is at least a single-arm trial. However, in the field of consumables (especially high-value consumables with high innovation value), whether there is evidence-based data is a test for companies.To address this, Chen Yingyao suggests that if there is some difficulty in obtaining evidence-based data, it might be possible to consider "conditional payment". For instance, allowing the use of some highly innovative high-value consumables under certain conditions, with medical insurance providing certain support, while also requiring companies to accumulate real-world clinical application evidence within 1 to 2 years to supplement or verify clinical efficacy and economic benefits. This approach may reduce the risk of medical insurance payments, and companies can also receive medical insurance support more quickly.

In addition, several experts have proposed to make full use of diverse payment methods such as public welfare insurance and commercial health insurance. "In order not to hinder the enthusiasm of innovative pharmaceutical and medical device companies, the payment for high-value new drugs and new technologies may consider being funded through commercial insurance and critical illness insurance. The nature of basic medical insurance is to ensure the basics; if an innovative drug or medical device has sufficient evidence of efficacy and evaluation to support it, it can attract more city-tailored commercial medical insurance to participate," added Zhang Qinghong.