The General Office of the State Council has recently issued the Guiding Opinion on Further Reform of the Basic Medical Insurance Payment Regime (the “Opinion”). The Opinion sets out guidelines for the reform of the Basic Medical Insurance (“BMI”) regime, in particular in relation to the payment regime for BMI.

The Opinion clarifies the aim of the reforms. Since 2017, the management of the BMI fund has been strengthened and the multi-compounded BMI payment regime, which mainly focuses on the disease-based payment regime, will be fully promoted. Local authorities will select certain kinds of disease as the base of the disease-based payment regime, and, the central government will implement the Diagnosis Related Groups-based (“DRGs”) payment regime as a pilot in certain selected places.   The Opinion also encourages that the headcount-based and in-patient bed-based payment regimes be refined.  Accordingly, the main content of the reforms will be: 1) implement the multi-compounded BMI payment regime; 2) promote the disease-based payment regime; 3) implement the pilot of DRGs-based payment; 4) perfect the headcount-based and bed-based payment regime and 5) strengthen the administrative measures on medical activities.  Detailed reform measures under each of five reforms mentioned above have been clarified in the Opinion.

The Opinion has indicated that the future payment regime of the BMI and the reform measures mentioned may significantly influence the current business of medical institutions. Investors that are interested in the medical institution industry should review this Opinion and track any further reforms.