Shanghai Pilots: Leading Value-Based and Risk-Sharing Reimbursement for Medical Consumables in China

Executive Summary

Despite the absence of a national strategy to regulate basic medical insurance payments for medical devices, China has proactively taken steps since 2019 to create a unified national framework for the pricing and reimbursement of high-value medical consumables.

In 2020, the National Healthcare Security Administration (NHSA) introduced catalog-based management for consumables. The agency's subsequent interim measures outlined the establishment of a unified medical consumables catalog under basic medical insurance (BMI) at the provincial level, set to be implemented during the 14th Five-Year Plan period (2021 - 2025).

By 2023, the Shanghai Healthcare Security Administration (HSA) released the "Shanghai Standards for Inclusion of Medical Consumables in Medical Insurance Payment." These standards detailed the fundamental principles, selection criteria, admission methods, and procedures for including medical consumables in Shanghai's BMI payments. This marked a new phase of refined management for integrating medical consumables into China's basic medical insurance.

Earlier in May 2022, the Shanghai Healthcare Security Administration announced a two-year pilot program for performance-linked payments for heart valves (folded) used in Transcatheter Aortic Valve Replacement (TAVR) and intracardiac ultrasound catheters. This program aims to provide additional insights into innovative payment experiments for medical devices, which typically have a less robust evidence base at market entry compared to pharmaceuticals, within China.

Reflecting on the history of pharmaceutical reform, medical insurance negotiations progressed from local pilot stages to national implementation. Local pilots often provide referential experiences and lessons for national negotiations.

Similarly, the NHSA has indicated that for medical consumable categories managed by device generic names, the national government plans to gradually develop a unified national medical insurance catalog and systematically expand the range of consumable categories included.

In this article, we delve into Shanghai's trial initiatives focused on catalog-based access management for medical consumables and the city's performance-linked risk-sharing agreements for two selected medical consumables. Our examination aims to uncover insights into the future trajectory of medical consumable reimbursement under China's basic medical insurance.

Shanghai BMI: Coverage and Payment for Medical Consumables

Fundamental Principles

• Systematically integrate medical consumables with high clinical value and favorable economic evaluations into insurance coverage.
• Establish reasonable payment scopes and payment standards for medical consumables based on total budget control and precise calculations.
• Use methods such as negotiation to align consumable prices with their true value.
• Promote standardized clinical usage of medical consumables through performance-linked payments.
• Maintain rigorous expert reviews to ensure that the decision-making process for coverage and payment is open, transparent, standardized, and efficient.

Selection Criteria

Medical consumables considered for coverage and payment must meet the following conditions:

• They must be safe, effective, clinically necessary, reasonably priced, and affordable within the medical insurance fund.
• They must have been recently procured by the city and not be explicitly excluded from payment by national regulations.
• They should either be included in the insurance payment systems of provinces with similar economic levels or be recommended by the city's biopharmaceutical industry department.

Category-Based Admission Methods

a. Direct Admission

Consumables selected through volume-based procurement will be directly included. Payment standards will align with the winning bid prices.

b. Conventional Admission

Non-exclusive high-value consumables not included in volume-based procurement will fall under conventional admission. An expert review panel will classify these consumables into Category A or B. Category A consumables will be covered according to Shanghai's basic medical insurance regulations, while Category B requires insured individuals to initially pay 20% out-of-pocket, with the remainder covered as per regulations.

c. Negotiation Admission

Sole-sourced high-value consumables will be managed through negotiation-based admission. Negotiations will determine the payment standards (the total of fund payment and patient out-of-pocket expenses) and define payment scopes. These will be classified as "Category B" consumables.

Listing Process for Medical Consumables

The inclusion of medical consumables under Shanghai BMI involves four stages: preparation, review, negotiation, and publication.

a. Preparation Stage

The municipal medical insurance department develops a work plan and sets the principles, scope, and procedures for incorporating consumables into insurance coverage.

b. Review Stage

The review stage consists of two parts: comprehensive review and specialist review.

Comprehensive Review: A group comprising experts in clinical practice, health economics, public health, and medical insurance management discusses the work plan, identifies key technical review points, and proposes separate lists of consumables for conventional and negotiation admission.

Specialist Review: Experts recommended by relevant designated medical institutions review the proposed list of consumables for conventional admission and finalize the items for inclusion.

c. Negotiation Stage

For consumables qualified for pricing negotiations, the municipal medical insurance department coordinates with manufacturers to submit the necessary negotiation materials.

Insurance and pharmacoeconomic experts review the submitted data and evaluate the consumables based on their budget impact on the insurance fund and health economic assessments to determine a baseline price.

Subsequently, negotiation experts, including representatives from the medical insurance department and relevant specialists, conduct on-site negotiations with the manufacturers to establish payment policies and set payment standards.

d. Publication Stage

Once the review and negotiation results are approved, they are officially published.

Performance-Linked Payment for Medical Consumables

Devices and diagnostics often have a less robust evidence base at market entry. Additionally, clinical outcomes of medical device procedures can be influenced by the operator's experience, making their effectiveness more uncertain compared to pharmaceuticals. Performance-linked payments can address this uncertainty by collecting short-term effectiveness data to demonstrate clinical value.

To further evaluate performance-linked payments, in May 2022, the Shanghai Healthcare Security Administration announced a two-year pilot program for performance-linked payments for folded heart valves used in Transcatheter Aortic Valve Replacement (TAVR) and intracardiac ultrasound catheters.

Product Selection

The diverse range of medical devices complicates the evaluation of their effectiveness, making them not all suitable for risk-sharing agreements.

Shanghai's pilot program focused on products with a clear connection to specific treatment outcomes: heart valves (folded) used in TAVR procedures and intracardiac ultrasound catheters used in procedures guided by intracardiac ultrasound.

Performance Metrics

Selecting objective and measurable clinical outcomes as metrics is essential for the feasibility of performance-linked payments, as demonstrated in the Shanghai pilot.

For heart valves, the pilot specifies the immediate success rate or the incidence of severe perioperative complications following Transcatheter Aortic Valve Replacement (TAVR) surgery as performance metrics, with detailed calculation rules and definitions provided. Participating institutions can choose to link their payments using either metric.

Similarly, for intracardiac ultrasound catheters, the pilot specifies the immediate success rate or the complication incidence per procedure guided by intracardiac ultrasound catheters as metrics. Detailed calculation rules and definitions are also provided for these metrics, and participating institutions can choose either metric to link their payments.

Risk Sharing

Beginning each February, designated medical institutions will have their usage of the two selected medical consumables from the previous year evaluated based on the performance metrics they chose. If the metrics are met, full payment will be provided. If the metrics are not met, a 5% deduction will be applied to the portion of the cost covered by medical insurance.

Stakeholders

Internationally, performance-linked Risk-Sharing Agreements (RSAs) involve various forms of collaboration, with manufacturers partnering directly with public payers, commercial insurers, or medical institutions.

In China, performance-linked payments for medical devices are still in the early stages. The primary exploration is currently between healthcare security administrations and medical institutions, as seen in the Shanghai pilot. Additionally, there are manufacturer-led performance-linked payment agreements, primarily in cooperation with commercial insurers.

Data Collection

Designing and implementing RSA agreements is both time-consuming and costly. Data collection is crucial for determining the project's cost-effectiveness.

Shanghai's performance agreements specify the following:

(a) For heart valves and intracardiac ultrasound catheters, until a dedicated data collection system is established, designated medical institutions must manually submit relevant data according to the requirements outlined in the Performance Notice.

(b) For the incidence of severe perioperative complications in Transcatheter Aortic Valve Replacement (TAVR) and the incidence of complications in procedures guided by intracardiac ultrasound catheters, the relevant data will be obtained by the municipal medical insurance center through the medical record collection platform.

Final Thoughts

Historically, most regions in China broadly classified medical consumables based on their department of use and cost, making all items within these categories eligible for reimbursement. This approach often led to the misuse of cost-ineffective medical consumables that nonetheless secured high reimbursement rates.

Shanghai's approach to medical consumables coverage and payment represents a new phase of refined management under China's basic medical insurance. It offers valuable insights and lessons for national negotiations, which can be distilled into three main points:

• Category-Based Management: Differences are reflected in varying admission routes, payment scopes, and ratios.
• Evidence-Based and Value-Driven: Coverage and payment for sole-sourced high-value medical consumables are determined based on clinical value, budget impact, and cost-effectiveness assessment.
• Risk Sharing: This approach links the use of medical consumables and associated clinical outcomes with insurance payments, effectively balancing the interests of key stakeholders in cost control, improved clinical outcomes, and market access. It will facilitate the market uptake of innovative medical devices with superior clinical value.

References:

1. 从国内经验看医疗器械医保支付前路, China Medical Insurance Magazine, 2023-7-11, http://www.phirda.com/artilce_32016.html?cId=4
2. 上海市医用耗材纳入医保支付范围的工作规范, 上海市医疗保障局 (Shanghai Healthcare Security Administration), 2023-7-10, https://www.songjiang.gov.cn/govxxgk/SHSJ49/2023-07-10/c423f133-a221-4879-8464-f49979f72073.html
3. 关于部分医用耗材试行按绩效支付的通知, 上海市医疗保障局 (Shanghai Healthcare Security Administration), 2022-5-118, https://ybj.sh.gov.cn/qtwj/20220519/ad620ec0be714247b43cbf87ca53c7f2.html
4. 中国医疗器械行业协会 - 医保局：TAVR耗材试行按绩效支付 或将引起几家头部企业产品市场放量加速， 中国医疗器械行业协会， 2022-5-24， http://www.camdi.org/news/10938
5. 按绩效支付的风险分担协议在医疗器械领域的应用与展望, 艾亚萍 et al., 艾昆纬企业管理咨询（上海）有限公司, 复旦大学公共卫生学院, 医药经纬, 1674-3830 （2023） 2-123-6 doi:10.19546/j.issn.1674-3830.2023.2.019
6. Advancements in China's BMI Payment Policies for High-Value Medical Consumables: How MedTech Should Prepare, NRDL+ Newsletter, 5-1-2024, https://www.nrdlplus.com/advancements-in-chinas-bmi-payment-policies-for-high-value-medical-consumables-how-medtech-should-prepare/