Charting a path forward: policy analysis of China's evolved DRG-based hospital payment system

Background: At present, the diagnosis-related groups-based prospective payment system (DRG-PPS) that has been implemented in China is merely a prototype called the simplified DRG-PPS, which is known as the 'ceiling price for a single disease'. Given that studies on the effects of a simplified DRG-PPS in China have usually been controversial, we aim to synthesize evidence examining whether DRGs can reduce medical costs and length of stay (LOS) in China. Methods: Data were searched from both Chinese [Wan Fang and China National Knowledge Infrastructure Database (CNKI)] and international databases (Web of Science and PubMed), as well as the official websites of Chinese health departments in the 2004-2016 period. Only studies with a design that included both experimental (with DRG-PPS implementation) and control groups (without DRG-PPS implementation) were included in the review. Results: The studies were based on inpatient samples from public hospitals distributed in 12 provinces of mainland China. Among them, 80.95% (17/21) revealed that hospitalization costs could be reduced significantly, and 50.00% (8/16) indicated that length of stay could be decreased significantly. In addition, the government reports showed the enormous differences in pricing standards and LOS in various provinces, even for the same disease. Conclusions: We conclude that the simplified DRGs are useful in controlling hospitalization costs, but they fail to reduce LOS. Much work remains to be done in China to improve the simplified DRG-PPS.