Recently, the National Health Insurance Bureau issued a notice announcing that since October 1, 2023, it will implement the elimination of hospitals’ right of return nationwide.
This policy is considered to be another major initiative of the health insurance reform, which aims to deepen the health care reform, promote the synergistic development and governance of health insurance, medical care and medicine, improve the efficiency of the use of the health insurance fund, reduce the cost of medicine circulation, and also solve the problem of the difficulty of the payback of pharmaceutical enterprises.
So, what does it mean to cancel the hospital’s right of return? What brand new changes will it bring to the medical industry? Please join me in unraveling this mystery.
**What is Elimination of Hospital Rebate Rights? **
The abolition of the hospital’s right of return refers to the abolition of the dual role of public hospitals as purchasers and settlers, and the settlement of payments to pharmaceutical enterprises by medical insurance organizations on their behalf.
Specifically, payments for national, inter-provincial alliance, provincial centralized banded procurement selected products and on-line procurement products purchased by public hospitals will be paid directly from the medical insurance fund to pharmaceutical enterprises and deducted from the corresponding public hospitals’ medical insurance settlement fees for the following month.
The scope of this elimination of the right of return covers all public hospitals and all national, inter-provincial alliance, and provincial centralized banded purchasing selected products and on-net purchasing products.
Selected products in centralized banded purchasing refer to drugs approved by the drug regulatory authorities, with drug registration certificates or imported drug registration certificates, and with national or provincial drug catalog codes.
The products of listed procurement refer to the consumables approved by the drug supervision and management department, with the certificate of registration of medical devices or the certificate of registration of imported medical devices, and with the catalog code of consumables at the national or provincial level, as well as the products of in vitro diagnostic reagents managed in accordance with the management of medical devices.
**What is the process for removing the hospital’s right of return? **
The process of canceling the hospital’s right of return mainly includes four links: data upload, bill review, reconciliation review and payment disbursement.
First, public hospitals are required to complete the uploading of the previous month’s procurement data and related bills on the nationally standardized “Drugs and Consumables Procurement Management System” by the 5th of each month. Before the 8th day of each month, the hospitals will confirm or make up for last month’s inventory data.
Then, before the 15th day of each month, the company will complete the audit and confirmation of last month’s purchasing data and related bills, and return any objectionable bills to the pharmaceutical enterprises in a timely manner.
Next, before the 8th of each month, pharmaceutical enterprises fill in the relevant information and upload the transaction bills according to the requirements based on the order information of actual procurement and distribution with public hospitals.
The bill information should be consistent with the system data, as the basis for the public hospitals to audit the settlement.
Then, before the 20th of each month, the health insurance agency generates a reconciliation statement for the previous month’s settlement in the procurement system based on the public hospital’s audit results.
Before the 25th day of each month, the public hospitals and pharmaceutical companies review and confirm the settlement reconciliation statement on the procurement system. After review and confirmation, the settlement data is agreed to be paid, and if it is not confirmed in time, it is agreed to be paid by default.
For settlement data with objections, public hospitals and pharmaceutical enterprises will fill in the reasons for the objections and return them to each other, and initiate the application for processing before the 8th of the following month.
Finally, in terms of disbursement of payment for goods, the handling organization generates settlement payment orders through the procurement system and pushes the payment data to the local health insurance financial settlement and core handling business system.
The entire payment disbursement process will be completed by the end of each month to ensure that timely payments are made to pharmaceutical companies and offset from the corresponding public hospitals’ health insurance settlement fees for the following month.
**What new changes will the removal of hospitals’ right to payment back bring to the healthcare industry? **
The abolition of hospitals’ right of return is a reform initiative of far-reaching significance, which will fundamentally reshape the operation mode and interest pattern of the healthcare industry, and will have a significant impact on all parties. It is specifically reflected in the following aspects:
First, for public hospitals, the abolition of the right of return means the loss of an important autonomous right and source of income.
In the past, public hospitals could obtain additional revenue by negotiating payback periods with pharmaceutical enterprises or soliciting kickbacks. However, this practice has also led to collusion of interests and unfair competition between public hospitals and pharmaceutical enterprises, jeopardizing market order and patients’ interests.
With the abolition of the right to payment back, public hospitals will not be able to derive profits or rebates from payment for goods, nor can they use payment for goods as an excuse for defaulting or refusing to pay to pharmaceutical enterprises.
This will force public hospitals to change their operational thinking and management mode, improve internal efficiency and service quality, and rely more on government subsidies and patient payments.
For pharmaceutical companies, the abolition of the right of return means solving the long-standing problem of difficult to pay back.
In the past, public hospitals hold the initiative and the right to speak in the settlement of payments, often for various reasons to default on or deduct the payment of goods. Cancel the right of return, pharmaceutical companies will be directly from the medical insurance fund to obtain payment, no longer subject to the influence of public hospitals and interference.
This will greatly alleviate the financial pressure on pharmaceutical enterprises, improve cash flow and profitability, and facilitate increased investment in R&D and innovation to enhance product quality and competitiveness.
In addition, the abolition of the right of return also means that pharmaceutical enterprises will face more stringent and standardized supervision and assessment, and can no longer use kickbacks and other improper means to gain market share or increase prices, and must rely on the cost-effectiveness of the product and the level of service to win customers and the market.
For health insurance operators, the abolition of the right of return means more responsibility and tasks.
In the past, health insurance operators only needed to settle with public hospitals and did not need to deal directly with pharmaceutical companies.
After the abolition of the right of return, the health insurance agency will become the main body of the settlement of payments, and need to work with public hospitals and pharmaceutical companies to carry out data docking, billing audit, reconciliation review and payment of goods and so on.
This will increase the workload and risk of health insurance agencies, and require them to improve their management and informatization levels, and establish a sound monitoring and evaluation mechanism to ensure accurate, timely and secure payment settlements.
Finally, for patients, the abolition of the right of return means enjoying fairer and more transparent medical services.
In the past, due to the transfer of benefits and kickbacks between public hospitals and pharmaceutical companies, patients were often unable to obtain the most favorable prices or the most suitable products.
With the abolition of the right to payment back, public hospitals will lose the incentive and room to derive profits or kickbacks from payment for goods, and will not be able to use payment for goods as an excuse for refusing to use certain products or promoting certain products.
This enables patients to choose the most suitable products and services according to their needs and conditions in a fairer and more transparent market environment.
In summary, the abolition of hospitals’ right of return is a major reform initiative that will have far-reaching impact on the healthcare sector.
It not only reshapes the operation mode of public hospitals, but also adjusts the development mode of pharmaceutical enterprises.
At the same time, it improves the management level of health insurance organizations and the level of patient services. It will promote the synergistic development and governance of health insurance, medical care and pharmaceuticals, improve the efficiency of health insurance fund utilization, reduce the cost of pharmaceutical circulation, and safeguard the legitimate rights and interests of patients.
Let’s look forward to the successful implementation of this reform, which will bring a better tomorrow for the medical industry!
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Post time: Sep-06-2023