Tiered diagnosis and value-based healthcare: can the outpatient reimbursement policy for medical costs in retail pharmacies promote both?

BACKGROUND: Amid growing health demands and tight welfare budgets, guiding rational healthcare-seeking behavior to improve health while controlling costs has become a global challenge. This study aims to examine whether the reform of medical insurance on the cost-sharing of pharmacy can promote tiered diagnosis and value-based healthcare. METHODS: Using 2011-2018 China Health and Retirement Longitudinal Study data and the Staggered DID method, this paper estimates the effects of the Retail Pharmacies Outpatient Reimbursement (RPOR) reform in the Urban Employee Basic Medical Insurance (UEBMI). RESULTS: The RPOR indeed promoted the pharmacy visits (0.119) and the proportion of its expenditures in the total medical expenses (0.439**). However, its crowding-out of lower-level outpatient services (-0.670***) may pose certain obstacles to the tiered diagnosis system. Although the reform controlled the increase of total health expenditure (-0.490**) and adjusted the structure of medical expenditures, its effect on health improvement and value-based healthcare still needs to be realized. The above effects vary with policy design, regional resources, as well as individuals' age and income. CONCLUSIONS: This study demonstrates that while the cost-sharing reform effectively controls total expenditures, the resulting substitution of primary care with pharmacy services and its limitation on health gains call for a more effective policy design to achieve tiered diagnosis and value-based healthcare.