The impact of DIP payment reform on hospitalization costs and equity in type 2 diabetes mellitus patients: evidence from a pilot city in Central China

Background: In order to regulate the surging medical spending, the Chinese government conducted a reform of medical insurance payment directed to regional global budgets and Diagnosis-Intervention Packet (DIP) system. Methods: An interrupted time series analysis was conducted using monthly medical insurance claims data from 45,900 T2DM inpatients in S City, China between January 2020 and December 2023, comparing outcomes before and after the January 2021 DIP reform implementation across insurance types (UEBMI vs. URRBMI) and hospital types (TCM vs. general hospitals). Results: The DIP reform significantly reduced total hospitalization costs and length of stay overall, but divergently affected out-of-pocket ratios-decreasing them for UEBMI enrollees while significantly increasing them for URRBMI patients and TCM hospital patients-indicating worsened financial equity for vulnerable subgroups despite improved cost. Conclusion: While the DIP payment reform effectively reduced hospitalization costs and length of stay for T2DM patients, it simultaneously exacerbated out-of-pocket inequities across insurance schemes and hospital types, indicating that future payment policies must integrate cost containment with health equity.