Do non-local hospitalized patients cost more? A comparative study based on the implementation of the DRG payment

Abstract Aims: This study investigates whether non-local patients—those hospitalized outside their registered insurance region—incur higher medical expenditures than local patients under China’s Diagnosis-Related Groups (DRG) payment reform. Total hip arthroplasty (THA) was used as a standardized clinical model to evaluate cost disparities and potential cost-shifting behaviors post-reform. Methods: We analyzed 55,532 THA inpatient records from Sichuan Province (2015–2023), classifying patients as local or non-local. Descriptive statistics and univariate tests were conducted using R and SPSS. A multi-period difference-in-differences (DID) model was employed to estimate the reform’s impact, adjusting for individual, institutional, and temporal variables. Results: Non-local patients consistently incurred higher hospitalization costs, despite being younger and having fewer comorbidities. Prior to DRG implementation, the average cost gap was CNY 2,730, mainly from treatment and examination fees. Post-DRG, the gap widened to CNY 2,869 (p < 0.01), with significant increases across all categories—especially consumables and treatment. DID analysis showed significant cost reductions for local patients, while treatment costs for non-local patients rose (β = 0.11, p < 0.01), indicating potential cost-shifting. Conclusions: DRG payment reform effectively reduced costs for local patients but was linked to selective cost increases for non-local patients, particularly in treatment-related spending. These findings suggest that mixed reimbursement models may incentivize differential billing. Ongoing monitoring of expenditure structures is crucial to ensure equitable policy outcomes.