The Office of the National Health Insurance Administration and the General Office of the Ministry of Finance issued the “Notice on Accomplishing the Prepayment of Health Insurance Funds”.

The “Notice” clarifies regulatory requirements in terms of policy system arrangements, application procedures, accounting and supervision, etc., and mainly reflects “three clarifications” and “three standards.”

Among them, “three clear” means:

The first is to clarify the content of the policy. An advance payment is a revolving fund for medical expenses such as the procurement of pharmaceuticals and medical consumables by the health insurance department in advance to a given medical institution. It cannot be used for non-medical expenses such as infrastructure investment, daily operation, or debt repayment of the medical institution. Special prepayments from health insurance funds for centralized procurement of pharmaceuticals and medical consumables are carried out in accordance with the original regulations.

The second is to clarify the disbursement conditions. Fund safety is a basic prerequisite for implementing prepayment work, and we should adhere to the principle of doing our best and doing what we can. In principle, the conditions and criteria for disbursing advance payments are based on the cumulative balance of the co-ordinated regional health insurance co-ordinated fund and the operating risk level of the health insurance fund.

The third is to clarify expenditure standards. In principle, the approval standard is based on the average monthly expenditure of the relevant medical insurance fund for the previous one to three years. The basic size of the advance payment is reasonably determined, and the prepayment scale should be about 1 month.

According to the interpretation of the National Health Insurance Administration, it insists on using “advance payments” as “enabling funds” so that designated medical institutions can ease the pressure on medical expenses and effectively empower the sustainable development of designated medical institutions, thereby providing better quality medical coverage to the insured, promoting the steady operation of pharmaceutical and consumables enterprises, and promoting the collaborative development and management of the “Three Medicines” in an integrated manner, so as to better serve and guarantee the overall macroeconomic development situation and contribute to the smooth operation of society.

It is urgent to resolve the problem of pharmaceutical device companies' repayment difficulties.

After the medical insurance advance payment system is established, the pressure on the capital turnover of medical institutions will be greatly reduced, and both upstream and downstream billing periods are expected to improve. Combined with multi-faceted measures such as the direct settlement system and the construction of an online settlement platform, the repayment cycle is expected to be drastically shortened.

Zhongtai Securities released a research report saying that the domestic medical device industry is still in a stage of rapid development. In the short term, the overall industry continues to be under pressure due to high diagnosis and treatment base and policy disturbances, but the bank is still optimistic about innovation-driven import substitution and global development. It is expected that many negative effects have been fully released at the current point of time, and marginal trends are expected to continue to improve in the future. Low-value consumables continued the rapid growth trend in the first half of the year, even if high base+policy disturbances put pressure on in-hospital diagnosis and treatment in the short term. Among them, the 24Q3 revenue growth rate remained stable, and profit growth continued to be under pressure. Among them, low-value consumables continued to perform well.

Pharmaceutical device-related companies include:

Minimally invasive medicine (00853), minimally invasive robot-B (02252), minimally invasive brain science (02172), Elken Healthcare (01789), Chunli Medical (01858), Weigao (01066), Yuanda Pharmaceuticals (00512), Beckon Medical-B (02170), Eagle Hitomi Technology-B (02251.HK), etc.