This work aimed to evaluate a pre/post-reform pilot study from 2015 to 2018 in a rural county of Zhejiang Province, China to realign the provider payment system for primary health care (PHC).

Data were extracted from the National Health Financial Annual Reports for the 21 township health centers (THCs) in Shengzhou County. An information system was designed for the reform. Differences among independent groups were assessed using Kruskal–Wallis H-test. Dunn’s post hoc test was used for multiple comparisons. Differences between paired groups were tested by Wilcoxon signed-rank test. Two-tailed P < 0.05 indicated statistical significance. Data were processed and analyzed using R 3.6.1 for Windows.

First, payments to THCs shifted from a “soft budget” to a mixed system of line-item input-based and categorized output-based payments, accounting for 17.54% and 82.46%, respectively, of total revenue in 2017. Second, providers were more motivated to deliver services after the reform; total volumes increased by 27.80%, 19.22%, and 30.31% for inpatient visits, outpatient visits, and the National Essential Public Health Services Package (NEPHSP), respectively. Third, NEPHSP payments were shifted from capitation to resource-based relative value scale (RBRVS) payments, resulting in a change in the NEPHSP subsidy from 36.41 to 67.35 per capita among the 21 THCs in 2017. Fourth, incentive merit pay to primary health physicians accounted for 38.40% of total salary, and the average salary increased by 32.74%, with a 32.45% increase in working intensity. A small proportion of penalties for unqualified products and pay-for-performance rewards were blended with the payments. The reform should be modified to motivate providers in remote areas.

In the context of a profit-driven, hospital-centered system, add-on payments – including categorized output-based payments to THCs and incentive merit pay to primary care physicians (PCPs) – are probably worth pursuing to achieve more active and output/outcome-based PHC in China.