Small money, big change: The distributional impact of differentiated doctor's visit fee on healthcare utilization

A prominent issue in China's healthcare sector is the overcrowding of high-tier hospitals, whereas low-tier hospitals and community health centers are severely underutilized. This study aims to examine whether doctor's visit fee and copay differentiated by the level of healthcare providers can change the distribution of outpatient visits across different levels of healthcare providers. By leveraging the exogeneity of the policy change implemented in a megacity in China in 2017, we apply a parametric discontinuity regression model to study the causal impact of differentiated pricing on patients' health-seeking behavior, using a large-scale insurance claim database. We find that the reform of differentiated doctor's visit fee schedule effectively increases the proportion of visits to primary care facilities among all outpatient visits. This effect is driven by a decline in visits to the highest-tier hospitals and an increase in visits to community healthcare centers. Furthermore, the policy effects are more pronounced among the elderly and people with chronic diseases. Our results suggest that shifting the focus of pricing policies from coinsurance to copays while continuing to improve the capacity of primary care facilities is an effective way to facilitate triaging patients into different levels of care without triggering moral hazard.