The National Medical Insurance Administration Office and the Office of the Ministry of Finance have issued a "Notice on Improving the Prepayment Work of Medical Insurance Funds".

The "Notice" clarifies the standardized requirements from the aspects of policy and system arrangements, application process, accounting, and supervision, mainly reflecting the "three clarifications" and "three specifications".

Among them, the "three clarifications" refer to:

First, clarify the policy connotation. Prepayment is the revolving fund for medical expenses such as drug and medical consumables procurement advanced by the medical insurance department to designated medical institutions, and shall not be used for non-medical expense expenditures such as medical institution infrastructure investment, daily operations, debt repayment, etc. Drug and medical consumables centralized procurement for medical insurance fund special prepayment shall be implemented as originally stipulated.

Second, clarify the payment conditions. The safety of the fund is the basic premise for implementing prepayment work, and the principle of doing one's best and acting within one's capabilities should be adhered to. In principle, the conditions and standards for disbursing prepayments should be based on the cumulative balance of the overall medical insurance fund in the pooling area and the operational risk level of the medical insurance fund.

Third, specify the expenditure standards. The approved standards should generally be based on the monthly average expenditure of the relevant medical insurance fund in the previous one to three years, reasonably determine the basic scale of prepayments, and the scale of prepayments should be around one month.

The National Healthcare Security Administration stated that it insists on using "prepaid funds" as "empowerment funds" to help designated medical institutions relieve the pressure of advance payment of medical expenses, effectively empower and support the sustainable development of designated medical institutions, thereby providing better quality medical security for insured individuals, promoting the stable operation of pharmaceutical and consumable enterprises, collectively driving the coordinated development and governance of the "three medicals", in order to better serve the overall economic development and contribute to the smooth operation of society.

The problem of difficult collection for pharmaceutical and medical device companies needs to be solved urgently.

After the establishment of the healthcare prepaid fund system, the financial turnover pressure on medical institutions is expected to be significantly alleviated, with improvements expected in both upstream and downstream payment periods. In addition to various measures such as the direct settlement system, the construction of online settlement platforms, the payment cycle is expected to be greatly shortened.

Zhongtai Securities released research reports stating that the domestic medical device industry is still in a rapid development stage. In the short term, under the high base of diagnosis and treatment and policy disruptions, the overall industry continues to be under pressure. However, the industry remains bullish on import substitution and globalization under the drive of innovation. It is expected that multiple negative factors have been fully released at the current time point, and the future marginal trend is expected to continue to improve. Even though the internal diagnosis and treatment are under short-term pressure due to the high base and policy disruptions, low-value consumables continue the rapid growth trend from the first half of the year. Among them, 24Q3 revenue growth remains stable, profit growth continues under pressure, and low-value consumables performance remains outstanding.

Pharmaceutical and medical device-related companies include:

Microport (00853), Microport Robot-B (02252), Microport Neuro-Science (02172), AK Medical (01789), Chunli Medical (01858), Weigao Group (01066), Grandpharma (00512), Beckon Medical-B (02170), and Siasun Robot&Automation-B (02251.HK), etc.