Title: From per-diem payment to case-based per-episode payment for acute mental disorders in Guangzhou, China: A propensity score matching and difference-in-differences analysis using real world data Authors: Jingmei Xie1, Tiantian Zhang1, Sen Wang1, Jeff Jianfei Guo2, Jie Jiang1,3 1 College of Pharmacy, Jinan University, Guangzhou, 510632, P. R. China 2 College of Pharmacy, University of Cincinnati, Cincinnati, OH, USA 3 Institute of Dongguan, Jinan University, Dongguan 523808, P. R. China Abstract: The case-based per-episode payment policy has been initiated in Guangzhou, a major city in China, since 2015 for patients with acute mental disorders such as schizophrenia, depression, and bipolar disorder. This study evaluated the economic impact of per-episode payment policy whether aggregated payment with per-diem for chronic patients and case-based per-episode for acute patients is more cost-saving than traditional payment with per-diem for both chronic and acute patients. A total of 6,778 episodes of medical records from Feb 1, 2014 to Feb 1, 2016, including 2,091 patients in one intervention hospital and 4,687 patients in ten control hospitals were extracted from Guangzhou Urban Employee Basic Medical Insurance. Length of stay, the number of hospitalization and medical expenditures per year were compared between groups. The total medical expenditures were calculated as a sum of medical insurance reimbursement and patient out-of-pocket payments. Economic impact was assessed using propensity score matching (PSM) plus difference-in-differences (DID) method. From governmental health insurance perspective, significant reductions in intervention group were observed in relevant economic outcomes per year per capita, including length of stay reduced 14.11 days (P=0.037), number of hospitalization reduced 0.02 times (P=0.04), medical insurance reimbursement reduced US$439.4 (P=0.017), patient out-of-pocket payments reduced US$242.4 (P<0.01), total medical expenditures reduced US$681.8 (P=0.002). The new payment policy was proved cost-saving and may facilitate acute mental disorder patients’ prognosis.