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Background: Currently, the most popular hospital payment method in China is fee-for-service (FFS) with a global budget cap. As of December 2009, a policy change means that heart stents are covered by public health insurance, whereas previously they were not. This policy change provides us an opportunity to study how a change in insurance benefit affected the quantity and quality of hospital services. The new policy introduced incentives for both patients and providers: it encourages patient demand for percutaneous coronary intervention (PCI) services and stent use (moral hazard effect), and discourages hospital supply due to the financial pressures of the global cap (provider gaming effect). If the provider's gaming effect dominates the moral hazard effect, actual utilisation and costs might go down, and vice versa. Our hypothesis is that patients in the higher reimbursement groups will have fewer PCIs and lower inpatient costs. Objective: We aimed to examine the impact of health insurance benefit design on PCI and stent use, and on inpatient costs and out-of-pocket expenses for patients with acute myocardial infarction (AMI) in Shanghai. Methods: We included 720 patients with AMI (467 before the benefit change and 253 after) from a large teaching tertiary hospital in Shanghai. Data were collected via review of hospital medical charts, and from the hospital billing database. Patient information collected included demographic characteristics, medical history and procedure information. All patients were categorised into four groups according to their actual reimbursement ratio: high (90-100 %), moderate (80-90 %), low (0-80 %) and none (self-paid patients). Multiple regression and difference-in-difference (DID) models were used to investigate the impacts of the health insurance benefit design on PCI and stent use, and on total hospital costs and patients' out-of-pocket expenses. Results: After the change in insurance benefit policy, compared with the self-paid group, PCI rates for the moderate and low reimbursement groups increased by 22.2 and 20.3 %, respectively, and decreased by 48.7 % for the high reimbursement group. The change in insurance benefit policy had no impact on the number of stents used. The high reimbursement group had the lowest hospital costs, and the low reimbursement group had the highest hospital costs, regardless of benefit policy change. The general linear regression results showed that the high reimbursement group had higher total hospital costs than the self-paid group, but were the lowest among all reimbursement groups after the benefit policy change (DID = 1,202.21, P = 0.0096). There were no significant changes in the other two groups, and there were no differences in the out-of-pocket costs across any of the insured groups. Conclusions: Our results suggest that the benefit policy change did not impact life-saving procedures or reduce patients' burden of disease among AMI patients. The effect of 'provider gaming' was the strongest for the high reimbursement group as a result of the global budget cap pressure. The current FFS with a global budget cap is of low efficiency for cost containment and equity improvement. Payment method reforms with alignment of financial incentives to improve provider behaviour in practicing evidence-based medicine are needed in China. [ABSTRACT FROM AUTHOR]