In China, trauma is the fifth leading cause of death across the entire population (1), and fractures are among the most common traumatic conditions. Their incidence is closely linked to the ongoing process of population aging. As the proportion of older population continues to rise, the incidence of age-related fractures—such as osteoporotic and hip fractures—has increased significantly. Meanwhile, factors such as traffic accidents and sports injuries have also contributed to the persistently high fracture rates among younger and middle-aged populations. According to the Global Burden of Disease Study (2), there were 178 million new fracture cases worldwide in 2019, representing a 33.4% increase compared to 1990. The number of individuals suffering from acute or chronic symptoms related to fractures reached 455 million, with a 70.1% increase over the same period (2). It is projected that by 2050, the annual number of hip fractures among older population in China will reach 1.3 million (3) Fractures often lead to absenteeism, reduced productivity, disability, impaired quality of life, substantial health losses, and high medical costs (4–7). To address these challenges, health insurance payment reform in China is imperative. Against this backdrop, Diagnosis-Related Groups (DRG) payment reform has emerged as a critical breakthrough in promoting refined healthcare management and improving medical efficiency (8, 9).

The DRG payment system originated in the United States in the 1960s (10). Its core principle is to classify diseases into distinct groups based on diagnosis, treatment methods, complications, and other factors, with each group assigned a fixed reimbursement rate—thus achieving the goal of “equal treatment and equal payment for the same disease.” Over the past two decades, several countries have adopted prospective DRG-based payment systems (11, 12). In China, a national DRG payment pilot was officially launched in 2019, initially covering 30 cities and gradually expanding nationwide (13, 14).

Current research on the impact of DRG payments on healthcare systems predominantly focuses on chronic diseases (15–19), generally confirming that its implementation can effectively reduce hospitalization costs, shorten average length of stay, and curb unnecessary medical interventions. However, in disease areas such as fractures, which are characterized by high rates of emergency surgery, prolonged recovery periods, and significant individual variability, the standardized DRG payment model faces particular challenges (20–22). Although progress has been made in epidemiological studies of traumatic fractures in China (23–26), systematic research on economic burden analysis—particularly within the context of DRG payment—remains notably underdeveloped. Specifically, the current DRG payment mechanism primarily covers the inpatient phase and struggles to adequately account for the extended costs associated with fracture patients, such as long-term rehabilitation needs, multiple follow-up visits, and secondary surgeries (27–31). This institutional design may lead to insufficient incentives for healthcare institutions when treating patients with complex fractures, thereby undermining their motivation to provide systematic and continuous medical services. Therefore, there is an urgent need to conduct research on the effectiveness of payment policies tailored to the unique spectrum of fracture-related conditions, in order to provide evidence for developing a refined medical insurance payment model that aligns with their clinical characteristics.

This study integrates interrupted time series analysis (ITS), structural variation metrics, and gray relational analysis to investigate the heterogeneous impact of the DRG payment system on fracture patients across different diagnostic groups. The aim is to provide evidence-based recommendations for developing differentiated medical cost-control strategies and to support the ongoing reform and optimization of China’s healthcare payment system.

A schematic of the study design is presented in Figure 1.

With the accelerating aging process in China and the continuous rise in trauma incidence, the economic burden of fracture treatment has become a critical issue in public health. As a key measure to control medical insurance costs, the implementation of the DRG payment reform has shown significant differences in its effects across various types of fracture patients. This study systematically evaluated the impact of the DRG reform on the cost structure of eight common fracture groups through structural variation analysis, interrupted time series, and gray relational analysis, revealing three notable phenomena: cost substitution effects characterized by a general decline in treatment costs alongside differentiated changes in consumables expenses; advantages of TCM and age-related differences, reflecting varied treatment demands among different age groups. These findings provide empirical evidence for optimizing trauma payment policies. This phenomenon can be partially explained by the inherent mechanisms of DRG-based payment. Because DRGs emphasize “same price for the same disease,” hospitals facing fixed payments often proactively adjust resource allocation to avoid losses from high-cost cases. Evidence from international studies supports this effect; for example, research in Switzerland has shown that DRGs encourage hospitals to focus more on efficiency and process management, but may also lead to tendencies such as selective admission or early discharge (34).

Following DRG implementation, the proportion of male patients significantly increased, especially in S72 (femoral fractures) and S82 (lower leg fractures) groups, possibly indicating gender-specific healthcare-seeking behaviors under the new payment system. The proportion of older population (≥60 years) rose across S42 to S92 groups, suggesting that DRG may have influenced patient admission standards and thus patient demographics. Notably, the proportion of patients with hospital stays exceeding 30 days increased in S22, S32, and S42 groups, while the 15–30 day hospitalization rate rose in S72 and S82 groups. Such variations may result from differences in fracture site complexity or reflect strategic responses by medical institutions to DRG payment standards (35, 36). Moreover, the observed disparities by sex and age may also reflect broader social factors. Previous studies have indicated that male labor-force populations are more likely to opt for hospitalization following trauma, whereas female and older population are often constrained by family support and rehabilitation resources (37–39). The DRG reform appears to have amplified these differences, suggesting that future payment system designs should not only consider disease-specific clinical characteristics but also account for factors such as sex, age, and social support networks to enhance policy equity and generalizability. The most significant cost structure adjustments were observed in medication expenditures, with median costs decreasing by 12.1% overall after DRG reform (up to 39.8% decrease in the S72 group). In contrast, treatment and consumable costs exhibited opposite trends: treatment costs generally declined (S72 group DsV = −77.6%), indicating that DRG’s fixed payment may suppress high-intensity therapeutic interventions, while consumable costs increased sharply (S32 + 2170.4%, S72 + 527.8%), suggesting a “consumable substitution effect” whereby institutions compensate for lost revenues by increasing consumable usage. Although rehabilitation costs remained low (median increased from 0 to 47.1 yuan), there were significant differences between groups (decreasing in S72 vs. increasing in S82), indicating that DRG coverage of rehabilitation services remains insufficient. By contrast, foreign DRG-related policies with earlier coverage have shown marked improvements in rehabilitation expenditures (40, 41). This “consumables substitution effect” has also been observed internationally; for instance, many hospitals have increased the use of reimbursable implants and consumables to offset reductions in conventional medical service costs (42). This indicates that, without explicit regulation on consumable usage, DRG-based payments may facilitate cost-shifting behaviors. Therefore, in the process of DRG implementation in China, it is necessary to further refine the classification and payment standards for high-value consumables to prevent the emergence of new sources of irrational cost increases. Diagnostic costs’ median dropped from 302.26 yuan pre-reform to 273.72 yuan post-reform, with reduced variance, indicating a trend toward streamlined diagnostic procedures under DRG. Although total costs slightly decreased, volatility did not significantly narrow, implying that while DRG can partly control expenses, it struggles to uniformly manage costs for complex cases. From the perspective of cost composition, DRG reform led to a marked reduction in medication costs and compression of diagnostic costs, whereas treatment and rehabilitation costs increased, possibly reflecting a policy shift from “drug-dominated” toward “technology-dominated” expenditure structures (43, 44). Total costs saw a modest decline but individual variability remained substantial, suggesting that further refinement of DRG payments, such as disease complexity grading, remains necessary to improve cost control. From an international perspective, reductions in pharmaceutical expenditures are a common outcome across most DRG systems. DRGs effectively curb the rapid growth of drug spending; however, they may also lead to an increased reliance on diagnostic and therapeutic services (45, 46). The trend observed in this study—decreased proportion of drug costs accompanied by increased proportion of technical service costs—indicates that China’s policy orientation is gradually shifting toward the value of technical services. Nonetheless, avoiding excessive technologization and consumable usage still requires careful balancing by policymakers through multiple mechanisms, including medical insurance supervision, payment standards, and clinical pathway regulations.

The analysis of structural variation through the three indicators—VSV, DsV, and CRSV—reveals the profound impact of the DRG payment reform on the inpatient cost structure of fracture patients, highlighting the complexity and specificity of medical behavior adjustments. The results not only validate the effectiveness of policy intervention but also expose structural issues worthy of attention during the reform process. First, the general decline in treatment costs (S72 group DsV = −77.62%) contrasts sharply with the significant rise in consumable costs (S72 group VSV = 3,474.02), illustrating a distinct “treatment-consumable substitution” phenomenon. This likely reflects adaptive strategies employed by medical institutions under the DRG fixed payment system. Particularly noteworthy is the extreme pattern observed in the S32 group, where diagnostic costs increased substantially (VSV = 623.70) while treatment costs plummeted (VSV = −17,123.05), potentially indicating a “substituting tests for treatment” behavior by some hospitals. This finding aligns with (20), who reported behavioral changes in diagnosis and treatment following payment reform. Second, the drastic fluctuations in consumable costs across multiple fracture types—such as the S32 group’s extraordinarily high DsV of 2,170.42%—are cause for concern. This surge may arise from two mechanisms: on one hand, there is rigid demand for high-value consumables (e.g., internal fixation devices) in orthopedic surgery (47, 48); on the other hand, it cannot be ruled out that medical institutions increase consumable usage to offset revenue losses elsewhere. While consumable regulation remains important in internal medicine where consumable proportions are low (49), greater vigilance is warranted in surgical fields with higher consumable shares to prevent regulatory evasion. The systemic decline in rehabilitation costs (S92 group VSV = −991.80) reveals potential shortcomings in the current payment policy. Contribution rate analysis shows that treatment costs dominate in many groups (CRSV > 69%), indicating that DRG exerts the strongest regulatory effect on core diagnosis and treatment activities. However, the unique “treatment-rehabilitation” dual dominance mode in the S22 group (combined CRSV > 80%) suggests that the impact of payment reform may be more multifaceted for certain fracture types.

This study, through interrupted time series analysis, confirms that the DRG payment reform has exerted a structural impact on medical costs for fracture patients. Following policy implementation, except for a rebound in some diagnostic costs, total costs, treatment costs, medication costs, and rehabilitation costs all showed a downward trend, a finding consistent with relevant domestic and international research (32). Notably, the cost containment effect was particularly pronounced in case types that previously exhibited a significant upward cost trend (e.g., S32 fractures), indicating that DRG played a key role in curbing excessively rapid growth in medical expenditures. This overall cost control effect stems from the inherent incentive for cost management created by the DRG payment standards for medical institutions. It prompts hospitals to shift their management focus forward to the starting point of the clinical pathway—the diagnostic stage. By strengthening diagnostic investment and improving classification accuracy, they establish a scientific basis for subsequent treatment plan selection, thereby reducing unnecessary medical resource consumption at the source and achieving systematic optimization of treatment costs (50). Regarding consumables costs, although they showed an overall downward trend after the DRG policy implementation, consumables costs for S42 fracture patients exhibited anomalous growth. This phenomenon may be related to the clinical characteristics of S42 fractures (mainly including clavicle, scapula, and proximal humerus fractures). The treatment options for this type of fracture are diverse, ranging from conservative treatment and closed reduction minimally invasive surgery to complex open reduction and internal fixation, and even shoulder arthroplasty. The types and costs of consumables required for different schemes vary significantly (51). After the implementation of the DRG policy, the strengthening of the diagnostic phase may prompt medical institutions to define the classification earlier and opt for more definitive surgical solutions, consequently leading to increased use of high-value consumables in S42 fractures, forming a phenomenon of “diagnosis-driven growth in consumables costs.” In terms of medication costs, Western medicine costs for all fracture types consistently decreased after the DRG policy, reflecting the significant effectiveness of the policy in standardizing medication practices. This change is related both to medical institutions actively optimizing medication regimens and promoting rational drug use, and may also benefit from the synergistic effects of the national volume-based procurement policy (52). Worthy of further exploration is that the changing trends of some TCM costs were not entirely consistent with those of Western medicine, suggesting that the use of proprietary Chinese medicines may be influenced by multiple factors such as adherence to clinical pathways and physicians’ prescribing habits. The standardized management mechanisms for TCM still require in-depth study (32). The widespread decline in treatment and rehabilitation costs demonstrates the regulatory effect of DRG on core medical services. However, phenomena such as the sharp drop in rehabilitation costs for S32 fractures (β₃ = −483.58) are particularly noteworthy. Although this reflects the effectiveness of cost control to a certain extent, it also hints at the potential risk that excessive compression of necessary rehabilitation services may impair patients’ functional recovery and long-term prognosis (9, 53). Therefore, while continuing to advance cost control, determining how to scientifically balance economic efficiency with medical quality will be an important direction for the future optimization of DRG policy.

The gray relational analysis revealed heterogeneity in the correlation between cost categories before and after the implementation of the DRG payment model across different fracture types. Firstly, S22 and S42 fractures showed a marked increase in the correlation coefficients of diagnostic and pharmaceutical expenses, suggesting that under DRG constraints, the relative weight of diagnostic procedures and medication management increased, consistent with standardized clinical pathways and rational drug utilization. This feature aligns with the AO principles of orthopedic internal fixation (54, 55). The trend was particularly pronounced in S42, where nearly all cost categories demonstrated steady growth, indicating that DRG implementation reinforced a balanced distribution of expenses in this fracture type. In contrast, S52 and S62 fractures exhibited an overall downward trend. In S52, the correlations for treatment, consumables, and rehabilitation decreased most notably, suggesting potential cost containment through reduced therapeutic interventions or optimized rehabilitation processes. Similarly, multiple expense categories in S62 declined significantly, implying that complex fractures may be more sensitive to cost pressures under the DRG system. By comparison, S72 fractures maintained a relatively stable structure with minimal fluctuations, suggesting little change before and after DRG or that clinical pathways were already highly standardized. S82 fractures demonstrated mild increases across categories, indicating modest optimization in expense allocation without substantial shifts. S92 fractures, however, showed consistent strengthening across all categories, suggesting that DRG exerted the most balanced and significant regulatory effect on this group. In summary, the impact of the DRG payment model on the cost structure of fracture patients was not uniform but category-specific. Diagnostic and pharmaceutical expenses increased markedly in certain fractures, whereas treatment, rehabilitation, and consumables declined in others. These differences may reflect variations in fracture complexity, the degree of clinical pathway standardization, and healthcare resource allocation.

This study is the first to integrate structural variation analysis with ITS to systematically evaluate the multi-level impacts of DRG reform on inpatient costs for fracture patients. Gray relational analysis quantified the relative contribution of different cost categories, addressing limitations of conventional statistical methods. Findings indicate that observed cost structure changes reflect not only financial effects but also the adaptive response of DRG payment in China’s evolving healthcare context. Heterogeneous responses across fracture types highlight the interplay between policy implementation and clinical practice, offering empirical evidence to guide policy refinement. While DRG reform enhanced overall cost control, behavioral responses such as upcoding and selective admission may affect outcome validity, and older population with multiple comorbidities experienced greater shifts in cost structure, suggesting potential under-treatment risks.

Several limitations warrant consideration. Data were derived from a single region, potentially limiting generalizability, and functional outcome measures, frailty indices, and comorbidity severity scores were unavailable, constraining evaluation of cost-quality relationships. The study period overlapped with the COVID-19 pandemic, which may have transiently influenced healthcare utilization and resource allocation. Additionally, only cost indicators were analyzed, without integrating functional recovery, readmission, or mortality, precluding full assessment of cost-effectiveness. Some fracture subgroups had limited sample sizes, which could mask subtle variations. Future multi-center, longitudinal studies incorporating clinical outcomes and quality-of-life measures are needed to more comprehensively assess the effectiveness and equity implications of DRG reform.

However, our analysis was limited to cost indicators and did not incorporate clinical outcomes such as functional recovery, readmission, mortality, or patient-reported experience measures, which precludes a full assessment of cost-effectiveness. Future multi-center, longitudinal studies integrating these broader indicators are needed to more comprehensively evaluate the effectiveness and equity implications of DRG reform. In summary, while DRG reform shows promise in controlling costs, achieving a balance between economic efficiency, clinical effectiveness, and patient-centered care will be essential for its long-term success.

The DRG-based payment reform has effectively controlled pharmaceutical expenditures and increased diagnostic costs, consequently triggering structural shifts in the treatment of certain fracture types, such as increased use of medical consumables and reduced treatment intensity. The reform outcomes exhibit marked fracture-type specificity, highlighting the necessity for implementing differentiated and refined management strategies. This study provides empirical evidence to support the optimization of DRG payment standards and offers valuable insights for advancing the reform of the healthcare payment system.