Abstract: During the 14th Five-Year Plan period, public hospitals in China have entered a phase of high-quality development, with health insurance payment system reforms becoming a crucial means to promote this advancement. However, from the current situation, although the diagnosis related group (DRG) payment reform has made great achievements in shortening the average length of stay, improving the case-mix index, and reducing the mortality rate of low-risk groups, there are also many problems and challenges such as incomplete supporting policies, the classification system needs to be updated, the quality of medical record home pages varies, the quality of coding urgently needs to be improved, and how to deal with the use of new technologies. Thus, revisiting the impact of the DRG payment method on the high-quality development of public hospitals will not only help to understand the current challenges more clearly, but also offer valuable insights for further improving and optimizing the payment method of health insurance in the future.