Abstract: This study selected inpatients in the anorectal department of a tertiary Grade A integrated traditional Chinese and Western medicine hospital in Hefei from January 2020 to August 2024 as the research subjects and divided them into an intervention group and a control group according to medical insurance type. A Difference-in-Differences (DID) model, the synthetic control method, and a placebo test were used to evaluate the impact of the diagnosis-related groups (DRG)-based payment policy on the average total cost per case, cost structure, and TCM-characteristic services among inpatients in TCM hospitals. The results showed that after the implementation of the DRG payment reform, the average total hospitalization cost per case in the intervention group decreased significantly by approximately 18.9% (P < 0.05), and the out-of-pocket payment ratio also decreased significantly (P < 0.05). However, the interaction term coefficients for itemized costs, including general medical service fees, TCM syndrome differentiation and treatment fees, nursing fees, and surgical treatment fees, as well as for indicators reflecting TCM-characteristic services, such as the proportion of TCM medical service costs and the proportion of Chinese herbal medicine costs, did not change significantly (P> 0.05). The results of the synthetic control method and placebo test further corroborated the reliability of the above core findings. Accordingly, medical insurance authorities should improve the price formation and adjustment mechanism for TCM services, explore medical insurance payment methods suited to the characteristics of TCM diagnosis and treatment, increase funding, and improve supporting policies and incentive mechanisms, so as to jointly promote cost control and the development of TCM characteristics.