Objective: The paper conducts a statistical analysis of the implementation effect of the Diagnosis Intervention Packet (DIP) payment method for traditional Chinese medicine (TCM) characteristic diseases in a hospital in Zhongshan City of Guangdong Province, in order to provide a reference for further promoting the reform of DIP payment method for TCM characteristic diseases. Methods: We selects the TCM characteristic diseases, and reassigns the scores referring to the original comprehensive therapy. By conducting statistical analysis on the number of cases, settlement amount, disease classification, dominant diseases, medical insurance settlement amount, patients' self payment, hospitals' medical insurance surplus amount and other indicators of TCM characteristic diseases carried out by the hospital from March 1, 2021 to December 31, 2022, we compares the costs of TCM characteristic therapies with other therapies, analyzes the incentives of DIP payment method on medical institutions carrying out TCM characteristic diseases, and analyzes the balance of medical insurance funds from the perspective of health economics. Results: It is feasible to adopt DIP payment method for TCM characteristic diseases, which has a significant incentive effect on medical institutions and staff, and can reduce expenditure of medical insurance fund and control excessive diagnosis and treatment. Compared with the same period in 2021, the number of cases and settlement amounts of TCM characteristic diseases carried out in 2022 increased by 3.50 times and 3.36 times, respectively. From the perspective of health economics, the total cost of cases, medical insurance payment, and patients' self payment of TCM characteristic therapies have significantly decreased. The hospital cost structure and the use of medical insurance funds have been optimized. Conclusion: Carrying out DIP payments for TCM characteristic diseases can effectively improve the TCM treatment rate in medical institutions, enhance the value of TCM professional medical personnel, motivates them to participate in the reform, and effectively develop the advantages of TCM, which is simple, convenient, effective and cheap. Also it can significantly reduce the cost of drugs and consumables, reduce unnecessary treatment, and improve the effectiveness of medical insurance funds, taking into account interests of medical institutions, medical insurance funds, patients, medical personnel, and other parties.