Aim: In order to solve elders’ survival problem, service integration and innovation of institutional care are inevitable. Based on investigation in several areas, this research summarized the 43 innovation of medical-nursing combined institutional care mode, which aims at disabled elders, provides service in innovative ways and emphasize on professional medical services that differs from traditional institutional care. To help the new mode develop, this research proposes a policy design that “pay by person“, sets payment standards based on health life table. Institutions are directly financed to make flexible use of the money to pay medical and nursing fees. Data and method: Using the decreasing life table method, calculate the urban life table by gender specific based on the sixth census data firstly; then calculate the number of urban elders aged 60 and above combined with the probability of disabled elders; thirdly calculate the disabled life expectancy using the Sullivan method, then design the payment policy based on the proportion of disabled life expectancy in the life expectancy by age specific; fourthly forecast the number of disabled elders using the enrolment rate to Medical-Nursing Combined Institution; finally forecast the total finance expenditure. Results: Results show that the average payment criteria rise to 361.45 RMB/d in 2030 from 45.85 in 2012. The payment criteria of urban elders aged 80 is 2.7 times that of elders aged 60, indicating the policy support for the vulnerable aged; population covered rises from 243,500 in 2012 to 2.31 million; the total amount of financial support from government rises from 4.26 billion to 372.83 billion. Implication: Future policy support including expansion to rural areas, region-specific payment criteria, especially source of government financial support is discussed to provide reference for government policy design. Key words: Medical-Nursing combined; institutional care; disabled elders; policy innovation Acknowledgements: This paper is supported by National Science and Technology Support Project ‘Labor and Social Security Policy Simulation Model Platform and Decision Support System (2012BAK22B02)’and the Key Project in the Field of Philosophy and Social Science by the National Ministry of Education ‘The Constructive Study of the Social Service System for the Elders” (NO.12JZD035)’.