Post-healthcare reforms, the Medicare HI trust fund is expected to be depleted by 2029, unless current financing arrangements are overhauled. The government now has only 19 years to deal with the challenge of designing and implementing a plan to sustain this trust fund. To be able to do this, controlling costs (without compromising quality) and minimising waste remain the two main viable mechanisms.
With this in mind, the proposal of ‘dynamic pricing’ by Steven Pearson and Peter Bach and evaluated by Bob Doherty in this blog would be a step towards controlling costs. The idea of integrating comparative effectiveness research (with the American Recovery and Reinvestment Act allocating a billion dollars towards it) findings with the Medicare payment model seems a fitting proposal at first glance. It would indeed be utopic if Medicare could allocate payments commensurate with the health outcomes that a treatment modality produced. This would in turn not only incentivise innovation, but also realise considerable savings for Medicare.
However, to arrive at that ‘magic formula’, the scope of several terms needs to be identified and relevant questions answered: - How does one define ‘superior’? Would just the remission of symptoms or the extirpation of disease or absence of symptoms qualify a modality to be superior? - If a modality was to be ‘superior’, would not the funds invested in its research cause it to be more expensive than alternatives available? - What if superior outcomes were to be produced by a basic interaction between the physician and patient (as described by some comments on the original blog) and by a simple follow-up mechanism? - How would differing outcomes based on the physical and genetic structure be factored into the evaluation of the modality? - Who would bear the responsibility of proving the comparative effectiveness? Would it lie with the manufacturer of the ‘superior’ product? Would supporters of existing therapies participate in the evaluation? Or would Medicare spend its precious dollars on achieving this comparison? What happens when the allocated one billion dollars get exhausted? - Why three years of time? Would this be sufficient to certify a modality to be effective? - How would dynamic pricing address the concerns of patients, physicians, politicians and other stakeholders, which Bob Doherty raises?
The fact remains that Medicare is faced with the stark reality of its depleting reserves. In its infancy, the model of dynamic pricing leaves several questions unanswered. From the trend of comments on the blog, not many appreciate this proposal (it would of course cut into their reimbursements!). And this may be the case with every other proposal that will be brought to the table. However, with the clock ticking away, if the concerns relating to dynamic pricing are to be addressed, Medicare could have well found one of the solutions to its financial woes!
Overall, I tend to like this hybrid approach between pay for performance and implementation of comparative effectiveness research. It addresses both quality of care and cost control in Medicare. However as I read this I thought of two main concerns or questions.
The first thing that came to mind was, how would treatments across illnesses be considered, especially for those illnesses that don’t have highly effective treatments available? Would the best practice standards continue to be reimbursed in the “usual way” or at a lower rate for not meeting a superior rating? I know the general idea is to incentivize implementing the more effective treatment for a given health problem, but this could be overlooked if there was a standard rating system that guided pricing across all ailments.
Another concern ties into potential physician dissents that might arise from being guided by population-based research rather than clinical judgment. Would this new pricing system be allowed to take into account that some patients might not be well-suited for the more effective treatment due to their personal health history? In these situations, doctors should not be penalized for treating their patients according to what is best for them, nor should they be incentivized to provide a treatment that would be less helpful for a particular patient or even harmful.
Again, it seems like an innovative idea that deserves more attention and thought at the very least, but also requires assessing and addressing many potential negative effects.
Post-healthcare reforms, the Medicare HI trust fund is expected to be depleted by 2029, unless current financing arrangements are overhauled. The government now has only 19 years to deal with the challenge of designing and implementing a plan to sustain this trust fund. To be able to do this, controlling costs (without compromising quality) and minimising waste remain the two main viable mechanisms.
ReplyDeleteWith this in mind, the proposal of ‘dynamic pricing’ by Steven Pearson and Peter Bach and evaluated by Bob Doherty in this blog would be a step towards controlling costs. The idea of integrating comparative effectiveness research (with the American Recovery and Reinvestment Act allocating a billion dollars towards it) findings with the Medicare payment model seems a fitting proposal at first glance. It would indeed be utopic if Medicare could allocate payments commensurate with the health outcomes that a treatment modality produced. This would in turn not only incentivise innovation, but also realise considerable savings for Medicare.
However, to arrive at that ‘magic formula’, the scope of several terms needs to be identified and relevant questions answered:
- How does one define ‘superior’? Would just the remission of symptoms or the extirpation of disease or absence of symptoms qualify a modality to be superior?
- If a modality was to be ‘superior’, would not the funds invested in its research cause it to be more expensive than alternatives available?
- What if superior outcomes were to be produced by a basic interaction between the physician and patient (as described by some comments on the original blog) and by a simple follow-up mechanism?
- How would differing outcomes based on the physical and genetic structure be factored into the evaluation of the modality?
- Who would bear the responsibility of proving the comparative effectiveness? Would it lie with the manufacturer of the ‘superior’ product? Would supporters of existing therapies participate in the evaluation? Or would Medicare spend its precious dollars on achieving this comparison? What happens when the allocated one billion dollars get exhausted?
- Why three years of time? Would this be sufficient to certify a modality to be effective?
- How would dynamic pricing address the concerns of patients, physicians, politicians and other stakeholders, which Bob Doherty raises?
The fact remains that Medicare is faced with the stark reality of its depleting reserves. In its infancy, the model of dynamic pricing leaves several questions unanswered. From the trend of comments on the blog, not many appreciate this proposal (it would of course cut into their reimbursements!). And this may be the case with every other proposal that will be brought to the table. However, with the clock ticking away, if the concerns relating to dynamic pricing are to be addressed, Medicare could have well found one of the solutions to its financial woes!
Overall, I tend to like this hybrid approach between pay for performance and implementation of comparative effectiveness research. It addresses both quality of care and cost control in Medicare. However as I read this I thought of two main concerns or questions.
ReplyDeleteThe first thing that came to mind was, how would treatments across illnesses be considered, especially for those illnesses that don’t have highly effective treatments available? Would the best practice standards continue to be reimbursed in the “usual way” or at a lower rate for not meeting a superior rating? I know the general idea is to incentivize implementing the more effective treatment for a given health problem, but this could be overlooked if there was a standard rating system that guided pricing across all ailments.
Another concern ties into potential physician dissents that might arise from being guided by population-based research rather than clinical judgment. Would this new pricing system be allowed to take into account that some patients might not be well-suited for the more effective treatment due to their personal health history? In these situations, doctors should not be penalized for treating their patients according to what is best for them, nor should they be incentivized to provide a treatment that would be less helpful for a particular patient or even harmful.
Again, it seems like an innovative idea that deserves more attention and thought at the very least, but also requires assessing and addressing many potential negative effects.