Unbiased Analysis of Today's Healthcare Issues
A Health Affairs post by Dana Goldman and Darius Lakdawalla argues that dose-based pricing for pharmaceuticals is suboptimal. They make a clear distinction between typical goods, where cost and benefits are roughly proportional to quantity consumed, and pharmaceuticals. Buying two bunches of bananas naturally costs twice as much as one bunch. Twice as many bananas can…
Yesterday I posted about MIPS, the new Medicare physician reimbursement program set to begin in 2019. The Health Affairs blog provides a nice summary of some of the changes. First and probably most importantly, the formulaic approach to setting base payment rates is gone, replaced with automatic increases for all doctors from 2015 through 2019. For…
I have spilled much ink on this blog discussing the pros and cons of pay-for-performance approaches to medicine. Incentivizing high quality care is good in theory, but in practice changes in quality have been modest and providers may be able to readily game the system. Despite these challenges, Medicare announced this week that it would being tying 30…
A McKesson study cites 7 trends in value-based reimbursement: Rapid adoption of VBR. About 90% of payers and 81% of providers are already using some mix of value-based reimbursement (VBR) combined with fee-for-service (FFS). Collaborative regions are more aligned with VBR. Collaborative regions, where one or two payers and providers stand out, are more aligned…
In pay-for-performance (P4P) or value-based purchasing (VBP) schemes, health care provider reimbursement rates depend on performance. Physicians can receive bonuses for following best practices, and hospitals can increase reimbursement rates from Medicare if they improve clinical processes and patient satisfaction. As an economist, rewarding good performance with financial payments makes perfect sense. Or does it?…
How can Medicare improve quality and reduce cost? One idea is to introduce value-based purchasing (VBP). For instance, Medicare’s hospital value-based purchasing (HVBP) system increases payment rates for hospitals that demonstrate high quality. A paper by Ryan et al. (2014) explains the program in more detail. Under HVBP, acute care hospitals—those paid under Medicare’s Inpatient…
General Practitioners (GPs) in the UK NHS are paid a mixture of capitation, lump sum allowances, and a pay-for-performance bonus. The P4P element, the Quality and Outcomes Framework (QOF), rewards GPs according to their performance on a large number of indicators. QOF payments represented up to 20% of GPs ’ income in the first year…
Ontario implemented a physician pay-for-performance (P4P) scheme in 2002. This P4P framework was a jointly agreed upon by the Ontario government and the Ontario Medical Association. The Ontario P4P program is described in Hurley, DeCicca and Buckley (2013) in more detail below: [Ontario’s P4P program] targets performance bonuses on effective preventive services whose rates of provision were…
Where has public policy gone in the last few years? Popular policies include move towards more bundled payments, the creation of accountable care organizations, additional funding for comparative effectiveness research (CER), evidence-based medicine (EBM) and value-based purchasing programs that link payments to various quality metrics. With health care costs rising, payers are looking to decrease…
Why do physician practice patterns differ so much? One cause of the regional variation the utilization of medical care is due to regional variation in patient health status. Maynard, however, states that variation in patient health is not a primary cause of regional variation in the utilization of medical services. He cites an article by…