Misaligned Payment Systems Threaten Medical Innovation
October 6th, 2008
I believe there are two distinct reasons why medical innovation is threatened in our health care system in the US.
First, I strongly believe that the misaligned payment systems drive inappropriate treatment choices and delivery. This includes differentials in payment by site of service and separate physician payments for procedures that cause inappropriate utilization.
Second, health care policy makers, out of touch with coverage and payment systems, do not truly understand how medical technology fits and is adopted within the framework of coding and coverage systems. It causes manufacturers to force fit new technology into payment and coding systems that have no reflection on true costs or value… To address either explosive volume or costs of a new procedure or service, technology is subject to a threshold of payment and coverage criteria that ultimately causes a true disruption in innovation and dissemination of medical breakthroughs.
If many of the current commonly accepted medical treatments were subject to the level of irrational evidence hurdles required now, we would see a dramatic, stifling of medical advancements.
Having said this, it is critical that we begin to assess how we can begin to consider new approaches for payment and adoption of innovative technology and treatments that embrace the concept of value based on improved patient outcomes.
The only way to truly drive reasonable, value-driven care, is to reform payment methodologies that embrace the concept of an episode of care specifically incorporating the practitioner within that global episode.
As long as the end-user is paid separately for performing or using a service, utilization and treatment choices will always be suspect of over-utilization (or underutilization if payment is inadequate). Surely any educated health care professional is aware of the credibility of studies conducted within a system such as Kaiser where the end-user has no financial incentive to drive an intervention. Second, coverage thresholds and evidence requirements (comparative effectiveness?) should be based on a rational process based on risk with the reasonable expectation that data will be collected and analyzed over time (a form of conditional coverage).
We are proud of the medical achievements and access to incredible medical choices in the US. If we continue to increase the barriers to entry, all patient care will be compromised. We have to continue to force ourselves to avoid the tendency to err on the side of more regulation—health care is not Wall Street! Health requires experimentation and some element of risk to constantly achieve the medical success.
It is imperative that we begin to realistically approach new ways to encourage innovation and embrace medical experimentation for improved patient care. If we continue to strictly regulate health care choices based on the notion that costs will be controlled by limiting access through coverage conditions, we will only slow medical innovation that we crave.
Related posts:
- Comparative Effectiveness Research: Through the Lens of Medical Innovation
- Replicating Innovation, Dissolving Boundaries
- Payment Reform: A System-wide Solution to Medication Adherence
- Run for Cover: Young Adults with Chronic Medical Conditions & Disabilities
- The Need for Innovation: Our Health Care Crisis Cannot Be Solved by Insurance Alone
October 7th, 2008 at 9:25 am
I think you have hit on a major issue Randal – the misalignment of incentives within the health system certainly establishes and reinforces behaviors that are both stifling innovation and impacting the quality of patient care. The inequity of reimbursement is something that I see as a root cause for many of the issues that result in poor patient care.
In addition to incorporating the practitioner in the global care of a patient, we have to start to focus our payment system, our practitioners and our patients on preventive care. As it stands now there is no perceived value from a practioner’s “wallet” perspective on wellness and keeping people healthy.
From an innovation perspective, we have to encourage and embrace a culture of innovation in the health system. I look at the pharma industry and the decades of innovation that the industry has brought novel new drugs to market. But the squeeze on pricing, shareholder pressure to get drugs to market and poor discovery and commercialization protocols have had a very damning effect on innovation in this industry. We see that in the number of new drugs coming to market that ate “me toos” and the fact that there are perhaps a handful of medicines that have been launched that can truly be called innovative over the past decade. Why not reward for innovation instead of following the typical status quo. So if a drug lke Gardasil, which truly revolutionized the prevention of HPV is brought to market, why not contemplate a reward in a longer patent life that would also enable the pharma company to spread costs out over a longer period of time and make access to the drug more affordable.
We must be more creative in the way that we solve and/or inspire healthcare companies to innovate and we must be more creative with how reward those companies and individuals that are willing to take the risk to innovate.
October 8th, 2008 at 10:14 am
In our efforts again to reduce even nominal risk, we are limiting our ability to test new drugs and techniques. (If aspirin had to go through an FDA process right now, it would never make it). There are many practical solutions to provide innovators the ability to try new approaches and solutions to improve health but using a standardized, one-size fits-all Comparative effectiveness approach or other coverage with evidence requirements to maintain control of dissemination of technology or drugs is not the only solution. I believe we are focused on the wrong “target” to control costs. Along with changing fragmented, misaligned payment systems, we also need to examine some of the middle layers of administrative health businesses that have proliferated to simply process and negotiate claims or contracts (GPOs come to mind right away…). Why are we not considering ways to reduce the adminstrative burden of our system to provide immediate impact on costs? Let’s continue to seek new and innovative ways to collect important clinical information on new technologies and drugs that clearly have major benefits to vast majorities of patients and use these methods for improved medical decision making. Using new research designs and rewarding manufacturers (as mentioned above)is a good approach–partnered with the needs of the regulators to protect the safety of the patient.