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Bayani DB, Wee HL. Value-based payment for high-cost treatments in Singapore: a qualitative study of stakeholders' perspectives. Int J Technol Assess Health Care 2024; 40:e22. [PMID: 38629196 DOI: 10.1017/s0266462324000217] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 05/03/2024]
Abstract
OBJECTIVES The rising costs of drugs have necessitated the exploration of innovative payment methods in healthcare systems. Risk-sharing agreements (RSAs) have been implemented in many countries as a value-based payment mechanism to manage the uncertainty associated with expensive technologies. This study aimed to investigate stakeholder perspectives on value-based payment in the Singaporean context, providing insights for future directions in health technology assessment and financing. METHODS This descriptive qualitative inquiry involved participant interviews conducted between October 2021 and April 2022. Thematic analysis was conducted in two phases to analyze the interview transcripts. RESULTS Seventeen respondents participated in the study, and five key themes emerged from the analysis. Stakeholders viewed RSAs as moderately positive, despite limited experience with them. They emphasized the importance of clearly defining objectives and establishing transparent criteria for implementing these schemes. The current data infrastructure was identified as both a barrier and facilitator, as RSAs impose administrative burdens. To successfully implement these payment mechanisms, capacity building, and effective stakeholder engagement that fosters mutual trust and cocreation are crucial. CONCLUSION This study confirms previously identified barriers and facilitators to successful RSA implementation while contextualizing them within the Singaporean setting. The findings suggest that value-based payment has the potential to address uncertainty and improve access to healthcare technologies, but these barriers must be addressed for the schemes to be effective.
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Affiliation(s)
- Diana Beatriz Bayani
- Saw Swee Hock School of Public Health, National University of Singapore, Singapore, Singapore
| | - Hwee Lin Wee
- Saw Swee Hock School of Public Health, National University of Singapore, Singapore, Singapore
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Newhouse JP, Price M, Hsu J, Landon B, McWilliams JM. Delivery system performance as financial risk varies. Am J Manag Care 2019; 25:e388-e394. [PMID: 31860233 PMCID: PMC7412600] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Grants] [Subscribe] [Scholar Register] [Indexed: 06/10/2023]
Abstract
OBJECTIVES Banner Health, a large delivery system in Maricopa County, Arizona, entered into both Medicare and commercial insurance contracts that varied the amount of financial risk that Banner assumed. Rates of utilization and spending under these various contracts were investigated. STUDY DESIGN Prior to 2012, Banner held Medicare Advantage (MA) contracts, and in 2012 it began as a Medicare Pioneer accountable care organization (ACO). Banner also introduced a commercial ACO contract in that year. We compared risk-adjusted healthcare utilization and spending in the MA plan, the ACO, and a local traditional Medicare (TM) comparison group. We also compared risk-adjusted utilization and spending in Banner's commercial ACO with that of a comparison group drawn from the same employment groups who were not attributed to Banner providers. METHODS We used claims and encounter data to measure utilization and spending. We risk adjusted using CMS and HHS Hierarchical Condition Categories. RESULTS Within Medicare, MA enrollees had lower risk-adjusted utilization and total spending than either the Pioneer ACO participants or a local TM comparison group. Participation in the Pioneer ACO program was associated with a greater reduction in hospitalization rates for ACO patients relative to local TM patients served by non-ACO providers, but the effect on total medical spending was ambiguous. Risk-adjusted differences between the commercial ACO group and the fee-for-service comparison group were generally small. CONCLUSIONS The results are consistent with CMS' efforts to shift reimbursement away from pure fee-for-service reimbursement.
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Goodman C, Villarivera C, Gregor K, van Bavel J. Regulatory, Policy, and Operational Considerations for Outcomes-Based Risk-Sharing Agreements in the U.S. Market: Opportunities for Reform. J Manag Care Spec Pharm 2019; 25:1174-1181. [PMID: 31535596 PMCID: PMC10398029 DOI: 10.18553/jmcp.2019.19167] [Citation(s) in RCA: 4] [Impact Index Per Article: 0.8] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 11/05/2022]
Abstract
BACKGROUND Although interest in outcomes-based risk-sharing agreements (OBRSAs) and other value-based contracts (VBCs) continues to grow, the number of VBCs in the United States is still limited. A better understanding of the evolving and fluid context of policies, regulations, and operational factors affecting their uptake in the United States is needed in order to lower or obviate barriers and advance OBRSAs. OBJECTIVES To (a) identify and recognize priorities among policies, regulations, and other factors that are most likely to influence the feasibility, design, and execution of OBRSAs and (b) suggest opportunities for reform and other modifications that may advance OBRSAs in the United States. METHODS Across 18 months during 2017-2018, we reviewed health policy literature, examined stakeholder group communications, and conducted semistructured interviews with representatives of 12 diverse stakeholder organizations. Across these, and incorporating real-time contextual changes, we identified priorities for enabling and improving OBRSAs. RESULTS Regulatory and policy priorities most often cited by manufacturers were Medicaid best price rule, Medicare Part B average sales pricing, FDA restrictions on communications, and the Anti-Kickback Statute. While recognizing these, health plans were more concerned about operational barriers, particularly associated with data collection and analysis, selection of outcomes that are feasible to assess, bandwidth for managing OBRSAs, and implementation costs relative to return on investment. Most recognized limitations on access to personal health information, target population turnover, and insufficient information sharing of OBRSA experiences. Noteworthy were asymmetries of administrative burden and cost management: individual manufacturers may pursue OBRSAs for 1 or a few products per year, while health plans are approached by multiple manufacturers about OBRSAs for their respective products; manufacturers focus on drugs, while health plans must manage broader costs of care. CONCLUSIONS While all stakeholders express interest in OBRSAs, health plans tend to consider them as a narrower priority than manufacturers. Solving operational barriers, in addition to addressing policy and regulatory barriers, is essential for aligning efforts to advance OBRSAs. Doing so depends on collaboration to improve decisions about when and how to pursue OBRSAs, with attention to data management, modeling and piloting OBRSAs, and information sharing. These findings pertain to companies operating in the United States and some likely extend to certain value-based arrangements in other countries. DISCLOSURES This analysis was funded by Merck Sharp & Dohme (MSD), a subsidiary of Merck, as a component of the Learning Laboratory for Advancing Value-Based Healthcare, which is a multiyear collaboration of MSD and Optum, a health services, technology, and data company. The manuscript underwent an internal review by the sponsor. The Lewin Group (Lewin) is a subsidiary of OptumServe. OptumServe is wholly owned by UnitedHealth Group (UHG). Neither OptumServe nor UHG or its subsidiaries review the work products of Lewin. Lewin operates with editorial independence and provides its clients with health care and human services policy research and consulting services. Goodman and Villarivera are employees of Lewin; Gregor is an employee of Optum; and van Bavel is an employee of MSD. Goodman and Villarivera report fees from UHG, unrelated to this study. A poster presentation based on this manuscript was accepted and presented at the ISPOR Europe 2018 Conference in Barcelona, Spain, on November 13, 2018.
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Abstract
Enthusiasm for performance-based risk-sharing arrangements (PBRSAs) continues but at variable pace across countries. Our objective was to identify and characterize publicly available cases and related trends for these arrangements. We performed a review of PBRSAs from 1993 to 2016 using the University of Washington PBRSA Database. Arrangements were categorized according to a previously published taxonomy. Macro-level trends were identified related to the timing of adoption, countries involved, types of arrangements, and disease areas. Our search yielded 437 arrangements. Among these, 183 (41.9%) were categorized as currently active, while 58.1% have expired. Five main types of arrangements have been identified, namely coverage with evidence development (149 cases, 34.1%), performance-linked reimbursement (104 cases, 23.8%), conditional treatment continuation (78 cases, 17.8%), financial or utilization (71 cases, 16.2%), and hybrid schemes with multiple components (35 cases, 8.0%). The pace of adoption varies across countries but has renewed an upward trend after a lull in 2012/2013. Conditions in the USA may be changing toward a more favorable environment of PBRSAs. Interest in PBRSAs remains high, suggesting they are a viable coverage and reimbursement mechanism for a wide range of medical products.
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Affiliation(s)
- Josh J Carlson
- Pharmaceutical Outcomes Research and Policy Program, University of Washington, 1959 NE Pacific St., Box 357630, Seattle, WA, 98195-7630, USA.
| | - Shuxian Chen
- Pharmaceutical Outcomes Research and Policy Program, University of Washington, 1959 NE Pacific St., Box 357630, Seattle, WA, 98195-7630, USA
| | - Louis P Garrison
- Pharmaceutical Outcomes Research and Policy Program, University of Washington, 1959 NE Pacific St., Box 357630, Seattle, WA, 98195-7630, USA
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Beckman H, Healey P, Safran DG. Improving partnerships between health plans and medical groups. Am J Manag Care 2015; 21:647-650. [PMID: 26618367] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 06/05/2023]
Affiliation(s)
- Howard Beckman
- EagleDream Health, 300 Trolley Blvd, Rochester, NY 14606. E-mail:
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Garrison LP, Carlson JJ, Bajaj PS, Towse A, Neumann PJ, Sullivan SD, Westrich K, Dubois RW. Private sector risk-sharing agreements in the United States: trends, barriers, and prospects. Am J Manag Care 2015; 21:632-640. [PMID: 26618366] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 06/05/2023]
Abstract
OBJECTIVES Risk-sharing agreements (RSAs) between drug manufacturers and payers link coverage and reimbursement to real-world performance or utilization of medical products. These arrangements have garnered considerable attention in recent years. However, greater use outside the United States raises questions as to why their use has been limited in the US private sector, and whether their use might increase in the evolving US healthcare system. STUDY DESIGN To understand current trends, success factors, and challenges in the use of RSAs, we conducted a review of RSAs, interviews, and a survey to understand key stakeholders' experiences and expectations for RSAs in the US private sector. METHODS Trends in the numbers of RSAs were assessed using a database of RSAs. We also conducted in-depth interviews with stakeholders from pharmaceutical companies, payer organizations, and industry experts in the United States and European Union. In addition, we administered an online survey with a broader audience to identify perceptions of the future of RSAs in the United States. RESULTS Most manufacturers and payers expressed interest in RSAs and see potential value in their use. Due to numerous barriers associated with outcomes-based agreements, stakeholders were more optimistic about financial-based RSAs. In the US private sector, however, there remains considerable interest--improved data systems and shifting incentives (via health reform and accountable care organizations) may generate more action. CONCLUSIONS In the US commercial payer markets, there is continued interest among some manufacturers and payers in outcomes-based RSAs. Despite continued discussion and activity, the number of new agreements is still small.
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Affiliation(s)
- Louis P Garrison
- University of Washington School of Pharmacy, Box 357630, 1959 NE Pacific St, H-375A, Seattle, WA 98195. E-mail:
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Abstract
Will accountable care organizations (ACOs) deliver high-quality care at lower costs? Or will their potential market power lead to higher prices and lower quality? ACOs appear in various forms and structures with financial and clinical integration at their core; however, the tools to assess their quality and the incentive structures that will determine their success are still evolving. Both market forces and regulatory structures will determine how these outcomes emerge. This introduction reviews the evidence presented in this special issue to tackle this thorny trade-off. In general the evidence is promising, but the full potential of ACOs to improve the health care delivery system is still uncertain. This introductory review concludes that the current consensus is to let ACOs grow, anticipating that they will make a contribution to improve our poor-quality and high-cost delivery system.
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Fulton BD, Pegany V, Keolanui B, Scheffler RM. Growth of Accountable Care Organizations in California: Number, Characteristics, and State Regulation. J Health Polit Policy Law 2015; 40:669-688. [PMID: 26124303 DOI: 10.1215/03616878-3149988] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Indexed: 06/04/2023]
Abstract
Accountable care organizations (ACOs) result in physician organizations' and hospitals' receiving risk-based payments tied to costs, health care quality, and patient outcomes. This article (1) describes California ACOs within Medicare, the commercial market, and Medi-Cal and the safety net; (2) discusses how ACOs are regulated by the California Department of Managed Health Care and the California Department of Insurance; and (3) analyzes the increase of ACOs in California using data from Cattaneo and Stroud. While ACOs in California are well established within Medicare and the commercial market, they are still emerging within Medi-Cal and the safety net. Notwithstanding, the state has not enacted a law or issued a regulation specific to ACOs; they are regulated under existing statutes and regulations. From August 2012 to February 2014, the number of lives covered by ACOs increased from 514,100 to 915,285, representing 2.4 percent of California's population, including 10.6 percent of California's Medicare fee-for-service beneficiaries and 2.3 percent of California's commercially insured lives. By emphasizing health care quality and patient outcomes, ACOs have the potential to build and improve on California's delegated model. If recent trends continue, ACOs will have a greater influence on health care delivery and financial risk sharing in California.
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Abstract
There are now more than seven hundred accountable care organizations (ACOs) in the United States. This article describes some of their most salient characteristics including the number and types of contracts involved, organizational structures, the scope of services offered, care management capabilities, and the development of a three-category taxonomy that can be used to target technical assistance efforts and to examine performance. The current evidence on the performance of ACOs is reviewed. Since California has the largest number of ACOs (N=67) and a history of providing care under risk-bearing contracts, some additional assessments of quality and patient experience are made between California ACOs and non-ACO provider organizations. Six key issues likely to affect future ACO growth and development are discussed, and some potential "diagnostic" indicators for assessing the likelihood of potential antitrust violations are presented.
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Abstract
A remarkable consensus has developed that the fee-for-service (FFS) approach for paying medical providers must be replaced. This payment approach is said to increase the volume of services without improving care coordination. In response to these calls, Medicare and private payers are experimenting with payment systems that combine the basic element of FFS - a fee for each service - with arrangements that allow providers to share the savings if they hold total spending per patient below a targeted amount. Medicare's accountable care organizations (ACOs) embody the shared savings approach to payment reform. Private payers have introduced total cost of care contracting (TCOC) in several locations. This article questions the consensus that FFS must go. If the fees are too high, then someone needs to "bite the bullet" and reduce fees in key areas. Hoping to control overspending by investment in ACOs is wishful thinking. I describe the theory and practice of shared savings payment systems and summarize recent TCOC contracting initiatives in the private sector. Medicare's shared savings approach is likely to be less effective than private contracts. Cutting providers' fees would be more efficient. Finally, the new payment models in the Affordable Care Act will not ease the problem of high prices for private payers.
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Affiliation(s)
- Michael Drummond
- Centre for Health Economics, Alcuin A Block, University of York, Heslington, York, YO10 5DD, UK,
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12
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Affiliation(s)
- Livio Garattini
- CESAV, Centre for Health Economics, IRCCS Institute for Pharmacological Research 'Mario Negri', Via Camozzi, 3 c/o Villa Camozzi, Ranica, 24020, Bergamo, Italy,
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Eggbeer B, Sears K, Homer K. Partnering with payers? Key lessons to keep in mind. Healthc Financ Manage 2014; 68:84-89. [PMID: 24511782] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 06/03/2023]
Abstract
Key factors healthcare leaders might wish to consider when evaluating potential partnerships with payers include: Use of safeguards to prevent a payer from using benefit design to shift expected volume from high-revenue service lines or channels. Right to participate in narrow networks. Use of segment-specific language, which protects providers from payers that may try to extend a rate decrease from one patient segment to another. Exclusive co-branding. Automatic price increases if volume is not achieved.
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Garrison LP, Towse A, Briggs A, de Pouvourville G, Grueger J, Mohr PE, Severens JLH, Siviero P, Sleeper M. Performance-based risk-sharing arrangements-good practices for design, implementation, and evaluation: report of the ISPOR good practices for performance-based risk-sharing arrangements task force. Value Health 2013; 16:703-19. [PMID: 23947963 DOI: 10.1016/j.jval.2013.04.011] [Citation(s) in RCA: 180] [Impact Index Per Article: 16.4] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 04/03/2013] [Accepted: 04/04/2013] [Indexed: 05/22/2023]
Abstract
There is a significant and growing interest among both payers and producers of medical products for agreements that involve a "pay-for-performance" or "risk-sharing" element. These payment schemes-called "performance-based risk-sharing arrangements" (PBRSAs)-involve a plan by which the performance of the product is tracked in a defined patient population over a specified period of time and the amount or level of reimbursement is based on the health and cost outcomes achieved. There has always been considerable uncertainty at product launch about the ultimate real-world clinical and economic performance of new products, but this appears to have increased in recent years. PBRSAs represent one mechanism for reducing this uncertainty through greater investment in evidence collection while a technology is used within a health care system. The objective of this Task Force report was to set out the standards that should be applied to "good practices"-both research and operational-in the use of a PBRSA, encompassing questions around the desirability, design, implementation, and evaluation of such an arrangement. This report provides practical recommendations for the development and application of state-of-the-art methods to be used when considering, using, or reviewing PBRSAs. Key findings and recommendations include the following. Additional evidence collection is costly, and there are numerous barriers to establishing viable and cost-effective PBRSAs: negotiation, monitoring, and evaluation costs can be substantial. For good research practice in PBRSAs, it is critical to match the appropriate study and research design to the uncertainties being addressed. Good governance processes are also essential. The information generated as part of PBRSAs has public good aspects, bringing ethical and professional obligations, which need to be considered from a policy perspective. The societal desirability of a particular PBRSA is fundamentally an issue as to whether the cost of additional data collection is justified by the benefits of improved resource allocation decisions afforded by the additional evidence generated and the accompanying reduction in uncertainty. The ex post evaluation of a PBRSA should, however, be a multidimensional exercise that assesses many aspects, including not only the impact on long-term cost-effectiveness and whether appropriate evidence was generated but also process indicators, such as whether and how the evidence was used in coverage or reimbursement decisions, whether budget and time were appropriate, and whether the governance arrangements worked well. There is an important gap in the literature of structured ex post evaluation of PBRSAs. As an innovation in and of themselves, PBRSAs should also be evaluated from a long-run societal perspective in terms of their impact on dynamic efficiency (eliciting the optimal amount of innovation).
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Affiliation(s)
- Louis P Garrison
- Pharmaceutical Outcomes Research & Policy Program, Department of Pharmacy, University of Washington, Seattle, WA 98195, USA.
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Klein SP, O'Connor R, Cepelewicz BB. Is a risk retention group right for your medical malpractice insurance needs? Med Econ 2013; 90:56-57. [PMID: 23875275] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 06/02/2023]
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Hammerman A, Feder-Bubis P, Greenberg D. Financial risk-sharing in updating the National List of Health Services in Israel: stakeholders' perceived interests. Value Health 2012; 15:737-742. [PMID: 22867784 DOI: 10.1016/j.jval.2012.01.007] [Citation(s) in RCA: 8] [Impact Index Per Article: 0.7] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 01/28/2011] [Revised: 11/02/2011] [Accepted: 01/25/2012] [Indexed: 06/01/2023]
Abstract
OBJECTIVES Risk-sharing is being considered by many health care systems to address the financial risk associated with the adoption of new technologies. We explored major stakeholders' views toward the potential implementation of a financial risk-sharing mechanism regarding budget-impact estimates for adding new technologies to the Israeli National List of Health Services. According to our proposed scheme, health plans will be partially compensated by technology sponsors if the actual use of a technology is substantially higher than what was projected and health plans will refund the government for budgets that were not fully utilized. METHODS By using a semi-structured protocol, we interviewed major stakeholders involved in the process of updating the National List of Health Services (N = 31). We inquired into participants' views toward our proposed risk-sharing mechanism, whether the proposed scheme would achieve its purpose, its feasibility of implementation, and their opinion on the other stakeholders' incentives. RESULTS Participants' considerations were classified into four main areas: financial, administrative/managerial, impact on patients' health, and influence on public image. Most participants agreed that the conceptual risk-sharing scheme will improve the accuracy of early budget estimates and were in favor of the proposed scheme, although Ministry of Finance officials tended to object to it. CONCLUSIONS The successful implementation of risk-sharing schemes depends mainly on their perception as a win-win situation by all stakeholders. The perception exposed by our participants that risk-sharing can be a tool for improving the accuracy of early budget-impact estimates and the challenges pointed by them are relevant to other health care systems also and should be considered when implementing similar schemes.
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Affiliation(s)
- Ariel Hammerman
- Department of Health Systems Management, Faculty of Health Sciences and Guilford-Glazer Faculty of Business and Management, Ben-Gurion University of Negev, Beer-Sheva, Israel.
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Hammerman A, Greenberg D. [Risk-sharing schemes: a new paradigm in adopting innovative pharmaceuticals]. Harefuah 2012; 151:364-376. [PMID: 22991869] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 06/01/2023]
Abstract
In recent years, spending on prescription drugs contributes substantially to the continuous growth in health expenditure in most Western countries. This increase in spending is influenced by both a rise in the use of existing drugs and by the adoption of new and expensive drugs. Risk-sharing agreements between pharmaceutical companies and health insurers have emerged as insurers began to deny reimbursement of expensive innovative treatments with unfavorable cost-effectiveness ratios. This occurred in cases where the expected budgetary impact was too high or when the long-term effectiveness was questionable. Risk sharing agreements serve the interests of both the insurers and the drug manufacturers. Pharmaceutical companies' interests are to dispel the uncertainties encountered by the health insurers white deciding on drug reimbursement. The insurers are interested in these agreements in order to reduce the budgetary risk while allowing their patients access to innovative drugs. Currently, only a few risk sharing agreements have been implemented, and the scientific literature on such schemes is still sparse. Since the health insurers' interest is to develop mechanisms that will contain health costs, without affecting the insured, it appears that this trend will continue to emerge. It is also likely that the adoption of similar mechanisms in the Israeli National List of Health Services updating process, would improve the accuracy of early estimates of the budgetary impact, and the actual use of the new technologies would be close to early estimates. This article reviews the principles of risk-sharing schemes and issues involved in the actual implementation of such agreements.
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Affiliation(s)
- Ariel Hammerman
- Department of Health Systems Management, Ben-Gurion University of the Negev, Beer-Sheva.
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Abstract
OBJECTIVES Health insurers are increasingly making use of risk-sharing agreements with drug manufacturers to manage uncertainties regarding the costs and effectiveness of new drugs. Several risk-sharing models exist including those based on sales volume, achievement of clinical thresholds, and achievement of cost-effectiveness thresholds. The objective of this article is to compare two risk-sharing arrangements and to investigate conditions under which each is preferable from the perspective of the payer and the manufacturer. METHODS We develop two two-period models to compare two risk-sharing arrangements between a payer and a drug manufacturer in which there is uncertainty about the effectiveness of the new drug. In the first risk-sharing agreement, the drug is listed on a formulary in the first period but delisted in the second period if the net monetary benefit in the first period is negative. In the second risk-sharing agreement, the manufacturer pays a rebate in each period if the net monetary benefit in that period is negative. RESULTS We show that the relative performance of the two arrangements depends on several factors and that neither arrangement is always preferred. Additionally, we are able to identify situations in which a payer and a manufacturer would prefer the same plan and other situations in which the two parties would disagree on which plan was most desirable. CONCLUSIONS Because neither risk-sharing arrangement is always preferred, payers and manufacturers must carefully consider the characteristics of their individual situation when entering into such contracts.
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Affiliation(s)
- Gregory S Zaric
- Richard Ivey School of Business, University of Western Ontario, London, ON, Canada.
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Meiners MR, McKay HL, Mahoney KJ. Partnership insurance: an innovation to meet long-term care financing needs in an era of federal minimalism. J Aging Soc Policy 2007; 14:75-93. [PMID: 17432478 DOI: 10.1300/j031v14n03_05] [Citation(s) in RCA: 9] [Impact Index Per Article: 0.5] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 11/18/2022]
Abstract
In the case of long-term care financing, federal minimalism is not new news. Long-term care has long played a weak "third fiddle" to national health reform concerns about the uninsured and catastrophic expenditures on prescription drugs. The states have been left to struggle with the issue of long-term financing as part of their responsibilities in funding and administering the means-tested Medicaid program. Recently, the environment has become even more challenging. Much of what is on the national agenda for health and welfare reform has been delegated to the states. This "devolution" of responsibilities has created many competing priorities for both the attention and resources of states. This context of evolving federal minimalism calls for creative solutions that balance competing points of view. In this article, we provide some background and insights from one such effort: a collaboration between state governments and private insurers to put into operation an insurance-based approach to long-term care financing that uses Medicaid as an incentive to encourage potential purchasers.
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Waymack PM. Exit strategies: planning for contract termination. Healthc Financ Manage 2005; 59:50-2. [PMID: 16323809] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 05/05/2023]
Abstract
An effective managed care contract exit plan includes: performance measurement, stakeholder analysis, communication plan, timing assessment, project plan.
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Affiliation(s)
- Pamela M Waymack
- Phoenix Services Managed Care Consulting, Ltd, Evanston, IL, USA.
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Physicians, hospitals and health plans seek new risk-sharing arrangements. Capitation Manag Rep 2005; 12:116-20, 109. [PMID: 16305048] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Abstract] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 05/05/2023]
Abstract
Dollars paid to providers under capitation have declined the past four years, but new risk-sharing arrangements, pay-for-performance initiatives and a resurgence of Medicare Advantage members may turn the tide.
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Lipton HL, Agnew JD, Stebbins MR, Kuo A, Dudley RA. Managing the unmanageable: the nature and impact of drug risk in physician groups. J Health Polit Policy Law 2005; 30:719-50. [PMID: 16318167 DOI: 10.1215/03616878-30-4-719] [Citation(s) in RCA: 2] [Impact Index Per Article: 0.1] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Indexed: 05/05/2023]
Abstract
As drug costs rose in the 1990s, health maintenance organizations (HMOs) began transferring risk for prescription drug expenditures to physician groups. With principal-agent theory as a framework for understanding drug-risk transfer, we used a multiple case-study design to examine the relationship between the level of drug risk that a physician group accepts and the physician group's adoption of drug-use management strategies. The data demonstrated that adoption of drug-use management innovations was not related to level of risk for pharmacy costs and that factors other than drug-risk level (e.g., contracting and data issues, financial and market factors, and physician group assessments of the fairness and incentives of risk contracts) can influence the principal-agent relationship. The data also revealed a novel form of information asymmetry between physicians and HMOs and unexpected failures of HMOs to fully enable their physician-agents. We believe these observations reflect the complexity of relationships in the health care system and have implications for the use of incentives. Based on principal-agent theory and our findings, we offer an alternative approach to drug-risk contracting that reduces physicians responsibility for aspects of drug use that are beyond their control while maintaining the incentives to manage drug costs and use that were the original intent of drug-risk contracting.
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Affiliation(s)
- Helene Levens Lipton
- Department of Clinical Pharmacy, School of Pharmacy, University of California, San Francisco, USA
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Siegel S. A bitter pill: the new Medicare prescription drug benefit. Health Care Law Mon 2005:3-9. [PMID: 15818780] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 05/02/2023]
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Agnew JD, Stebbins MR, Hickman DE, Lipton HL. Financial risk relationships and adoption of management strategies in physician groups for self-administered injectable drugs. J Manag Care Pharm 2003; 9:523-33. [PMID: 14664660 PMCID: PMC10437281 DOI: 10.18553/jmcp.2003.9.6.523] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Indexed: 04/27/2023]
Abstract
OBJECTIVE To consider the extent, nature, and range of risk arrangements between physician groups and health maintenance organizations (HMOs) for self-administered injectable (SAI) drugs; to examine types and frequencies of SAI drug-use management strategies adopted by physician groups; and to explore the relationship between locus and level of financial risk for SAIs and physician group strategy adoption. METHODS We used a multiple case-study design to select physician groups and their health maintenance organization (HMO) contractual partners in 4 markets in the United States (Northwest, Northeast, Midwest, Southwest). Physician groups in these markets were chosen based on size (e50 physicians) and experience with drug risk (e1 year). Physician groups were asked to identify their 3 major HMO contractual partners in each market. Telephone interviews were conducted from January 2000 to June 2001, with the resulting purposive sample of 37 individuals representing 20 physician groups. RESULTS We found that the level and locus of SAI financial risk were related to the adoption of management strategies. Physician groups with higher financial risk for SAIs adopted more strategies than lower-risk groups. Groups with SAI financial risk in the medical services capitation (MSC) adopted 9.2 strategies per group. In contrast, groups with SAI financial risk in the pharmacy-risk budget (PRB) averaged 1.5 strategies per group. Groups with SAI financial risk in both the MSC and PRB fell in-between, averaging 4.5 strategies per group. The most frequently adopted strategy was designing evidenced-based therapeutic guidelines, i.e., protocols based on evidence from the peer-reviewed literature used to guide physicians in the treatment of typically chronic conditions (9 groups, 45% of sample). The second most common strategy involved adapting the existing utilization management system to process SAIs (7 groups, 35%) and the establishment of office procedures for internal authorization (5 groups, 25%). The least frequently used strategies were determining amount paid to out-of-group physician providers (1 group, 5%) and hiring personnel (e.g., pharmacists) in claims or utilization management departments to implement and manage SAI programs (1 group, 5%). We also identified potential factors that increased the likelihood of strategy adoption and that could slow the rate of SAI cost increases. CONCLUSION Our findings suggest that adoption of SAI drug-use management strategies may be more likely to occur when there is a minimum level of risk for SAI drug costs. Likewise, both the adoption of strategies and the opportunity to slow the rate of SAI cost increases may be more likely to occur when 3 additional factors are present: a contractual environment conducive to controlling SAI drug costs, the ability to implement SAI drug-use management strategies, and power in negotiations with drug manufacturers to reduce SAI prices. A sustainable and affordable SAI financial risk management program maximizing these factors while minimizing the financial burden for patients will require collaboration among all stakeholders, payers, providers, drug manufacturers, and patients.
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Affiliation(s)
- Jonathan D Agnew
- Centre for Health Services and Policy Analysis, University of British Columbia, Vancouver, BC, Canada
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Curtiss FR. Contractual arrangements between HMOs and medical groups to manage drug costs. J Manag Care Pharm 2003; 9:572-3. [PMID: 14664667 PMCID: PMC10437299 DOI: 10.18553/jmcp.2003.9.6.572] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Indexed: 04/27/2023]
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Affiliation(s)
- Gisele Norris
- Aon Healthcare Alliance, Santa Cruz, California 95060, USA.
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Abstract
Provider risk sharing was common throughout the 1990s. Recent evidence suggests waning interest, although no information exists that is specific to Medicaid. This paper examines risk-sharing arrangements in Medicaid managed care through a survey of participating plans in eleven states conducted during 2001. Risk sharing is prevalent among Medicaid-participating plans and often involves traditional providers. The "flight from risk" that others describe is not yet apparent in Medicaid, but Medicaid's idiosyncrasies might mean that trends appearing in other lines of business do not apply.
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Crocker KJ, Moran JR. Contracting with limited commitment: evidence from employment-based health insurance contracts. Rand J Econ 2003; 34:694-718. [PMID: 15025030] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Grants] [Subscribe] [Scholar Register] [Indexed: 05/24/2023]
Abstract
Impediments to worker mobility serve to mitigate the attrition of healthy individuals from employer-sponsored insurance pools, thereby creating a de facto commitment mechanism that allows for more complete insurance of health risks than would be possible in the absence of such frictions. Using data on health insurance contracts obtained from the 1987 National Medical Expenditure Survey, we find that the quantity of insurance provided is positively related to the degree of worker commitment. These results illustrate the importance of commitment in the design of long-term contracts, and provide an additional rationale for the bundling of health insurance with employment.
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Abstract
The transfer of financial risk from health maintenance organizations (HMOs) to providers is controversial. To provide timely national data on these practices, we conducted a telephone survey in 1999 of a multi-staged probability sample of HMOs in 20 of the nation's 60 largest markets, accounting for 86% of all HMO enrollees nationally. Among those sampled, 82% responded. We found that HMOs' provider networks with physicians, hospitals, skilled nursing homes, and home health agencies are complex and multi-tiered Seventy-six percent of HMOs in our study use contracts for their HMO products that involve global, professional services, or hospital risk capitation to intermediate entities. These arrangements account for between 24.5 million and 27.4 million of the 55.9 million commercial and Medicare HMO enrollees in the 60 largest markets. While capitation arrangements are particularly common in California, they are more common elsewhere than many assume. The complex layering of risk sharing and delegation of care management responsibility raise questions about accountability and administrative costs in managed care. Do complex structures provide a way to involve providers more directly in managed care, or do they diffuse authority and add to administrative costs?
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Affiliation(s)
- Marsha R Gold
- Mathematica Policy Research, Inc., Washington, DC 20024, USA
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32
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Baker S. Self-funded HMOs on the rise. Manag Care 2002; 11:46D, 46F, 46H. [PMID: 12061160] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 02/25/2023]
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Sommerfeld J, Sanon M, Kouyate BA, Sauerborn R. Informal risk-sharing arrangements (IRSAs) in rural Burkina Faso: lessons for the development of community-based insurance (CBI). Int J Health Plann Manage 2002; 17:147-63. [PMID: 12126210 DOI: 10.1002/hpm.661] [Citation(s) in RCA: 22] [Impact Index Per Article: 1.0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 11/06/2022] Open
Abstract
In resource-poor environments, community-based insurance (CBI) is increasingly being propagated as a strategy to improve access of poor rural populations to modern health care. It has been repeatedly hypothesized that CBI schemes need to be grounded in national as well as local traditions of solidarity. This paper presents a typology of informal risk sharing arrangements (IRSAs) in a rural area of North-Western Burkina Faso and discusses their modus operandi as well as the underlying concepts of solidarity and reciprocity. The research was explicitly multi-disciplinary, combining anthropological and economic as well as qualitative and quantitative data collection methods. Focus group and interview data were complemented by a census of existing IRSAs. In addition to presenting the main features of existing institutions, the paper discusses whether IRSAs can serve as entry points for CBI schemes. In spite of the fact that existing IRSAs fulfil important solidarity functions in the rural Burkinian context, we conclude that they cannot serve as institutional models for more formalized CBI schemes. Community participation in a future CBI scheme will need to tap into existing notions of solidarity and mutuality. The CBI scheme itself, however, needs to be newly tailored.
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Affiliation(s)
- Johannes Sommerfeld
- Ruprecht-Karls University of Heidelberg, Medical Faculty, Department of Tropical Hygiene and Public Health (ATHOEG), Germany
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Infrastructure issues hold key to future success under risk. Capitation Manag Rep 2001; 8:113-7. [PMID: 11534368] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 02/21/2023]
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Dupee R, Halpern R. Identifying, assessing and managing high-risk patients under Medicare risk contracts. J Med Pract Manage 2001; 16:321-5. [PMID: 11497315] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 02/21/2023]
Abstract
Physicians participating in Medicare managed care plans are increasingly sharing in the financial risks of providing care to enrollees. Although capitation payments are calculated to reflect the average costs for an entire patient panel, there is typically great variation among patients, from healthy individuals to patients requiring high volume and high-cost care. To be successful, physicians must identify high-risk seniors, develop care plans to maintain health and functioning, and monitor health status and ongoing care and treatment. Techniques for performing a comprehensive geriatric assessment include written questionnaires and interviews during office appointments. The goal is to evaluate each patient's health status, medical risk factors, psychosocial profile, cognitive capacities, and functional capabilities and limitations. After frail and at-risk seniors are identified, the physician must collaborate with the case manager, geriatric nurse practitioner, other caregivers, and the patient and family members to initiate and maintain effective care management.
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Affiliation(s)
- R Dupee
- MedWest LLC, and Geriatrics Division, New England Medical Center, Boston, MA, USA
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36
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Dutt HR, Zezza MA, Smith JD. The financial implications of HMOs' partial county carve-out option. Manag Care Interface 2001; 14:46-9. [PMID: 11385947] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Abstract] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 02/20/2023]
Abstract
This study examined the Health Care Financing Administration's policy allowing Medicare HMO risk contracts to carve out certain portions of counties from their service areas without adjusting the HMOs' capitation rate. In 1999, the policy resulted in 2.2 million Medicare enrollees losing access to HMOs and 2.3 million Medicare enrollees left with fewer HMO options. Although the majority of Medicare HMOs did not appear to be adopting the policy, there did seem to be a general tendency to exclude higher cost areas, which resulted in an estimated loss to the Medicare Trust Fund of $769 million in 1999. Of particular concern is the magnitude of profits and losses this policy generated for some individual HMOs.
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Abstract
In many countries, competing health plans receive capitation payments from a sponsor, whether government or a private employer. All capitation payment methods are far from perfect and have raised concerns about risk selection. Paying health plans partly on the basis of capitation and partly on the basis of actual costs ("risk sharing") reduces plans' incentives for selection but sacrifices some incentives for efficiency. This paper summarizes our empirical research on Dutch health plans with respect to various forms of risk sharing. All sponsors can improve their payment systems by either implementing or changing their form of risk sharing.
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Affiliation(s)
- E M van Barneveld
- Department of Health Policy and Management, Erasmus University, Rotterdam, The Netherlands
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38
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Abstract
Provider organizations have evolved to function as intermediaries between managed care plans and individual providers. These organizations assume much financial risk and care management responsibilities. We profile the characteristics of these organizations in markets across the country. The data, taken from a 1999 telephone survey of sixty-four entities in twenty markets and from interviews conducted during site visits to four markets, highlight the youth of many of these organizations, the large financial risk and functional responsibilities they bear, and the mixed views they hold about the health plans they contract with in terms of their willingness to delegate the authority, support, and collaboration that accompany risk. Policymakers need to evaluate what this means for oversight of managed care.
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Affiliation(s)
- M R Gold
- Mathematica Policy Research (MPR), Washington, D.C., USA
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39
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Abstract
This paper uses data from the 1987 National Medical Expenditure Survey to examine the nature of equilibrium in the market for employment-related health insurance. We examine coverage generosity, premiums, and insurance benefits net of expenditures on premiums, showing that despite a degree of market segmentation, there was a substantial amount of pooling of heterogeneous risks in 1987 among households with employment-related coverage. Our results are largely invariant to (i) firm size and (ii) whether or not employers offer a choice among plans. Our results suggest the need for caution concerning incremental reforms that would weaken the link between employment and insurance without substituting alternative institutions for the pooling of risks.
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Affiliation(s)
- A C Monheit
- Center for Cost and Financing Studies, Agency for Healthcare Research and Quality, Rockville, MD 20852, USA
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40
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Aller RD, Weiner H, Weilert M. A different approach to the buyer-vendor relationship. CAP Today 2000; 14:60-1. [PMID: 11188351] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 02/19/2023]
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Scheffler RM, Wallace NT, Hu TW, Garrett AB, Bloom JR. The impact of risk shifting and contracting on mental health service costs in California. Inquiry 2000; 37:121-33. [PMID: 10985107] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Grants] [Subscribe] [Scholar Register] [Indexed: 02/17/2023]
Abstract
This paper identifies the impact of "program realignment," a 1991 California state policy that significantly enhanced local governments' financial risk and programmatic authority for public mental health services, on treatment costs per user, and on the mix of inpatient and outpatient service costs. The study employs a natural pre-realignment and post-realignment design using the 59 California local mental health authorities (LMHAs) as the unit of analysis over a seven-year period spanning policy implementation. Total treatment and inpatient cost per user decreases and outpatient cost per user increases after program realignment. Higher levels of contracting with private providers tend to enhance this trend, while risk for institutional services reduces user costs uniformly. Financial and programmatic decentralization can enhance cost efficiency in treatment, while promoting substitution of outpatient services for inpatient services. Local conditions such as risk and contracting determine the extent of the policy response.
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Affiliation(s)
- R M Scheffler
- School of Public Health, University of California, Berkeley 94720-7360, USA
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42
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Abstract
This note comments on the application of results from the theory of fair compensation to risk adjustment. It argues that the main flaw of such application lies in the consideration of health plans merely as administrative social agents, through which money flows from a central fund to providers of medical care, ignoring their economic behaviour. However, it is that behaviour which raises the issue of risk selection to begin with. With linear health expenditure function, the fair compensation axiomatic solution is shown to be equivalent to the solution of a simple optimal regulation problem. That equivalence permits the analysis of several further issues related to risk adjustment and to the application of the theory of fair compensation to it.
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Affiliation(s)
- A Shmueli
- Hebrew University, Jerusalem, Israel.
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43
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How to avoid the dangers of disease-specific carve-outs. Capitation Manag Rep 2000; 7:126-7. [PMID: 11186760] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 04/15/2023]
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Gauvreau E, Sinaiko J. Full risk contracting. A new hospital/physician/health plan relationship is needed. Cost Qual 2000; 6:27, 36-7. [PMID: 11183210] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 02/19/2023]
Affiliation(s)
- E Gauvreau
- Department of Health Policy, Management, and Behavior, Albany State University of New York, USA.
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45
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Bazzoli GJ, Dynan L, Burns LR. Capitated contracting of integrated health provider organizations. Inquiry 2000; 36:426-44. [PMID: 10711318] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 02/15/2023]
Abstract
This paper examines global capitation of integrated health provider organizations that link physicians and hospitals, such as physician-hospital organizations and management service organizations. These organizations have proliferated in recent years, but their contracting activity has not been studied. We develop a conceptual model to understand the capitated contracting bargaining process. Exploratory multivariate analysis suggests that global capitation of these organizations is more common in markets with high health maintenance organization (HMO) market share, greater numbers of HMOs, and fewer physician group practices. Additionally, health provider organizations with more complex case mix, nonprofit status, more affiliated physicians, health system affiliations, and diversity in physician organizational arrangements are more likely to have global capitation. Finally, state regulation of provider contracting with self-insured employers appears to have spillover effects on health plan risk contracting with health providers.
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Affiliation(s)
- G J Bazzoli
- Institute for Health Services Research and Policy Studies, Northwestern University, Evanston, IL 60208, USA
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46
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Abernathy M. Avoid common problems in risk-sharing contracts. Manag Care 2000; 9:29-30, 32. [PMID: 11182946] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 02/19/2023]
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Abstract
We review the policy concerns underlying some of the most contentious issues that must be resolved prior to the enactment of a Medicare drug benefit. We consider critical issues both in benefit design-targeted versus universal eligibility, benefit subsidies, and benefit comprehensiveness--and in benefit administration, focusing especially on issues involving the administration of the drug benefit in traditional Medicare. Despite the apparent contentiousness of the drug benefit debate, alternative proposals may not be so far apart on these issues.
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Abstract
An estimated five million Medicare beneficiaries received outpatient prescription drug benefits through Medicare + Choice in 1999. However, little is known about how these benefits are managed or about their effects on costs and quality of care. This exploratory study applies a case-study methodology to four large Medicare health maintenance organizations (HMOs) to identify and assess drug-use management strategies. It also poses a number of important issues for consideration by both policymakers and health services researchers, as the debate rages on over the creation and administration of a Medicare outpatient drug benefit, especially in light of the predilection for the use of private pharmacy benefit managers (PBMs) in many of these proposals.
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Abstract
Health care expenditures exceeded $1 trillion in 1997, with projections for $2.2 trillion in expenditures by 2008. Decreasing organizational revenues and efforts to reduce operating costs have had a direct impact on infection control programs. Senior managers in hospitals and other provider organizations are focusing on achieving and maintaining revenues while controlling costs. Infection control professionals must align themselves and their programs with these organizational goals by (1) identifying areas in which the infection control program can support and enhances revenues, (2) facilitating the avoidance of excess costs for care, especially those related to nosocomial infection, (3) identifying opportunities for cost reduction through value analysis, and (4) participating in efforts to measure and prevent other adverse outcomes of care.
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Affiliation(s)
- E Rhinehart
- Quality Management Services, AIG Consultants, Inc, Healthcare Management Division, Atlanta, GA 30328, USA
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50
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Abstract
As networks have proliferated, questions have arisen regarding which structure is optimal. To obtain an answer from the hospital perspective, the authors conducted a survey of New York State hospitals to determine how network integration, complexity, and financial risk sharing relate to measures of financial performance during the period of 1991-1995. Of the 64 hospitals indicating a network affiliation by 1995, 67.2 percent listed some network risk-sharing activity. The least integrated networks were associated with the smallest improvements in throughput, and the most complex were associated with the largest negative changes in operating margins. During the first 2 years of network membership, hospitals joining risk-sharing networks experienced operating margin gains averaging 12 percentage points higher than hospitals joining networks without risk sharing; however, this difference dissipated in later years. Networks with higher levels of integration, lower levels of complexity, and which involve some risk-sharing between affiliates are most likely to experience improved hospital financial performance during the network's initial years.
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Affiliation(s)
- E Nauenberg
- State University of New York at Buffalo, USA
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