Healthcare News & Insights

Does value-based pay stifle care innovation?

A new study shows pay-for-performance models discourage care innovation, but new legislation may fix that. 

86536156Typically, hospitals and healthcare providers want to find innovative ways to treat patients using new technology. But according to new research by the Analysis Group in the Journal of Medical Economics, there are fewer incentives to do this as the healthcare industry shifts toward value-based reimbursement.

Shrinking incentives

In fact, the study says the current pay-for-performance models may do the opposite.

After conducting comprehensive interviews with several commercial insurers, researchers found that 75% of payors will transition to a value-based reimbursement model by 2016. Right now, insurers are planning to focus those new payment models around cost-efficiency and reduction.

The study also found it was becoming harder for providers to receive coverage approval for new technology under these models — even if the new treatment or device is clinically appropriate for the patient.

A majority of respondents said that their organizations have become stricter about approving (and paying for) new technology in the last three years. And over 40% said the approval criteria would get even tougher in the next three years, with more evidence of value required before approval.

As a result of these trends, facilities and providers are less likely to incorporate new technologies into their care, despite potential benefits. The restrictions are problematic, especially considering that hospitals and accountable care organizations will need to leverage new technologies if they want to effectively meet the needs of patients with chronic or complex conditions.

HHS relief

There may be some relief from the Department of Health & Human Services (HHS), though. In its newest proposed rule, HHS is trying to reduce some of the barriers for coordinating and innovating care for patients enrolled in government programs.

The new rule is removing some of the restrictions placed on providing patients with devices, like blood pressure cuffs and scales, that could help them manage their chronic symptoms.

In a similar effort to bolster care innovation, HHS is removing some of its more outdated anti-fraud and abuse rules related to gain-sharing and kickbacks among clinical partners. The gain-sharing provision would allow hospitals to pay physicians or other clinical partners a portion of the saving if they provide care at a lower cost.

The hope is that by removing some of these barriers, hospitals and accountable care organizations will have more flexibility in coordinating care, utilizing technology and customizing treatments.

Facilities that want to take advantage should evaluate if they have patients that fall under the new rule’s scope. From there they should look into how they and their clinical partners can begin incorporating technology to revamp chronic care management.


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