Value-Based Drug Pricing: Watch Out for Side Effects

http://www.commonwealthfund.org/publications/blog/2016/jul/value-based-drug-pricing?omnicid=EALERT1068913&mid=henrykotula@yahoo.com

What would penicillin cost under value-based pricing, a system in which drug makers set prices based on the benefits of their products to consumers and the larger society, rather than drugs’ costs of production? Penicillin has saved millions of lives since its first use in 1942, and it still works for many patients despite growing bacterial resistance to the drug. (Fortunately, many fewer patients get infections with pneumococcus now because we have a good vaccine for it.) Surely, under value-based pricing, penicillin would sell for thousands or tens of thousands of dollars a dose.

Where’s the value in accountable care?

Where’s the value in accountable care?

From left: Stephanie Baum of MedCity News, Christina Miles of Aon Hewitt, David Van Houtte of Aetna, Dr. Katherine Schneider of Delaware Valley ACO and Dr. Greg Carroll of GOHealth Urgent Care

Accountable care is supposed to be about paying for value. But six years after passage of the Affordable Care Act heralded the shift away from fee-for-service, Dr. Greg Carroll, corporate clinical leader of GOHealth Urgent Care, has an important question: “Where’s the value?”

Survey reveals 3 value-based payment trends to watch

http://managedhealthcareexecutive.modernmedicine.com/managed-healthcare-executive/news/survey-reveals-3-value-based-payment-trends-watch?cfcache=true

Population Health2

 

Pay-for-Performance: Will the Models Provide Value?

http://www.healthleadersmedia.com/quality/pay-performance-will-models-provide-value-0?spMailingID=9166254&spUserID=MTMyMzQyMDQxMTkyS0&spJobID=960513787&spReportId=OTYwNTEzNzg3S0

In theory, paying for performance makes logical sense, says Ashish Jha, MD, MPH, director of Harvard’s Global Health Institute. But eliminating pay-for performance programs isn’t the answer, he says. Instead, an overhaul is necessary.

Payer merger impact on provider reimbursement

http://managedhealthcareexecutive.modernmedicine.com/managed-healthcare-executive/news/payer-merger-impact-provider-reimbursement?cfcache=true

Merger Ahead

Though recent payer mergers will have a big impact on the industry, it’s doubtful that impact will be related to provider reimbursement. SafaviThat’s according to Kaveh Safavi, senior managing director for consulting firm Accenture’s global healthcare business.

Safavi says the goal behind the payer mergers is to reduce the cost of doing business, not to reduce reimbursement. Insurance is a highly regulated business, and payers are trying to remain profitable and sustainable over time, he says.

“The profit margin for payers is typically 5%. If they’re going to plan for the future, payers have to lower the cost of doing business. By merging, these payers can become more competitive and keep their administrative costs low.”

The Fundamentally Different Goals of the Affordable Care Act and Republican ‘Replacement’ Plans

http://blogs.wsj.com/washwire/2016/06/07/the-fundamentally-different-goals-of-the-affordable-care-act-and-republican-replacement-plans/?utm_campaign=KFF-2016-June-Drew-ACA-GOP-alternatives&utm_medium=email&_hsenc=p2ANqtz-9Uqf60gdSQ_FC57uSLNkYvFicHfqEALEVvadSgR8xY01bL5QFOrYsCgcl6KB_N5PVHy5G8fwynf8MEywb7m1kUxPljFQ&_hsmi=30331935&utm_content=30331935&utm_source=hs_email&hsCtaTracking=7825060e-e865-4738-ba5a-68a31a8904b6%7C192993c0-5763-4c2a-b289-c32fd7a5274a

Rep. Pete Sessions and Sen. Bill Cassidy introduced legislation last month calling for replacing elements of the Affordable Care Act. A House task force established by SpeakerPaul Ryan is expected to follow with more health-care proposals. These Republican health plans are generally referred to as “replacements” for the ACA–in the spirit of “repeal and replace”–as though they would accomplish the same objectives in ways that conservatives prefer. But the proposals are better understood as alternatives with very different goals, trade-offs, and consequences. Whether they are “better” or “worse” depends on your perspective.

To boil down to the most basic differences: The central focus of the Affordable Care Act is expanding coverage and strengthening consumer protections in the health insurance marketplace through government regulation. By contrast, the primary objective of Republican plans is to try to reduce health-care spending by giving people incentives to purchase less costly insurance with more “skin in the game,” with the expectation that they will become more prudent consumers of health services. They also aim to reduce federal spending on Medicare and Medicaid and the federal government’s role in both programs. Elements of the ACA were designed to reduce costs, such as the law’s Medicare payment reforms, and elements of Republican plans such as tax credits aim to expand access to insurance, but the primary aims of the ACA and the Republican plans differ.

4 forces that will influence medical cost trends in 2017

http://www.healthcaredive.com/news/4-forces-that-will-influence-medical-cost-trends-in-2017/421162/

Binoculars

The healthcare industry is in a transformational period. The rising use of retail clinics, MACRA, population health efforts and the Medicare Part B demonstration are but a few examples of disruptive conversations being had in board rooms. Yet, all of these discussions are underscored by the one topic underlying most business conversations: the almighty dollar.

There’s a push and pull between healthcare services utilization and narrow networks focusing on value that could shift the medical cost growth rate in future years. “When medical growth outpaces general inflation, a flat trend is not good enough,” the report states.

“As a result, 2017 will be a tough balancing act for the health industry,” the report states, adding, “Healthcare organizations must simultaneously increase access to consumer friendly services while decreasing unit cost. Employers, worried that this current trend is at an inflection point that could turn back up, will demand more value from the health industry.”

Oregon P4P efforts paying off, net $168M in incentives

http://www.healthcaredive.com/news/oregon-p4p-efforts-paying-off-net-168m-in-incentives/421531/

http://www.oregon.gov/oha/news/Pages/Oregon%20Health%20Authority%20releases%20the%20fourth%20CCO%20Metrics%20Report.aspx

Today the Oregon Health Authority released its fourth annual Coordinated Care Organization (CCO) Metrics Report. The report details CCO performance on a variety of quality measures, and shows the incentive payments the 16 health plans will receive based on each plan’s results in serving Oregon Health Plan (OHP) members. For 2015, CCOs received a combined total of $168 million in incentive payments. These pay-for-performance funds mark a continued movement toward paying for quality and access to care—not just services delivered—in Oregon’s health care system.

Health Affairs Study On Hospital Profitability Gives Us Some Important Factors To Watch Going Forward

http://healthaffairs.org/blog/2016/06/21/health-affairs-study-on-hospital-profitability-gives-us-some-important-factors-to-watch-going-forward/

Blog_faded surgeon hallway

Bai and Anderson report two profitability-related factors that reflect the effect of hospital consolidation trends: regional power and system affiliation. Regional power refers to hospitals that face less competition in their local markets, while system affiliation indicates hospitals that are part of multi-hospital systems. Both are associated with higher profitability in their study.

More and more hospitals across the country are joining systems that operate outside their local markets. This is due, in part, to the fact that antitrust regulators have limited local market mergers but have not, in general, adapted their models of hospital market competition and antitrust to address non-local mergers. As a result, hospitals in some instances are able to join systems, gain market power, and raise their prices without necessarily improving quality or service. My own research in this area (forthcoming inINQUIRY) shows that hospitals that are part of the largest multi-hospital systems in California were able to negotiate price increases that are consistently well above all other hospitals in that state.

A shifting definition of insurers at AHIP Institute

http://www.fiercehealthcare.com/payer/editor-s-corner-ahip-institute-reveals-shifting-definition-health-plans?utm_medium=nl&utm_source=internal&mrkid=959610&mkt_tok=eyJpIjoiWlRkbVlqUXpaREE1TURnMiIsInQiOiJwa1dNekJcL2p6Vk80ZzA2b2hsd3ByRFwvYjhOa0YxaXBFYTlkMTlkRjVjck42NjFXWWdwbWNoWGJ6QjNhSnFqMlBCbGFOMVlUXC9nZHVqa1FWMW1rMlpSWjd0VFJqYWVnOE05d2xuUGViMDBVMD0ifQ%3D%3D

Business people mingling at the 2016 AHIP conference

The line between payer and provider continues to blur. Not only are insurers increasingly working closely with providers, but more and more, they are acting like them—and vice versa. Just ask David Bernd, CEO emeritus of the integrated system Sentara Health, who pointed out that the historical “head-to-head combat” between the two entities no longer works in today’s health system. Similarly, as evidenced by the amount of time AHIP CEO Marilyn Tavenner spent lauding Medicaid managed care plans, care management—with a focus on the member as a whole person, not just a patient—is the future.