Book review: "Decisive" by the Heath brothers
Robert Merton on Innovation Risk

Links I like

Today’s post will be a quick overview of recent Health Affairs papers I liked.

Payers and Reference Pricing. In “Payers Test Reference Pricing and Centers of Excellence to Steer Patients to Low-Price and High-Quality Providers” (September 2012), Robinson and MacPherson, both from UC Berkeley, examine two major new benefit design instruments currently being tested to encourage employees to make price-conscious choices: (1) reference pricing, where “an employer or insurer makes a defined contribution toward covering the cost of a particular service and the patient pays the remainder,” a bit like a reverse deductible, and (2) centers of excellence where “employers or insurers limit coverage or strongly encourage patients to use particular hospitals”

Episode-Based Payment. In “Episode-Based Payment for Cancer Care: A Proposed Pilot for Medicare” (March 2011), Bach, Mirkin and Luke, all from the Memorial Sloan-Kettering Center in New York City, “propose a framework for episode-based payment during chemotherapy treatment, which would cover the costs of drugs and their administration for a predefined period of treatment and would have the potential to reduce costs and improve patient outcomes.” They focus on metastatic lung cancer treatment to provide guidelines for a payment reform program that could be implemented as a pilot program by Medicare, and later be extended to “longer time periods, other cancer diagnoses and additional care components.”

Consumer-Directed Plans. In “Growth of Consumer-Directed Health Plans to One-Half of All Employer-Sponsored Insurance Could Save $57 Billion Annually” (May 2012), Haviland, Marquis, McDevitt and Sood, respectively from Carnegie Mellon, RAND, Towers Watson and UCLA, discuss the challenges associated with consumer-directed health plans, which have the potential to reduce health care spending by the equivalent of a 4 percent decline in total health care spending for the nonelderly, but may also “reduce the use of recommended health care service as well as increase premiums for traditional health insurance plans.”

Capitation & Shared Savings. Finally, Frakt and Mayes, from Boston University and UC-Berkeley/ University of Richmond, “chronicl[e] the expansion and decline of the capitation model in the 1990s” (capitation is a lump sum per person per month to provide all care to a patient), “offer lessons learned and assess the extent to which these lessons have been applied in the development of contemporary forms of provider cost sharing” in “Beyond Capitation: How New Payment Experiments Seek to Find the ‘Sweet Spot’ In Amount of Risk Providers And Payers Bear” (September 2012). A key insight is that capitation in the 1990s shifted liability for health costs from insurers to providers and that consolidating practices to spread risk across patients did not always prove successful in controlling risk. Today’s suggested reforms differ in substantial ways, which the authors describe in detail.

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