Jump to ContentJump to Main Navigation
Show Summary Details
More options …

Forum for Health Economics & Policy

Editor-in-Chief: Goldman, Dana

2 Issues per year


CiteScore 2016: 0.30

SCImago Journal Rank (SJR) 2016: 0.140
Source Normalized Impact per Paper (SNIP) 2016: 0.098

Online
ISSN
1558-9544
See all formats and pricing
More options …

Integrating Patient Incentives with Episode-Based Payment

Lorens A. Helmchen
  • Corresponding author
  • Associate Professor, Department of Health Administration and Policy, George Mason University, 4400 University Drive – M/S 1J3, Fairfax, VA 22030, USA
  • Email
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
/ William E. Encinosa
  • Center for Delivery, Organization and Markets, Agency for Healthcare Research and Quality, Rockville, MD 20850, USA
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
/ Michael E. Chernew / Richard A. Hirth
  • Department of Health Management and Policy, University of Michigan School of Public Health, Ann Arbor, MI 48109-2029, USA
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
Published Online: 2013-05-15 | DOI: https://doi.org/10.1515/fhep-2012-0002

Abstract

To rein in cost, payers are exploring bundled payment, which aggregates fees for a range of services into a single prospective payment. While under bundled payment providers would have incentives to reduce cost, they might also withhold more expensive care that patients prefer. We explore how bundled payment could be aligned with a benefit design that would encourage patients’ consideration of cost without jeopardizing access to the most expensive treatments. Least-costly-alternative approaches allow patient choice but might deter patients from choosing more expensive care by exposing them to potentially large out-of-pocket payments. A novel “shared-savings supplement” would reward patients for choosing the least costly alternative with a supplemental cash disbursement and thus allow them to share in any cost savings. This cash incentive for the least-costly-alternative allows a reduction of the out-of-pocket payment for the expensive alternative. Thus, patients would still have the option of the more expensive therapy while facing only a modest out-of-pocket cost. Such benefit modifications could be aligned with bundled payment by splitting the responsibility for the incremental cost of more expensive care between patients and their providers.

Keywords: benefit design; bundled payment; cancer; supplemental insurance

References

  • Bach, P. B. (2009) “Limits on Medicare’s Ability to Control Rising Spending on Cancer Drugs,” New England Journal of Medicine, 360:626–633.Web of ScienceGoogle Scholar

  • Bach, P. B., J. N. Mirkin and J. J. Luke (2011) “Episode-Based Payment For Cancer Care: A Proposed Pilot For Medicare,” Health Affairs, 30:3500–3509.Web of ScienceGoogle Scholar

  • Baicker, Katherine and Dana Goldman (2011) “Patient Cost-Sharing and Healthcare Spending Growth,” Journal of Economic Perspectives, 25(2):47–68.CrossrefGoogle Scholar

  • Cassidy, A. (2011) “Health Policy Brief: Putting Limits on ‘Medigap’,” Health Affairs, September 13, 2011.Google Scholar

  • Centers for Medicare & Medicaid Services (2011). “Medicare Shared Savings Program: Accountable Care Organizations (CMS-1345-P).” Accessed at: http://www.gpo.gov/fdsys/pkg/FR-2011-04-07/pdf/2011-7880.pdf (accessed April 29, 2013).

  • Chernew, M. E., L. Sabik, A. Chandra and J. P. Newhouse (2010) “Ensuring the Fiscal Sustainability of Health Care Reform,” New England Journal of Medicine, 362:1–3.Web of ScienceGoogle Scholar

  • Chernew, M., W. Encinosa and R. Hirth (2000) “Optimal Health Insurance: The Case of Observable, Severe Illness,” Journal of Health Economics, 19(5):585–609.PubMedCrossrefGoogle Scholar

  • Ellis, R. P. and T. G. McGuire (1990) “Optimal Payment Systems for Health Services,” Journal of Health Economics, 9:375–396.PubMedWeb of ScienceCrossrefGoogle Scholar

  • Feigenbaum, Susan (1992) “‘Body Shop’ Economics: What’s Good for Our Cars May be Good for Our Health,” CATO Regulation: The Review of Business & Government 15(4). http://www.cato.org/pubs/regulation/regv15n4/reg15n4b.html (accessed May 2, 2010).

  • Feldman, Roger (2008) How to Fix Medicare: Let’s Pay Patients, not Physicians. Washington, DC: American Enterprise Institute for Public Policy Research.Google Scholar

  • Gianfrancesco, Frank G. (1983) “A Proposal for Improving the Efficiency of Medical Insurance,” Journal of Health Economics 2(2):176–184.PubMedGoogle Scholar

  • Hussey, P. S., M. S. Ridgely and M. B. Rosenthal (2011) “The PROMETHEUS Bundled Payment Experiment: Slow Start Shows Problems In Implementing New Payment Models,” Health Affairs, 30:112116–112124.Web of ScienceGoogle Scholar

  • Kaiser Family Foundation (2010) Medicare: A Primer. Available at: http://www.kff.org/medicare/upload/7615-03.pdf (accessed April 29, 2013).

  • Kaiser Family Foundation (2011). Projecting income and assets. Publication #8172. Available at: http://www.kff.org/medicare/upload/8172.pdf.

  • Medicare Payment Advisory Commission (2010) Report to the Congress: Aligning Incentives in Medicare. Available at: http://www.medpac.gov/documents/jun10_entirereport.pdf (accessed April 29, 2013).

  • Medicare Payment Advisory Commission (2011) Report to the Congress: Medicare and the Health Care Delivery System. Available at: http://www.medpac.gov/documents/Jun11_EntireReport.pdf (accessed April 29, 2013).

  • Neumann, P. J., J. A. Palmer, E. Nadler, C. Fang and P. Ubel (2010) “Cancer Therapy Costs Influence Treatment: A National Survey of Oncologists,” Health Affairs, 29:196–202.Web of ScienceCrossrefGoogle Scholar

  • Pauly, Mark V. (1971) “Indemnity Insurance for Health Care Efficiency,” Economic and Business Bulletin, 24(1):53–59.Google Scholar

  • Pearson, S. D. and P. B. Bach (2010) “How Medicare Could Use Comparative Effectiveness Research in Deciding on New Coverage and Reimbursement,” Health Affairs, 29(10): 1796–1804.Web of ScienceCrossrefGoogle Scholar

  • Perlroth, D. J., D. P. Goldman and A. M. Garber (2010) “The Potential Impact of Comparative Effectiveness Research on U.S. Health Care Expenditures,” Demography, 47:S173–S190.CrossrefWeb of ScienceGoogle Scholar

  • Schrag, D. and M. Hanger (2007) “Medical Oncologists’ Views on Communicating with Patients About Chemotherapy Costs: A Pilot Survey,” Journal of Clinical Oncology, 25:233–237.Web of ScienceCrossrefGoogle Scholar

  • Streeter, S. B., L. Schwartzberg, N. Husain and M. Johnsrud (2011) “Patient and Plan Characteristics Affecting Abandonment of Oral Oncolytic Prescriptions,” Journal of Oncology Practice, 46s–51s.Google Scholar

  • United States Congress (2010) Patient Protection and Affordable Care Act, January 5, 2010, Public law 111–148, section 3210. Washington, DC. Available at: http://www.gpo.gov/fdsys/pkg/PLAW-111publ148/pdf/PLAW-111publ148.pdf (accessed April 29, 2013).

  • Van Eenwyk, J., J. S. Campo and E. M. Ossiander (2002) “Socioeconomic and Demographic Disparities in Treatment for Carcinomas of the Colon and Rectum,” Cancer, 95:39–46.CrossrefGoogle Scholar

  • Zeckhauser, Richard (1970) “Medical Insurance: A Case Study of the Tradeoff Between Risk Spreading and Appropriate Incentives,” Journal of Economic Theory, Elsevier, 2(1):10–26.CrossrefGoogle Scholar

About the article

Corresponding author: Lorens A. Helmchen, Associate Professor, Department of Health Administration and Policy, George Mason University, 4400 University Drive – M/S 1J3, Fairfax, VA 22030, USA, e-mail:


Published Online: 2013-05-15

Published in Print: 2013-01-01


Citation Information: Forum for Health Economics and Policy, ISSN (Online) 1558-9544, ISSN (Print) 2194-6191, DOI: https://doi.org/10.1515/fhep-2012-0002.

Export Citation

©2013 by Walter de Gruyter Berlin Boston. Copyright Clearance Center

Comments (0)

Please log in or register to comment.
Log in