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Under the Affordable Care Act, hospitals with “worse than expected” 30-day readmission rates will be penalized by Medicare. But though a focus on readmissions may have good face validity, the policy attention to 30-day readmissions may be misguided. Reducing hospital readmission rates has captured the imagination of U.S. policymakers because readmissions are common and costly and their rates vary — and at least in theory, a reasonable fraction of readmissions should be preventable. Policymakers therefore believe that reducing readmission rates represents a unique opportunity to simultaneously improve care and reduce costs. As part of the Affordable Care Act (ACA), Congress directed the Centers for Medicare and Medicaid Services (CMS) to penalize hospitals with “worse than expected” 30-day readmission rates. This part of the law has stimulated hospitals, professional societies, and independent organizations to invest substantial resources in finding . . .

Strategic purchasing of health services involves a continuous search for the best ways to maximize health system performance by deciding which interventions should be purchased, from whom these should be purchased, and how to pay for them. In such an arrangement, the passive cashier is replaced by an intelligent purchaser that can focus scarce resources on existing and emerging priorities rather than continuing entrenched historical spending patterns. Having experimented with different ways of paying providers of health care services, countries increasingly want to know not only what to do when paying providers, but also how to do it, particularly how to design, manage, and implement the transition from current to reformed systems. 'Designing and Implementing Health Care Provider Payment Systems: How-To Manuals' addresses this need. The book has chapters on three of the most effective provider payment systems: primary care per capita (capitation) payment, case-based hospital payment, and hospital global budgets. It also includes a primer on a second policy lever used by purchasers, namely, contracting. This primer can be especially useful with one provider payment method: hospital global budgets. The volume's final chapter provides an outline for designing, launching, and running a health management information system, as well as the necessary infrastructure for strategic purchasing.

The Affordable Care Act's financial penalty for “excessive” readmissions may be too weak to overcome the substantial counterincentives currently at work. But a “warranty” payment would provide a stronger business case for hospitals to get with the program. Hospital readmissions are receiving increasing attention as a largely correctable source of poor quality of care and excessive spending. According to a 2009 study, nearly 20% of Medicare beneficiaries are rehospitalized within 30 days after discharge, at an annual cost of $17 billion. 1 Causes of avoidable readmissions include hospital-acquired infections and other complications; premature discharge; failure to coordinate and reconcile medications; inadequate communication among hospital personnel, patients, caregivers, and community-based clinicians; and poor planning for care transitions. Although studies have shown that specific interventions, particularly among patients with multiple medical conditions, can reduce readmission rates by 25 to 50%, 2 the . . .

The sustained growth rate, or SGR, has been described as hanging over physicians, similar to the mythical sword of Damocles. The SGR formula is an attempt to restrain the growth of Medicare spending on physician services. Ever since its inception, numerous temporary fixes have been enacted. In 2013, 3 congressional bills were introduced to repeal SGR; however, they never became law. The Bipartisan Budget Act of 2013 established a 3-month fix for 2014. This manuscript describes various issues related to SGR and its hopeful repeal. The manuscript also describes 3 different approaches taken by the Congress and compares those approaches as well as hurdles to be faced in 2014 in repealing the SGR.

Congress may reform drug pricing policies under Medicare Part D as part of a larger health reform effort. Currently, the \"noninterference\" provision prevents the government from negotiating drug prices on behalf of Medicare Part D prescription drug plans. Commonly considered reform proposals borrow ideas from Medicaid, either through returning dual eligibles to Medicaid drug pricing or by imposing mandatory rebates across the Part D population. We examine a menu of other options, including value-based pricing; expansion of generic and therapeutically equivalent substitution; increased formulary diversity; importation; and limited antitrust waivers. These latter options may reduce federal spending without direct government price negotiations. [PUBLICATION ABSTRACT]

Sweden has experienced a national value-based pricing (VBP) system for innovative outpatient drugs operated by the Pharmaceutical Benefits Board — LFN (now called the Dental and Pharmaceutical Benefits agency — TLV) since 2002. VBP has the character of a monopoly system, leading to reimbursement decisions where usage of new medicines is limited to subgroups and not the population for which the drug is approved. VBP relies on a broad societal perspective, encouraging innovations by signaling to firms that value-adding treatments are demanded. However, the VBP system is operated without a drug budget responsibility. The budget responsibility lies at the regional level, not operating VBP, thus an intrinsic conflict is built into the system. The aim of this article is to suggest a modification to the current reimbursement system in Sweden where payment for pharmaceuticals is split between the regional and national levels. The system is expected to make new innovative pharmaceuticals accessible to a larger number of patients and provide more consumer surplus without reducing the producer surplus. In short, the county councils pay the marginal cost of production while the state pays for the innovation.

Background A previous study has suggested that drug price adjustments allow physicians in Taiwan to gain greater profit by prescribing generic drugs. To better understand the effect of price adjustments on physician choice, this study used renin-angiotensin drugs (including angiotensin-converting enzyme inhibitors [ACEIs] and angiotensin receptor blockers [ARBs]) to examine the impact of price adjustments on utilization of and expenditures on patented and off-patent drugs with the same therapeutic indication. Methods Using the Taiwan’s Longitudinal Health Insurance Database (2005), we identified 147,157 patients received ACEIs and/or ARBs between 1997 and 2008. The annual incident and prevalent users of ACEIs, ARBs and overall renin-angiotensin drugs were examined. Box-Tiao intervention analysis was applied to assess the impact of price adjustments on monthly utilization of and expenditures on these drugs. ACEIs were divided into patented and off-patent drugs, off-patent ACEIs were further divided into original brands and generics, and subgroup analyses were performed. Results The number of incident renin-angiotensin drug users decreased over the study period. The number of prevalent ARB users increased and exceeded the cumulative number of first-time renin-angiotensin drug users starting on ARBs, implying that some patients switched from ACEIs to ARBs. After price adjustments, long term trend increases in utilization were observed for patented ACEIs and ARBs; a long-term trend decrease was observed for off-patent ACEIs; long-term trend change was not significant for overall renin-angiotensin drugs. Significant long-term trend increases in expenditures were observed for patented ACEIs after price adjustment in 2007 (200.9%, p = 0.0088) and in ARBs after price adjustments in 2001 (173.4%, p < 0.0001) and 2007 (146.3%, p < 0.0001). A significant long-term trend decrease in expenditures was observed for off-patent ACEIs after 2004 price adjustment (−156.9%, p < 0.0001). Expenditures on overall renin-angiotensin drugs showed long-term trend increases after price adjustments in 2001 (72.2%, p < 0.0001) and 2007 (133.4%, p < 0.0001). Conclusions Price adjustments did not achieve long-term cost savings for overall renin-angiotensin drugs. Possible switching from ACEIs to ARBs within individuals is evident. Policy makers should reconsider the appropriateness of the current adjustment strategies applied to patented and off-patent drugs.

Background In 2004 an allocation formula for primary care services was introduced in England and Wales so practices would receive equitable pay. Modifications were made to this formula to enable local health authorities to pay practices. Similar pay formulae were introduced in Scotland and Northern Ireland, but these are unique to the country and therefore could not be included in this study. Objective To examine the extent to which the Global Sum, and modifications to the original formula, determine practice funding. Methods The allocation formula determines basic practice income, the Global Sum. We compared practice Global Sum entitlements using the original and the modified allocation formula calculations. Practices receive an income supplement if Global Sum payments were below historic income in 2004. We examined current overall funding levels to estimate what the effect will be when the income supplements are removed. Results Virtually every Welsh and English practice (97%) received income supplements in 2004. Without the modifications to the formula only 72% of Welsh practices would have needed supplements. No appreciable change would have occurred in England. The formula modifications increased the Global Sum for 99.5% of English practices, while it reduced entitlement for every Welsh practice. In 2008 Welsh practices received approximately £6.15 (9%) less funding per patient per year than an identical English practice. This deficit will increase to 11.2% when the Minimum Practice Income Guarantee is abolished. Conclusions Identical practices in different UK countries do not receive equitable pay. The pay method disadvantages Wales where the population is older and has higher health needs.