The role of hospital payments in the adoption of new medical technologies: an international survey of current practice

How Denmark, England, Estonia, France, Germany, and the USA Pay for Variable, Specialized and Low Volume Care: A Cross-country Comparison of In-patient Payment Systems

BACKGROUND

Diagnosis-related group (DRG)-based hospital payment can potentially be inadequately low (or high) for highly variable, highly specialized, and/or low volume care. DRG-based payment can be combined with other payment mechanisms to avoid unintended consequences of inadequate payment. The aim of this study was to analyze these other payment mechanisms for acute inpatient care across six countries (Germany, Denmark, England, Estonia, France, the United States [Medicare]).

METHODS

Information was collected about elements excluded from DRG-based payment, the rationale for exclusions, and payment mechanisms complementing DRG-based payment. A conceptual framework was developed to systematically describe, visualise and compare payment mechanisms across countries.

RESULTS

Results show that the complexity of exclusion mechanisms and associated additional payment components differ across countries. England and Germany use many different additional mechanisms, while there are only few exceptions from DRG-based payment in the Medicare program in the United States. Certain areas of care are almost always excluded (eg, certain areas of cancer care or specialized pediatrics). Denmark and England use exclusion mechanisms to steer service provision for highly complex patients to specialized providers.

CONCLUSION

Implications for researchers and policy-makers include: (1) certain areas of care might be better excluded from DRG-based payment; (2) exclusions may be used to incentivize the concentration of highly specialized care at specialized institutions (as in Denmark or England); (3) researchers may apply our analytical framework to better understand the specific design features of DRG-based payment systems.

Adoption of hospital diagnosis-related group financing in Switzerland and the availability of computed tomography scanners

We study the relationship between diagnosis-related group (DRG) financing and the availability of computed tomography (CT) scanners in Switzerland. A number of Swiss hospitals switched to DRG payment for a portion of their payments progressively between 2002 and 2011. As of 2012, all hospitals were required to use DRG payment for a substantial portion of reimbursement. We conducted two main analyses. First, we studied hospitals switching in 2002-2011 and estimated event study models to compare changes in CT availability before and after the adoption of DRG financing, using the hospitals that did not switch during this time as a comparison group. In the second, we compared trends in CT availability before and after 2012, for the hospitals that switched in that year. In both analyses, we find a statistically significant association between the switch to DRG financing and lower levels of CT availability.

Coverage with evidence development for medical devices in Europe: Can practice meet theory?

Health economists have written extensively on the design and implementation of coverage with evidence development (CED) schemes and have proposed theoretical frameworks based on cost-effectiveness modeling and value of information analysis. CED may aid decision-makers when there is uncertainty about the (cost-)effectiveness of a new health technology at the time of reimbursement. Medical devices are potential candidates for CED schemes, as regulatory regimes do not usually require the same level of efficacy and safety data normally needed for pharmaceuticals. The purpose of this research is to assess whether the actual practice of CED for medical devices in Europe meets the theoretical principles proposed by health economists and whether theory and practice can be more closely aligned. Based on decision-makers' perceptions of the challenges associated with CED schemes, plus examples from the schemes themselves, we discuss a series of proposals for assessing the desirability of schemes, their design, implementation, and evaluation. These proposals, while reflecting the practical challenges with developing CED programs, embody many of the principles suggested by economists and should support decision-makers in dealing with uncertainty about the real-world performance of devices.

Assessing, Pricing and Funding Point-of-Care Diagnostic Tests for Community-Acquired Acute Respiratory Tract Infections-Overview of Policies Applied in 17 European Countries

Point-of-care diagnostic tests for community-acquired acute respiratory tract infections (CA-ARTI) can support doctors by improving antibiotic prescribing. However, little is known about health technology assessment (HTA), pricing and funding policies for CA-ARTI diagnostics. Thus, this study investigated these policies for this group of devices applied in the outpatient setting in Europe. Experts from competent authority responded to a questionnaire in Q4/2020. Information is available for 17 countries. Studied countries do not base their pricing and funding decision for CA-ARTI diagnostics on an HTA. While a few countries impose price regulation for some publicly funded medical devices, the prices of CA-ARTI diagnostics are not directly regulated in any of the surveyed countries. Indirect price regulation through public procurement is applied in some countries. Reimbursement lists of medical devices eligible for public funding exist in several European countries, and in some countries these lists include CA-ARTI diagnostics. In a few countries, the public payer funds the health professional for performing the service of conducting the test. Given low levels of regulation and few incentives, the study findings suggest room for strengthening pricing and funding policies of CA-ARTI diagnostics to contribute to increased acceptance and use of these point-of-care tests.

Investment and quality competition in healthcare markets

We study the strategic relationship between hospital investment and provision of service quality. We use a spatial competition framework and allow investment and quality to be complements or substitutes in patient benefit and provider cost. We assume that each hospital commits to a certain investment before deciding on service quality, and that investment is observable and contractible while quality is observable but not contractible. We show that, under a fixed DRG-pricing system, providers' lack of ability to commit to quality leads to under- or overinvestment, relative to the first-best solution. Underinvestment arises when the price-cost margin is positive, and quality and investments are strategic complements, which has implications for optimal contracting. Differently from the simultaneous-move case, the regulator must complement the payment with one more instrument to address under/overinvestment. We also analyse the welfare effects of different policy options (separate payment for investment, higher per-treatment prices, or DRG-refinement policies).

Hospital payment schemes and high-priced drugs: Evidence from the French Add-on List

Under prospective payment schemes, hospitals may be disincentivised to use high-priced drugs. In this context, supplementary payment schemes have been implemented to fund hospitals beyond hospital tariffs for the use of such technologies. In France, since 2004, an add-on list scheme ensures that listed high-priced drugs are reimbursed by the state, thereby imposing no cost on hospitals while drugs are on the list. Yet little is known about the impact of drug delisting, i.e., when drugs are removed from the add-on list, on hospital utilisation. In this paper, we investigate the effects of delisting for 12 cancer drugs on the volumes prescribed, the generic shares and the purchase prices negotiated by hospitals. Using French hospital-level data over the period 2008-2016, we construct volumes, generic shares and purchase prices at the molecule level to account for potential substitutions across therapeutically equivalent drugs. Hospital fixed effects allow for time-invariant unobserved hospital heterogeneity linked to e.g., prescription preferences or hospitals' bargaining power. Our results indicate that prescription volumes, generic shares and price levels are not systematically affected by delisting, nor do we find evidence of response heterogeneity by hospital type. Overall, our findings mitigate concerns that the financial incentives associated with add-on lists may lead to hospitals over-prescribing high-priced drugs.

The reimbursement of new medical technologies in German inpatient care: What factors explain which hospitals receive innovation payments?

Most hospital payment systems based on diagnosis-related groups (DRGs) provide payments for newly approved technologies. In Germany, they are negotiated between individual hospitals and health insurances. The aim of our study is to assess the functioning of temporary reimbursement mechanisms. We used multilevel logistic regression to examine factors at the hospital and state levels that are associated with agreeing innovation payments. Dependent variable was whether or not a hospital had successfully negotiated innovation payments in 2013 (n = 1532). Using agreement data of the yearly budget negotiations between each German hospital and representatives of the health insurances, the study comprises all German acute hospitals and innovation payments on all diagnoses. In total, 32.9% of the hospitals successfully negotiated innovation payments in 2013. We found that the chance of receiving innovation payments increased if the hospital was located in areas with a high degree of competition and if they were large, had university status and were private for-profit entities. Our study shows an implicit self-controlled selection of hospitals receiving innovation payments. While implicitly encouraging safety of patient care, policy makers should favour a more direct and transparent process of distributing innovation payments in prospective payment systems.

Changing payment instruments and the utilisation of new medical technologies

This paper empirically investigates the impact of additional reimbursement instruments on the diffusion of new technologies in inpatient care. Using 2010-2014 German panel data on hospital level for every patient undergoing coronary angioplasty, this study examines the utilisation of drug-eluting balloon catheters (DEB) over time while additional payment instruments changed. Hypothesising that the utilisation of DEB increased abruptly when a new reimbursement instrument came into force, we estimate a fixed effects regression comparing years with a change and years where the reimbursement instrument remained the same. The model is adjusted for patient age and severity of the disease. The utilisation of DEB increased from 8407 in 2010 to 19,065 in 2014. Hospitals used significantly more DEB when an additional payment instrument changed compared to years when it remained the same. The increase was roughly twice as large. In short, hospitals are incentivised to utilise new technologies if the reimbursement changes to an instrument that is designed in a more reliable way, e.g. including less bureaucracy or guaranteeing fixed prices.

Physicians' Decision Making on Adoption of New Technologies and Role of Coverage with Evidence Development: A Qualitative Study

OBJECTIVES

To foster value-based pricing and coverage with evidence development in Germany, certain new diagnostic and treatment methods have been subject to a benefit assessment since 2016 to determine their reimbursement. Although this is a paradigm shift, the German approach is limited to some few specific technologies for which reimbursement is requested. As physicians encounter this regulatory instrument, the aim of the study was to understand physicians' decision making regarding the adoption of new medical technologies and to identify their perspectives on the evidence base and financing with additional reimbursement systems.

METHODS

From April to August 2017, semistructured interviews with chief and senior physicians of vascular surgery and cardiology in inpatient care in Germany were conducted (N = 23). The interviews were carried out by one researcher in one-to-one appointments or via telephone. Data were analyzed inductively to identify factors and generate thematic categories using qualitative content analysis.

RESULTS

We identified 52 factors in eight categories influencing physicians' adoption of new technologies. The evidence base for new technologies was criticized (e.g., lack of available studies). Physicians' knowledge of the regulation of market approval and innovation payments varied. They recommended the utilization of new technologies in certain specialist centers and the facilitation of observational studies.

CONCLUSIONS

Physicians saw the need for the new approach and supported its aim. However, its design and implementation appeared to be questionable from their medical perspective. The provision of summarized information on the benefit of technologies might be a possibility to assist physicians' decision making.

[Jurisdictions on the reimbursement of new medical technologies by public health insurance: A systematic review]

BACKGROUND

In Germany reimbursement for new medical technologies is often enforced before a social court. It is likely that these judicial decisions also affect the sickness funds' decisions on requests for reimbursement and thus patient access to new technologies in general.

OBJECTIVES

The aim of this study was to identify the technologies that have repeatedly generated court actions and whether these actions have been successful. The focus was on differences between sectors, technology groups and indications. Based on this, we analysed in a case study whether judicial decisions on the reimbursement of the same technologies vary across the years.

MATERIAL AND METHODS

Based on a systematic review, we identified judicial decisions of German social courts on new technologies for the years 2011 to 2016. The analysis included social court decisions on reimbursements for technologies used in the treatment of individual patients.

RESULTS

284 judicial decisions on new technologies were considered in the analysis. In one third of the cases, the sickness funds were required to reimburse the costs, with a higher percentage in inpatient than in outpatient care. Technologies used in treatment of diseases of the eyes and the ears were granted most frequently. In cases involving similar circumstances the social courts sometimes came to conflicting decisions; these decisions are, in part, contradictory to subsequent assessments by the Joint Federal Committee (G-BA).

CONCLUSIONS

Decisions as to whether reimbursement for new technologies is granted or not do not appear to follow a systematic approach. In the context of the seemingly innovation-friendly policy in inpatient care, there is uncertainty with regard to the "generally accepted state of medical knowledge." It is problematic for both patients and their treating physicians that over a number of years legal proceedings are being initiated for technologies that have not been subjected to a systematic assessment of their benefit.