How Hepatitis C Is Shining A Light On Critical Gaps In Payment Reform

In this blog post, we consider alternative payment policies that could help to ensure that—despite their potentially high cost—breakthrough treatments are consistently delivering value to patients and that the health care system is addressing inefficiencies in the delivery and total costs of care.

Paying for Value and Outcomes: Alternative Provider Payment Models
Over the last several decades, payers and providers have taken significant steps to move coverage and reimbursement from fee-for-service (FFS) payments that incentivize higher volume and intensity to a focus on achieving better results and lower overall costs for patients. Such payment reforms have important implications for breakthrough treatments, as they allow treatment access while also ensuring care coordination and more efficient total spending.

Paying for Value and Outcomes: Outcomes-based Reimbursement
A further extension of payment reforms that shift from volume and intensity to value is tying payments for the treatment itself to outcomes or other measures of performance. Outcomes-based contracting, in which manufacturers share the risk of a treatment outcome, could help alleviate concerns that high-cost treatments actually lead to patient improvement or cures in practice. At their most basic, outcomes-based reimbursement agreements establish defined payment for defined outcomes: a manufacturer shares in the cost of failure in practice through larger rebates, discounts, or refunds if a product does not achieve the performance or outcomes goals agreed to by the payer.

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