How to pay for breakthrough treatments ... without breaking the bank

Bundled payments, outcomes-based reimbursement well-suited for most costly care

New, advanced and effective drugs and treatments most always come with a big price tag, such as the hepatitis C drug Solvadi, which costs about $100,000 for a treatment course per person. But with alternative payment and delivery reforms, payers and providers can give patients the benefits of breakthrough treatments without breaking the bank, according to a Health Affairs blog post.

The post outlines two such methods that, while familiar, could be especially effective for such breakthrough, potentially-curative products.

Bundled payments

While payers and providers have taken steps to transition away from a fee-for-service payment model to value-based reimbursement, there still is room for improvement, especially when it comes to ground-breaking treatments--despite their potentially high costs.

The blog post argues that bundled payments could cover even a broader range of services--such as chemotherapy--but due to complex benefit design structures, such payment models may only work for "physician-administered drugs that are covered by medical benefits and are traditionally purchased by providers who are then reimbursed by payers after administration."

Outcomes-based payments

Issuing payments based on outcomes can establish the mentality of "defined payment for defined outcomes," noted the blog post. For instance, a drug manufacturer would share the cost of failure in practice later on via larger rebates or refunds should the product not live up to the performance goals set by the payer.

The blog post mentioned risk-sharing models, such as accountable care organizations, that will incentivize providers to work with manufacturers to increase the treatment's effectiveness without relying too heavily on the volume of the treatment. Ultimately, this could create a "win-win" opportunity for both payers and providers.

For more:
- here's the blog post

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