Unbiased Analysis of Today's Healthcare Issues

Why don’t payers adopt my technology?

Written By: Jason Shafrin - Aug• 25•14

Why don’t payers adopt innovative approaches to treat mental illness? For instance, crisis intervention programs, recovery-focused consumer education programs, telehealth programs, and on-line treatment programs have sometimes have had problems receiving reimbursement from payers. Monica Oss of OpenMinds takes the payers’ perspective:

Often, the organization proposing the new program comes to the table with an expectation that the payer will reimburse for the service on a traditional volume-based, fee-for-service (FFS) basis. For most payers (whether Medicaid, Medicare, health plans, or employer health plans), the prospect of adding a new program that is reimbursed on a volume basis is problematic. There is no “guarantee” of cost savings – and a very real possibility of increased cost.

How do you gain payer approval? One option is to bring data of significant health improvements and/or large cost offsets. For instance, effective drugs may improve health and also decrease hospitalization rates. Another option is to put yourself at financial risk using a pay-for-performance approach or cost sharing financial agreement.

A great example of this principal in action is the recent decision by the Centers for Medicare & Medicaid Services (CMS) to waive the Medicare rules requiring a three-day hospital stay for covered skilled nursing facility (SNF) care – but only for provider organizations in the Bundled Payments for Care Improvement initiative, accepting bundled payments (referred to as Model 2). In the Model 2 arrangement, each participating provider (as of March 2014, there are 169) chooses their own “custom” bundled services from a group of 48 different episodes (for the full list, see BPCI Initiative Episodes: Details on the Participating Health Care Facilities).

Under this program, Medicare continues FFS payments to the participating providers, but the total payment for a beneficiary’s episode will then be compared against a CMS estimate of what the bundled services ‘should’ cost. If the provider delivers care under the estimate, they share in the savings. If the cost of services goes over the estimate, the provider makes up the difference…

This is an example…where payers are willing to give flexibility to provider organizations – in programming, in care authorization, in service eligibility requirements, etc. – but only when the provider organization has a shared financial incentive.

Providers and manufacturers generally may dislike risk sharing; insurers are the ones who manage risk, providers and manufacturers treat patients. However, as the US continues to move towards considering cost-effectiveness in reimbursement, demonstrating that your product creates value for patients and payers will become increasingly important for providers, pharmaceutical firms and devicemakers.

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