AR: Value-based reimbursement can fuel innovation, improve outcomes

Two decades of experts calling for value in Medicare reimbursement has gone largely unheeded. However, transitioning toward value-based reimbursement for imaging could optimize innovation and reward advances that deliver improved health and economic outcomes, according to an article published in the September issue of Academic Radiology.

The rationale for considering a value-based model includes a number of variables. Medicare spending on imaging nearly doubled from 2000 and 2006, increasing from $6.4 billion to $12 billion. Meanwhile, multiple stakeholders have issued calls for evidence-based medicine, including comparative effectiveness research and cost-effectiveness studies. Finally, there are unanswered questions about how to best reward innovation in medical interventions.

Louis P. Garrison, Jr., PhD, of the department of pharmacy at University of Washington in Seattle, and colleagues explained that the current Resource-Based Relative Value Scale Medicare reimbursement mechanism overlooks “economic value.” Economic value, they said, includes monetary savings from imaging due to the reduced need for other services, reductions in mortality or morbidity and reduction in diagnostic uncertainty.

Meanwhile, others have expanded the definition of value to include dynamic efficiency, and stated that rewarding manufacturers for dynamic efficiency can spur innovation.

The current reimbursement model for diagnostic imaging technical services, wrote Garrison et al, not only hinders the incentive to innovate, it does not encourage appropriate adoption or promote pre- and post-launch data collection to measure the clinical and economic value of the innovation.

At the same time, “inappropriate overutilization” of imaging technologies rewards innovators and may counteract suboptimal reimbursement for specific procedures. In fact, the fee-for-service model may push imaging into the inappropriate use zone, where societal costs exceed benefits to the patents.

Value-based reimbursement
“Value-based reimbursement means that payments or reimbursement are based on the economic value generated rather than on the short-run marginal cost of supplying a good or service,” Garrison wrote.

Three options for implementing a value-based reimbursement system exist: a comprehensive overhaul of imaging procedure CPT codes, a limited evaluation of high-volume and high-cost procedures and development of a new mechanism to evaluate and value emerging innovative imaging procedures.

However, a total overhaul of CPT codes may be cost-prohibitive and overly complex, the authors said. In addition, the transition could be hindered by a lack of existing high-quality analyses of the relationships between imaging applications and costs and outcomes.

With 10 imaging procedures accounting for nearly half of Medicare spending on imaging, the authors presented a hybrid model for transitioning to value-based reimbursement.

“The most useful step would be to initiate 'horizon scanning' for new procedures or step changes in existing procedures that would have potentially a high-cost or high-volume impact and conduct economic evaluations of these relative to current imaging practice, to establish the incremental economic value of the innovation at the proposed price of the equipment and its implied rental/lease rate.”

Garrison and colleagues said that more studies of existing and emerging innovations are needed as are studies of how or whether incentives impact innovations. One possibility is creating unique codes for new imaging procedures and a value-based reimbursement mechanism to encourage additional data collection with the launch of new technology.

The right blend, the authors concluded, may be the push-pull model, which encourages clinical and economic evaluations of imaging innovations via government funding and rewards innovators for demonstrating the value of innovation.