A Modest Proposal: Pay More for Care Only if It's Better

Cheryl Clark, October 7, 2010

It doesn't make sense to Peter B. Bach, MD, why Medicare pays more for some new types of care when there's no evidence showing they're actually better than the old way.  It doesn't make sense to me either.

There are many examples of how the system is wrong, says the associate attending physician at Memorial Sloan-Kettering Cancer Center in New York. "We have a steady introduction of new technologies, and drugs, and devices that are never really evaluated against the old ones, though they cost us a lot more money."

Are they really worth it?

In a paper published this week in the journal Health Affairs, Bach and Steven D. Pearson, president of the Institute for Clinical and Economic Review in Boston, propose a more sensible approach.

Enter the era of comparative effectiveness research, which the Centers for Medicare and Medicaid Services could use to reset the federal reimbursement system. Instead of just paying whatever to whomever, only services with higher relative value would justify higher payment.

Right now, however, implementing their suggestion is prohibited by no fewer than eight sections of the Affordable Care Act. Here's how this system would work.

When considering whether to cover a particular service, be it a new cancer drug, cardiac defibrillator, or expensive surgical device, CMS would also determine—right then and there—how the service's effectiveness compares to the usual standard of care. It would look at the evidence and ask: Is it better, the same, or perhaps worse, or do we even know? If we haven't tried to find out, perhaps we should.

This scrutiny would place this new treatment in one of three categories:

Superior:  Service that are truly more effective or cause fewer side-effects compared to the current clinical standard, would receive higher payment.

Comparable: If the new service is just as effective as alternatives, it would be reimbursed the same as those other services.

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