title: US hospital payment adjustments for innovative technology lag behind those in Germany, France, and Japan.
abstract: Medicare pioneered add-on payments to facilitate the adoption of innovative technologies under its hospital prospective payment system. US policy makers are now experimenting with broader value-based payment initiatives, but these have not been adjusted for innovation. This article examines the structure, processes, and experience with Medicare's hospital new technology add-on payment program since its inception in 2001 and compares it with analogous payment systems in Germany, France, and Japan. Between 2001 and 2015 CMS approved nineteen of fifty-three applications for the new technology add-on payment program. We found that the program resulted in $201.7 million in Medicare payments in fiscal years 2002-13-less than half the level anticipated by Congress and only 34 percent of the amount projected by CMS. The US program approved considerably fewer innovative technologies, compared to analogous technology payment mechanisms in Germany, France and Japan. We conclude that it is important to adjust payments for new medical innovations within prospective and value-based payment systems explicitly as well as implicitly. The most straightforward method to use in adjusting value-based payments is for the insurer to retrospectively adjust spending targets to account for the cost of new technologies. If CMS made such retrospective adjustments, it would not financially penalize hospitals for adopting beneficial innovations.
authors: John Hernandez (john.hernandez@av.abbott.com) is divisional vice president of Health Economics and Outcomes Research at Abbott Vascular, in Santa Clara, California.
authors: John
authors: J
authors: Hernandez
authors: Susanne F. Machacz is senior manager of Health Economics and Outcomes Research at Abbott Vascular.
authors: Susanne F
authors: SF
authors: Machacz
authors: James C. Robinson is the Leonard D. Schaeffer Professor of Health Economics and director of the Berkeley Center for Health Technology, School of Public Health, at the University of California, Berkeley.
authors: James C
authors: JC
authors: Robinson
mesh_terms: D014487:Centers for Medicare and Medicaid Services, U.S. / Q000191:economics* / Q000592:standards; D003365:Costs and Cost Analysis; D003431:Cross-Cultural Comparison; D003953:Diagnosis-Related Groups; D004469:Economics, Hospital; D005602:France; D005858:Germany; D006801:Humans; D019458:Insurance Coverage / Q000191:economics* / Q000592:standards / Q000639:trends; D007564:Japan; D010343:Patient Admission / Q000191:economics / Q000592:standards; D011445:Prospective Payment System / Q000191:economics* / Q000592:standards / Q000639:trends; D012189:Retrospective Studies; D012720:Severity of Illness Index; D013673:Technology Assessment, Biomedical / Q000191:economics* / Q000379:methods / Q000592:standards; D014481:United States
keywords: Financing Health Care; Hospitals; Medical technology; Medicare