Two radically different approaches to financial incentives

We stumbled across two entirely different approaches to financial incentives today:

The first approach was discussed in an intriguing story by Andrew Pollack in today’s New York Times. In this story, drug makers change “what they charge for their drugs, based on how well the medicines improve patients’ health.” The article discusses a new agreement between Merck and Cigna, in which reimbursement for Januvia and Janumet will hinge on the ability of the drugs to control blood sugar. The deal is actually quite complex, though, since Merck will actually charge less for the drugs if they work as hoped: “In effect, though, Merck is betting not only that its drugs prove superior but that Cigna’s incentives to reap the benefits of the deeper Januvia and Janumet discounts will prompt the insurer to try to keep patients on those drugs,” writes Pollack. Merck’s advantageous pricing for the drugs will also help it get a better place on Cigna’s formulary.

The second approach, published in a commentary in Circulation: Cardiovascular Quality and Outcomes, proposes that physician reimbursement should be “evidence-based.”

Cedars-Sinai cardiologists George Diamond and Sanjay Kaul (no stranger to CardioBrief) cite the results of COURAGE and “propose that physicians of the patients who undergo PCI be paid on a sliding scale, from $8,000 to $24,000, with the highest payments going to the physicians of patients with the most severe symptoms because the sickest patients receive the most benefit from the procedure,” according to a Cedars-Sinai press release.

George Diamond sent the following additional commentary to CardioBrief:

In some ways, these two proposals are very similar. Both rely on financial incentives to modify behavior, improve outcomes and reduce costs. The incentives attached to the Merck/Cigna plan, like the Pfizer/Florida plan before it, target the payers of health care services. In contrast, the incentives attached to our evidence-based reimbursement plan more directly target the physician at the point of care. Physicians are thereby rewarded for making the best possible decisions (which is under their control) and not for the actual outcomes (which are not). This is what distinguishes evidence-based reimbursement from so-called “pay-for-performance” plans that are expected to play a major role in the Obama administration’s health care reform legislation later this year.

Here is the press release from Cedars-Sinai about the Diamond and Kaul paper:

Health-care reform should start with paying evidence-based financial incentives to doctors

Authors of a commentary in Circulation: Cardiovascular Quality and Outcomes are available to explain their call to change physician insurance reimbursement

Healthcare Reform should start with “evidence-based reimbursement”, structuring physician payment incentives around existing empirical evidence of clinical benefit, which would improve quality and reduce the cost of healthcare, says a commentary written by two cardiologists and published in Circulation: Cardiovascular Quality and Outcomes.

For example, some 500,000 U.S. patients suffering from mild chest pain due to coronary artery disease undergo balloon angioplasty or percutaneous coronary intervention (PCI) every year, a procedure that costs approximately $20,000 per patient, for a total U.S. expenditure of $10 billion a year. However, empirical studies document that 10 percent-20 percent of PCI patients are asymptomatic, only 50 percent have undergone a stress test to determine the severity of their disease and as many as 30 percent aren’t taking prescription heart medications that, for patients with mild coronary artery disease, could be just as effective as PCI.

The authors cite a recent COURAGE (Clinical Outcomes Utilizing Revascularization and Aggressive drug Evaluation) trial which followed 2,000 patients with mild to moderate chronic stable angina. All patients received optimal medical therapy. Half of the patients also underwent angioplasty. The patients received follow-up care for 4.6 years, but there was no significant difference between the groups in the mortality rate.

As an example of Evidence-based Financial Incentives, the authors propose that physicians of the patients who undergo PCI be paid on a sliding scale, from $8,000 to $24,000, with the highest payments going to the physicians of patients with the most severe symptoms because the sickest patients receive the most benefit from the procedure.

WHO: George Diamond, M.D., a senior research scientist, emeritus and Sanjay Kaul, M.D., director of the Cardiology Fellowship Training Program and director of the Vascular Physiology and Thrombosis Research Laboratory in the Division of Cardiology at the Cedars-Sinai Heart Institute.

“A lot of care isn’t tied directly to proof of patient benefit in clinical trials,” Diamond said. “It’s not that the care is wrong. It’s not documented to be of value. And if it’s not documented to be of value, then it should be worth less. The purpose is not to deny anybody of healthcare, but rather to funnel them to the best proven care alternatives.”

RAMIFICATIONS: Diamond and Kaul suggest empirical data could be used to determine how much physicians would be paid by Medicare and private insurers for performing specific procedures. They hope to prompt a discussion of “evidence-based reimbursement incentives” rather than “pay for performance” among the public and policy makers. President Barack Obama has called for a national discussion of healthcare reform in the fall of 2009.

Diamond and Kaul have written several related articles, including “Pay for Proof” for and an editorial in the Oct. 15, 2008 Journal of the American Medical Association.

CONTACT: To arrange interviews with Diamond and Kaul, contact Sally Stewart at 310.248.6566.

About the Cedars-Sinai Heart Institute

The Cedars-Sinai Heart Institute is internationally recognized for outstanding heart care built on decades of innovation and leading-edge research. From cardiac imaging and advanced diagnostics to surgical repair of complex heart problems to the training of the heart specialists of tomorrow and leading-edge research that is deepening medical knowledge and practice, the Cedars-Sinai Heart Institute is known around the world for excellence and innovations.

Citation: Circulation: Cardiovascular Quality and Outcomes, a publication of the American Heart Association, March 2009.

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