More on Reimbursement

Innovative healthcare treatments require innovative payment models

Because many payment strategies are as new as the treatments, the coming years will be a test for effectiveness in managing costs.

Mallory Hackett, Associate Editor

Following what was a year of revolutionary change in healthcare, many experts are attempting to predict what 2021 will have in store for the industry at large.

Among CVS Health's forecasts for the new year are two particularly pertinent forces – first, that innovative care services will continue accelerating and second, they will require equally innovative models for payment, according to its Health Trends Report 2021.


Throughout 2020, virtual care was king. Telehealth usage soared to new heights, as did the adoption of digital health apps and wearables.

"Among the many lessons we have learned from this pandemic, we now know care can be done in multiple ways, including online," Adam Pellegrini, SVP of enterprise virtual care and consumer health innovation at CVS Health, said in the report.

"We need to offer care in the ways that people are looking to receive it – through phones, through connected devices, through asynchronous conversations and, of course, through the telehealth visit."

Before virtual care can be utilized to its highest potential, hospitals and other healthcare facilities will need to smooth out integration, the report says. It cited a Medical Group Management Association survey that found only 5% of practices use patient data from wearable technologies.

Once patient-generated data is better connected with electronic health records, providers will be given greater insight into their patients' conditions with more accurate information, according to an evaluation from JMIR Human Factors.

Another challenge for these virtual care services, along with innovative gene therapy treatments, is how to pay for them.

Gene therapies can be particularly expensive. A recent CVS Health study found that therapies for 11 conditions alone could add $45 billion to healthcare costs over the next five years.

These new care options will require stakeholders from all sides, including payers, providers and drug manufacturers, to work together to get them to patients at an affordable price, according to the CVS Health report.

One option that has already seen success is value-based care contracting. With this, reimbursement for treatment is tied to patient outcomes.

As more of these contracts are created between manufacturers and providers, experts say the question is no longer if it works, but how it is best implemented.

Medical management partnerships are another way to keep innovative treatment prices down, according to the report. Here, case managers and providers work together to ensure that these therapies are administered in settings with the greatest chance of success over time.

For self-funded employers in smaller payment pools, the CVS Health report suggests setting up financial protection plans, such as stop-loss insurance. This strategy caps out-of-pocket expenses for plans at an agreed-upon amount. Other options include installment payment plans to spread the payment of high-cost therapies over several years.

"These strategies give plan sponsors an approach to prevent them from the alternative – not covering these therapies at all," Dr. Joanne Armstrong, the chief medical officer for Women's Health and Genomics at CVS Health, said in the report. "That just wouldn't be good for medicine."

Since many of these payment strategies are as new as the treatments they cover, the coming years will serve as a test for their effectiveness in managing costs, the report said.


Among the other trends highlighted in the CVS Health report are advancements in EHRs, a focus on mental health, care improvements for cardiac, cancer, diabetic and older patients, pharmacists taking on a more central role in healthcare, and new ways of leveraging data.

Other predictions for the future include wider use of automation within healthcare, especially for high-value tasks such as risk analysis and preventative care. And although healthcare mergers and acquisitions were down overall in 2020, analysts believe COVID-19 will be a catalyst for future deals.

Twitter: @HackettMallory
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