WHAT IF: The price of new provider fees were coordinated across Canada, supported by existing HTA...

What if: The price of new provider fees were coordinated across Canada, supported by

existing HTA capacity and networks?

Don Husereau, University of Ottawa

don.husereau@gmail.com

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Context• Increasing expenditure on

providers (CIHI, 2010)• Opportunities for gains in efficiency

(WHO, 2010; OECD, 2011)• Provider choices (medical

technology) source of expenditure growth (Newhouse, 1992; Cutler and McClellan 2001)

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Context

• Fees are cost-based - little incentive for choosing high- versus low-value service

• Uncertainty of cost-effectiveness leads to “experimental“ or uninsured status

• Lack of standardization for fee code development – opportunities for “whipsawing”

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“Whipsawing”

“Cars” pajamas

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Current use of HTA in adopting new provider fees

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Proposed Option: HTA-based Pricing Provider Services

• A pan-Canadian approach, informed by HTA – Develop standard method for

translating HTA information into value-based fee price modifiers, and create value-based modifiers for future provider services. [Mandatory]

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Proposed Option: HTA-based Pricing Provider Services

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YearTechnology A

(Cost = $200 per year)Technology B

(Cost = $2,100 per year)Total healthcare costUnits Fee Costs Tech A

CostTotal Cost Units Fee

CostTech B cost

Total Cost

Pre-modifiers($30 fee for both)

1,000 $30,000 $200,000 $230,000 1,000 $30,000 $2,100,000 $2,130,000 $2,360,000

Post- modifiers ($45 for A; $15 for B)

1,400 $63,000 $280,000 $343,000 600 $9,000 $1,260,000 $1,269,000 $1,612,000

Difference 400 $33,000 $80,000 $113,000 -400 -21,000 -840,000 -861,000 -748,000

Example using Value-Based Provider Fee Modifiers

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Proposed Option: Optional Functions

– Develop a standard approach to assessing the value of new fees, which could be adopted by individual provinces. [Optional]

– Develop a resource-based relative-value schedule of all or some (those most often used) fee codes across provinces. [Optional]

– Review new fee codes and create suggested provider fees for adoption across jurisdictions. [Optional]

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Benefits• Reduce inequity in fees for services across

country• Reduce unnecessary political pressure• Influence providers’ behavior toward best

practices in use of health technologies and avoid unnecessary health expenditures

• Works with supplier-induced demand (Evans, 1974; McGuire and Pauly 1991) and fee-based utilization

• Provide a platform for further health system efficiency through– Coordinated technology management– Coordinated health and human resource needs

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Challenges• Whose value? – QALYs may be

insufficient - will require explicit, agreed-upon recognition of value

• Costly - requires priority setting• Variation in current fee schedules –

requires communication and priority setting

• What is high-value? – requires threshold or other measure of opportunity cost

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Implications for Canada

Recommendation:

New coordinating body required that must be governed provincially.23-04-11 12

Don Husereaudon.husereau@gmail.com

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