Sang-Soo Lee, PhD, MBA, Chair, ISPOR Asia Consortium Industry Committee, Sr. Director, Health Care Economics and Government Affairs (HCE&GA); Medtronic North Asia (Korea and Japan), and Head of Center of Expertise (COE), HCE&GA, Medtronic Asia Pacific, Seoul, South Korea
Health systems in Asia Pacific regions are under tremendous pressure to deal with the rising costs, unequal access to service, and uneven quality of care. Healthcare systems across the region have increasingly embraced a value-based health care (VBHC) agenda. There are questions about how to maximize value for money and maximize patient outcomes, and how health care is paid for and delivered. In the backdrop of all this, the ISPOR Asia Consortium Industry Committee has hosted a webinar titled “Value-based Payment in Asia Pacific: Case Studies and Lessons Learned” on April 27, 2022. The webinar brought a panel of experts to discuss the current situation of value-based payment in the Asia Pacific region and beyond, challenges and opportunities for VBHC implementation in the region. Three distinguished speakers presented their experience and insight into VBHC. Dr. Gabriela Prada explored the progress of value-based reimbursement and procurement models in various countries, including the United States, Canada, and Europe. Examples and lessons learned were provided, along with policy recommendations for considerations in the Asia Pacific region. Dr. Viva Ma introduced Singapore healthcare transformation including care delivery, digital transformation, key areas of innovation and latest HTA process. She also discussed the Australia prosthesis reform including general miscellaneous category review and tier-based evaluation pathways. Professor Jing Wu introduced the insurance payment reform of diagnosis-related groups (DRG) and Big Data Diagnosis-Intervention Packet (DIP) in China and discussed the changes in the payment environment and value-based pricing. The key messages from the speakers are summarized as below.
Value-Based Payments (VBP) – International Experience: Presented by Dr. Gabriela Prada, Senior Director, Global Health Systems Policy, Global Government Affairs, Medtronic, Minneapolis, USA
Health systems in developed and developing countries are increasingly focusing on value-based models, and the impetus for changes is coming from all directions: government’s adopting pay for performance, providers’ increasingly adopting bundles and value-purchasing, and suppliers’ taking risks for quality outcomes. Value-based payment models are driving greater efficiencies and improved health outcomes, and by doing this, these models are enabling value-based health care. The opportunities to improve population health are enormous. For example, imagine a model in which a supplier of diabetes products is rewarded based on the reduction of A1C from an established baseline after 6 months. This was the objective of an agreement between Medtronic and Aetna (United States) to implement and manage an insulin pump program. This project aimed to improve patient experience, clinical outcomes and total cost of care. Similar projects are already flourishing in other countries and having a positive impact on diabetes care.
Spain has experimented with a heart rhythm solution that included a risk-sharing model and pay for performance to improve outcomes of patients with implantable defibrillators. As a result of this program, all targeted clinical outcomes (including detection of atrial fibrillation, infection rate after implants, and reduction of shock reduction rates) exceeded their original goals, while patient satisfaction increased, and the number of in-office visits decreased. A more ambitious and recent project was assigned in Canada to expand coronary angiography capacity, increase remote monitoring, and reduce 30-day readmission rate to hospital for heart failure patients. All these projects involved collaborative approaches to partner for patient-centric, better quality and more sustainable health care and embrace risk or benefit sharing. As APAC countries continue to explore the merits of value-based payments (VBP), it is important to keep in mind that value assessments are not cost-effectiveness analyses or cost utility analyses; determining value entails different analytical value frameworks, different timeframes, and different methodologies, which often involve real-world evidence (RWE). Therefore, although HTA can inform value-based payments, it doesn’t need to be a condition for VBP.
Payment Updates in Asia Pacific - Australia and Singapore: Presented by Dr. Viva Ma, Director, Strategic Access, Public Affairs, Greater Asia, BD, Singapore
Recent changes in medical device payment/policy in Australia and Singapore reflect government’s efforts in standardizing value assessment and payment, optimizing processes, and minimizing waste. In Australia, Prostheses List (PL) reform has reached a significant milestone, including the initiation of price reduction, category removal and potential process change. In March 2022 updates, the prices of devices with a current gap of more than 7% above the weighted public price will be reduced by 40%/20%/20% considering a 7% “floor” for all products. In the same announcement, 1,053,944 items totaling AU$227,284,462 in benefits in Part A category products, 03, 04, 10 will be removed. Full removal will take place on July 1st 2023, and before then price reductions will be carried out in phases based on private-public price difference. Furthermore, the new PL process is expected to be “a modernized fit-for-purpose listing process”, as described in the public consultation paper. First, administratively, the PL Management System is expected to be replaced by the one-stop shop Health Products Portal (HPP). Second, evidence requirements will shift towards a 3-tier assessment pathway based on device risk classification, aligned with TGA classification. Third, for devices that require health technology assessment (HTA), cost recovery fees have been suggested. Outstanding questions remain, such as how the structure of the fee schedule will change (fixed fee, based on the extent of work, and/or weighed by sales volume) and how these reforms will impact the attractiveness of new product launches in Australia.
In Singapore, HTA for medical devices for national reimbursement was standardized in 2018. In the past, topics for device HTA could only be submitted by the Ministry of Health and Public Healthcare Institutions. In March 2022, industry-led HTA topic submission was made possible. The rules are similar to that in Australia, where a pre-submission consultation to check eligibility is possible, and cost recovery fees are required. However, company-developed value dossier and economic analysis are not accepted at the moment. While this is significant progress, the government and industry should work closely to create synergy and transparency in value assessment.
China’s Payment Environment Changing and Value-based Pricing: Presented by Prof. Jing Wu, Pharmaceutical Economics and Policy, Tianjin University, Tianjin, China
In both developed and developing countries, soaring health expenditures have become a major concern for policymakers and the public. Under this circumstance, the Chinese government plans to give high priority to payment reforms and roll out bundled payment nationwide to replace traditional fee-for-service (FFS) payment. With the launch of a new ministry in 2018 such as the National Healthcare Security Administration (NHSA), one priority of the government is to develop and implement the national diagnosis-related group (DRG) and Diagnosis-Intervention Packet (DIP)-based payment system that are better able to control the rising costs amongst inpatient services. DRG payment method is widely adopted around the world. However, the DIP payment which is originated in China is an innovative bundled payment method for inpatient care. One of the major differences between these two is the classification system, and another is the costing/pricing system. Prof. Jing Wu provided a literature review for the evaluation of the DRG/DIP payment reform in China. Most studies found that the bundled payment model was associated with declining costs and length-of-stay for hospitalization. Reports also demonstrated that the DRG or DIP payment did not produce an unfavorable effect that undermines quality of care. Some also have observed care providers who are under great pressure to survive and thrive and gamed the payment reform by selecting patients, changing the practice pattern, shifting cost or conducting up-coding behavior. Thus, Prof. Jing Wu suggested that further evidence-based monitoring and evaluation linked with adequate management systems should be undertaken to enable China to broadly implement and refine DRG/DIP payment models. These kind of bundled payment methods within inpatient department are closer to value-based payment/pricing compared with FFS model, although a significant gap did exist from the ideal mode. At the end, Prof. Wu discussed the outlooks of value-based payment/pricing in China, including explaining the definition of “value” from the perspective of health care, introducing various innovative provider payment strategies to achieve value-based pricing, and emphasizing the main obstacles and barriers on the way to promote value-based pricing and how to overcome them. The presentation was concluded with sharing opinions and perspectives to provide bundled payments covering the full care cycle or, for chronic conditions, covering periods of one year or more, as a feasible approach in the exploration process.