Common Pharmacy Reimbursement Strategies to Calculate Insurance Payments

The current fee-for-service reimbursement model places the incentives on volume over value, lacking any scope for preventive care and care coordination among providers. In order to lower down the cost and improve medical outcome the payment structures need to be redesigned to focus incentives on results and overall value of healthcare. Here are some research backed Pharmacy Reimbursement strategies targeting the payment and payer systems:

Strategy I: Health Insurance Exchanges

Health Insurance Exchanges are most generally formal structures that are regulated by government. They try to pool in the insurance buyers offering them unrestricted access to a number of competing health insurance policies. Individuals enroll into the plan of their choice after accessing the standard benefits offered by plans, comparing features of competing plans, doctors; clinics and hospitals associated with plans, premiums required to be paid and the whole enrollment process. Exchanges decide and set the regulations for collecting premiums deciding if it will be on per-person or family basis or whether it would be adjusted based of age or other such factors.

Exchanges have been praised for lowering healthcare costs and improving healthcare quality. The arrangement provides health insurance companies with a pool of potential enrollees. On the other hand, enrollees in the pool have a clear economic interest to select the health insurance plans that submit the lowest risk-adjusted bids, by requiring enrolls to pay most of the extra cost of plans whose risk-adjusted bids are higher.

Strategy II: Bundled and Fee-For-Episode Payments

Healthcare circles today are a constant observer of the debate around quality improvement of services by providers at reduced cost. Fee-for-service structure and capitation style model of reimbursement lay focus on volumes rather than on value-driven care.

Bundled Payments on the other hand lay emphasis on the entire procedure for a given condition instead of an episode.

In opposition to capitation Bundled Payments are based on per population payment irrespective of whether a member has a condition or not. By setting a single reimbursement fee for a condition, the provider is expected to deliver in quality care the most cost-effective manner. Adjusting payments based on patient- severity factors makes the system fair. Fee-for-episode payments would focus providers in managing care in a patient-centered, coordinated fashion, reducing complications and improving outcomes across the continuum of care.

PROMETHEUS Payment is a consumer centered approach that shifts the focus away from unit-of-service payment to episode-of-care payment. While dealing with several chronic, acute medical and procedural conditions, the method defines what services are included in episode payments and adjusting reimbursements based on the severity of patients. Based on quality-improvement motto, the method ensures that a physician’s scorecard is tied to his potential for reducing complications.

Strategy III: Value-Based Insurance Design and Healthcare Spending

Incentivizing and other similar benefit designs are tools used by both the public and the private insurers to reduce healthcare spending. Co-payments today are set in a standardized one-size-fits-all style that can create diverse range incentives for patients. Co-payments for essential, high-value services are often set too high. As a result they are underused which leads to missed opportunities to prevent and treat expensive diseases. Whereas on the other hand co-payments for nonessential, low-value services are sometimes not set high enough to minimize their unnecessary use.

Value-based insurance design (VBID) is a cost-sharing system that sets appropriate incentives for patients based on the evidence-based value of specific services. Here the co-payments are set at low levels for high-value services and at high levels for those services that are less valuable.  Selectively raising co-payments for low-value services may achieve cost-savings by directly reducing the use of unnecessary services