DRG-Based Hospital Payment Systems and Technological Innovation in 12 European Countries

Abstract

Generous short-term payment instruments to promote technological innovation should be applied carefully as they may imply rapidly increasing health-care expenditures. In general, they should be granted only if rigorous analyses have demonstrated their benefits. If the evidence remains uncertain, coverage with evidence development frameworks or frequent updates of the DRG-based hospital systems may provide policy alternatives. Once the data and evidence base is substantially improved, future research should empirically investigate how different policy arrangements affect the adoption and use of technological innovation and health-care expenditures.

Hospital Payment Based On Diagnosis-Related Groups Differs In Europe And Holds Lessons For The United States

“…All systems have developed mechanisms to provide additional payments for certain innovative technologies, including drugs, when they are not adequately reimbursed through the payment system. 19 Adequacy Of Hospital Payments If DRGbased payments to hospitals are too low to cover treatment costs, providers will attempt to reduce costs by cutting services or reducing quality. If payments are too high, providers have no incentive to behave efficiently and will waste resources.…”

“…In the other four countries the time lag between collection of cost data and determination of payment rates is two years. 19 There is a trade-off between collecting highquality cost accounting information and ensuring that a large and representative sample of hospitals contribute to a national cost database. 20 The Netherlands has struck a balance between representativeness and data quality by collecting data on resource use from all hospitals and data on unit costs from a small sample of hospitals.…”

Evolving Reimbursement And Pricing Policies For Devices In Europe And The United States Should Encourage Greater Value

“…The lack of sufficient payment may provide a disincentive for hospitals to adopt and use new devices that may be beneficial, because the payment amount is below actual costs. 12 To address this issue, Germany, the United Kingdom, France, Italy, Spain, and Sweden have introduced separate or supplementary payments to provide partial or total reimbursements for potentially beneficial devices until they are fully captured by the payment system, either through a new diagnosis-related group or an increase in the reimbursement price. 12 Such payments are negotiated nationally or locally with manufacturers, hospitals, or other local authorities, and they are generally temporary, lasting two to three years.…”

“…12 To address this issue, Germany, the United Kingdom, France, Italy, Spain, and Sweden have introduced separate or supplementary payments to provide partial or total reimbursements for potentially beneficial devices until they are fully captured by the payment system, either through a new diagnosis-related group or an increase in the reimbursement price. 12 Such payments are negotiated nationally or locally with manufacturers, hospitals, or other local authorities, and they are generally temporary, lasting two to three years. Most of the countries using this approach-particularly Germany, the United Kingdom, and France-consider evidence of therapeutic benefit and, in some cases, costeffectiveness to determine whether a technology is eligible for the short-term payment.…”

“…Either way, reimbursement prices are derived through reference pricing for similar existing devices or through a competitive public-tender process. 12 Unlike more complex, higher-cost devices, these types of devices do not normally undergo a health technology assessment to determine value.…”