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Incorporating Value Into Physician Payment and Patient Cost Sharing

Zirui Song, MD, PhD; Amol S. Navathe, MD, PhD; Ezekiel J. Emanuel, MD, PhD; and Kevin G. Volpp, MD, PhD
Allowing the appropriateness of services to play a more meaningful role in the design of physician and patient incentives may improve the value of care.

The United States is simultaneously moving toward value-based payments for populations and precision medicine for individuals. During this evolution, innovations in payment and delivery that enhance tailoring of treatments to individuals while improving the value of care are needed. We propose one such innovation that would allow physician payment and patient cost sharing to better reflect the value of care by allowing the appropriateness of a service for a given patient in a given clinical situation to play a more meaningful role in the design of such incentives. We introduce the idea of a payment modifier, based on indication and appropriateness, and discuss its advantages and challenges to implementation.

Am J Manag Care. 2018;24(3):126-128

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Author Affiliations: Department of Health Care Policy, Harvard Medical School (ZS), Boston, MA; Department of Medicine, Massachusetts General Hospital (ZS), Boston, MA; Department of Medical Ethics & Health Policy, Perelman School of Medicine (ASN, EJE, KGV), and Center for Health Incentives and Behavioral Economics, Leonard Davis Institute (ASN, EJE, KGV), University of Pennsylvania, Philadelphia, PA; Center for Health Equity Research and Promotion, Philadelphia Veterans Affairs Medical Center (ASN, KGV), Philadelphia, PA.

Source of Funding: Dr Song was supported by the Office of the Director, National Institutes of Health (NIH Director’s Early Independence Award No. 1DP5OD024564-01).

Author Disclosures: Dr Navathe reports consultancies for Navvis Healthcare, Lynx Medical, and Indegene; grants received from Hawaii Medical Service Association and Oscar; and lecture fees received from Cleveland Clinic. Dr Emanuel is a board member of VillageMD, Abramson Cancer Center, and IMF External Science and Technology Advisory Group; is a member of the Peterson Center on Healthcare Advisory Board; and is employed by University of Pennsylvania and Oak HC/FT. He reports receiving lecture fees from Leigh Bureau, his speakers bureau, and royalties from book sales through publishers. Dr Volpp reports consultancies for VAL Health and CVS; research grants received from Hawaii Medical Service Association, CVS, Humana, Oscar, and Discovery/Vitality; and stock ownership in VAL Health. The remaining author reports no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.

Authorship Information: Concept and design (ZS, ASN, EJE, KGV); acquisition of data (ZS, EJE); analysis and interpretation of data (ZS); drafting of the manuscript (ZS, ASN, EJE); critical revision of the manuscript for important intellectual content (ZS, ASN, EJE, KGV);  obtaining funding (ZS); and administrative, technical, or logistic support (KGV).

Address Correspondence to: Zirui Song, MD, PhD, Department of Health Care Policy, Harvard Medical School, 180A Longwood Ave, Boston, MA 02115. Email:
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