The Potential Benefits of Deferred Payment

Hlavka and his colleagues used a hypothetical gene therapy for congestive heart failure to assess the impact of a new payment model on access and outcomes.

A summary of this paper is below. The full journal article is available at Applied Health Economics and Health Policy.

As pharmaceutical and medical innovations advance, the possibility for curative therapies increases. These hypothetical treatments have the potential to deliver long-term clinical benefits to patients, improving health outcomes and quality of life. But, the unit prices of these products are also likely to be very high. Short-term budget constraints of payers can lead to obstacles to access, as we have seen in the case of hepatitis C drugs.

A deferred payment model shifts the payment structure to that of chronic conditions. It also has the potential to include a performance component, thereby linking payment to clinical outcomes. Using a hypothetical therapy for congestive heart failure, the researchers test the clinical and financial outcomes of a deferred payment model.

Using data on 91,000 Medicare fee-for-service beneficiaries over a period of 5 years (2009–2014), the researchers looked at access, health outcomes and total cost to payers when applying down payments of differing amounts and monthly installments for each period when a patient is stable.

The researchers find that a deferred payment model is associated with earlier access to treatment and a consequent improvement in clinical outcomes. Their analysis shows that 25 percent down-payment is associated with the highest relative improvement and reduces hospital admissions by 0.52 percent and mortality by 0.29 percent compared to the status quo.

Furthermore, because some patients may benefit from treatment more than others and an installment-based payment links costs to key outcomes including mortality and readmissions, the proposed payment model could help increase cost-effectiveness of future gene therapies in select patient populations while holding average cost of therapy constant.

Citation: Hlávka, J.P., Mattke, S. & Wilks, A. The Potential Benefits of Deferred Payment for a Hypothetical Gene Therapy for Congestive Heart Failure: A Cost-Consequence Analysis. Appl Health Econ Health Policy (2020).