Medicare’s National Coverage Decisions for Technologies, 1999–2007

Peter Neumann, Sc.D., Maki S. Kamae, M.D., M.P.H., and Jennifer A. Palmer, M.S. Health Affairs, November/December 2008 27(6):1620–31

A multiyear analysis of Medicare’s “national coverage decisions”—policies for reimbursing health care providers for particular medical services—shows that the program considers the available evidence “fair” or “poor” for most medical technologies it reviews. Nonetheless, Medicare issues favorable decisions in 60 percent of cases.

Dynamic Cost-Effectiveness: A More Efficient Reimbursement Criterion

Douglas Lundin and Joakim Ramsberg (2008) “Dynamic Cost-Effectiveness: A More Efficient Reimbursement Criterion,” Forum for Health Economics & Policy: Vol. 11: Iss. 2 (Economics of Health Care Contracting), Article 7.
Abstract

Basing drug reimbursement on cost-effectiveness provides too little incentives for R&D. The reason for this is that cost-effectiveness is concerned with immediate value for money. But since the price of a drug usually declines over time, the drug might well provide value for money as seen over its entire life cycle, even though its price during patent protection is too high to warrant reimbursement according to the cost-effectiveness decision rule. We show in a theoretical model that welfare could be improved if decision-makers took a longer perspective and initially allowed higher prices than immediate value for money can motivate. We also discuss the real world relevance of applying dynamic cost-effectiveness.