The Role of Alternative Payment Models in Pharmaceutical Services and Outcomes

Abstract

A persistent challenge within the healthcare sector is balancing cost containment for health services and the quality of care associated with these services. This challenge has reinvigorated interest in alternative payment models (i.e., risk-sharing, shared savings, capitation), arrangements between payers and healthcare providers that structure reimbursement for services based on health outcomes. Although much research has assessed the association between these payment models and financial outcomes for medical services, there is a paucity of research that has likewise assessed pharmaceutical outcomes (i.e., electronic prescribing, evidence-based prescribing, medication adherence). The papers comprising this dissertation contribute to this limited body of research by specifically assessing variations in medication-based outcomes across providers engaged in different payment models. The hypotheses of this three-paper dissertation were constructed using agency theory and prospect theory. Furthermore, the three papers were conceptually organized according to Donabedian’s structure-process-outcome framework. The first paper (structure) assessed the association between participation in alternative payment models and adoption of two health technologies, computerized provider order entry (CPOE) and clinical decision support (CDS). The results did not identify any significant variation in the likelihood of adoption of such systems across different payment models and failed to support the hypothesis that increased financial incentives encourage greater adoption of these tools. The second paper (process) assessed evidence-based prescribing of two classes of diabetes medication for type 2 diabetic patients exhibiting cardiovascular comorbidity. The results suggested a reduced likelihood of prescribing these medications among providers engaged in capitated arrangements as compared to providers associated with fee-for-service arrangements. Finally, the third paper (outcome) assessed variations in medication adherence and medical costs of type 2 diabetic patients across payment models. The results indicated slightly higher medication adherence for patients associated with alternative payment models and a mediating role of medication adherence in the association between payment model and medical costs. The results of these papers may assist various stakeholders, including payers, healthcare providers, and policymakers, in identifying opportunities for refining existing value-based payment models to further consider the potential role of pharmaceutical services in reducing costs and improving outcomes.