Decision-Making by Public Payers

Abstract

Public payers could be the most important players in a world of comparative effectiveness, because of the large populations covered and the amount of money spent. Moreover, they frequently set the payment rules for other private payers to follow. However, they are also constrained by program-specific legislative authority and regulations. This chapter explains the framework, openness, and use of findings from their own or other research that public payers use to shape determinations about coverage and payment at the state and federal level. Medicare and Veterans Administration are compared to each other as well as three of the largest Medicaid states – California, New York, and Texas. Medicare uses comparative effectiveness findings largely in a bottom-up approach with local coverage decisions informing national coverage decisions sometimes vetted by a very open centralized advisory panel that relies upon research done by the Agency for Healthcare Research and Quality. Veterans Administration is largely internally driven and closed decision-making by the clinicians and staff, but with the help of a program of their own that synthesizes evidence-based research. The Medicaid programs focus on pharmaceuticals and use comparative effectiveness to develop their automated drug utilization review rules and their preferred drug formulary rules. Medicaid is less likely than Medicare or Veterans Administration to use comparative effectiveness decision-making for devices, procedures, or services. Risk-sharing and outcome-based contracting models are increasingly relying on comparative effectiveness findings to drive performance measures that in turn drive payments.