United States: Digital Health Innovation In The United States And United Kingdom: The Promise And Challenge Of Government Reimbursement Policies

Digital health has excited health care innovators for many years, but understanding how these tools can fit within existing health care financial structures is critical for success.

(SOME) DOOM AND GLOOM

Unfortunately, neither the U.S. nor the UK public health systems have created a comprehensive framework to support digital health tools generally. There are a number of reasons for this.

First, public health systems charged with paying for products and services must evaluate their efficacy and costeffectiveness in order to responsibly provide reimbursement. While both the National Health Service (NHS) in the United Kingdom and the Department of Health and Human Services in the United States have made some progress, neither reimbursement system is set up to perform the difficult task of quickly and effectively evaluating the vast range of constantly evolving products and services within the digital health sector.

Second, many digital health tools do not fall within the scope of services traditionally offered by public health systems. Disease monitoring, wellness, and prescription or therapy adherence tools, for example, traditionally have not been reimbursed in the fee-for-service or provider tariff-based models in either country. Accordingly, these products would increase expenditures under government reimbursement programs, at least in the short term.

Third, even if a tool is effective at treating a condition, and is otherwise cost effective compared to alternatives, the tool may increase utilisation and, ultimately, financial cost.

Without a doubt, these are difficult challenges, but an uncertain reimbursement landscape has a number of negative consequences for maximising the potential for digital health solutions.

First, the hype around digital health could result in a digital health "bubble", where value is inflated and not reflected in future revenue streams.

Second, many digital health solutions may not presently be financially viable, leaving only digital giants able to afford the front-end carrying costs, and resulting in fewer suppliers further down the road.

Third, the types of digital health tools adopted by practitioners could be limited. Providers may want to invest only in digital health products that result in cost savings related to the delivery of health care services, and may lack incentives to invest in digital health products that aim to prevent or delay interventions through self-management or early intervention, if this reduces their volume of services.

This is not to say that health care providers are motivated solely by economics, and we roundly reject this sentiment. At the same time, however, it would be foolish not to acknowledge the fact that economic factors must come into play in decision making: providers must be able to financially sustain themselves.

Finally, if the health care provider community is not actively adopting these tools, then their patients may not have an incentive to do so themselves.

(BABY) STEPS IN THE RIGHT DIRECTION

All is not doom and gloom, however. Payment systems in both the United Kingdom and United States have been evolving to support digital health innovation.

In the United States, for example, reimbursement for telemedicine services has slowly been gaining ground. Medicaid programmes reimburse a wide range of telemedicine services and Medicare, despite continuing to burden telemedicine reimbursement with highly restrictive qualification requirements, continues to add services subject to reimbursement. Most states have legislatively mandated that private insurance programs reimburse telemedicine services, and in some instances mandate reimbursement at the same economic level as in-person services.

More interesting and, in the longrun more importantly, the United States is slowly evolving into a "value-based" reimbursement market, where reimbursement for medical services is increasingly subject to quality and efficiency standards. In a recent survey, digital health companies indicated that this has been the most significant force for digital health adoption.

The vast number of value-based systems, and their complexity, can pose a challenge. Each value-based Federal or state payment programme has its own unique blend of quality and efficiency metrics and incentives.

While there is some commonality across programmes, proving a digital health tool's value for specific programmes requires some work. For example, the recently announced Bundled Payments for Care Improvement Advanced (BPCIA) provides a bundled payment to cover specific inpatient and outpatient episodes. Specific quality measures will be tracked and payments will be adjusted accordingly. Digital health tools can benefit providers looking to participate in BPCIA, but the most attractive will be those with use cases that can be applied to the specified episodes of care and help to achieve success under the specified quality metrics.

Similarly, since 2014, UK NHS policy has been to move to an integrated or accountable care model of health care providers, using outcomes or value based metrics and digital and data analytics to manage overall demand for care. A few areas have moved quickly to value-based contracts where the providers take overall budget responsibility for managing care. Unsurprisingly, these areas and primary care providers, where pricing is based on a price per patient, have been keen to adopt new technologies. Progress overall has, however, been somewhat "stop start" as fears of privatisation have recently slowed progress.

In theory, digital health tools are key levers to help NHS providers deliver care to a set budget. The real challenge is whether NHS commissioners have unrealistic expectations about the savings to be delivered from day one so that budgets do not give sufficient incentives to providers to move away from a tariff model or invest in new tools.

Other developments are more promising. In 2017, a new NHS "innovation" tariff was introduced for commissioners to purchase approved digital health tools. At the same time, the national tariff rules explicitly encouraged local commissioners and providers to reach pricing agreements where care was provided remotely.

So far, the only digital health tool covered by the innovation tariff is a mobile chronic obstructive pulmonary disease product, to be funded by commissioners at £20 per patient. On one level, this tariff is encouraging, because it formally recognises the role of digital technology. But, a payment directly to a digital health company by a commissioner (bypassing the health care provider) may not create the right long-term incentives for providers to manage overall cost or for digital health manufacturers to maximise value.

AN ENTICING FUTURE?

Government, by its nature, is slow to act and slow to change. So we must recognise that from a reimbursement prospective, it's still early days. When contrasted with the clear interest of consumers and providers, the gap between demand and reimbursement can seem vast.

It is important to bear in mind, however, that public payment programmes must balance a competing set of interests. Digital health innovators who see government reimbursement as a key to a promising future would be well-served to help the government address these issues, and in so doing, help to shape the future innovation of health care.

Digital Health Innovation In The United States And United Kingdom: The Promise And Challenge Of Government Reimbursement Policies

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