Page 51 - Effective healthcare cost containment policies Using the Netherlands as a case study - Niek W. Stadhouders

Effective healthcare cost-containment policies: a systematic review
– due to the large number of articles – the last category is further subdivided into market structure policies, market conduct policies and market performance policies. We briefly discuss the findings for each intervention.
Budgeting total or sector expenditures is a widespread policy measure (Abel-Smith and Mossialos, 1994; Wolfe and Moran, 1993). Despite their intuitive appeal, budgets are not necessarily effective in containing spending. For example, budget constraints may be considered soft if hospitals expect a government bail-out in case of overspending (Kornai, 2009; Rodden et al., 2003; Tjerbo and Hagen, 2009). Therefore, effectiveness of budgets as a cost containment tool is an empirical question. However, we could only include two studies at the payer level. The introduction of the Balanced Budget Act in the US (1997) limited total spending on Medicare by 112 billion dollar (Bazzoli et al., 2005). In response, the Centre for Medicare and Medicaid Services introduced a series of cost-containment measures, such as price reductions and payment reform. After two years, hospitals with higher exposure to Medicare patients ended up with on average 9% lower revenues than hospitals with low Medicare exposure, without declines in actual volume (Bazzoli et al., 2005). A systematic review (2 studies) evaluated the effectiveness of GP drug budgets; a significant reduction in pharmaceutical expenses of 27%-70% was found in the UK, while a non-significant reduction of 18%-27% was reported in Ireland (Sturm et al., 2007).
Budgets
Price controls include limits on reimbursements (price setting, fee schedules, price negotiations or reference pricing) and controls of production factors (wages, profits, capital or pharmaceutical inputs). The price of pharmaceuticals in turn may be set based on prices in other countries (external reference pricing) or based on prices of comparator drugs (internal reference pricing). We found two studies on price limits, one study on profit controls, one review on reference pricing (16 studies), one study on external reference pricing, one review on generic substitution (8 studies) and one additional study on generic substitution.
Price controls
Hospital price cuts due to the US Omnibus Budget Reconciliation Act (1989) has been estimated to reduce spending by 6% for every 10% reduction in price (Nguyen, 1996). Reductions in US Medicare homecare prices as a result of the Home Health Interim Payment System (1997) have shown to reduce both use and costs of homecare without any effect on mortality (Huckfeldt et al., 2014). A systematic review found no evidence for pharmaceutical profit controls for Ireland (Lee et al., 2015).
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