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Estimating the budget impact of new technologies added to the National List of Health Services in Israel: Stakeholders' incentives for adopting a financial risk-sharing mechanism

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  • Hammerman, Ariel
  • Greenberg, Dan

Abstract

Background The Israeli National List of Health Services (NLHS) is updated annually according to a government allocated budget. The estimated annual cost of each new technology added to this list is based on budget-impact estimations provided by the HMOs and the manufacturers. The HMOs argue that once a new technology is reimbursed, extensive marketing efforts by industry expands demand and renders the allocated budget insufficient. Industry claims that HMOs, in order to secure a sufficient budget, tend to over-estimate the number of target patients. We provide a framework for a financial risk-sharing mechanism between HMOs and the industry, which may be able to balance these incentives and result in more accurate early budget-impact estimates.Objectives To explore the current stakeholders' incentives and behaviors under the existing process of updating the NLHS, and to examine the possible incentives for adopting a financial risk-sharing mechanism on early budget-impact estimations.Results and conclusions According to the financial risk-sharing mechanism, HMOs will be partially compensated by the industry if actual use of a technology is substantially higher than what was projected. HMOs will partially refund the government for a budget that was not fully used. To maintain profits, we assume that the industry will present a more realistic budget-impact analysis. HMOs will be less apprehensive of technology promotion, as they would be compensated in case of budget under-estimation. In case of over-estimation of technology use, the budget re-allocated will be used to enlarge the NLHS which is in the best interest of the health technology industry. Our proposed risk-sharing mechanism is expected to counter balance incentives and disincentives that currently exist in adopting new health technologies in the Israeli healthcare system.

Suggested Citation

  • Hammerman, Ariel & Greenberg, Dan, 2009. "Estimating the budget impact of new technologies added to the National List of Health Services in Israel: Stakeholders' incentives for adopting a financial risk-sharing mechanism," Health Policy, Elsevier, vol. 89(1), pages 78-83, January.
    • Handle: RePEc:eee:hepoli:v:89:y:2009:i:1:p:78-83
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    References listed on IDEAS

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    1. Gregory S. Zaric & Bernie J. O'Brien, 2005. "Analysis of a pharmaceutical risk sharing agreement based on the purchaser's total budget," Health Economics, John Wiley & Sons, Ltd., vol. 14(8), pages 793-803, August.
    2. Gérard Pouvourville, 2006. "Risk-sharing agreements for innovative drugs," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 7(3), pages 155-157, September.
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    1. Arieh Gavious & Dan Greenberg & Ariel Hammerman & Ella Segev, 2014. "Impact of a financial risk-sharing scheme on budget-impact estimations: a game-theoretic approach," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(5), pages 553-561, June.

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