Abstract
Innovation in the field of diagnostic imaging is based primarily on the availability of new and improved equipment that opens the door for new clinical applications. Payments for these imaging procedures are subject to complex Medicare price control schemes, affecting incentives for appropriate use and innovation. Achieving a "dynamically efficient" health care system-one that elicits a socially optimal amount of innovation-requires that innovators be rewarded in relation to the value they add and can demonstrate with evidence. The authors examine how and whether value-based reimbursement for diagnostic imaging services might better reward innovation explicitly for expected improvements in health and economic outcomes.
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