02.04.09
Reimbursement Roadmap
With Obama, focus on comparitive effectiveness.
Tim Hunter
Over the past few years, the Centers for Medicare and Medicaid Services (CMS) have unveiled a number of initiatives aimed at improving care for Medicare recipients. The new presidential administration will bring a number of changes in 2009 and beyond, including those related to healthcare. This article examines important Medicare-related issues of interest in the new administration, offers insight into which current policies are likely to continue and recommends action for device manufacturers.
Healthcare Changes Possible in Long Haul
While the new administration has signaled a promise to begin delivering change during its first 100 days, possibilities for significant change on the healthcare front likely will take longer to deliver. Both the president and Congress have signaled their intent for comprehensive healthcare reform, such as government-run health plans and proposed expansions to the State Children’s Health Insurance Program.
Comprehensive Healthcare Reform
Members of Congress and the administration already are cautioning that comprehensive reform will not be among the first initiatives debated this year. However, congressional action may begin in earnest midway through this year and extend indefinitely.
Medicare Buy-in for Patients Under Age 65
The Obama administration and leading Democrats in Congress have recently articulated plans to reduce the number of Americans lacking health insurance coverage. Among the ideas being vetted is one to allow individuals ages 55-64 to buy into the Medicare program. While such an initiative is not new—the American Association of Retired Persons and others, for example, addressed Medicare buy-in programs a decade ago—the new makeup of the 111th Congress and the promised focus from the Obama administration provide the best opportunity for action.
While blueprints have been disseminated, new legislation will be required. The end of 2009 may not be a realistic timetable for such broad reform, but 2010 and later remain viable opportunities.
At some point, if the legislation passes and is signed into law, CMS will have to figure out how to administer this expanded benefit.
Some Things Will Be Accelerated
While the new administration offers the possibility for significant change, many CMS initiatives likely will continue or be expanded during the next few years.
It stands to reason that CMS will continue its efforts to focus on quality of care, including the reduction or prevention of hospital-acquired infections, “never events” and other preventable errors. Other initiatives likely to grow include:
• Aligning Surgeon and Hospital Incentives: As discussed in the 2009 Medicare hospital inpatient final rule, providers (including surgeons) and hospitals sometimes have different incentives with respect to patient care. Sen. Max Baucus (D-Mont.), the chairman of the Senate Finance Committee (the Senate committee with jurisdiction over Medicare programs), included alignment as one of many areas for short-term focus.
• Comparative Effectiveness: While comparative effectiveness as a concept is much broader than the existing CMS efforts (coverage with evidence development), it is worth mentioning as it is the initiative most likely to be expanded in the coming years. While it may take some time to create an independent institute for comparative effectiveness, as outlined in President Obama’s healthcare plan or 2008 legislation, comparative effectiveness research can be enhanced through strategic federal agency funding, such as expanded discretionary funds for CMS’s CED or increased funding for the Agency for Health Research and Quality (AHRQ), which already has begun to examine comparative effectiveness.
In 2007, AHRQ released its draft guidance for comparative effectiveness. The guide recommends a framework for completing comparative effectiveness studies and describes how comparative data may be assessed. To date, this agency already has completed comparative effectiveness evaluations for several orthopedic treatments, including drug treatments for arthritis.
Comparative effectiveness research, regardless of source, could be used by health payors to establish coverage policies, identify preferred products (including devices), determine which patient groups benefit most and least for any technology or service, and attempt to establish a value comparison among competing technologies.
In some form or fashion, payors likely will use comparative effectiveness to decrease healthcare costs as well as to improve patient care. Congressional proponents, such as Baucus, offer comparative effectiveness as an opportunity to reduce healthcare costs by providing unbiased information on treatment options and outcomes.
The most important (and unresolved) questions for orthopedic device companies involve how competing products will be compared, what evidence will be used for comparison, and whether pricing and cost information will be used as a comparator.
• Fraud and Abuse Detection and Prevention: Based on historical performance, Democratic leaders in the House and Senate likely will make fraud and abuse detection and prevention key elements of any future systematic change. Additionally, Medicare spending reductions resulting from reduced payments and/or fines will be needed to offset any cost increases associated with programmatic expansion.
The Time Has Come to Look, Listen, Act
Manufacturers of orthopedic devices should closely monitor administrative and congressional actions during the first few months of the new administration. In addition to monitoring new legislation, companies should be focused on administrative actions, including the following:
• Fiscal Year (FY) 2010 Federal Budget: With a Democratic-controlled Congress, one of the first signals from the Obama administration will come in the form of the FY 2010 budget. This document will lay out key health priorities for the coming year as well as set the groundwork for longer-term initiatives.
• FY 2010 Medicare Hospital Inpatient Proposed Rule: In April, CMS will issue the FY 2010 Medicare Hospital Inpatient Prospective Payment System Proposed Rule. This rule, which sets the stage for final Medicare coverage and payment policy, may include new programmatic changes. Current initiatives also are likely to be discussed, including prevention of never events, hospital quality reporting, reduction of hospital-acquired infections and alignment of incentives for surgeons and hospitals.
Finally, orthopedic device companies should prepare now for future implementation of programs that may impact product use or sales. For example, establishment of comprehensive education and training programs for surgeons and hospitals can help to improve quality of care by increasing surgeon experience in implanting a new device or by helping to reduce the incidence of device-related infection.
Among all proposed or current initiatives, comparative effectiveness has the opportunity to most dramatically impact product use and adoption. Companies should consider comparative effectiveness in all aspects of product design and commercialization, including the following:
• Pivotal clinical trials
• Publication strategies
• Post-market studies (clinical and/or economic)
• Post-market registries
• Customer training and continuing education
Manufacturers that understand the challenges and opportunities resulting from the inevitable focus on comparative effectiveness and that proactively develop evidence to meet these higher thresholds will be best equipped to properly position their technologies for use. Devices that undergo more rigorous clinical study generate better clinical outcomes that result in high-level publication, and/or have robust economic data demonstrating cost savings should be advantaged in any comparative effectiveness analysis.
Tim Hunter is the director of reimbursement for Musculoskeletal Clinical Regulatory Advisers, LLC. In this capacity, he works with client companies to solve complex coverage and reimbursement issues for existing, new and future products. Please send inquiries to Tim at
info@mcra.com.