Reform
The Role of Novel Technologies
in the Healthcare Debate
The 2008 Academy of Health
National Health Policy Conference
Washington, D.C.
“There is no problem, however difficult, which if we
roll up our sleeves, we cannot completely ignore”.
--George Carlin
February 5, 2008
Randel E. Richner, BSN, MPH
President, Founder
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Policy Overview
Technology Is Good.
1. Technology Assessment and
Value
Technology per se, does not “cause” increased
health care costs…
1. It is only randomly possible to accurately detect the true
value of technology due to our fragmented care delivery,
migration of services, and system issues (complex
overlay of private/public insurers to track and monitor
care).
2. Medical risks may be misrepresented and limit-- or
encourage– technology inappropriately.
3. Misaligned payment systems cause perverse care
incentives and effect costs.
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Technology’
Technology’s Place in Health Care Today
Industry
Payer
Value
Usage containment
Low costs
Price
Rigorous R&D
Fast approvals
Timely coverage
Transparency
6
New, Innovative and Complex Technologies
ƒ
Devices are getting smarter and are providing more information
• Intelligent devices
Inconsistent
InconsistentPolicies
Policies
More
MoreClinical
ClinicalData
Data
Higher
Standards
Higher Standards
No
NoTransparency
Transparency
• Biotechnology Revolution
• Personalized Medicine
• Combination Products
• Information-Rich Therapeutics
Regulator
Physician
Safety/efficacy
More data
Early technology access
Cost-conscious
Safety/efficacy
Post-market surveillance
Faster approval
Implanted devices, more complex
Younger patients, remote monitoring
Longer follow-up
Congress
More devices, more recalls
Increased oversight/hearings
Global harmonization
Little risk tolerance
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Code of Hammurabi 1760 BC
ƒ 260 or so rules that served as law in ancient
Babylon
ƒ Nine of these (215-223) pertained to physician
Technology Access
Decision-Making Occurs at Multiple Levels
Geographic Level
Organizations Involved
• CMS, (Global--International)
• Major national third party payers and
benefit managers
treatments
• If a physician make a large incision with an operating knife and cure it, or if he
open a tumor (over the eye) with an operating knife, and saves the eye, he
shall receive ten shekels in money. (COMPARATIVE EFFECTIVENESS)
National
• If a physician make a large incision with the operating knife, and kill him, or
open a tumor with the operating knife, and cut out the eye, his hands shall be
cut off. (TORT REFORM)
Regional
• Medicare Intermediaries and Carriers,
DMERCs
• Regional health plans
• If he had opened a tumor with the operating knife, and put out his eye, he
shall pay half his value. (P4P)
• If the physician heal the broken bone or diseased soft part of a man, the
patient shall pay the physician five shekels in money. (P4P and Quality)
•
•
•
•
Local
Medicaid administrators
IDNs
Physician groups
Hospitals
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Commercial Payers
ƒNumbers: 300,000,000 Americans in 2006
Employment-Based Insurance
2. Risks
174,819,000
Directly Purchased/Individual Market
26,781,000
Medicare
40,185,000
Medicaid
38,134,000
Military Healthcare Coverage
11,172,000
Uninsured
46,577,000
Total Coverage Arrangements
337,668,000
ƒ Commercial Health Plans 202,000,000 of
300,000,000
ƒSource:
Unitedof
States
Census Bureau, Current Population Reports, August 2006. Table
ƒ Five Times the
Size
Medicare
C-1: Income, Poverty, and Health Insurance Coverage in the United States: 2005, p. 60.
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FDA/CMSDisconnect Between Regulator and Payer
Fundamental
Drug Risks:
Near-Term Fatalities Per Person-Year
Source: Cohen, Neumann, TUFTS NEMC
Log Scale
1000
100
35
65
76
10.4
10
3 Orders
Of
Magnitude
2.8
1
0.1
0.07
0.01
FDA/CMS
FDA/CMS
FDA/CMS
Sm
all
po
x
EVIDENCE
(data)
Vio
xx
iC Stent
Deaths per 100,000 person-years
CV
va
cc
An
in
tih
e
is
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es
ail
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br
if
or
M
S
Imaging
2
Recreation
Source: Cohen, Neumann, TUFTS, NEMC
Fire fighters: 11
ALL WORKERS: 4
2.8
1
Office + admin: 0.4
35
76
65
Rock climbing: 36
10.4
10
2.8
Bicycling 2.1
1
Downhill skiing: 0.49
0.07
0.1
HS+college football: 0.058
in
e
0.01
al
lp
o
x
ih
is
t
va
cc
Vi
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Sm
An
tih
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M
S
0.01
100
An
t
0.1
0.07
1000
x
Truck drivers: 45
10.4
10
Tree fellers: 358
Vi
ox
76
65
35
am
in
D
es
ai
ly
as
pi
rin
C
lo
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sa
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br
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M
S
1000
100
Climb Mt. Everest: 13,000
Deaths per 100,000 person-years
Deaths per 100,000 person-years
Work
Source: Cohen, Neumann, TUFTS NEMC
Transportation
Source: Cohen, Neumann, TUFTS, NEMC
Deaths per 100,000 person-years
3. Payment Misalignments
1000
100
35
65
76
10
Passenger car: 11
2.8
Cell phones + driving: 1.3
1
0.1
Motorcycle: 450
Truck drivers: 45
10.4
0.07
Commercial airplane: 0.15
lp
o
al
Sm
Vi
ox
x
An
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va
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M
S
0.01
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Medicare’
Medicare’s Misaligned Reimbursement System causes
mismis-use, overover-use and underunder-use of technology
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ƒ Each payment system has its own rules, based in
statute, and uses data from the providers it pays
Major CMS Payment Systems
ƒ PROSPECTIVE PAYMENT
SYSTEMS:
ƒ FEE SCHEDULES:
• Physicians
• Different payments in different sites for the same
items or services
• Inpatient PPS
• Can create inappropriate incentives
• Inpatient Rehab
• Providers learn to balance underpaid/overpaid
services to achieve bottom-line
• Long-term Care Hospital
• Durable Medical Equipment,
Prosthetics & Orthotics
• Inpatient Psych
• Ambulance
• Benefits of less invasive services, migration to less
costly settings, not recognized in value calculations
• Skilled Nursing Facility
• ESRD
• Outpatient PPS
• Ambulatory Surgical Centers
• Clinical Labs
• Home Health
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Example of Payment Divergences
Home Hemodialysis provides great
value; providers limit adoption
Diagnostic Colonoscopy – CPT 45378
ƒMajor clinical benefits
1.15 million procedures performed in 2003
Payment
•LVH, heart failure improvement
•Anemia
•Rehabilitation/QOL
Site Utilization
ƒOPPS
$513
56%
ƒASC
$446
22%
ƒ15-25% annual savings
ƒPFS-PE
$177
6%
potential ($10-17K of 70K
costs)
VS.
•Kaiser promoting home dialysis
physician fee schedule (PFS)
practice expense (PE)
Payment misaligned; price controlled
and limited
Daily home dialysis challenges
Largest savings in
hospital costs, which
are part of a different
budget (Part A vs.
Part B) and are not
realized by the
dialysis provider
ƒ Patient access is skewed
toward those with
commercial insurance, and
Medicare beneficiaries are
denied care
ƒ Potential to save Medicare
$10,000 per year per patient
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Understanding Financial Risk:
Reimbursement Strategy
ƒ Financial risk flows through health plans and
provider structures in different ways
ƒ The ‘holder’ of financial risk typically controls
decisions about purchase and use of new
technology
ƒ The strategies and tactics associated with obtaining
reimbursement depend on the integration of all
reimbursement elements
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Improving U.S. Healthcare
9 Change the notion of competition from shifting costs to
embracing value
9 Sort out who pays, how, what, why
9 Improve incentives for performance
9 More transparent, predictable pathway for new services & devices
9 Medical technology & devices are not the problem, they offer
solutions to:
9 Labor– improve productivity
9 Capital – miniaturization, point-of-care
9 Quality – improve interactivity, outcomes, track & involve patient
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Solution 1
ƒ New Study Paradigm. Encourage access, innovation, balance risks,
benefits and costs.
ƒ Risk-based stratification of evidence (Comparative Effectiveness)
ƒ Physician end-user involvement
ƒ Focus on treatment comparisons rather than individual product
comparisons
ƒ Electronic records, and HIT advances; invest in this infrastructure.
ƒ Gold standard, database, epidemiological studies
ƒ Bayesian analysis: “preexisting” data are constantly adjusted using
Solution 2
ƒ Avoid the temptation to regulate when events occur
before the technology is tested thoroughly.
ƒ Partner with industry and medicine on improved
methods to accurately measure risk;
ƒ Tort reform.
new data as acured: potential reduction of sample sizes, and ability to
continually update probability of success or failure.
ƒ Collaborate with NIH, AHRQ, Private, public entities
ƒ Global interactions and use of data
Solution 3
ƒ
Imposing new evidence requirements prematurely without alignment in payment
systems may have irreversible consequences in the growth and adoption of new
technology
ƒ
Reward preventative services and interventions that can clearly demonstrate a
significant value over existing products.
ƒ
Integrate nanotechnology, IT, molecular diagnostics and combination therapies
(drugs/devices) into existing payment schemas:
ƒ
Continue to educate policy makers to change health care systems to accommodate
the rapid growth and shift in innovation.
ƒ
Evaluate new medical technologies at CMS through the Council of Medical
Technology and Innovation;
ƒ
Use an episode of care as a reward technology that moves from acute to home
setttings (works in Kaiser-like systems where physician payment is not linked to
utilization; providers and payers are aligned)
ƒ
Include physician payments and incentives in the episode of care.
Founder & President: Randel E. Richner, BSN, MPH
ƒ
PREEMPTIVE, PREDICTIVE, PERSONALIZED, and PARTICIPATIVE
508-655-6161 Š Richner@neocuregroup.com
www.neocuregroup.com
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