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Medicare's response to innovation: More hindrance than help.

"As the nation's largest healthcare "A payer, the Medicare program exerts significant influence on patient access to new medical technologies," a recent report from the Advanced Medical Technology Association (AdvaMed) begins. It uses words like "inconsistent," "time consuming," and "uncoordinated" to characterize the exhaustive bureaucratic processes involved in obtaining coverage, coding, and adequate payment for new devices and diagnostic tests. "Impediment" might be a more apt description.

The Medicare Payment Process and Patient Access to Technology Report, produced by the Lewin Group, a healthcare consulting firm in Falls Church, VA, for AdvaMed, details the consequences of this unwieldy process, the most notable of which is to keep seniors from reaping the benefits of technological advances and breakthroughs, sometimes for years. Lack of Medicare approval can create barriers for younger Americans as well because private payers often follow Medicare's lead in coverage decisions.

Achieving national Medicare coverage can take 5 years or more and subject a manufacturer to largely unexplained and unpredictable requirements, according to the report. And obtaining coverage from local Medicare carriers, which is generally how a new test or device enters the market, requires multiple applications and results in a hodgepodge of fees and coverage criteria.

Add the hurdles involved in getting proper coding--which can take 15 to 27 months--and Medicare's often inadequate payment for new technology, and the deterrent effect becomes clear. Aside from discouraging innovators, federal reimbursement often falls so far below the actual cost of the new device, therapy, or diagnostic test that physicians, hospitals, and laboratories can't afford to use it.

That's the assertion of Washington, DC-based AdvaMed, whose 800 member companies collectively produce nearly 90% of the healthcare technology products used in the US. Clinicians and patients have long uttered similar complaints. And in recent months, congressmen intent on breaking down these barriers have become vociferous critics as well, according to a recent article in The Washington Times. (For a current laboratory example, see MLO's cover story, "The uphill battle for higher Pap smear reimbursements," p. 28.)

Glaring examples of these obstacles are detailed in case studies highlighted in the report. One such example focuses on the lengthy approval process that dual energy x-ray absorption endured.

In 1990, 3 years after DEXA was introduced, HCFA authorized a series of technology assessments that took years to complete. Local Medicare carriers began paying for DEXA in the meantime, but coverage patterns were erratic. Some authorized testing to determine if estrogen replacement therapy or a change in treatment was needed, for example. Many others rejected that same application on the grounds that it's a screening service, which Medicare doesn't cover. National coverage--which brings uniform payment and coverage criteria--finally took effect in 1998, a year after Congress passed the Bone Mass Management Act.

Not all new diagnostic or lab tests encounter such problems, though. Digene Corp., maker of the Hybrid Capture II HPV DNA test approved by the FDA in 1999, reports few problems with coverage or payment, for example.

But many do. Randy Burkholder, associate vice president of policy and advocacy communications at AdvaMed, cites the automated homocysteine test, which has been a victim of "flawed"--meaning woefully inadequate--reimbursement. In Florida, says Burkholder, the reimbursement rate was about $6.69 and the actual cost of the test was around $20. So the lab and local carrier worked to get Medicare to look at this issue nationally. "They finally got HCFA to fix it, but that's only in Florida," he notes, adding ruefully: "The labs do a lot less of the automated tests at that price." In addition, because nonautomated testing is so labor-intensive, labs are less inclined to perform homocysteine tests at all.

At press time, congressional sources confirmed that House committees had approved legislation that would help eliminate delays in obtaining coverage and coding, require Medicare to develop special ways of paying for medical innovations, and set clear and open procedures for coding and payment decisions. The measures, which began as part of the Medicare Patient Access to Technology Act, have been incorporated into the House version of the Balanced Budget Refinement Act of 2000. If the full House and Senate give final approval and these measures become law, Medicare would also be required to issue codes far more frequently--and deliver annual reports to Congress detailing how long they are taking to make decisions about new technology. Seniors' rights to appeal decisions not to cover new technology would be stepped up as well.

While Medicare recently made some changes aimed at streamlining its processes, critics say some changes raised additional problems and others were too little too late. "The legislation is needed because of Medicare's lack of changes," Burkholder asserts. "Companies are having an easier time getting through the FDA, thanks to the Modernization Act. Then Medicare is a brick wall."
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Title Annotation:approval and financing procedures
Author:Lippman, Helen
Publication:Medical Laboratory Observer
Article Type:Brief Article
Geographic Code:1USA
Date:Nov 1, 2000
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