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The waiting game: When will Medicare cover technology?

Physicians say a long and difficult coverage process keeps new technology from Medicare patients for too long.

By Markian Hawryluk, amednews staff. June 2/9, 2003.

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Earlier this year, Leslie Saxon, MD, had to ask a patient to choose between his money and his life. The elderly gardener met all the criteria for people at risk for sudden cardiac death who could benefit from a $30,000 implantable cardioverter defibrillator. The only catch -- he was a Medicare patient.

Although Medicare has approved coverage for the device for other indications, program officials are still weighing whether to cover the device for preventive therapy. Absent Medicare funding, implanting the device could have bankrupted her patient and the grandchildren that relied on him.

Dr. Saxon, a cardiac electrophysiologist at the University of Southern California in Los Angeles, was ultimately able to find an alternative way to pay for the potentially life-saving device, but many other Medicare beneficiaries may not be as lucky.

Many physicians and device manufacturers have pointed to the debate over implantable cardioverter defibrillators as a prime example of how arduous the Medicare national coverage decision process has become.

What has angered Dr. Saxon most is that she thinks clinicians have demonstrated the therapy's benefit. A study in the March 21, 2002, New England Journal of Medicine found that the devices cut the relative risk of death by 31% for patients like the gardener. On the basis of that evidence, the Medicare Coverage Advisory Committee recommended that Medicare expand its coverage. Yet agency officials remain unconvinced.

"Everybody going into this trial thought the gold standard for proving the efficacy of therapies was to show survival benefit in high-risk populations with a well-performed placebo study," Dr. Saxon says. "That's what this was, yet there is a tremendous amount of resistance to it."

But according to Sean Tunis, MD, chief medical officer at the Centers for Medicare & Medicaid Services, the evidence is not as overwhelming as some physicians claim. "There remain a nontrivial number of extremely well-informed cardiologists and EP specialists and scientists and researchers who believe that the jury is out that every patient who meets the [study's] criteria should have a cardioverter defibrillator," he says.

Medicare was due to make its coverage determination by late May.

"A company in this environment would be crazy to approach CMS immediately in support of a national coverage decision if you look at the ICD process as any type of a guide," says Steven Ubl, executive vice president, federal government relations, for AdvaMed, which represents device manufacturers.

For most manufacturers, Ubl says, it makes sense to first try the local coverage determination process, in which carriers make determinations for their regions. Requesting a national coverage decision can be a gamble. Besides the lengthy process, if the agency opts against coverage, that decision holds nationwide, with no local carrier leeway.

The agency's critics have accused CMS of dragging its feet on the ICD decision in part because of the potential billions in new spending involved.

Dr. Tunis denies the charge. "We would not say that device X is beneficial, but it is simply so expensive that it is not worth it. But for something that is going to have a huge economic impact on the program, we pay a lot more attention to wanting to be sure the evidence available supports its benefit."

Turtle vs. hare?

The manufacturing community is concerned about the rising level of evidence device manufacturers must meet and the time it takes to do so, Ubl says. A study for AdvaMed by the Lewin Group found that Medicare can take between 15 months and five years after Food and Drug Administration approval to provide coverage for a device.

"Especially after it's been FDA-approved as safe and effective, CMS takes entirely too long to determine whether it will pay for a technology and frequently uses a variety of tactics to slow the diffusion of the technology, whether it's the coverage process or delays in assigning the code, or appropriate payment level," Ubl says.

Doctors have complained that CMS coverage decisions often take so long that Medicare patients are denied technologies long after they are available in the private sector. For example, the FDA approved positron emission tomography in 1990. Yet it took CMS five years to approve PET for a single cardiac function. By 2002, Medicare expanded PET coverage to six broad cancer indications and cardiac imaging. But the program still does not cover PET for diagnosing breast cancer, head and neck cancer, or Alzheimer's disease.

"PET is an example of a major advance in medical technology, an outgrowth of federally supported medical research, that has been kept from our patients far too long due to disorganized and indifferent federal agencies," said Paul Shreve, MD, a diagnostic radiologist at the University of Michigan Health System, Ann Arbor, in testimony before Congress.

Pleasanton, Calif.-based Thoratec Corp. is in the middle of the process now as it tries to expand Medicare coverage for its left ventricular assist devices. The LVADs have been approved as a bridge to heart transplants but not as permanent support. Despite a positive recommendation from the coverage advisory committee in March, the company has no idea whether the coverage will be expanded.

Many manufacturers' products are used overwhelmingly by older patients, so Medicare coverage can make or break a device.

"Hospitals cannot afford to do this procedure without some reimbursement from the payer or the patient," says Jeffrey Nelson, president of Thoratec's cardiovascular division.

While Nelson admits his company has a vested interest in securing Medicare coverage, he says delays mean that patients are not getting access to the latest technology and the best chance at good outcomes.

Some physicians have resorted to providing treatments such as the ICDs or LVADs under other approved indications. But they then open themselves and their facilities up to potential fraud investigations.

The payment obstacle

Even after Medicare approves coverage, payment and coding can still limit patient access to new products. In July 2002, the FDA approved the INFUSE bone graft, a bone fusion device used to join adjacent vertebrae. Previously, spinal fusion required two surgeries, one to harvest small pieces of bone, usually from the hip, and a second to place the bone between the two vertebrae. The new device eliminated the need for bone-harvesting surgery and had a higher success rate.

Up to 45,000 Medicare patients potentially could benefit from the device, but because Medicare hospital payment has not been updated to account for the device's higher cost, fewer than 5% of eligible Medicare patients get it, according to AdvaMed.

Stephen Ondra, MD, director of spine surgery at Northwestern Memorial Hospital in Chicago, says the funding shortfall leaves him with a difficult dilemma.

"Do I provide the latest technology to patients that is going to shorten their recovery at the risk of bankrupting the system and not being able to provide care to anyone in the future?" he says. "Or do I give them older technology that will lengthen their recovery and perhaps result in long-term pain in their hip?"

Some companies run into trouble when trying to conduct the clinical trials that will show a product's effectiveness. Currently, Medicare covers the routine health costs of beneficiaries who take part in clinical trials only if the research is federally funded. AdvaMed said that has made it difficult for smaller companies to start clinical trials.

According to Steven Jenkins, vice president of Evanston, Ill.-based SG-2, a health care technology consulting firm, the dilemma about medical decision-making stems from the faster pace of new development.

"FDA is speeding up approval times, but the current standards for medical coverage decision-making by Medicare and private health plans, by definition, require multiyear studies to demonstrate effectiveness and cost effectiveness," he says. "New technologies that have great benefit won't meet that standard and won't be approved for coverage."

Many have suggested that better coordination of the FDA and CMS approval processes might help speed technologies to Medicare patients. "CMS and FDA have been taking steps to make sure there is more coordination in the process, but they are different decisions," says Mark Miller, PhD, executive director of the Medicare Payment Advisory Commission.

FDA tests whether a product is safe and effective and approves what is included in the product's labeling. Nothing prevents physicians from using that product for other indications. But once safety and efficacy are determined, there is still the matter of whether a product offers any benefit over existing therapies and how much should be paid for the product, Dr. Miller says.

CMS is encouraging companies to approach the agency much earlier in the process. "In some cases, it would be possible for us to give them some feedback in terms of trial designs that would make it much more likely, not only that they would get FDA approval, but that they would get CMS coverage," Dr. Tunis says.

A model for success

Doctors, regulators and manufacturers point to the approval process for drug-eluting stents as a model for future determinations. Johnson & Johnson, whose Cordis Corp. subsidiary manufactures the stents, initiated contact with CMS well before the FDA was close to approval. The company wanted to ensure that the appropriate payment level for the stent was available as soon after approval as possible.

The company had to convince the agency that the stents improved care enough to justify a higher-paying diagnosis related group. So J&J gave CMS officials access to data that were still being reviewed by the FDA.

In July 2002, after Medicare officials confirmed that the FDA was heading toward approval, CMS approved coverage and payment levels for the stents. The FDA announced its approval in April 2003.

While CMS received some criticism for getting out in front of the FDA, manufacturers and physicians hailed Medicare's action as a positive step. The experience also led CMS to develop a Medical Technology Council to better coordinate coverage, payment and coding issues.

"It seemed to us that, rather than depending on the companies to be sure that they're touching all the right bases -- which is probably only within the reach of the very large companies -- we ought to be able to do that on our own," Dr. Tunis says.

The internal council will bring together the clinical side and the payment side of coverage debates. Dr. Tunis hopes the panel will reduce the time it takes to get coverage, payment and coding decisions finalized.

Further reforms might come from Congress. Lawmakers have introduced bills that would direct Medicare to cover routine care costs associated with all FDA-approved clinical trials and to set reasonable deadlines for coverage decisions.

The measures would require CMS to reduce the time it takes to set payment levels for inpatient procedures and would speed patients' appeals of coverage decisions. Some of those provisions are expected to be included in Medicare reform legislation under development in Congress this summer.

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