Comparative effectiveness needs reimbursement reform

August 1, 2009
Scott Huennekens
Scott Huennekens

Straying from the popular opinion of the industry, a handful of medical device manufactures have aligned with Obama's proposed investment in comparative effectiveness research.

Comparative effectiveness research has been defined by the Congressional Budget Office as, "rigorous evaluation of the impact of different options that are available for treating a given medical condition for a particular set of patients." Currently, this type of research is used largely in the pharmaceutical industry to weigh the effectiveness of brand name drugs against their generic alternatives. The results are what one may expect: the majority of generics offer the same level of effectiveness at a lower price point-an appealing finding for payers and patients stressed by current economic conditions.

Similar to the research that has provided generics an edge over brand name drugs, the medical device industry worries that comparative effectiveness research may show their technologies are not effective versus other alternatives on cost and quality parameters. For some time now, concerns have been raised that research into today's most popular imaging technologies, MRI, CTA, nuclear stress tests and CTs, may prove that these procedures fail to provide enough value to justify their cost-a threat to patients and the healthcare system. Proving that these technologies are often overused and lack enough information to diagnose and treat patients appropriately could have serious repercussions on manufacturers.

Straying from the popular opinion of the industry, a handful of medical device manufactures have aligned with Obama's proposed investment in comparative effectiveness research. Pressure has been placed on the United States medical community to lower healthcare costs and improve patient outcomes by treating the right patient at the right time with the right method. Investing in research to find faster, less expensive methods to treat common medical problems at the same or better quality is seen by some as a tremendous win for both patients and the system. U.S. manufacturers and service providers in other industries do this every day to compete and thrive in a global economy.

For example, the FAME study recently published in the New England Journal of Medicine demonstrates that patients with multi-vessel coronary artery disease who are treated by stenting with FFR (fractional flow reserve) guidance benefit from a significant reduction in mortality, reducing not only the hospital's total procedural cost but also overall healthcare system spending. The study found that FFR could save over 20,000 lives and $500 million annually in the U.S. However, because FFR is not directly reimbursed, physicians are discouraged from using the technology because the line item cost of $650 for the FFR wires is viewed as reducing the hospital's profit margin as dictated by the reimbursement code. Hospitals are reimbursed about $15,000 for this procedure regardless of which technology is used.

While most would agree it would be prudent to spend $650 on a diagnostic technology in order to save $2,000 and improve patient outcomes, our current system incentivizes hospitals and physicians to use the highest reimbursed procedure while using the fewest products possible.

While the U.S. dominates the medical device industry, technologies such as FFR are more widely used in universal single payer healthcare systems in Europe and Japan, where they enjoy lower adverse event rates and lower overall healthcare expenditures (roughly 10% of GDP). Regulatory constraints in the U.S. also force manufacturers to test their technologies overseas, enabling new medical technology to be available in Europe two to three years prior to the U.S. market. What other major industry in the U.S. accepts adopting new technology two to three years behind the rest of the world? It is important for reform initiatives to promote innovation to support young companies and engineers in the development of technologies or medical delivery systems to replace expensive surgeries or hospitals.

Any recommendations or changes made to the healthcare system will be incomplete if they do not include an overhaul of the reimbursement system as it exists today. The current system forces physicians and hospitals to do expensive, often unnecessary procedures with long recovery times rather than make use of available technologies that have been shown to improve outcomes, reduce costs, or both. The medical device industry may differ in opinion on comparative effectiveness, but manufacturers are in consensus that if additional regulatory and reimbursement hurdles could be avoided, technologies such as FFR could be adopted more quickly to improve care for U.S. patients at a lower cost.

As Congress enters into August recess, many strategies, including comparative effectiveness, are on the table for improving healthcare. Pressure is on the President and Congress to work together to put into action a successful plan to improve quality and affordability of care for our nation's citizens and industry.

Scott Huennekens, is president & CEO of Volcano Corporation, a healthcare company focused on developing technology to facilitate better patient outcomes at lower costs.