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The former director of the Michigan Department of Human Services and executive at Blue Cross Blue Shield of Michigan, she says medical technology encompasses new procedures, pharmaceuticals and medical devices.

Unlike in most industries, where new technology lowers costs, healthcare innovations often lead to more expense, Udow-Phillips says. New devices and approaches can lead to more diagnostics as well. Offering healthcare coverage to the previously uninsured and underinsured also will increase demand for costlier services.

The Agency for Healthcare Quality & Research is in the process of doling out $300 million in federal stimulus funds to support comparative effectiveness research with the caveat that research should be directed toward discovery of comparative clinical quality, not costs. The cost/value proposition will undoubtedly be weighed separately by private payers and used for coverage decisions.

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