Originally Published MDDI March 2005

NEWSTRENDS

Medicare Reform May Take Time to Affect Industry

Maria Fontanazza

The portions of the Medicare Prescription Drug, Improvement, and Modernization of Act of 2003 (MMA) relevant to the device industry haven't yet had a chance to have a significant effect after a year of implementation. However, device companies should keep close watch over the progress of certain provisions and continue to provide input on them, experts say. In particular, extra payments for use of breakthrough technologies have not come through as anticipated.

“As CMS (the Centers for Medicare & Medicaid Services; Baltimore) sloughs along with implementation, we're engaged in watchful waiting for many of these issues,” says Ted Mannen, managing director at ContentHealth LLC (Washington, DC).

“Part of the difficulty with discussing the changes so far is that some of the provisions in MMA related to devices have not really kicked in yet,” says Erica Bisguier, director of reimbursement and consulting at Boston Healthcare Associates (Boston). “I think what you really saw with MMA was a very quick kick start to all of the changes related to drugs, and more of an evolutionary process with devices and diagnostics.”

One area that holds promise for 2005 is the Council on Technology and Innovation. CMS launched the council in August 2004 to function as a single contact point for doctors, patients, and device companies regarding coding, coverage, and payment decisions. “The benefit to industry is that Congress instructed CMS to provide an avenue where new technology could be approved and covered in a more expeditious manner,” says Bisguier. Although a lot hasn't come out of the technology advisory panel yet, Bisguier advises industry to keep an eye on it this year.

“The areas of implementation that we feel have gone particularly well include the coverage decision time frames, opening the Council on Technology and Innovation, and the changes to payment for Category A clinical trials,” says Carol Kelly, executive vice president of healthcare systems and federal legislative policy at AdvaMed. Medicare will now cover routine patient-care costs of breakthrough clinical device trials.

The provision that expanded the scope of the trial coverage took effect on January 1, 2005. “We still have to wait and see what will happen,” says Mannen.

CMS also established faster time frames for national coverage decisions, which set the deadline at 9 months for internal decisions and 12 months for those referred to the Medicare Coverage Advisory Committee or an external evaluation organization. Those provisions have been in effect for more than a year, but it's not yet known whether CMS is complying.

“I haven't seen the data that show whether or not the time frames are in sync with what the law requires,” says Mannen. “In September, CMS put out a notice soliciting comment on the process by which guidance documents would be issued. I think the area of greatest promise is when they begin to issue the documents. If this is done with adequate industry input, it could help clarify the requirements to satisfy a national coverage decision.”

However, Mannen is disappointed with the lack of progress in the add-on payments for inpatient reimbursement. The program allows hospitals to get paid more for using certain types of significant new technologies.

“I think it's fair to say that industry hasn't seen a lot of those new technology applications approved over the last several years,” says Mannen. “Under the Medicare law that was approved in 2003, there were some additional required proindustry changes.” Although those changes were implemented, only two out of the 10 submitted applications for fiscal year 2005 were approved, Mannen notes. “The bottom-line result doesn't show a great deal of change. This is one instance where the provision has actually taken effect, and you can at least measure some of the early results.”

Kelly agrees that add-on payments have been one of the biggest challenges this past year, adding that the agency has been “too prescriptive in their implementation.”

The first year of Medicare reform was supposed to set the groundwork for changes to be enacted during the next few years. The jury's still out on whether the reforms are on the right track.

“Moving forward, I think the big policy change will be the movement to get new technology covered in a more-expeditious manner,” says Bisguier. “I think everyone's waiting with bated breath to see how this develops. We'll see over the next few years how CMS implements these changes.”

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