Stealth Economics: Case Studies from US Medicare

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Stealth Economics Case Studies from US
Medicare

• Sean Tunis MD, MSc
• Senior Fellow,
• Health Technology Center

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Menckens Law

• Whenever they tell you its not about the
  money..its about the money.
• Regarding Medicare coverage, it is DEFINITELY not
  about the money.

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now nearly 16
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Statutory Basis for Coverage

• Sect. 1862 (a)(1)(A), Title 18, SSA
• Notwithstanding any other provisions of law . .
  .no payment may be madefor items or services . .
  which are not reasonable and necessary for the
  diagnosis or treatment of illness or injury.
• Quiz RN vs SE regulation and guidance

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Defining RN

• 1989 proposed regulation
• Safe and effective
• Not experimental or investigational
• Cost effective
• Appropriate
• 2000 notice of intent
• Demonstrated medical benefit
• Demonstrated added value

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Reasonable and Necessary

• case law derived from NCDs since 2000
• Safe and effective (if regulated by FDA)
• home brew tests not reviewed for SE
• Adequate evidence to conclude that the item or
  service improves net health outcomes
• generalizable to the Medicare population
• as good or better than current covered
  alternatives
• EBM framework used to assess quality and adequacy
  of evidence

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Role of costs and CEA

• No statue or regulations address role of economic
  factors in coverage
• CMS does not explicitly consider costs (and
  explicitly states that they dont)
• Medicare has no annual budget
• Payments are historically resource-based
• But rising inclination is to maximize health
  benefits for given level of spending
• Opportunistic use of existing authorities for
  implicit use of CEA has increased

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iFOBT

• Statute authorized Medicare to add new tech for
  CRC screening, factoring in cost
• iFOBT appears to have same sensitivity, better
  specificity, higher compliance than gFOBT
• Medicare pays about 5 for gFOBT
• Should we pay for iFOBT, what price?
• Used NCD process, commissioned incremental CEA
• Covered test, priced at 22 (low end from ICEA)
• Company folded

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Smoking Cessation

• Excluded from coverage for many years as a
  preventive service
• Compelling evidence of effectiveness and
  cost-effectiveness
• CMS encouraged NCD request for patients with
  smoking-related illness
• Approach could have been applied to recent
  cardiac rehab coverage and lifestyle mod.

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Functional equivalence

• Darbopoetin approved for treatment of CIA
  competes with Procrit
• New drugs get 95 AWP for 2 years Procrit
  payment based on charge data
• CMS tried to calculate payment based on new
  concept of functional equivalence
• Legal basis was equitable adjustments
• Dose conversion ratio used to set price
• Congress passes law that prohibited further use
  of functional equivalence

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Kaplan-Meier Survival by Treatment Group

Total Mortality CONV 19.8 ICD 14.2
Hazard Ratio 0.69
Adjusted P0.016
31 reduction in risk of all-cause mortality
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Kaplan-Meier Estimates of the Survival
Probability in MADIT II for Patients with QRS gt
120 ms
p-value0.001
Patients with pacemakers were excluded. CMS
analysis of the MADIT II dataset supplied by
Guidant.
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Kaplan-Meier Estimates of the Survival
Probability in MADIT II for Patients with QRS ?
120 ms
p-value0.25
Patients with pacemakers were excluded. CMS
analysis of the MADIT II dataset supplied by
Guidant.
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CMS ICD coverage June 2003

• CMS covers MADIT-I patients and wide-QRS subgroup
  of MADIT-II
• Key considerations
• Single trial
• Possible selection bias (unstable pts)
• IIa recommendation by ACC/AHA/NASPE
• SCD-HeFT nearly complete
• (300k eligible patients, 9B/yr)

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Clinical experts react to Medicare ICD policy

• The Medicare program cannot prove that this
  technology does not provide a benefit, and
  therefore is obligated to pay for it.
• I find it hard to believe that in a country as
  wealthy as the US, we cannot find the funds to
  pay for lifesaving technology
• What Hitler was unable to do, the Medicare
  program is trying to finish

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(No Transcript)
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Coverage under protocol

• Links coverage with requirement for prospective
  data collection
• Applied to potentially high value technologies
  under careful investigation
• Another approach to factoring CEA into coverage
  decisions
• May address concerns about EBM as barrier to
  innovation

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Medicare CED

• LVRS
• PTA with carotid stenting
• LVAD
• PET for suspected dementia
• ICD registry
• Off-label use of drugs approved for colorectal
  cancer
• PET for cancer staging/restaging

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Some observations

• Tough going and marginal impact from
  opportunistic approach
• In US, recent policy discussions dont suggest
  readiness for CEA / priorities
• Rationing identified services much harder than
  rationing broad benefits
• Need dialog not just about whether, but how and
  who considers costs
• Payers, clinicians, patients, etc

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Barriers to use of CEA(see AJMC May 2004)

• CEA-specific issues
• Complexity / transparency of models
• Concerns about motivations for use
• Application to individuals
• Locus of decision making
• Transparency of payer decisions
• Judgments about adequate evidence
• Impact on innovation

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Health System Views among Sicker Adults(from
Schoen, et al., Health Affairs, November, 2005)
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• You should never be afraid to abandon a losing
  strategy
• -John Newcombe