By Sabriya Rice
Posted: October 8, 2014 - 3:15 pm ET
“Prove it.” That was the resounding message to medical-device manufacturers during the annual Advanced Medical Technology Association conference in Chicago this week. Innovation is needed to advance medicine and better patients' quality of life, but gone are the days of sticking higher price tags on products that only provide incremental improvements, the leaders of health insurance companies, health systems, quality improvement and consumer organizations told the industry.
“We don't want to squelch innovation,” said Dr. Scott Josephs, national medical officer for the health insurance provider Cigna Corp. “But tell me what I'm getting for my healthcare costs. Show me that these new technologies are superior,” he told the audience during a session Wednesday morning.
Josephs was joined on the panel by Susan DeVore, president and CEO of the health improvement organization and group purchasing organization Premier; and Mark Neaman, CEO of the Chicago area's NorthShore University HealthSystem. An essential element in the aim for higher efficiency will be the need to more critically assess the value of new innovations, the panelists said.
“If it's clinically appropriate but equally efficacious to existing technology, then frankly it's just adding costs to the system,” Josephs said. “That's not something we would prefer.”
Fee for service is dead and the current landscape “is a bit chaotic,” noted DeVore, who said health providers are in the process of integrating what has been a fragmented industry. In light of that, the old ways of doing things are not going to suffice, Neaman said. “The stakes are very high for us as providers,” he told the audience.
New payment models aimed at improving efficiency and getting a handle on costs have proliferated quickly in recent years, nurtured by provisions of the Patient Protection and Affordable Care Act. Many providers are joining accountable care organizations, which are risk-sharing mechanisms available through government payers like Medicare as well as private payers, in which members agree to strive for cost and quality targets and share savings or losses.
Monday, AdvaMed promoted an industry-funded white paper based on the responses of officials from nine unnamed health insurance companies who were interviewed about their movement toward pay-for-performance and risk-based contracts. Officials from five insurers said they had become more selective about approving coverage for new technologies in the past three years. Four said they plan to demand more evidence before covering products. All said costs were driving their organizations to explore new reimbursement models.
The trade group representing medical-device manufacturers worried these rapidly burgeoning pay-for-performance and risk-based reimbursement models will result in what AdvaMed CEO Stephen Ubl called “unintended consequences.”
Too many of the arrangements emphasize cost targets over quality benchmarks, said Joe Almeida, the trade group's chairman as well as CEO of the medical-device manufacturer Covidien. “They run the risk of really tipping too far, so physicians have incentive not to adopt things that really benefit patients,” said David Nexon, an AdvaMed senior vice president.
Health economists countered that the white paper may have overstated those concerns and that it's hard to make the extrapolation. Insurers agreed, saying truly superior innovations would not be overlooked, even if they come at higher costs. And most health officials interviewed by Modern Healthcare said the key factor is the proof.
“The thing that's been missing from the model until now is the evidence,” said Diana Zuckerman, a researcher who has been critical of the Food and Drug Administration's procedures for approving and monitoring medical devices.
The federal agency's recent plans for an accelerated approval pathway for some medical devices has been met with criticism by consumer advocates who say such efforts put patients in danger.
During a conference session on Tuesday afternoon, FDA Commissioner Dr. Margaret Hamburg said that as science and technology advance at extraordinary rates, the agency wants to stay up to speed as a partner with the medical technology community. A more efficient system overall will allow for the delivery of new science and technology for patients in more reliable and cost-effective ways, but the emphasis on speed doesn't mean a step away from scientific rigor, she said.
As new products make their way to the forefront, no matter how rapidly, the onus is increasing for manufacturers to ensure that providers are convinced the innovations are worth the financial investment.
It's not about the lowest price point, that's just one part of the overall value equation, Cigna's Josephs said. It's about having more data and conceiving of partnership arrangements to help get there, according to Premier's DeVore. “Bring your evidence and data, and bring a willingness to collaborate and take risks,” she said.
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