|October 05, 2010
12:01 AM EST
From Health Affairs
Medicare Should Use Comparative Effectiveness Research to Decide Reimbursement for New Services, Say Researchers
Bethesda, MD -- The Affordable Care Act puts strict limits on the ability of the federal government to draw on comparative effectiveness research (CER) to determine what can be covered under Medicare. But researchers writing in the October issue of Health Affairs say using the research to determine how much to pay for newly covered services could yield billions of dollars in savings without threatening patient choice.
"The time is ripe for Medicare to use comparative effectiveness research to reach a new paradigm, which would include equal payments for services that provide equivalent results," say authors Steven Pearson and Peter B. Bach. Pearson is president of the Institute for Clinical and Economic Review at Massachusetts General Hospital's Institute for Technology Assessment. Bach, an attending physician at Memorial Sloan-Kettering Cancer Center in New York City, was an advisor to a CMS Administrator during the G. W. Bush administration.
Under the three-pronged model set forth by Pearson and Bach, Medicare would pay more for interventions that research had demonstrated provided superior results for patients. By the same token, when two interventions demonstrated comparable clinical effectiveness, Medicare would pay the same amount for both. When a new service or treatment lacked any comparative evidence, Medicare would set a tentative payment while research on the intervention's effectiveness was carried out. After three years, if there was no clear evidence that the new service had a clinical advantage over an alternative intervention, Medicare could reevaluate what it would pay for the service.
The authors say this "dynamic pricing" model could save Medicare billions of dollars over time and would prevent the program from being "trapped" into paying more than was warranted for interventions. They cite the experience with Medicare payment for intensity-modulated radiation therapy in the early part of the decade, a new form of targeted radiation therapy often used to treat patients with breast or prostate cancer. When Medicare covered this treatment, there were no trials or studies that compared its effectiveness to conventional radiation treatment. Because this therapy required more expensive equipment, Medicare agreed to pay $42,000, compared to $10,000 for the traditional approach. This led more providers to buy the equipment needed to offer the new therapy in favor of the traditional approach and wound up costing Medicare $1.5 billion more each year on prostate cancer treatment alone, without any evidence of superior clinical outcomes.
Under the new model, Medicare would have only paid higher prices for intensity-modulated radiation therapy for three years. During that period, manufacturers and clinicians would have had to perform research to compare the performance of the newer therapy to the traditional approach. If evidence showed that the therapy did not offer clinical advantages, Medicare would have cut the price for intensity-modulated radiation therapy to the level it paid for conventional radiotherapy. If evidence showed that the intervention was superior to the traditional approach, Medicare would continue to pay a higher rate.
The authors admit there are several challenges to advancing their model. It would require new legislation, and would undoubtedly be highly contested by those with a vested interest in keeping the status quo. But Pearson and Bach say the idea of paying equally for comparable results is one that would resonate with Americans and help move Medicare to solid financial footing.
The article is one of several in this month's issue of Health Affairs which examine the implications of the new investment in comparative effectiveness research. The October issue of Health Affairs is funded by the National Pharmaceutical Council, WellPoint Foundation, and Association of American Medical Colleges.
Highlights of other articles:
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