How Medicare Could Sneak "Comparative Effectiveness" Into Practice
The Affordable Care Act sets up a comparative effectiveness research (CER) institute, but specifically bars the results of this research from being used in Medicare coverage decisions. Yet there's a crying need for Medicare, Medicaid, and private payers to use CER to prevent the cost of new technology from overwhelming our ability to pay for healthcare.
A new paper published in Health Affairs suggests a way of doing that without rationing care or stifling innovation. I applaud the effort, with one caveat: Massive, government-sponsored consumer education will be required to make any kind of technological cost control possible.
In the Health Affairs article, Steven D. Pearson, president of the Institute For Clinical and Economic Review at Massachusetts General Hospital, and Peter B. Bach, a pulmonary and critical care physician at Memorial Sloan-Kettering Cancer Center, make a startling proposal: Medicare should pay different amounts for different healthcare interventions, depending on their proven clinical value. If one test or treatment has been shown to produce superior outcomes to another that's already covered for the same condition, and it costs more, Medicare should pay the extra amount, they write. If the intervention is known to produce the same outcomes as the alternative test or treatment, the two interventions should be reimbursed at the same level. If there isn't any evidence of an intervention's comparative efficacy, the authors would have Medicare pay an amount that would compensate providers for the technology's cost for a period of three years. At that point, if there were no comparative evidence or if the evidence showed that the new technology was not superior to the other one, Medicare would lower its payment to the rate it was paying for the other intervention. If the new technology produced worse results, Medicare might stop covering it.
While all of this sounds sensible, it would represent an upheaval in Medicare's current payment methodology. Today, the government program pays for any "reasonable and necessary" intervention, normally setting the payment at a level that, in the government's view, covers the cost of the technology plus a profit margin. To differentiate payments based on the proven value of the test or treatment would challenge suppliers and providers, for the first time, to justify their technologies and their choices. Without a doubt, any move by Congress to pass legislation authorizing Medicare to take this approach would encounter monumental opposition from pharmaceutical companies, device makers, hospitals, and physician specialists.
While such a bill probably couldn't garner the necessary votes today, things might change a few years from now, when the disastrous economic consequences of giving healthcare innovators a blank check become visible to every employer and government official. But even then, consumers would balk at any effort to limit their access to new technologies, as another new Health Affairs study shows. The most that the majority of respondents would be willing to do, this paper says, would be to give patients financial incentives to choose cheaper tests or treatments if the alternatives were no better.
What this means is that it's time for the government to launch a massive educational effort to explain why patients can't have everything they want when they get sick. Pearson's and Bach's proposal isn't tantamount to rationing, because it wouldn't reduce access to beneficial care. But it would limit the amount that Medicare (and presumably private plans) would pay for a particular test or treatment if it can't be proven superior to the alternatives. That would incentivize drug and device companies to perform comparative trials but wouldn't come close to killing innovation.
In the end, we simply can't afford to pay for everything, regardless of its value. The sooner the public understands that, the better off we'll all be.
Image supplied courtesy of Flickr.
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