WASHINGTON — Although the healthcare reform law forbids it, using cost factors in comparative effectiveness research could save billions of dollars and put Medicare on a more secure financial footing, researchers argued.
Writing in the single-topic October issue of Health Affairs, they criticized the current payment model, in which Medicare covers any treatment that is deemed “reasonable and necessary,” regardless of how it stacks up in cost or efficacy against other comparable treatments.
“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,” wrote authors Steven Pearson, MD, MPH, and Peter Bach, MD.
Pearson is president of the Institute for Clinical and Economic Review at Massachusetts General Hospital’s Institute for Technology Assessment. Bach is an attending physician at Memorial Sloan-Kettering Cancer Center in New York City and former adviser to the CMS Administrator.
The 2009 economic stimulus bill included $1.1 billion to fund comparative effectiveness research, and the Affordable Care Act (ACA), the healthcare reform law passed six months ago, established the Patient-Centered Outcomes Research Institute to identify priorities and conduct research to compare the clinical effectiveness of different medical treatments.
But the ACA explicitly forbids the new institute from considering costs of things like drugs, devices, treatments, services, or diagnostic tools in its comparative analyses. That language was added after discussions over using cost in comparative effectiveness research turned into a debate about “rationing.”
“Medicare’s processes for determining coverage and setting reimbursement rates are like computer programs that date all the way back to the 1960s,” Pearson and Bach wrote. “They demonstrate the arcane complexity of decades of ad-hoc updates with no fundamental redesign.”
The reimbursement-plus-profit model currently used by Medicare is often criticized by policy experts who argue that the doctors who stand to gain the most under Medicare are the ones who provide the most expensive procedures.
Under the model proposed by Pearson and Bach, Medicare would still use its “reasonable and necessary” standard, but would also use comparative effectiveness research to assign each treatment to one of three categories — “evidence of superior comparative clinical effectiveness; evidence of comparable comparative clinical effectiveness; or insufficient evidence to determine comparative clinical effectiveness.”
Payment for treatments in the “superior” bucket would be set according to current Medicare formulas. For treatments in the “comparable” bucket, Medicare would examine the rates paid for those comparable alternatives and pay at the lowest price.
If a new service or treatment lacked evidence of comparative effectiveness, Medicare would set up a temporary payment schedule while comparative research is conducted. If, over time, evidence fails to show a new modality is superior to an existing one, Medicare would evaluate whether it should reimburse for the new service, and likely drop reimbursement rates for the service in the meantime.
The authors list a number of barriers to using costs to set payment policies, and partisan politics is near the top of the list.
But they argue that “the straightforward idea of paying equally for comparable results would make sense to most Americans,” and said if patients and others banded together to support the idea, it could perhaps start in private health plans or state Medicaid programs and eventually influence how Medicare pays for care.
Two other papers published in the same issue help bolster that view. They reported on national opinion polls that found that people generally see the value of comparative effectiveness research, but fear that it may be used to ration care, and they do not want their medical treatment choices restricted.
Meanwhile, two other researchers, writing in still another paper in Health Affairs argue that the Patient-Centered Outcomes Research Institute should not use cost in its comparative analyses.
“Including cost-effectiveness analyses in the research sponsored by the institute may be unnecessary as well as politically and legally questionable,” wrote Alan M. Garber, MD, of Stanford University’s Center for Health Policy, and Harold Sox, MD, of Dartmouth Medical School. Sox co-chaired the Institute of Medicine (IOM) Committee on Comparative Effectiveness Research Priorities in 2009.
However, cost-conscious insurance companies, physician groups, hospitals, and savvy patients should compare costs of various treatments, they wrote.
Pearson and Bach also acknowledged the politically sensitive issue of using cost in comparative effectiveness.
“Just mentioning Medicare and comparative effectiveness research in the same sentence is enough to raise temperatures in Washington health policy circles,” they wrote.
No one knows that better than Donald Berwick, MD, administrator of CMS. Berwick’s appointment was held up by Republicans who accused the longtime healthcare improvement advocate of favoring a system in which cost considerations would be used to deny medical care for some Americans.
Berwick defended his mission of lowering healthcare costs during a Health and Human Services summit on Monday dedicated to improving healthcare quality.
Berwick told attendees at the summit that he has a threefold aim as head of CMS: to improve care, to improve the nation’s health, and to “lower per capita costs of healthcare without harming a single hair on any person’s head.”
The October issue of Health Affairs is funded by the National Pharmaceutical Council, WellPoint Foundation, and Association of American Medical Colleges.