New Medical Devices Invention, Development, and Use (1988) / Chapter Skim
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A Conflict: Medical Innovation, Access and Cost Containment
A Conflict: Medical Innovation, Access and Cost Containment
Pages 104-124
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From page 104... ...
Because modern medical technologies tend to be expensive, however, conflict arises between the desire of policymakers to reduce health care expenditures and the demand for medical technology by health care providers and the public. Early medical devices were frequently unwieldy and cumbersome, but modern devices are often compact and more versatile.
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From page 105... ...
Until such measures become available, health care practitioners will have to rely on technological innovations in diagnosis and treatment. INCENTIVES AND DISINCENTIVES FOR MEDICAL DEVICE INNOVATION In the years since World War II, the medical device industry has made remarkable contributions to medical progress.
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From page 106... ...
Reimbursement associated with the use of implantable devices, such as pacemakers, generally fall under surgical DRG categories, but services using medical devices that do not require surgical intervention, such as gastroscopy or diagnostic imaging, are not independently specified in the DRG reimbursement structure (Bunker and Schaffarzick, 19861. Incentives embodied in the PPS could stifle innovation of costly medical technologies even if they prove beneficial, but PPS may also lead providers to avoid ineffective, unsafe, or wasteful technologies and may induce innovators and manufacturers to focus on true "breakthrough" and cost-effective technologies (Office of Technology Assessment, 1985b)
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From page 107... ...
Recent evidence indicates that this margin has been surprisingly large under PPS (Prospective Payment Assessment Commission, 1987~. However, operating funds are not specifically set aside for investing in technological change.
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From page 108... ...
Innovation Under Alternative Health Care Delivery Systems Under alternative health care delivery systems, such as the managed care approaches in health maintenance organizations and the price competitive models of preferred provider organizations, incentives are to delay coverage or acquisition of major new technologies until adoption is justified on the basis of cost savings or high-volume use. Instead of the short-term savings incentives embodied in the PPS, these providers emphasize long-term cost-effectiveness in selecting new medical devices and technologies.
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From page 109... ...
Under cost-based reimbursement, the physician could deliberately or inadvertently increase the intensity of health care services to the patient, and there were few disincentives to exceed optimal care (Myers and Schroeder, 1981~. Now, realities of cost containment end competition have introduced the physician to a greater awareness of and in some cases a liability for the economic consequences of prescribed medical care.
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From page 110... ...
Current examples of such technologies include extracorporeal shock wave lithotripsy for the removal of kidney stones, laser techniques in a variety of applications, and arthroscopic and endoscopic diagnostic and surgical procedures. Medical device manufacturers face prospects of considerable delays in reimbursement decisions, uncertainty of payment rates, and constraints on hospitals for major acquisitions.
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From page 111... ...
Manufacturers will be less likely to invest in the health care technological needs of the less visible, less articulate, and underprivileged groupsthe handicapped, the indigent, and the elderly since support for these technological innovations will be uncertain and slow in coming from public sources. Risks of suppressed or aborted medical innovation due to reimbursement constraints may also be the most damaging effect of cost-containment on the future quality of health care.
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From page 112... ...
Unfortunately, although the government is committing a share of its biomedical research funds to the development of these devices, it is also—as regulator and thirdparty payer implicitly disavowing responsibility to fund assessments of these new medical devices.
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From page 113... ...
Technology assessment for coverage decision-making purposes will demand greater analytic resources and augmented data bases than are now available. In making assessments, policymakers and third-party payers should consider issues such as relative efficacy of a new medical technology in comparison with competing technologies; cost-effectiveness; impact on quality of life; rehabilitative potential; the relationship between productivity measures and patient outcomes; and other ethical, legal, and societal concerns.
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From page 114... ...
A number of criteria could be adopted to screen new technologies and to order priorities for assessment purposes. These criteria might include medical significance; potential benefit and clinical utility; proportion of beneficiaries affected; spin-off effects; ease of diffusion; economic incentives; impact on the health care delivery system; and important legal, ethical, and social considerations (National Center for Health Care Technology, 1980; Perry, 1982; Roe et al., 1986~.
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From page 115... ...
Even the identification let alone the assessment—of such technologies has aroused serious concern from device manufacturers that premature assessment of emerging medical technologies would stifle innovation (Perry, 19821. Interim Coverage Policy A decision by the federal government and other third-party payers to cover a particular medical technology need not be all or nothing as it is now.
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From page 116... ...
In view of the recent demise of the federal health planning program, thirdparty payers could play a major role in promoting appropriate regionalization of health care services, thus conserving scarce and expensive resources. A reform measure recommended by the National Center for Health Care Technology and endorsed by the Of fice of Technology Assessment would establish interim coverage policies (Office of Technology Assessment, 1984; Towery and Perry, 1981~.
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From page 117... ...
Some of these changes are proposed for the 10th revision of the ICD-CM (Thacker and Berkelman, 19861. A recent survey noted that hospitals' device-related problems were not reported to outside organizations, such as the FDA or medical device manufacturers, 49 percent of the time (General Accounting
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From page 118... ...
This distinction is not recognized in the existing DRG rate structure (Altman, 19851. ProPAC has recommended that the grouping of pacemaker implantations be reclassified in order to correlate resource use with payment rates more effectively (Prospective Payment Assessment Commission, 1986b)
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From page 119... ...
However, a number of DRG adjustments proposed by ProPAC in response to changing medical practices were rejected by HCFA. In some cases, Congress itself has enacted adjustments to hospital payments (Prospective Payment Assessment Commission, 1986d)
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From page 120... ...
Such evidence may include advances in the state of the art, the introduction of alternative techniques, emerging safety concerns, new evidence about the effectiveness of a procedure or device, or refinement of clinical applications. Additional criteria for selecting old technologies for review could include the magnitude of the economic impact of competing technologies including both prevalence of practice and cost per unit, potential for misuse, feasibility of an assessment, or evidence of cost-ineffectiveness of an outdated device or procedure (National Center for Health Care Technology, 19801.
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From page 121... ...
1986. Don't let cost containment stifle technological innovation.
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From page 122... ...
1985. Information Requirements for Evaluating the Impacts of Medicare Prospective Payment on Post-Hospital Long-Term Care Services: Preliminary Report.
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From page 123... ...
Department of Health and Human Services. Washington, D.C.: Prospective Payment Assessment Commission.
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From page 124... ...
1985. Medicare coverage, Medicare costs and medical technology.
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