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Another Component of NCD Process Goes Public

CMS today announced that a heretofore shadowy facet of Medicare's national coverage process is going public:  the technology assessments the agency commissions for some of the trickier issues it has under review. 

Performed by the Agency for Healthcare Research and Quality, these assessments are today public only in a minimalist sense; basic status information is provided, and the final reports ultimately find the light of day.  What's new is that CMS will give stakeholders a formal opportunity to comment on the reports in draft form, before they're finalized. 

Previous posts have noted the march of transparency across Medicare's national coverage process.  Like the listing of potential NCD topics that CMS announced this past summer, today's action marks another step in this same direction, snapping into place an improved component for the increasingly complex Medicare machine.

Global Positioning

CMS today posted a navigational aid for innovators . . . a travel guide of sorts, designed to help drug and device developers plan journeys through Medicare's reimbursement byways.   

Aficionados will be parsing phraseology in this 56-pager (labeled v. 1.0) for some time, but a first-blush reading suggests a relatively thorough rendering of the classic coverage-coding-payment trilogy, helpfully annotated to point out the CMS organizational units through which a persistent tourist will pass.  Recitation of steps does not a strategy make, but the new guide seems at least to serve the GPS-like function of helping pinpoint for an innovator company the venues where its dilemmas lie. 

In Unprecedented Action, CMS Posts List of 20 Potential NCD Topics

CMS tonight posted a list of 20 health care interventions that it said are potential candidates for national coverage review.  The list spans a variety of drugs, devices, and services.  Public comments on the list are due September 28. 

The CMS posting, while unprecedented, didn't come without warning.  In a guidance document finalized in April 2006, the agency had said:

New Gateway to Medicare Coverage of Preventive Services?

The U.S. Preventive Services Task Force (USPSTF) has long been recognized as an important decision maker in the coverage of screening and other preventive services, for both public and private payers.  But with enactment of the new law providing the physician fee-schedule fix, the task force, an AHRQ entity that reviews evidence and issues clinical guidelines, seems poised to become a genuine gateway for the entry of certain preventive services into Medicare.

MedCAC to Go Another Round on Research Priorities

Announcement today of a MedCAC Town Hall meeting on Medicare research priorities may be bringing CMS closer to a more systematic approach for filling what it views as Medicare's evidentiary gaps.  Coming on the heels of other recent CMS actions, the Town Hall, set for April, hints at the possibility of change in the agency's national coverage decisionmaking.

Medicare's Clinical Research Policy -- Another Shoe Dropping?

That soft "thud" out of Baltimore last Friday may have been another Medicare clinical research shoe dropping.  For among a small torrent of transmittals that CMS uncorked just before the long holiday weekend were two that speak directly to how providers file claims for Medicare-reimbursed research.

Suddenly . . . CED

With the dawning of 2008, the outlines of how CMS might use Coverage with Evidence Development, or "CED," have become a little clearer . . .

Background

Since July 2006, when CMS issued its CED guidance document, there's been a phony war of sorts as agency officials have alluded to, but never moved explicitly to implement, the controversial new doctrine for making Medicare national coverage decisions.   But then, suddenly, just before the holidays, CMS struck with three CED proposals in eight days . . . as reported in an article in MX Magazine.

MedPAC: Journey to the Center of Health Policy

You've seen those parody maps in which the foreground frames a distinct locale, such as Manhattan's 9th Avenue, in magnified, bountiful detail, while letting other cities, states, and whole countries recede into the horizon as mere topographical specks.  The conceit -- that the distinct locale is the center of the universe -- is one some clever health policy cartographer might enlist to depict 601 New Jersey Avenue, N.W., Washington, D.C., digs for MedPAC, as ground zero for all manner of great thinking on Medicare, as well as, by implication, the program's lesser private insurance pretenders.

Indeed, MedPAC's influence has never seemed greater, a fact underscored just last Friday when the Commission let rip its annual June report, a health policy bible fertile with ideas that sweep across MA plans, hospitals, comparative effectiveness, home care, drugs, and all the other vital precincts.   Growing out of two largely forgotten predecessor organizations, MedPAC now seems the outsourcee of choice for a Congress that desperately needs a politically neutral arbiter to help sort through Medicare's often-intractable issues.  But lest our health policy map become myopically focused on New Jersey Avenue, two events remind us that those specks on the distant horizon can be pretty important, too.

No Joke: Lawyers as Health Care's Leading Indicators

One of Shakespeare's characters in "Henry VI"  famously said, "The first thing we do, let's kill all the lawyers."  That vow seems turned on its head in health care today, converted to what many Americans may consider the truly terrifying prospect of hiring all the lawyers -- to lead major technology and payer organizations.   

Reminds me:  Did you hear the one about the three lawyers . . .

It started last July when drug giant Pfizer named former General Counsel Jeff Kindler as CEO.  As if in reply, Wellpoint, one of the largest health benefits companies, then slated its General Counsel, Angela Braly, to become CEO June 1.   And in medical devices, major orthopedic manufacturer Zimmer last week announced that its top lawyer, David Dvorak, has taken over the CEO's reins.    What's going on here?

Comparative Effectiveness: Day of the Locust

It's well known that there's a type of locust that materializes every 17 years (actually, it's a cicada, Magicicada septendecim, but scientific precision has never been one of our strong suits).  Less widely appreciated, however, is another organism --Comparatae effectamicus -- that swarms over the public policy landscape on roughly this same 17-year cycle. 

"Comparative effectiveness," as this second organism is sometimes known, has been spotted in the mid-Atlantic region of the United States this past winter and early spring.  Innovators everywhere are taking note, and there's some sense that this year's wave could be particularly virulent.

The organism has infested the Senate-passed 2008 budget resolution, where fiscally neutral acreage has been reserved for "a new federal or public-private initiative for comparative effectiveness research"    -- said by Senate Budget Committee Chairman Kent Conrad (D-ND), in a floor statement, to be a promising means to "address rising health care costs."  Not to be outdone, Senate Finance Committee head Max Baucus (D-MT) has included comparative-effectiveness provisions in his Chairman's Mark on the Part D drug pricing negotiations bill, while health policy expert and former MedPAC chief Gail Wilensky, in a Heath Affairs article, has called for a new agency to carry out comparative-effectiveness reviews.  Finally, later today, MedPAC itself fields a panel on comparative effectiveness, one more stop enroute to inclusion of this topic in the Commission's June report to Congress.

What's the strength of this spring's Comparatae effectamicus strain, relative to infestations of years past?

There was a mild outbreak in 2003, when MMA section 1013 established a new program on comparative-effectiveness research at AHRQ.  Some scientists believe this 1013 sub-species is not as potent because it's yielded less appropriated funding than the more energetic of the comparative-effectiveness advocates believe necessary.

To put this year's infestation in proper relief, one has to drop back into that murky era before (digitally) recorded time -- back roughly those rhythmic 17 years, when the Omnibus Budget Reconciliation Act of 1989 gave AHRQ's predecessor agency assorted lightening bolts of outcomes-related authority.  Indeed, "outcomes" was in those days the organism of interest, but Comparatae effectamicus lurked within it, silently oozing purported statutory authority that CMS to this day cites as justification for such comparison-oriented enterprises as Medicare's Coverage with Evidence Development guidance and clinical trial coverage policy (proposed new version of latter released earlier this week).

The mid-1980s saw the Institute of Medicine try to cobble together a public-private partnership to take on comparative effectiveness (remnants of the effort are still visible).  But the most concerted comparative effectiveness effort -- the one that today's calls for an independent agency/initiative most closely resembles -- returns us to the 1970s and the short life of an independently authorized HHS agency, the National Center for Health Care Technology. 

"NCHCT," as it was known, hatched from a study by another now-deceased entity, the Congressional Office of Technology Assessment, or OTA, then grew to maturity under legislation sponsored by Representative Henry Waxman (D-CA) and Senator Ted Kennedy (D-MA).  Controversial from the start, NCHCT took such steps as compiling an annual "emerging technology list" to help assessors draw a bead on innovations before they got too far along on the diffusion curve.  Early in the Reagan Administration, the agency's appropriations were pulled, and, later, NCHCT's authorization was collapsed into that for another Public Health Service entity.  After that, NCHCT became just another extinct agency, much to the chagrin and even the outrage of a sizable and vocal cohort of technology assessors worldwide.   

For some, then, the current comparative-effectiveness discussion sparks hope for resurrection of technology assessment's Lost Cause -- as represented by the kind of "single organized and adequately funded program or agency" for which OTA pined in 1982.  For others, Comparatae effectamicus signals possible return of a type of government policy that they had hoped would long stay dormant.

The Dem Stuff: It's Not Just About Reimbursement Anymore

Tom Wolfe recounts in The Right Stuff the elaborate steps NASA took to prepare the original Mercury astronauts for space flight.  The theory was that if in training an astronaut could be exposed to all possible sensations of space, then nothing during the flight itself could pose a surprise.  Thus, NASA made the astronauts hole up in mock space capsules for hours on end, piping recordings of Redstone rocket launches into headsets, rolling aerial photos of the Caribbean through the periscope, causing the capsule to yaw from side to side, to emit the gentle "whoosh" of hydrogen-peroxide thrusters, each time a finger touched the stick.  Still, despite the simulations, nothing ever quite readies one for space, as John Glenn's rocky reentry through the earth's atmosphere -- owing to Friendship 7's loose heat shield -- later made clear. 

A similar type of training has been in progress for those who keep at least one eye on Congress.  Since last November 7, the political capsule we inhabit has been the object of simulations designed to help us understand, in advance of the actual change, what a Democratically controlled Senate and House would feel like.  We've consumed untold articles, forecasts, analyses, insights, tips, etc., on everything from the predilections of the new Democratic committee chairs, to the ascendant culture of oversight, to the prospects for this or that health care issue.  And so now, in late February (45 years, to the day, since Glenn became the first American to orbit earth), the political "phony war" (State of the Union, 2008 budget submission, first 100 hours) has drawn to a close, and we've settled into the actualities of daily experience.  So how does it feel?

Well, it does feel different -- different in ways for which our training has not quite prepared us.  The headlines scream names . . . Waxman, Dingell, Kennedy . . . that are familiar, but that seem misplaced in an era of iPhones, private equity, and Angelina Jolie.  Recent House oversight hearings -- putting drug pricing in the same species of infamy that the war in Iraq is said to occupy -- were entirely predictable, given all our training, all our post-election simulations.  Yet, in the actual event, the effect was still a bit jarring.  I mean no partisanship (the author being that form of political relic known as a Stevenson Democrat) when I say that for health care our heat shield feels not entirely secure.

If there is an early lesson in all this, it is perhaps a familiar one:  The titanic tug of war between growing health care demand and constricting health care budgets is not just about "reimbursement."  Instead, it is a multifaceted engagement, with theaters of action stretching across many venues, not the least of which is Congress.  Former BCBS executive Harry Cain, writing in Health Affairs, has noted that "[t]he Medicare statute undergoes an average of fifty changes each year . . ."   Cain published those words in the summer of 1999, before enactment of BBRA, BIPA, MMA, and DRA -- the combined effects of which must have driven up his average considerably.  In all, to focus tightly on the coveragecodingpayment trilogy is to quaff small beer (see previous post, "The Reimbursement Times They Are A-Changin").  Today's environment rewards a broad-gauged perspective that recognizes "reimbursement" as a sweeping if subtle swirl of issues that's policy-diced, PR-sliced, and ultimately societal. 

And so, yes, prepare, simulate, do all that can be done to narrow the zone of uncertainty.  But expect also the unpredicted pocket of turbulence.

Godspeed, Leslie Norwalk!

What's the Effect of OMB's New Oversight Powers on Medicare Sub-Regulatory Guidances?

With the swirl of news surrounding the President's State of the Union address, not much attention got paid a potentially far-reaching regulatory document the White House put out about the same time.  Framed as amendments to a Clinton-era Executive Order, the Bush changes will result in agency guidance documents being subject to closer OMB scrutiny.   Given the growing reliance of CMS on Medicare sub-regulatory guidances -- e.g., national coverage guidances -- what's the effect of this new level of OMB oversight?

Some of the answer will depend on whether you're dealing with a plain vanilla guidance or one that's "significant."  For while all guidances come under new requirements, the "significant" ones require the issuing agency to provide OMB "advance notification" and to stand ready to participate in "additional consultation," should OMB seek it. 

A significant guidance is one that leads to an annual $100 million jolt to the economy or that satisfies any of a handful of other conditions, including creation of a material adverse effect on an economic sector.  A related OMB document, speaking to agency "Good Guidance Practices," goes into greater detail, but generally ratifies FDA's approach -- an approach that MMA requires CMS to emulate for national coverage guidances.   

In all, the new requirements seem significant, and OMB's in-box could look half-full or half-empty -- depending on where you stand on a given guidance.

Year-End Skirmishing: Policies on Clin Trials, Part B/D Drugs Gain Stealthy Momentum

As Medicare heads into what is likely its last "real" week of 2006, two issues -- concerning policies on clinical trials and Part B/D drugs  -- seem to be gathering quiet momentum.  Though playing out on less grand a stage than the politically explosive (but now-accomplished) physician SGR fix, these issues promise fireworks of their own in the year ahead, with the possibility of a minor detonation or two this coming week.

On Wednesday, MCAC turns to a CMS-proposed reconsideration of the current national coverage decision on reimbursing certain routine costs of clinical studies.  This issue has been in play since last summer, but it took a new turn with last week's CMS release of a content-packed, 11-page concept paper for the MCAC denizens to chew on.  Usually, CMS seems fairly circumspect in advance of MCAC sessions, but this time the agency let rip with assorted policy observations and near proposals. 

In the latter category was the idea that a study "required and reviewed by the FDA as a post-approval study" be "deemed" -- i.e., determined to constitute the kind of "good" research for which Medicare pays.  Given the nexus CMS seems to be trying to draw between reimbursed clinical trials and Coverage with Evidence Development (specifically, the Coverage with Study Participation branch of the doctrine),  one has to wonder whether at least some of the products subject to these post-approval studies are on a fast track to CED-land.  This is one of the questions to which considerable attention will no doubt be devoted, starting Wednesday and extending into 2007.

We've written previously on the Part B/D identity crisis that afflicts certain Medicare-reimbursed drugs ("Part B v. Part D Drug Coverage:  Bombs Away").  When last we visited this topic, CMS said it would give the new Part D adventure a couple of years before trying anything fancy.  Well, one of those years is now up, and the Part B/D jockeying has begun:

Item:  In its current rulemaking on crosshatching Part D claims data with that from Parts A and B, CMS noted that it has underway a new study that's examining "the relationship between Part B and Part D drug coverage," with said study to include "an assessment of the impact of such a change on beneficiaries, Part D sponsors and the Federal budget." 

Item:  The Medicare bill on physician fees that Congress passed early Saturday contains a provision that provides for vaccines that are Part D drugs to be paid as Part B drugs in 2007, then bounce back to Part D in 2008 (something like that).

Item:  Published reports suggest stakeholders are organizing on the Part B/Part D issue and talking with CMS about ways to map a new frontier between the competing reimbursement regimes. 

So the B/D dot on the horizon is getting larger, and, like clin trials policy, will be upon us in 2007.

                                                                          ***

Several of you seemed to like our previous dalliance with Medicare transmittals ("Editorially Unlikely:  Transmittals We Love").  So we wanted to update you on the latest addition to the collection . . . "PECOS to FISS Interface Via Extract File"  . . . which translates (in some language)  to . . . happy holidays!

Back to the Future: Yale-New Haven Case Provides New Hints on "Reasonable & Necessary"

In one sense, the opinion in the Yale-New Haven hospital case, handed down a few days ago by the U.S. Court of Appeals for the Second Circuit, seems a quaint reminder of an earlier time.  But in a broader sense, the court's ruling provides new hints to an enduring riddle:  What does "reasonable and necessary" -- the Medicare statute's mystical formulation of coverage criteria -- actually mean?

The case dealt with whether Medicare should cover $1.5 million in costs associated with implanting cardiac defibrillators in beneficiaries who participated in IDE clinical trials at Yale-New Haven in the period 1994-1995.  HHS contended that coverage was barred by a 1986 Medicare manual provision that said, "Medical devices which have not been approved for marketing by the FDA . . . are not reasonable and necessary . . ."    The Second Circuit found otherwise, ruling that then-HCFA had acted arbitrarily and capriciously -- strong words, these -- in tying Medicare coverage so inflexibly to FDA marketing approval.

We've written previously that the distinction between "mainstream" and "experimental" care began obviously to erode in the mid-1990s  (see earlier post, CED Strains Nomenclature, Vocabulary), leading in time to today's environment, in which it is both permissible and widely accepted for insurers to reimburse formerly verboten investigational interventions.  So the Yale-New Haven case helps us see that the evolution towards today's payment reality actually traces (legally speaking) to a point much earlier than the 1990s -- indeed, under the court's reasoning, to at least 1977, when Medicare issued guidelines linking coverage to general acceptance in the medical community.

But while the Yale-New Haven ruling stretches back in time, it has another lens that looks forward, relevant both to the current CMS and MCAC maneuvers on Medicare clinical trials policy, as well as to the agency's as-yet-unrealized plans for to "detail[ing] the interpretation of 'reasonable and necessary' in . . . future guidance documents" (this latter quote from the unposted 2005 version of the CMS guidance on Coverage with Evidence Development).  To wit, the Yale-New Haven court said the following:

Pertinence of FDA Marketing Approval -- "We cannot clearly discern why the standard adopted by the Secretary was FDA premarket approval, given that such a standard likely excludes numerous devices that would be the most appropriate treatments for certain patients."

Relationship of R&N to S&E -- "'[R]easonable and necessary' is not obviously the same standard as 'safe and effective,' and the authority to determine which devices are reasonable and necessary (an inchoate and value-laden standard) is conferred by Congress upon Medicare . . . not the FDA -- an agency with a separate statutory purpose and agenda."

Statutory Preference for Access -- "Legislative history of the Medicare Act suggests that Congress wanted Medicare patients to have access to the medical care most suited to their individual needs . . . This legislative history does not bind the Secretary to provide Medicare coverage for every or any new medical device that is suited to an individual patient's needs . . . but the statute arguably reflects a legislative preference to afford coverage, in the absence of a substantial reason to the contrary."

So, yes, in one sense, the court's words seem echoes of an earlier time.  But they also suggest grist for the mill as the "reasonable and necessary" debate goes forward.

New Hospital Outpatient PPS Rule as Literary Device

For those who worked their way through the 1,328 pages of last week's CMS final outpatient PPS rule for 2007, the term "literature" was perhaps not top of mind.  But deep in the Medicare OPPS rule's interstices lay significant new quality provisions that -- like soon-to-be-finalized recommendations of the National Quality Forum -- comprise key chapters of an unfolding story.

It is said that in all of literature there are really only about seven basic plots --  e.g., "new person comes to town."  So, too, in health care, there is really only a handful of possible economic scenarios.  One such scenario might be called "new service comes to bundle."  This is the scenario that bedevils all innovators who try to introduce a seemingly cost-additive intervention into a classification for which payment is capped -- such as a prospective payment system organized around DRGs or APCs.  Since higher payment is unlikely to accompany the new item (at least in the immediate term), the provider's incentive is to shun it.  So what's an innovator to do?

One strategy tailored to the times is to let the intervention ride the jet stream of a broader quality or safety measure.  We've previously noted the macro trends:  that health care increasingly is about . . . well, health care (see earlier post, "It's the Medicine, Stupid") and that decisional velocity is increasingly top-down ("The Reimbursement Times They Are A-Changin'").  These dynamics are helping make some cost-additive innovations attractive to providers as a means for satisfying new quality/safety imperatives, especially when the latter are interlaced with "pay for performance" incentives.  So, today, with a full DRG update riding on whether it hits 10 specified quality measures, a hospital is less likely to obsess over the cost of the aspirin that's supposed to be given each heart attack patient upon arrival. 

The aspirin example, of course, is extreme and not quite telling.  But think a little more broadly and you can begin to see how market plans for some new technologies could merge into the flight path of an ascendant quality/safety movement.  For example, proposed new 2007 HEDIS measures for physician services identify four classes of medications "considered acceptable as primary therapy for long-term control of asthma."  Thus, to meet the HEDIS standard, you have to use one of these classes of medications.  In this same way, a discrete surgical safety innovation (say) that fosters compliance with a surgical quality standard might have the effect not only of benefiting patients, but of giving hospitals good reason to look beyond a service bundle's stifling economics.

That's the longer-term significance of last week's Medicare OPPS rule, which set in motion for hospital outpatient departments the same types of quality/"pay for performance" incentives that CMS now applies to inpatient services.  There'll be different takes on the agency's action, to be sure.  But whatever your view, these outpatient changes seem the latest sign of growing opportunities for innovators to give the familiar fable of "new service comes to bundle" a surprising plot twist.

Editorially Unlikely: Transmittals We Love

Aficionados of Medicare transmittals lead ravaged lives, but occasionally a few gems come along that make it all worthwhile.  Here's a handful that remind us of the genre's creative possibilities:

"Medically Unlikely Edits," for example, doesn't quite say a provider's claims won't be paid, but it casts a pretty skeptical eye.  In contrast, "Analysis of Systems Changes Needed to Generate Unsolicited Responses to the Veterans Administration" seems resolute in its plan for aiming a telemarketing campaign at the VA, while "Change Management Process -- Electronic Change Information Management Portal (eChimp)" carries unmistakable animal-rights implications. 

Hanging by a thread is "Maintenance and Update of the Temporary Hook Created to Hold OPPS Claims that Include Certain Drug HCPCS Codes."  More secure in its role as leader of the brain-teaser category is "Options for Providers/Suppliers Affected by CR 4376:  Suppression of Standard Paper Remittance Advice (SPR) to Providers and Suppliers Also Receiving Electronic Remittance Advice (ERA) for 45 Days or More."  Similarly inscrutable is the vaguely unsettling "Correction of CROWD Form 5 Reporting for Internet Pilot Carriers." 

And as for "Revised Appendix P & Appendix PP-New Tag F334" . . . well, we'll leave that for you and the NSA to work through.   

McClellan's Midnight Numbers: Medicare as Data Tapestry

It wasn't exactly John Adams and the midnight judges, but Mark McClellan did pack a lot into last Friday, his final work day as CMS Administrator.  Much of the attention will likely go to a new report that touts the costs savings CMS says the Part D drug benefit is bringing to Medicare and the treasury.  But there was another initiative announced Friday -- ostensibly about Part D, too -- that confirms a deeper trend coursing through Medicare.

This second announced action concerns a proposed regulation to be published Tuesday on use of Part D data.  Patterned along the general lines of Grassley-Baucus legislation, the reg is intended to help identify potential drug side effects and get a better read on disease management.  But the reg will also propose broader linkages between Part D information and that derived from Parts A, B, and C.  Thus, while on the the whole seeming a bit narrow and researchy, the reg is actually part of a larger revolution -- one that seeks not only to draw on jumbo data banks to produce an integrated understanding of benefits (see previous post, "Part B v. Part D Drug Coverage:  Bombs Away"), but also to snap a holistic picture of beneficiary service utilization.  Indeed, if the Internet is today's information superhighway, then Medicare may be tomorrow's nuanced data tapestry. 

We wrote over a year ago ("The Coming Data Convergence") that "big, robust patient data bases are emerging as a broad new analytical commons where CMS and FDA will convene to decide Medicare coverage and product safety issues."  In this new world, "the volume of post-market data can trump the randomization of clinical trials in getting to the bottom of a product's performance and outcomes" ("Gottlieb Move May Punch Up CMS-FDA Post-Market Collaboration"). 

Medicare claims information, which has evolved from drab administrative utility to analytic rock star, serves as the conducting material for much of this new data mining and benefits crosshatching.  Such has come about in no small part because of new electronic systems that can aggregate isolated health care events and turn them into an insightful and powerful plural.   

So read Tuesday's reg not only for what it says . . . but for what it may signal.

The Sums of August: Expenditure Data Hint at Managed Care's Morphing

Lost in the August haze was an inconspicuous AHRQ-funded analysis that drew on Medical Panel Expenditure Survey, or "MEPS" data.  MEPS, an ongoing AHRQ survey of U.S. households, is touted as the only data set that crosshatches detailed demographics with detailed health expenditure data.  And so it's particularly sensitive to how health spending changes over time.

Much of what the August report had to say could have been predicted:  older people spend more on health care; sicker people spend more on health care; obesity is a significant problem.  But one conclusion seemed at least mildly jarring:  "Managed care has a neutral effect on the concentration of health care expenses."

Indeed, the MEPS data showed that among the under-65 population with health insurance at the workplace there were "no statistically significant difference in concentration [of health expenses] between those enrolled in HMOs and other types of gatekeeper plans and those enrolled in indemnity" and other fee-fee-service plans.  In other words, for individuals who spent the most on care, the kind of insurance they had didn't make any difference.

At one level, this may simply suggest that for the sickest Americans no insurance plan is likely to slow costs to any great extent -- the need for care is just too great.  But I wonder if the MEPS data might also be saying at least a little something about the morphing of "managed care."   

To wit:  When Paul Ellwood first hit upon and named the HMO in 1969, that was managed care.  But over the years, the classic closed-panel HMO has been overtaken by less tightly structured insurance arrangements with higher employee cost sharing -- notably, PPOs.  A recent headline out of Minnesota, center of gravity for the model Ellwood pioneered, tells the story:  "HMOs Steadily Losing Ground."  Such is documented more broadly by recent HealthLeaders/Interstudy data that show that HMOs now represent south of 40 percent of managed care enrollments. 

Thus, while managed care as a whole has greatly increased its insurance-market penetration -- approaching, in the commercial market, 90 percent -- its most pervasive flavor carries much less cost-control bite than the classic, tightly regimented HMO . . . not unlike how water gets shallower as it spreads across a flat surface.  (Interestingly, the newest HealthLeaders/Interstudy data show HMO enrollments stabilizing, but given HMOs' severe market erosion over the last few years, it's probably too early to accord this finding lasting significance.)

In all, the MEPS report's finding that high levels of expense are impervious to insurance may become a little more understandable in the context of managed care's evolution.   And so if you're like me, and you spent August soaking up summer's dwindling bliss rather than bearing down on data sets, now may be a good time to give the AHRQ analysis a look.

McClellan Legacy One of Activism, Agenda Setting

As CMS Administrator, Mark McClellan will probably be remembered -- positively or negatively, depending on your perspective -- for shepherding Medicare's Part D drug benefit through initial implementation.  But beyond such individual accomplishments (or setbacks), the McClellan legacy will likely also be flavored by an important thematic:  an inclination to act, sometimes for good, sometimes for ill, but, in the end, a combatant always in the arena.

McClellan, who announced his resignation earlier today, appears in retrospect not so different from another public official who seemed to relish his position not for what it was, but for what it allowed him to do.  You could accuse David Kessler of many things when he was FDA Commissioner, but one charge to which he remained invulnerable was that of stand-pat-ism.  Same with McClellan.  He seemed to perfect the art of being everywhere, always with an opinion, always ready to defend it through resort to close analysis and facts.

He arrived on the job well-prepared -- physician; health economist who had published significant studies on the value of medical technology; an FDA Commissioner like Kessler; White House aide; member of a politically accomplished Texas clan intertwined with the Bushes.  It was a strong platform, and McClellan made the most of it.  You could almost sense in him a will to overcome the inertia of officialdom.

Example:  Medicare chiefs had been talking since before there was a CMS, since before there was even a HCFA, about addressing coverage of new medical technology, but McClellan actually did something about it.  His policy on Coverage with Evidence Development, or "CED" (see earlier post, "CED Strains Nomenclature, Vocabulary") will have its fans and its detractors.  But give the man his due.  He did the tough blocking and tackling needed to craft a dramatically new approach -- to turn abstract talk about "conditional coverage" into an actual on-the-ground, in-your-face policy.

Example:  McClellan wasn't hesitant to order up a deftly administered dose of Medicare demonstration authority if the situation seemed to warrant it.  When physicians were set to take a hit on Part B drug payments, CMS instituted a demonstration that reimbursed for certain of their chemotherapy treatments, provided they filed data on patient outcomes (thus killing another bird with the same policy stone).  To say that not all these demos produced pristine policy results -- the OIG recently criticized the chemo demo, for example -- misses the point.  Like a dog that talks, though sometimes imperfectly, the fact that some of these demos could be done at all is what's amazing.  Indeed, they stand as the mark of a resourceful leader intent on moving his agenda. 

As so you can love Mark McClellan . . . or not.  But whatever your view, his record of impatient forward motion is one we're unlikely to soon see again at CMS.   

New MIT Study on Tech v. Insurance: Food for Thought on Reimbursed Markets

There's been the requisite hand wringing of late over what's driving health care costs.  Is it the prime endogenous suspect, technology?  Or an exogenous factor like insurance?  New data out of MIT gives us a better read, and, in a grossly oversimplified nutshell, the answer is . . . insurance.   

To be sure, it doesn't require deep insight to grasp that third-party insurance and health costs must have more than a nodding acquaintance.  After all, it's the existence of health insurance entities willing to pay for what people spend that puts the reimburse in reimbursement.  But if the insurance-cost relationship is more than casual, is it actually causal?

Yes . . . causal to the tune of about half of health care inflation.  That's the answer at the heart of the MIT study, which was nicely summarized in the most recent Business Week (online edition requires registration).  MIT Assistant Economics Professor Amy Finkelstein found that "the impact of Medicare on hospital spending is over six times larger than what [conventional studies] would have predicted."  Sifting through barn fulls of Medicare data, she produced a key insight:  It's the steady, relatively predictable flow of a reimbursement revenue stream that gives providers the fiscal confidence to build buildings and add services. 

Viewed in this light, technology is seen more as a natural consequence of insurance than as an independent driver of costs.  As splendidly brought to life in Andy Kessler's new book, The End of Medicine:  How Silicon Valley (and Naked Mice) Will Reboot Your Doctor, the med tech industry is suffused with innovation, yet now cynics can argue that all this creative juice is linked to insurance in the way canine saliva is linked to Pavlov.

The task of selling into a reimbursed market is indeed different.  Let's play "what if" and imagine that an assortment of well-known circumstances -- the Great Depression, Henry J. Kaiser's worker beneficence at Grand Coulee, World War II, etc. -- stimulates a series of actions that ultimately leads Congress in 1965 to adopt (and President Johnson in a rose garden ceremony to sign) a bill guaranteeing elderly Americans access to adequate amounts of . . . food.  This new national entitlement provides beneficiaries with insurance that reimburses food costs (subject to a deductible and co-payments), with the private sector being counted on to spoon up the actual meat and potatoes. 

Today, the situation has devolved to the following:

- Grocery stores and the feds squabble annually over complex adjustments to Nutrition Related Groups, or "NRGs," which classify beneficiaries by their nutritional needs.   Grocers, suffering a reduction in the number of elderly customers, contend that high-end specialty shops are cream-skimming.

- Chefs chafe as insurers turn up the heat on adherence to culinary practice guidelines.  A complex kitchen-expense calculation threatens to splinter cooks along the lines of the major food groups.

- Manufacturers, their foodstuffs already regulated by FDA, rage against insurers' additional evidentiary requirements for higher-cost items.  Disputes erupt over how to measure the effect of new foods on beneficiaries' nutritional well-being.

Far fetched?  Most assuredly.  But if the new MIT data is to be believed, the effect of insurance on markets is a lot more than chopped liver.

CED Strains Nomenclature, Vocabulary

Last week's post-July 4 fireworks at CMS blew out the way we will categorize -- and talk about -- Medicare coverage policy.  The context . . .

Back when things were simple (though, as we'll explain, not so beneficial to patients), Medicare drew a clear, unalterable line that separated "mainstream" health care from that which was "experimental."  If care was "mainstream," then it was was good and could thus be covered; if it was "experimental," it was bad (even Frankensteinesque) and thus could not. 

Indelible borders don't last long in health care, and this proved no exception.  By 1994, Medicare officials were talking openly about adding some zags to the mainstream/experimental frontier.  The following year, then-HCFA and FDA decided to pay for certain "Category B" devices in IDE trials, and five years after that, in 2000, Medicare put in place a policy to pay for certain "routine" costs of clinical trials -- concepts, all, to which most private insurers today pay fealty. 

So the line was eroding already.  What happened last week is that CMS pretty much erased it altogether.

The two key actions:  (1) issuance of a revised "Coverage with Evidence Development," or "CED" guidance document; and (2) initiation of a reconsideration of the 2000 policy on coverage of "routine" clinical trial costs.  Though they fell as separate shoes, the two changes need to be considered together to get the full effect.  To wit:

Medicare's mainstream/experimental line had always teetered atop the statute's "reasonable and necessary" provision, which basically says that items and services must be "reasonable and necessary" to be covered.  But in addition to this "big daddy" reasonable/necessary provision, the statute is littered with little, pint-sized reasonable/necessary progeny, one of which says that an item/service can be covered if reasonable/necessary within the confines of a particular type of government research program.  Until now, this provision has for the most part lain dormant (though it did make a cameo in the 2000 debut of the clinical trials policy).

What CMS did last week was to organize CED into separate wings -- one for "regular" coverage, another for research-oriented coverage, the latter being fused into the clinical trials policy by virtue of "little" reasonable/necessary.  In all, the situation devolves to the following:  An item or service can now be "covered" under a national "coverage" decision, yet not satisfy "reasonable and necessary" in the traditional, big-daddy sense of the term.  This means that at one level our vocabulary will need to morph as we tangle with the new parameters of "coverage" and new flavors of "reasonable and necessary."  More broadly, CMS seems to have brought a tidy conclusion to the mainstream v. experimental debate by establishing a means to address items/services for which payment previously would have been verboten.   

It's too soon to assess last week's full effects.  Gauged along the axis of history, however, you get the sense that patient access to care is making steady (if often frustratingly slow) progress.

How Full/Empty is Your Glass? CED on Way, But That's Not the Half of It

CMS will release any day now the final guidance document on Coverage with Evidence Development, or "CED" -- a fundamental reorientation in Medicare's evaluation of medical evidence for purposes of national coverage decisions.   But that's not all.

The key precursor is a draft CED guidance that CMS put out over a year ago and that the agency touted as a way to get innovations to patients faster.  This is the "glass is half full" interpretation -- i.e., that the policy will result (impliedly) in Medicare paying for services that would not otherwise qualify.    Stakeholders generally opt for the "glass is half  empty" interpretation -- i.e., that CED is simply another way to impose stiff new evidentiary requirements on beneficial innovations.  Sources of contention to date have centered on areas like implantable defibrillators, PET scanning, and colorectal cancer drugs.

CED is unquestionably significant, with antecedents tracing back to a 1988 lecture -- "Outcomes Management:  A Technology of Patient Experience" -- in which Paul Ellwood (he of HMO and Jackson Hole fame) suggested use of postmarket observational data to make tough health care decisions.  The concept has been refurbished of late by former CMS official Sean Tunis, in an article to which the current agency administrator, Mark McClellan, contributed.  But CED achieves its full policy resonance only when considered as one notch in a full-throttle rejiggering of Medicare's evidentiary dimensions. 

The winds of change have been evident for some time (see "The Coming Data Convergence . . . Straws in the Wind"), but look what the latest gusts have blown our way:

Item:  CMS posts new, largely unnoticed Web page to address "Post Coverage Analysis" -- essentially a place to share with family and friends "before" and "after" snapshots of young but covered technologies (PET, BPH, and TMR being the current exemplars).  The "before" shots record what a technology's sponsor said would happen if coverage were granted; the "after" snaps reveal an in-the-light-of-morning look at actual experience, based on claims data.

Item:  NY Times article (free registration required) reports CMS will release data on complications encountered among Medicare beneficiaries with implantable defibrillators.  Thus, CMS looks to its postmarket cache as a source of safety-related information, while FDA stakes out this same territory by entering data-mining contracts with private health insurers --all of which suggests emergence of jumbo data repositories that spit out just the facts, mam, and remain oblivious to who's asking and why. 

Item:  CMS posts innocuous-seeming transmittal that brings to fruition equally innocuous MMA provision on coordinating local coverage decisions.  The transmittal sets up a process for local Medicare contractors (themselves acquiring novel data capabilities courtesy of new contractor reforms) to "elevate" local coverage decisions onto the national stage.  On the one hand, this is not an altogether new possibility; local decisions have always been susceptible to nationalization.  But the very existence of a process devoted to this purpose suggests increased usage, which, in turn, suggests the tossing up of more new technologies and services into CED and CED-like crosswinds.   

So buckle up . . . it's going to be a turbulent postmarket ride.

Health Care Marketing in the Age of TiVo

Perusing the New York Times book review one recent Sunday, I was defeated in my attempt to forget health care for at least a few minutes.  For there it was:  an ad for a decidedly non-fiction volume, "Out of the Black Hole:  The Patient's Guide to Vagus Nerve Stimulation and Depression."

What?  Medical technology as a literary device?

It obviously worked, for I soon found myself at the book's web site (though I did manage to restrain myself from punching in 1-888-VAGUS-88).  The more I looked into this, the more it all sort of made sense:  With the continuing commotion about patient-centered health care, why shouldn't patients write books about the technologies that help them?  Indeed, this is a reality series that gives a new, more literal meaning to the term, "survivor." 

Who knows . . . patient-reported clinical experience may help open up a new frontier in health care marketing -- a venue where, today, clutter and clatter make it difficult to get a message through.  Not so different, in a way, than what's afoot in TVland . . .   

With today's TiVo practitioners zapping through commercials with honed proficiency,  it's become common for advertisers to fight back by parachuting products  into the television shows themselves.  Thus, the backdrop for all manner of comedy and drama is no longer littered with non-descript sedans, colas, and computing devices, but instead brought alive with BMWs, Pepsis, and Apples.  The idea is to TiVo-proof the brands by stitching them into a show's very fabric. 

And so we'll infiltrate health care discourse with the voice of, well, actual patients . . . who'll publish books  . . . that get sold to other patients . . . who'll tell their doctors about what they've read . . . who'll then prescribe . . .

Sounds powerful enough to be zap-proof.

Big Bucket, Little Bucket

Sometimes commonalities arise in the darndest, most seemingly unrelated of venues.  Such is what I've noticed in two recent, otherwise dissimilar Medicare rulemakings. 

First, the commonality:  a retreat from giving providers incentives to make rational clinical choices within a fixed "bucket" of money.   Choices . . . you remember them . . . the gravamen of many a health reform notion  -- DRGs, Part D, consumer-driven health plans -- idea being that as long as the spigot of dollars is controlled, people can make their own decisions (at least above some base minimum of clinically supportable care).   Yet in these two rulemakings Medicare proposes not to let the fish swim free in a relatively spacious fiscal bucket, but instead to drive the unit of analysis down to so tiny a pool as to leave little room to paddle.

Fish kill 1:  The proposed 2007 DRG rule, about which much has been written, said, emoted.  But while CMS's cost-center pyrotechnics have been the understandable focus, there's a more subtle revolution underway, too.  Specifically, DRGs have always been about averaging out payments on a hospital-wide basis.  Ask for higher payment for a new service, and the Medicare reply has often been something to the effect that, "you may be losing money on this DRG, but you'll make it up on others."  There's a logic to that; an overall construct within which rational planning can ensue.  Now, though, Medicare, in its latest DRG rulemaking, is demanding fiscal fidelity not at the hospital level, nor even at the DRG level, but instead at the specific-service level -- with a charge-to-cost ratio of 1.0 representing nirvana in a very small place. 

The same constricting focus is also engulfing the proposed rule on DMEPOS competitive bidding.  The idea, of course, is to save money.  Fair enough.  But how broad is the terrain over which the savings/costs are to be calculated?  The law would seem to allow the spreadsheet to stretch across a competitive bidding area -- that is, you could win some, lose some, but overall you'd have to achieve area-wide savings.  CMS, however, drives the analysis down to the level of the individual item -- requiring palpable savings for every little DMEPOS sliver.  And even that isn't sufficient -- the agency proposes a complex median-based calculation that can require some bid "winners" to sell at a price less than their (already savings-certified) bid amounts.  Call it belt and suspenders, with the waist taken in.

Batting averages even for Cooperstown's fixtures rarely breached the .400 level.   Shouldn't health economics allow a little margin for error . . . even for the kinds of choices that over time can drive down costs?

Makes you want to kick the bucket.

Cost Effectiveness: Doth the Payer Protest Too Much?

CMS released two little-noticed coverage guidance documents last week, both finalizing earlier, draft materials.  The first guidance addresses the factors CMS considers in deciding whether to initiate a national coverage decision; the second speaks to the circumstances in which the agency will commission an external technology assessment to support a coverage review.

Both guidances go out of their way to disclaim any motives related to cost effectiveness.  For example, the guidance on new reviews says “[c]ost effectiveness is not a factor CMS considers in making” national coverage decisions.  Both guidances invest considerable additional verbiage in driving this point home.

Doth the agency protest too much?  Methinks not, reason being that CMS has set the requirements for production of clinical evidence in a way that gives it all the leverage it needs.  As we've said before (It's the Medicine, Stupid), reimbursement is increasingly (and paradoxically) less about money and more about the clinical content of care.  And so CMS, and perhaps other payers, have no need to trifle with the complex and politically difficult issue of cost effectiveness.  Why wander into that thicket when clamping down on clinical evidence will alone do the trick?

In another plot twist, the guidance (the one on opening a review) effectively grafts a new module onto the front end of the national coverage process.  Specifically, CMS says it will each quarter post to its Web site a listing of issues on which the agency is thinking about initiating a national coverage review.   

So the national coverage process will now start earlier, and it'll include a preview window on the agency's direction.  But this is not a passive exercise for industry.  Indeed, the agency makes the point that stakeholders "bear the responsibility for reviewing the quarterly list and submitting comments or evidence that they believe to be relevant." 

So stay alert, and watch those quarterly notices for any latent cost-effectiveness impulses.

The "FDAization" of Medicare

Sitting through a recent day-long session of the Medicare Coverage Advisory Committee, or MCAC, I was reminded of the vast changes the last several years have wrought in the way Medicare treats its drug and device manufacturer stakeholders.  It's an evolution that might be termed "FDAization," by which I intend no criticism or value judgment. 

Today, manufacturers are indeed Medicare stakeholders, no longer relegated to the status of mere upstream vendors to the institutions and professionals that provide care directly to beneficiaries, but instead enjoying direct, bilateral relations with CMS.  At one level, this is evident from the obvious things, like the fact that there's now an "Open Door Forum" targeted to manufacturers' issues.  But at a deeper level, one need take only a quick dip into the Federal Register to be struck by the many issues and conventions -- the DRG new technology regimen, the outpatient PPS pass-through program, to name two -- that have as their antecedents the priorities of drug and device developers.

Moreover, the process by which Medicare interacts with technology types has been become . . . well . . . an actual process.  Gone are the days of Medicare's "physicians panel," a quasi-mystical, black-box operation.  In its place has arisen a national coverage process that seems intent on becoming (though clearly has not yet become) as open, structured, and ordered as any FDA pre-market review. 

And finally, none of this has been lost on the manufacturers themselves.  My recent MCAC meeting was packed with technology company reps -- a far cry from the near-deserted room I encountered at my first MCAC session in September 1999.  Indeed, most drug and device companies have created whole new career tracks devoted to reimbursement (try plugging "reimbursement" into Monster), not unlike the way the life sciences industries bulked up on regulatory expertise after major changes to the Food & Drug Act.

And so, yes, stakeholder status represents a key change, and it's all fine and good.  But is sure hasn't meant less time spent in meetings.

Study Finds Medicare Claims Data Can Produce Good Surrogates for Measuring Outcomes

An interesting new study -- abstracted here -- found that applying new statistical models to Medicare claims data produced estimates of heart failure mortality "that are very good surrogates" for those generated by models using patients' medical records.  If indeed what we're witnessing, in effect, is a crosswalking of claims data to patient records, then the new models would represent an important step forward in quality measurement.  More broadly, the study seems another indication that big administrative data sets may be where reimbursers and regulators will increasingly graze to get the answers they need (see "The Coming Data Convergence . . . Straws in the Wind").

AdvaMed Annual Meeting: The Big, Big Pix

Some of the most compelling learning to come out of AdvaMed's Annual Meeting didn't have to do with health care -- at least ostensibly. 

To wit:  Peter Zeihan's breathtaking tour of the world, in which he held forth on all manner of cultural, political, economic, geographic, military, diplomatic, and -- especially -- demographic forces crisscrossing the globe.  The presentation was quite literally a tour de force, and its message on the U.S. -- "Retirement Now" -- finds resonance in matters as immediate as new Medicare budget and expenditure information out of CBO in the last few days.

Dean Kamen and Jim Collins provided the meeting with yin/yang punctuation, Kamen extolling the unpredictable, uncontrollable, unmanageable process through which true innovation occurs, while Collins (he of "Good to Great" fame) weighed in with the need to build flywheel momentum, but within thoughtfully structured managerial systems.  A bit of tension here -- left brain, right brain -- but one that mimics tension in the world at large (to pick one example: moving, mutating technology versus stable, sometimes-sluggish health insurance systems). 

In all, a great meeting, not only for topics obviously tied to health care, but also for the larger framework within which health care (and much else) must play out.

It's the Medicine, Stupid

Two mildly conflicting items that crossed my cyberdesk in the last couple of weeks (and that are elsewhere noted on this site) offered reminders that "reimbursement" seems less and less about money (at least money, per se)  and more and more about the substance and content of medicine itself.

This may seem -- indeed, certainly is -- less than profound, but it's sometimes so easy to get wrapped up in coveragecodingpayment that we forget simple truths that lie at the heart of it all.  One such truth is that we should pay for good medicine.  Of course, our search for "good medicine" never ends (and never should end).  What's interesting, though, is the extent to which reimbursers are joining the quest.

Item:  CMS, FDA, and NIH enter a Memorandum of Understanding to  collaborate on uses of PET in the clinical testing of cancer interventions.  There are several story lines here.  One is about personalized medicine.  Another is about using technology to assess technology.  But the core learning is that this is another example of Medicare chief Mark McClellan's effort to slowly turn his battleship-like CMS on the course of a public health agency.  Yes, there will be any number of ongoing dust-ups on how much to pay, etc., for this or that service, but the crux of the CMS mission is unmistakably edging in the direction of good medicine.

Item:  The National Committee on Quality Assurance issued its proposed new HEDIS measures, an annual event entirely predictable and almost numbingly routine.  For 2007, though, the measures include a new wrinkle:  for six patient conditions (five chronic, one acute), HEDIS will attempt to measure whether health plans' spending for care is too much, not enough, or about right.  At one level, this, indeed, is about dollars and cents.  But context is everything, and, here, the economics seem driven by the clinical, rather than the other way around.  In all, one senses that this is not your father's cost-effectiveness.

And so yes, there is at least some degree of conflict between these two items.  But the terms on which they're debated seem increasingly lodged in the same lexicon -- one that's less about cost, more about medicine.

Cargill HSA Action May Signal New Vector in Economic Bargaining

The New York Times report (free registration required) that Cargill will contribute to farmers' Health Savings Accounts suggests a new outer ring in the rippling effects of health care in the economy.  Under the arrangement, farmers who agree to supply Cargill can be compensated in part by getting dollars dropped into their HSAs.  The grain behemoth sees it as another way to compensate  the farmers and compete more effectively for their business.

As the value of health care  (and of its associated tax advantages) comes to be recognized as sometimes superior even to hard currency, it takes little imagination to see how the Cargill model could extend into other sectors of the economy.  Indeed, the availability of flexible new insurance forms like HSAs are now revealed as additional bases through which suppliers and suppliees can get deals done.  This new vector in bargaining could be especially important to small suppliers that have had difficulty securing and offering health benefits in traditional ways. 

In all, a new, unifying tool.  No more silos!