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.
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