Cheaper and Better

2009 will bring about a complete transformation in health care in the United States.

That's what former Secretary of HHS Tommy Thompson told orthopedic surgeons at last week's AAOS meeting in Las Vegas. He told surgeons that with a $65 trillion unfunded Medicare mandate, the $1.1 billion healthcare comparative effectiveness portion of the $787 billion stimulus package will be used to save money.

Without lowering healthcare costs or raising the contribution from our paychecks, that unfunded mandate tsunami will swamp any economic recovery that might occur before 77 million baby boomers become Medicare beneficiaries.

Thompson told the surgeons that nothing will have the potential to impact their practices more than the $1.1 billion appropriation that includes a provision for 15 civil servants who will compare the effectiveness and cost of medical treatments and drugs, and make their recommendations and research public. They will also make recommendations to governmental healthcare agencies to do certain kinds of research and help coordination those efforts.

More precisely, the language from the "American Recovery and Reinvestment Conference Report, " page 157 of Division A, states:

That the funding appropriated in this paragraph shall be used to accelerate the development and dissemination of research assessing the comparative effectiveness of health care treatments and strategies through efforts that: (1) conduct, support, or synthesize research that compares clinical outcomes effectiveness, appropriateness of items, services, and procedures that are used to prevent, diagnose, or treat diseases, and other health conditions....

Goodbye, Good Enough

Medicare will be able to use this research as justification to change its coverage and reimbursement decisions from the current yardstick of whether or not a procedure is "reasonable" and "necessary, " or good enough, to one where you will have to demonstrate that your procedure is better and cheaper.

Here's an example of how this might work:

Scott Ellison, PearlDiver's Large Joint Analyst, wrote an important story for last week's Orthopedics This Week that was entitled, "Hemiarthroplasty, a Costly Choice?" Click here to read his article. (Subscription required)

Hemiarthroplasty is a hip procedure where only the femoral components are replaced. Compared to a total hip replacement (THR) procedure, one would expect recovery time to be quicker, reducing complications, hospitalization days and the price tag.

However, using the PearlDiver Patient Records database, Ellison found that the hemiarthroplasty procedure didn't stack up. It cost more and had three times the revision rate after three years versus THR.

Wrote Ellison, "The results show that hemiarthroplasty patients are not receiving a level of benefit comparable to a THR or commensurate to the price difference between the two options."

He continued, "Because there is less benefit for the patient, from an economic standpoint, charges for the hemi procedure should be lower than charges for the THR. But this is not the case, making hemiarthroplasty a costly choice.”

This type of analysis is precisely what we might expect to see as payers look to reduce costs. More importantly, the consideration of reduced cost didn't diminish the benefit of the procedure to the patient. We don't cite this particular situation as proof positive that comparative effectiveness will work, but it illustrates that those with patient data will have a huge advantage in demonstrating that their procedure deserves to be paid for when compared to another procedure.

Take another example. Last November five spine societies wrote a letter to CMS saying that they believed a more expensive kyphoplasty procedure offered no additional value over a lower-cost vertebroplasty procedure. Given that according to spine surgeon societies, both procedures offer the same value to the patient, payers would be irresponsible to pay extra for something the doctors said their patients don't need.

The examples go on and on.

Winners, Losers and Payers

Given an opportunity to cite data and professional medical support to deny payment for procedures, Thompson had no doubt that the comparative effectiveness data would be used to save money.

The U.S. won't be the first nation to try comparative effectiveness.

Britain, France and other countries have bodies that assess health technologies and compare the effectiveness, and sometimes the cost, of different treatments. The Brits' National Institute for Health and Clinical Excellence (NICE) has been a favorite whipping boy of those who think that this government effort is a slippery slope to rationing and will allow the dreaded government bureaucrat to intrude into the physician/patient relationship.

In a February 15 New York Times story, Representative Charles Boustany, Jr., a Louisiana Republican who is a heart surgeon, said he worried that “federal bureaucrats will misuse this research to ration care, to deny life-saving treatments to seniors and disabled people.”

Senators and Representatives who negotiated the legislative differences in the bill said they did not intend for the research money to be used to “mandate coverage, reimbursement or other policies for any public or private payer.”

But as Thompson told surgeons in Las Vegas…"Yeah right!"

The medical device manufacturers at AdvaMed are on board with the proponents of comparative effectiveness, sort of.      

Stephen J. Ubl, President and CEO of AdvaMed, released the following statement on the comparative effectiveness research provisions in the economic stimulus legislation:

“AdvaMed continues to support comparative effectiveness research as a way to provide more information to patients and physicians about which treatments are most appropriate for an individual’s unique medical needs.

“We appreciate that changes were made to the report language to express the intent of Congress―specifically that the funds under the program are to be used to study the medical effectiveness of different approaches to treating illness. The purpose of the research is to assist patients and health professionals in making better treatment decisions, not to mandate one-size-fits-all coverage decisions that would deny patients access to safe and effective treatments.”

But then he warned against creating "an innovation blind spot, " if comparative effectiveness research is based on cost decisions and puts an arbitrary dollar amount on an extra year of life.

President Obama's new budget director, Peter Orszag, spoke on Public Radio's “All Things Considered” on February 16. "More research on what works and what doesn't, tied to financial incentives to provide the higher-value care, could help to reduce costs without harming quality.... We currently have a set of financial incentives just for more care. And we need a set of financial incentives for better care. And part of that requires knowing what better care is, " Orszag said.

The idea of comparative effectives is not necessarily a partisan issue. Gail Wilensky, one of Senator John McCain's top health advisers and a former Medicare official for the first President Bush, said by helping show which treatments are not just more effective but more cost-effective, such research "will also help us have more sensible reimbursement strategies that various payers can use."

With $1.1 billion floating around Washington, the marketplace of ideas to find out what is cheaper and better has never been more active. Some are calling this the lobbyist stimulation act.

Data, Data, Data

We don't know yet if 2009 will bring about a complete transformation of our healthcare system. But if Tommy Thompson is right, the winners are going to be those armed with the data to prove that their products and procedures are not just good enough, but better and cheaper. That might be good news for taxpayers and a stimulus for innovation.