With comprehensive U.S. health care reform being viewed as a realistic near-term objective among key figures on Capitol Hill, a seat at the decision-making table is perhaps the best any one interest group could hope for - and signs suggest device firms have not been left idly standing.

One indication is consensus health reform recommendations released March 27 by a group called the Health Reform Dialogue, which included input from device trade association AdvaMed.

The five-page HRD ¹ document resulted from a six-month, invitation-only mediated discussion among 20 national health groups overall.

Organized by the American Hospital Association, the effort also included AARP, the American Medical Association and pharmaceutical and insurance representatives. It was intended to identify components of reform that have broad consensus and help avoid the type of conflicts that ultimately scuttled the last serious attempt at health care reform in the early 1990s.

The recommendations include expanding Medicaid eligibility, tax credits for more affordable coverage and an increased focus on disease prevention. Notably absent is any suggestion of cost savings through the targeting of high-priced technologies.

Instead, the document includes at least some emphasis on protecting medical technology innovation. One bullet point, for instance, under recommendations for "ensuring quality and value," advises considering "the potential effect of new payment methodologies on medical innovation."

In addition, while comparative-effectiveness research is included among the recommendations, it is specifically referred to as "comparative clinical effectiveness research," which would be performed via a public-private partnership "to provide additional information that can help improve care decisions." This model would fit with AdvaMed's insistence that comparative effectiveness not be used by the government to restrict coverage of expensive procedures.

Considering the similarities between the HRD proposal and a health reform ² plan issued by AdvaMed in 2007, "I think we had a pretty significant influence on the process," AdvaMed Senior Executive VP David Nexon said in an interview.

AdvaMed's plan also includes expanding Medicaid, tax credits and achieving long-term cost savings with prevention and treatment of chronic diseases, though it puts more emphasis on achieving the latter goal using new medical technology (³ Also see "Device Industry Proposes Medtech-Friendly Universal Coverage Plan" - Medtech Insight, 25 June, 2007., p. 6).

What type of impact the HRD proposal will have on the broader health reform debate remains to be seen.

The recommendations eschew the most contentious issues, such as whether a new public insurance plan should be created and individual health coverage made mandatory. Furthermore, two influential labor groups which participated in the dialogue - the Service Employees International Union and the American Federation of State, County and Municipal Employees - did not sign the consensus document.

From AdvaMed's standpoint, however, just being asked to participate "is a tangible recognition of the work we have done to establish ourselves as stakeholders in the process," said Steve Ubl, the group's president and CEO.

Cheerleading Reform, But Dissecting Some Details

The most influential dialogue on health reform is ongoing on Capitol Hill, particularly within the offices of Sens. Ted Kennedy, D-Mass., and Max Baucus, D-Mont. AdvaMed is contributing to these discussions as well.

"I think we are operating on two levels," said Nexon, who served as a health policy director for Sen. Kennedy before joining AdvaMed.

The device trade group is acting "in some sense as cheerleader and technical advisor" on the broad health reform themes of universal coverage, reduced costs and improved quality, he said. "But we are also watching for some specific issues relevant to medical devices and medical technology."

This does not mean coming up with completely unique proposals, but engaging with lawmakers as they put together the details of core health reform components.

Specifically, device lobbyists are digging deep on the three issues that will likely be part of any reform proposal that surfaces this year: pay-for-performance, comparative-effectiveness research and bundling of hospital and physician reimbursement.

AdvaMed says they support each of these concepts in the broader sense, but subtle changes in legislative language could make a huge difference.

For instance, in pay-for-performance, depending how the quality measures that dictate payment levels are determined, you can either have a system that is "absolutely negative for any therapy that is more expensive than other therapies, even if it is three times as good" or one that more appropriately responds to medical progress, Nexon contended.

As they did during debate on the American Recovery and Reinvestment Act, AdvaMed is also pushing heavily for language explicitly limiting the application of comparative-effectiveness research (⁴ Also see "Comparative Effectiveness Research Gets $1.1 Bil.; How Will Data Be Used?" - Medtech Insight, 16 February, 2009., p. 3).

Further, they are attempting to make sure that proposals to align physician and hospital payments do not include gainsharing arrangements that standardize the products that physicians use to save costs (⁵ Also see "Hospital Groups Urge CMS To Loosen Restrictions In Gainsharing Proposal" - Medtech Insight, 2 March, 2009., p. 19).

"Even though this is moving very fast, we are still in the early stages of getting into those kinds of details," Nexon said. Ultimately, "we are confident we will get a hearing and hopeful we will get good outcomes."

Reform Financing Plan Remains Vague

The other part of the equation, not currently being addressed in as much detail in Hill negotiations, is how the reform package will be paid for.

The matter of financing is also potentially perilous for device makers, whose high-price-tag products can offer a target for lawmakers looking for extra savings in Medicare payment policies.

President Obama's budget blueprint, released in February, offers some hints at the types of savings proposals on the table, most of which are palatable to the device industry at large (⁶ Also see "Despite Stock Drop, Obama Budget Not Expected To Tangibly Impact Medtech" - Medtech Insight, 9 March, 2009., p. 8).

But the health reform reserve fund in the proposed budget by all accounts would only cover a portion of comprehensive reform investments, so AdvaMed is preparing for "further contingencies," Ubl said.

In any case, there are "awfully big questions that need to be answered before you get to that second order of deliberation," he said. "What do you do about the tax cap? Do you include an employer mandate? These are questions that are going to heavily impact the revenue side of the equation. Until you get political resolution around them, it is premature to talk about the rest."

Ubl and Nexon are operating on the assumption that comprehensive legislation addressing reforms to the health care delivery system and expanding coverage to the uninsured will surface by early summer and be on the president's desk by October or November.

This ambitious timeline is consistent with recent public statements from Sen. Baucus who, along with Kennedy, has expended significant political capital in pushing for a package this year.

Nonetheless, many are skeptical that the effort can overcome the extreme political and economic barriers it faces.

A comprehensive health reform bill "is an incredibly heavy lift in a very short amount of time with a lot of obstacles," said Kim Monk, a managing director and health care analyst with Capital Alpha Partners.

But the device reps suggest that the key players are so focused on moving rapidly that it is prudent to stay fully engaged on a day-to-day basis.

"I think it has become sort of an article of faith among the proponents of reform that one of the big errors that prevented it from happening [during the Clinton administration] is that they did not move fast enough," Nexon said.

- David Filmore (d.filmore@elsevier.com)

Device Industry Continues Push To Influence Health Care Reform Dialogue

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