AdvaMed says it wants CMS to permit at least a five-year grace period from accountable care organization payment rules for physician early adopters of new medical technologies and treatments.

The recommendation is one of dozens being circulated by medical device groups in hopes that the Medicare agency will consider the impact that giving groups of providers shared incentives to cut costs will have on adoption of new medical technologies.

CMS is getting set to announce its plans early next year to move forward with a nationwide push for hospitals and physicians set up accountable care organizations (ACOs), as required by the health care reform law.

ACOs are networks of providers who agree to take shared accountability for total medical care of a group of patients. Under the most basic structure envisioned in the reform law, members of an ACO would be paid their usual fee-for-service reimbursement for services performed and also be eligible for an extra incentive payment to the group based on savings realized by the group compared to pre-specified spending targets.

CMS To Define ACO Best Models In January

Other models could be allowed as well, and “until we get a definition of ACOs from CMS in January, we won’t really know” what form of ACO the agency will approve, said Erik Johnson, senior VP of Avalere Health, on a Dec. 9 conference call on ACOs.

Under any model, CMS would be required to collect quality data from the ACOs and ensure care is not suffering in the name of reduced spending. But device companies are wary.

"ACOs could compromise patient access to the most appropriate treatment or service or access to new technologies simply because they are focused on cost savings that result from the use of older, less expensive, and less effective treatments and technologies," AdvaMed’s Ann-Marie Lynch writes in Dec. 3 comments to CMS.

“ACOs could compromise patient access to the most appropriate treatment or service” because of a focus on cost savings, says AdvaMed.

Specific protections should be included in ACO regulations to prevent newer technologies from effectively being restricted as a means for the group to meet the spending target, she warns. Such protections should include a designated period during which a physician in an ACO has the freedom to use a new technology without financial worry.

“There should be … a grace period where a provider is neither penalized nor rewarded for using the alternative treatment,” AdvaMed Senior Executive VP David Nexon said during a Dec. 6 press briefing.

Grace Period Likened To New-Tech Add-On Pay

He likened the proposal to the existing new technology add-on payment that is part of Medicare's inpatient payment system, where a new product can qualify for extra payment to cover its costs for a period of three years while CMS determines where it fits in long term. In the context of ACOs, though, Nexon says a five-year grace period would be more appropriate.

CMS should also allow ACO spending benchmarks to include adjustments that reflect the cost of new, higher-price tag treatments and to put caps on physician incentives "to limit the adverse impact on patient care that can result from financial incentives to limit items and services," Lynch writes.

In addition, the Medical Device Manufacturers Association is urging CMS to calculate cost savings linked to ACO incentives not just based on each episode of care, but over one year.

"To show that savings have not resulted in adverse effects on quality, the program must measure savings over a long enough period to capture all of the costs of care provided under the program," writes Thomas Novelli, MDMA's VP-government relations, in Dec. 3 comments. "Programs that encourage physicians to select medical devices based on cost rather than clinical appropriateness for the patients are likely to result in higher rates of medical complications, malpractice liability and hospital re-admittance."

HHS Waiver Authority A Concern

Underlying most companies' concerns is the fact that the health reform statute gives the government authority to waive restrictions under laws, like the physician self-referral law and anti-kickback statute, that typically would block doctors from making financial agreements with hospitals on strategies to cut patient care costs and other practices that may be important for ACOs. CMS is working with the Federal Trade Commission on waiver policies.

Industry is pressing the agencies to be cautious in applying such waivers, which "would likely give rise to greater product standardization in the hospital setting and could potentially limit patient access to innovative medical technologies," MDMA's Novelli writes.

The group was similarly concerned about waivers on kickback laws in the context of hospital-physician "gainsharing" demonstration projects launched by CMS under congressional authority several years ago (See " Also see "Medicare Gainsharing Demos Still Have A Pulse, CMS Release Confirms" - Medtech Insight, 24 August, 2009. " – "The Gray Sheet" Aug. 24, 2009). MDMA says CMS should wait until those projects have been completed and evaluated before moving ahead with ACO waivers.

AdvaMed's Lynch pointed out that while CMS is allowed to grant the waivers, “the policy concerns that gave rise to these laws still apply.”

To protect against abuse, Lynch stresses the need for strong, proactive monitoring by an independent third party of any ACOs acting under government waivers.

"Monitoring should continuously assess the performance of an ACO, including the ACO's performance on meeting patient-centeredness criteria, quality standards, improvements in beneficiary outcomes, and access to appropriate treatments and services," she explained.

By Sue Darcey

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