Four former CMS officials are calling for dramatic changes to Medicare coverage policy that would allow the agency to consider cost in its coverage decision-making, require prior authorization for technologies to ensure compliance with national coverage policies and devote more government resources to clinical research specific to Medicare needs.

The controversial recommendations are outlined in an August 2011 report issued by the Urban Institute and the Robert Wood Johnson Foundation.

The paper, “Improving the Quality and Efficiency of the Medicare Program Through Coverage Policy,” was written by Sean Tunis, CEO of the Center for Medical Technology Policy; Steve E. Phurrough, chief operating officer and senior clinical director for CMTP; Penny Mohr, vice president of program development for CMTP; and Urban Institute Fellow Robert A. Berenson. Each of the authors has held senior posts at CMS.

The health policy experts argue that updating Medicare coverage policies for new medical technologies could help the U.S. better meet its goals of improving health care quality while reducing costs.

“The vast majority of new technologies and services bypass any meaningful review,” the former CMS policymakers argue.

The authors admit that at least some of the changes would be politically difficult to achieve and would require Congress to give explicit new authorities to CMS.

“These more ambitious recommendations are made anticipating that any fundamental reconsideration and possible restructuring of the Medicare program should thoroughly review the current limitations in the CMS coverage process,” it writes.

The future of the Medicare program is set to play a central role in the ongoing deficit-reduction talks within the Super Committee. (See in this issue, “ Also see "Industry Council Recommends More Medicare Cost-Sharing To Supercommittee" - Medtech Insight, 19 September, 2011. .”)

Towards A More Coherent National Coverage Framework

A well-considered national coverage policy can influence the appropriate use of medical technology and help generate better evidence to support clinical and health policy decisions, the authors argue.

Currently, a small percentage of Medicare coverage policies are set nationally by CMS; most coverage decisions are made at the local level by regional Medicare contractors.

“The vast majority of new technologies and services bypass any meaningful review,” the former CMS policymakers state. The problem is “exacerbated by the absence of a coherent policy framework for activating the [national coverage determination] process nationally.”

Over the past decade, CMS has typically issued 10-15 national coverage decisions per year. A coverage analysis can be triggered either internally or at the request of outside interests, including manufacturers, provider groups, beneficiaries and Congress.

Key Recommendations

Four former CMS officials suggest ways to better tie Medicare coverage policy to quality improvements and cost reductions:

Devote more personnel and resources to the Coverage and Analysis Group within CMS.
Enlist the Medicare Evidence Development and Coverage Advisory Committee to help identify candidate topics for national coverage analyses.
Develop a list of CMS research priorities to share with funders of government and private research, and establish policy mechanisms to ensure that some CMS clinical research questions are given higher priority for funding.
Use the CMS national coverage process to actively promote the adoption of under-used, high-value technologies.
Provide more explicit legal authority to CMS to apply coverage-with-evidence-development policies for promising technologies that require better clinical effectiveness evidence.
Make statuatory changes allowing CMS to routinely consider cost as part of the national coverage process.
Consider giving CMS new pricing authorities that let the agency link prices to incremental benefits of technologies.
Use selective prior authorization for high-cost items with a history of innappropriate use.

In most cases, a national coverage analysis leads to a positive decision to provide coverage for the technology, even when the available clinical evidence supporting the technology is only characterized as “fair” or “poor,” the authors point out.

“The reality is that CMS cannot simply defer a decision on technology while waiting for ‘good’ or ‘excellent’ evidence to be produced,” they note.

The push for a more standard national coverage approach is counter to the device industry’s general position that new technology needs some leeway from the reimbursement system early in a product’s lifecycle while data continues to be collected. Companies say greater reliance on the local coverage determination process, rather than moving too quickly to national coverage policies, is one way to provide this breathing room.

The authors of the Urban Institute report acknowledge that the motives for issuing a positive coverage decision in the absence of strong data are largely based on the “desire to provide beneficiaries access to potentially beneficial technologies without the lengthy delays needed to design, fund and implement clinical studies after their regulatory approval.”

“However,” they argue, “it sometimes derives from political pressure from affected stakeholders, such as device and drug manufacturers, clinicians and patient advocacy groups.”

Greater use of the Medicare coverage-with-evidence-development policy could help generate more needed data on new technologies without delaying patient access, but the agency’s authority to demand CED remains uncertain, the paper notes. (See “ Also see "What Ails Coverage With Evidence Development? MedPAC Discusses Issues" - Medtech Insight, 16 November, 2009. ” – “The Gray Sheet” Nov. 18, 2009.)

“Without a clear legal mandate to pursue CED, CMS’s efforts have by necessity been ad hoc,” the report states, citing “no formal process for selecting appropriate topics; little learning from one initiative to the next; and limited resources and lack of dedicated staff skilled in navigating the political and operational issues raised by CED.” The agency is also limited in its ability to require suppliers and providers to report data, it adds.

The former CMS officials suggest that the national coverage process could be reformed not only to help curb overuse of medical technologies, but also to help identify areas where additional or more effective technologies are needed.

With the advice of the Medicare Evidence Development and Coverage Advisory Committee, the paper suggests, “CMS could identify important needs and current gaps in services in the Medicare program to better support care for elderly and disabled beneficiaries, sending clear signals to product developers and providers about high-impact areas for investment to develop new products and services.”

Noting that CMS also has no budget of its own to support clinical research, other agencies within the federal government – the National Institutes of Health in particular – “should be more attentive to the practical needs of CMS for comparative effectiveness research relevant to the Medicare program,” the authors contend.

Cost Considerations And Prior Authorization

The authors also want CMS to be free to consider comparative costs of technologies within its coverage decision process – something that industry has fought on multiple fronts. In particular, industry worked hard to separate cost from federally-funded comparative effectiveness research considered under health care reform. (See “ Also see "Senate’s Comparative Effectiveness Language Emphasizes Clinical Over Cost" - Medtech Insight, 2 February, 2009. ” – “The Gray Sheet” Feb. 2, 2009.)

This is not the first time some of the paper’s authors have voiced their support for more cost considerations backing Medicare coverage, including during their tenures at CMS. (See “ Also see "Cost-Effectiveness Policy In Brief" - Medtech Insight, 8 December, 2008. ” – “The Gray Sheet” Dec. 8, 2008.) But more explicit authority from Congress is critical, as “past efforts to accomplish this through regulatory actions have been stymied,” they write.

The health policy experts also want the agency to do a better job of upholding its coverage policies by devoting funds to monitoring how well regional contractors comply with the agency’s national coverage determinations.

For example, CMS could consider selective application of prior authorization to address high-costs items that have been linked to inappropriate use to help align the utilization patterns with the evidence base, the report states.

“If the additional resources were provided with accountability for their use, it is likely that the increased administrative costs would be more than offset with program savings resulting from reduction of services that do no benefit – or actually harm – Medicare beneficiaries,” the authors write.

To date, most discussion surrounding prior authorization has focused on the prospect of Medicare adopting the strategy to curb use of advanced imaging services. (See “ Also see "Obama Budget Seeks Prior Authorization For Medicare Imaging" - Medtech Insight, 2 March, 2009. ” – “The Gray Sheet” March 2, 2009.)

If implemented by Medicare, prior authorization should be narrowly applied and targeted to technologies that have high unit costs, are performed relatively infrequently, and are used in elective procedures that are not considered so time-sensitive that a prior authorization review would likely impact the outcome, the authors caution.

By Monica Hogan

Former Medicare Officials Urge Reforms To Coverage Process

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