Medicare’s bundled ortho payments yield modest savings

Medicare’s randomized trial of a new bundled payment model for hip and knee replacement surgeries led to $812 in savings per procedure, a 3.1% reduction in costs when compared with traditional means of paying for care, according to new research.

The study from Harvard T.H. Chan School of Public Health and Harvard Medical School found that the bundled payment model was also associated with a reduction in the use of skilled nursing care after hospitalization, but had no effects on complication rates among patients.

Published online today in the New England Journal of Medicine, the study confirms what an earlier Medicare study had found in terms of savings. In September, the Centers for Medicare & Medicaid Services (CMS) announced that Medicare payments for lower extremity joint replacement care fell by 3.3% among participating hospitals compared to a control group in the first year of its bundled payment pilot program. Quality of care was maintained in both settings, the federal health insurer said.

“Interest in bundled payments has exploded the past few years,” said Michael Barnett, one of the lead authors on the study and assistant professor of health policy and management at Harvard Chan School. “The big question has always been whether this new model can lead hospitals to meaningfully reduce spending without harming patients. This study indicates that with the right financial incentive, hospitals can save money without compromising quality by sending more patients home rather than to a nursing facility.”

Bundled payments are an alternative payment strategy that health plans, Medicare, and Medicaid are experimenting with to reduce expenses. Unlike traditional fee-for-service payments, bundled payments provide a single, fixed payment for a procedure and follow-up care rather than individually paying all parties separately.

In January 2016, CMS required all hospitals in 67 geographic areas to participate in the five-year “Comprehensive Care for Joint Replacement” (CJR) program aimed at lowering healthcare costs and improving outcomes. The program bundles payments for hip and knee replacements from hospital admission to 90 days after discharge.

Under the model, hospitals in the selected cities received bonuses or penalties depending on how much they spent on follow-up care 90 days after joint-replacement patients were discharged. The program is the largest randomized policy experiment in Medicare to date of a new payment model.

To determine if the bundled payment model was effective at reducing costs and complications, the Harvard researchers analyzed data from the first two years of the program (2016-2017). They compared costs associated with 280,161 joint replacement procedures in 803 hospitals that were required to participate in the bundled payment program with 377,278 procedures in 962 hospitals that were not participating in the program.

The analysis showed that before accounting for administrative costs, bonuses and penalties, the bundled payment model resulted in a modest 3% savings for each patient and that complications rates did not increase. The cost savings were driven almost exclusively from reducing the use of post-acute care nursing facilities, the researchers said.

One concern that has been expressed over bundled payments is that such models may incentivize hospitals to avoid operating on sicker, more costly patients. The Harvard study, however, showed that the model had little impact on the number of higher-risk patients who received lower extremity joint replacements.

The study adds to the growing body of evidence that bundled payment models reduce spending without sacrificing quality of care, the researchers said. They added that the cost savings associated with bundled payments grew during the 18-month study period and that it is likely savings would continue to grow as the bundled payment model matured.

“While there is widespread agreement that we need to move away from our typical payment system, how to do so remains unclear,” said Ateev Mehrotra, senior author and associate professor of health care policy at Harvard Medical School. “We need more rigorous experiments such as this one.”


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Nearly 150 groups join AdvaMed’s anti medtech tax letter

Medical device tax

In a recent letter sent to leaders of U.S.Congress and Senate, medtech industry lobbying group AdvaMed was joined by 142 other organizations in urging for the repeal of the 2.3% medical device tax.

Major medical companies including Medtronic (NYSE:MDT), BD (NYSE:BDX), Boston Scientific (NYSE:BSX) and GE Healthcare (NYSE:GE) added their signatures to the letter, as well as a large number of other medtech and biopharma industry groups

Although the 2.3% tax on prescribed medical devices was enacted as part of the Affordable Care Act in 2010, it didn’t go into effect until 2012 and was mothballed two years later; that moratorium, extended earlier this year, is slated to end in 2020.

The letter restates the same arguments the industry group has provided in the past, claiming that the tax, once reinstated, could reduce investment in the development of “life-changing innovations” and reduce the number of next-generation treatments and cures “for individuals in need.”

“We urge you to act before the end of this year to permanently repeal the device tax, so that individuals with life-threatening conditions will continue to benefit from the promise of advanced medical technology to extend and improve lives,” AdvaMed wrote in the letter.

Earlier this week, former U.S. House Speaker Newt Gingrich published an editorial urging members of Congress to repeal the medical device tax.

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Gingrich stumps for medical device tax repeal

Medical device tax

Former U.S. House Speaker Newt Gingrich this week published an editorial with StatNews urging members of Congress to repeal the medical device tax.

In the opinion piece, Gingrich calls the tax “misguided” and “job-killing” and suggested that the 2.3% tax, which was levied on medical devices as part of the Affordable Care Act in 2010, “threatens growth and innovation in America’s healthcare industry.”

The tax has seen two major delays so far, having been on hold since 2014, but is set to go back into full effect on 2020.

Gingrich claims that the tax unfairly affects smaller device manufacturers, saying that “it could be a death sentence for new startup companies trying to grow.”

“In short, the tax on medical devices would mean fewer jobs, less innovation, and higher healthcare costs through loss of efficiencies born from innovation,” Gingrich wrote in the editorial.

Gingrich referenced previous bipartisan efforts to repeal the tax, including a bill from departing Rep. Erik Paulsen (R-Minn.) which won votes from 226 Republicans and 57 Democrats this summer, but suggested that “it’s unlikely that Democrats will do anything now that helps make the case it is destructive to economic growth.”

He went on to urge Republicans to “get this done now” during their lame duck session before control was handed over to Democrats.

“Congress should permanently stop this tax by including language in one of the remaining appropriations bills that has yet to be decided. This would be the easiest, most expedient way to stop a terrible tax and protect innovation, growth, and the quality health care in the U.S.,” Gingrich wrote in the StatNews editorial.

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Medtech reporting would change under new opioid law

A section of the recently-passed bill to address the opioid crisis could have implications for medtech.

The 250-page Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT for Patients and Communities Act) contains a provision that would require manufacturers of certain medical devices, drugs and biologics covered by Medicare, Medicaid, or the Children’s Health Insurance Program to report payments or other transfers of value made to “covered recipients.”

“Covered recipients,” as originally written in the sunshine provision of the Affordable Care Act, were only physicians and teaching hospitals. Section 6111 of SUPPORT would expand that to include physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and certified nurse-midwives as of January 1, 2022. Also known as H.R. 6, the bill has passed both houses of Congress and is awaiting President Trump’s signature.

The reporting changes needn’t have anything to do with opioids, and this provision’s effective date is ambiguous, according to an FDA law blog post by the Washington, D.C. law firm Hyman, Phelps & McNamara. Stay tuned for CMS to clear this up in forthcoming regulations.






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Report: Trump to sign controversial law granting patients access to experimental drugs

President Donald Trump is slated to approve legislation this week that will give terminally-ill patients access to experimental drugs that haven’t yet been cleared by the FDA.

The “right-to-try” bill has sparked a great deal of controversy among policymakers and patient groups. While some, including the president, describe the effort as offering hope to patients with limited options, others argue that it undermines the FDA’s authority as the regulatory body charged with protecting patients.

Get the full story at our sister site, Drug Delivery Business News.

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HHS secretary calls on drug companies to ‘stop the price hikes’

After President Donald Trump’s drug pricing speech last week was deemed a “non-event” by analysts, all eyes turned to the secretary of the U.S. Dept. of Health & Human Services, Alex Azar, to see what the former pharma executive viewed as the administration’s top concerns.

Azar called on the industry to “stop the price hikes” and cautioned that Trump would not hold back from calling out drug manufacturers by name – an effort echoed by FDA chief Dr. Scott Gottlieb who told STAT that the agency would publish the names of companies that are hindering generic drugs from reaching the market.

Get the full story at our sister site, Drug Delivery Business News.

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Trump’s drug pricing plan called ‘non-event’ by analysts

President Donald Trump last week unveiled his administration’s plan to lower drug prices. But investors seemed relieved after the president made his highly anticipated announcement – stocks for large pharmaceutical companies and middlemen, like pharmacy benefit managers, were up on Friday.

Trump did not commit to follow through with promises he made while campaigning for office, like enabling Medicare to negotiate drug prices. Instead, he scolded the industry and said his administration is working on plans to boost competition from generic drugs.

Get the full story at our sister site, Drug Delivery Business News.

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CMS administrator Verma calls on insurers, providers to give patients their data

For the millions covered by Medicare, accessing their healthcare data ought to be simple – after all, the data belongs to them, according to Centers for Medicare & Medicaid Services administrator Seema Verma.

Earlier this year, CMS launched the latest version of the Blue Button initiative, a program designed to allow Medicare beneficiaries to collect their claims data and transfer it to secure applications, providers, services and researchers.

Verma called on private insurers to give the same opportunity to their patients, saying that the agency is going to reexamine their relationships with private payers.

She also floated another idea: should providers participating in the Medicare program be required to give patients their data?

“We’re doing it. We’re giving our patients our data. The expectation will be that other people are giving the data,” Verma told recently at the World Medical Innovation Forum conference in Boston. “So we’re making it very clear to the industry that if you’re going to be in the Medicare program, these are the requirements. The patients’ needs are the most important.”

In recent weeks, the agency has signaled an interest in tackling drug prices and helping ensure that patients can access their own data – issues that are top-of-mind for Verma. But the problem that keeps her awake at night? How much money the U.S. spends on healthcare.

“We’re still on target to spend 1 in 5 dollars on our healthcare services,” she said at the forum last month.

In an attempt to cut costs across the industry and boost outcomes for patients, Verma and CMS – like many private insurers – are looking towards the promise of value-based payment models. She wants CMS to “move away from a system that’s pay for volume and towards one that’s paying for value,” she explained.

Verma said she wants to modernize CMS programs and reevaluate the way that the agency thinks about value, starting with giving patients more information when they interact with healthcare systems.

“Over the past years, we haven’t been able to bend the cost curve and I always think, ‘Where’s the patient in this discussion?’ We’ve all had the experience of going to a provider and not having information in terms of cost and quality,” she said.

Hospitals are already required under CMS guidelines to make a list available, upon request, of their standard charges. But in late April, CMS updated those rules, requiring hospitals to post that information. The agency also requested comment from stakeholders to identify ways that hospitals can create interfaces for consumers to compare providers.

Millions of people are covered by CMS – the agency is the single largest payer of healthcare in the United States. And the woman in charge of it knows that her decisions can move the needle on a number of trending topics in healthcare.

“If it’s not happening at CMS and it’s not happening through Medicaid and Medicare, it’s probably not going to happen nationwide,” Verma said.

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Senators urge HHS to seek lower price for naloxone

U.S. Sens. Debbie Stabenow (D-MI) and Gary Peters (D-MI) penned a letter to the Dept. of Health and Human Services, urging the agency to demand that manufacturers lower the price of the opioid overdose reversal drug, naloxone.

The lawmakers wrote that the price of naloxone has climbed dramatically since it was first approved by the FDA decades ago – a two-pack of the drug’s nasal spray formulation, Narcan, costs $150, according to the senators.

Get the full story at our sister site, Drug Delivery Business News.

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Medtech’s existential crisis and how it can survive

The new EY report even includes an equation to show how medtech and other life science companies will need to deliver value: “Future value (FV) is driven by innovation (I) that focuses on outcomes with a high degree of personalization and is fueled
by unlocking the power of data (D.” [Image courtesy of EY]

Executives in medtech and other life sciences companies view digital health startups and high tech giants as an existential threat. To compete, they’re going to have to invest in or acquire customer engagement and personalization skills usually associated with online retailers and social networking sites, according to a new report out today from EY.

The report — Life Sciences 4.0: Securing value through data-driven platforms — quotes Johnson & Johnson CEO Alex Gorsky to indicate where things are going:  “Technology will touch everything that we do, whether it’s the way we use data to better understand the genome … or as it applies to things like minimally invasive surgery, even the way we talk to consumer vis-à-vis social media.”

Technology isn’t the only factor driving the change. Aging populations in the developed world mean that both public and private payers are tackling budgetary constraints and longstanding inefficiencies in healthcare systems.

In the medical device industry, companies are having to decide whether they are products companies selling to health providers or services companies focused on patients as a customer, according to the report’s author, Pamela Spence,  EY Global Life Sciences industry leader.

“I think companies need to decide what they want to be. … It’s hard to do both,” Spence said during an interview with our sister site Medical Design & Outsourcing.

Get the full story on MDO. 

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