The use of comparative effectiveness research would give Medicare a sophisticated tool for making coverage decisions on the basis of quality, but the federal health program's ability to use such data is hamstrung by political interests and the health reform law, according to two researchers.
“We believe that the time is ripe for Medicare to use comparative effectiveness research to reach a new paradigm of paying equally for services that provide equivalent results,” the authors wrote.
Dr. Steven D. Pearson, president of the Institute for Clinical and Economic Review in Boston, and Dr. Peter B. Bach, an attending physician at Memorial Sloan-Kettering Cancer Center in New York, say that Medicare can take advantage of the burgeoning comparative effectiveness movement to change its ways (Health Affairs 2010;29:1796–804).
The Obama administration is helping create a larger comparative effectiveness enterprise through some $1.1 billion that was set aside as part of the American Recovery and Reinvestment Act of 2009. In March 2009, the Department of Health and Human Services announced that 15 experts would guide investments and coordinate research through the Federal Coordinating Council for Comparative Effectiveness Research.
However, the council's role is limited in that it will not set clinical guidelines, or establish payment rates or tell Medicare what to cover. The Affordable Care Act further spelled out restrictions on how comparative effectiveness findings could be used by the federal government.
Currently, Medicare covers a drug, device, product, or service if evidence supports its effectiveness. No comparisons are made to other products. Payment is set separately, based on arcane formulas that cover cost and maybe a small profit.
Dr. Pearson and Dr. Bach propose that Medicare instead link coverage and payment decisions at the outset. The program could still use the “reasonable and necessary” threshold in deciding when to cover a product or service. But regulators could adopt a three-tiered effectiveness scale that would let them assign differing reimbursement to each level.
For instance, a superior rating would garner the highest payment. Such a product would have the fewest side effects or offer the most effective treatment when compared with similar treatments.
Next down would be the “comparable” product or service. Payment would be slightly less than that for the superior product, as in the difference between what is paid for a brand name and a generic pharmaceutical, for example.
The lowest rating, “insufficient evidence,” would be covered and reimbursed at the conventional cost plus a small profit, but the payment level would be reevaluated every 3 years.
The authors said a 3-year time frame can act as both a carrot and a stick. Having coverage – at current Medicare rates – is better than not having coverage, so innovation will not be stifled. Limiting that rate to only 3 years gives manufacturers and clinicians greater incentives to conduct comparative effectiveness studies.
Dr. Pearson reported no conflicts. He is a member of the National Institutes of Health's Comparative Effectiveness Research Steering Committee and was a previous vice chair of the Medicare Evidence Development and Coverage Advisory Committee. Dr. Bach made no disclosures. He serves on the Committee on Performance Management of the National Committee for Quality Assurance and the Institute of Medicine's National Cancer Policy Forum.