Dive Brief:
- Reimbursement is failing to keep pace with a jump in first-time premarket approvals in medical technology, especially advancements in cardiovascular care, according to a new report by Vizient, which works with providers on value-based care.
- The report said new devices on the market are improving patients' quality of life and helping them live longer, but hospitals are caught between inadequate reimbursement and premium prices for the procedures that are often significantly more expensive than current therapies.
- Technologies that have revolutionized cardiovascular care within the past six years include transcatheter aortic valve replacement (TAVR), the MitraClip, leadless pacemaker, left atrial appendage occlusion and drug-coated balloons for treatment of peripheral vascular disease, Vizient said.
Dive Insight:
Physicians want to be early adopters of innovative medical technology that can improve their patients' quality of life, but new devices are rarely reimbursed adequately when first introduced in the market. As a result, hospitals typically lose money on procedures involving new technology, especially for Medicare patients.
Vizient said its review of several recent cardiovascular device introductions found an average price increase of 273.3% over the predicate medical device. For devices that have no predicate, such as left atrial appendage occlusion, the premium over the comparable surgery can be much higher.
On the payment side, the time between when a device gains approval and Medicare grants reimbursement has averaged about six months, the report said. The only exception is drug-eluting stents, which received reimbursement at the time of FDA's premarket approval. A parallel pathway unveiled in 2010 was intended to synchronize FDA approval and CMS reimbursement but has been little used, while new technology add-on payments have helped bridge the gap but don't cover a device's full list price.
In one notable example, Vizient said its data showed that hospitals performing TAVR are likely to operate in the red or just break even on the procedure. The valves are made by Edwards Lifesciences and Medtronic. Medicare reimbursement codes have reduced payments by 3.7% for 2019 rates.
The national average cost for the procedure is $61,716, and the average purchase price for the device alone is $25,685 after rebates. Reimbursements under diagnosis related group (DRG) codes 266 and 267 for fiscal 2019 are $44,253 and $36,019. Vizient said providers face average gross losses of $22,082 (35.8%) on each procedure. However, actual profit or loss for a facility varies based on factors such as length of stay, level of nursing care, other procedures and tests performed during hospitalization, and complications.
Vizient advises hospital technology adoption committees to consider a value-based approach to decision making that takes into account the total cost of a patient's care. That includes rigorous evaluation of the available clinical evidence.
"While the ever-widening gap between device pricing and hospital episode of care reimbursement complicates financial considerations about the adoption of innovative technology, that doesn't mean these novel devices are not providing additional clinical value over predicate therapies," the report said.
Abbott's MitraClip for mitral valve repair, for example, reduced the rate of all hospitalizations for heart failure and death over 24 months, compared to a control group in the COAPT clinical study. Technologies that address an unmet need, improve outcomes, have low clinical risk and reduce the total cost of patient care may justify adoption. "Determining the value of a technology is key to the innovation adoption process," the report said.
Vizient advises providers to weigh the timing of adopting a technology innovation, noting some technologies are never widely adopted for various reasons. A further advantage to delayed implementation is that reimbursement often improves as more clinical evidence becomes available.
