Medical Device Daily Washington Editor

WASHINGTON — The cost of medical care holds an increasingly central place in healthcare policy discussions, so it was no surprise that this year's World Health Care Congress found a place for a discussion concerning how payers determine reimbursement — or not — for medical devices.

Ken Patric, chief medical officer at Blue Cross/Blue Shield Tennessee (BCBS/T; Chattanooga), gave an overview of how a modern Medicare and private insurance contractor decides what and how it will cover. The process, he indicated, is not always top-down.

"Most of what we do is driven by our contracts" with employers, Patric said, and "making sure everything we did is medically necessary." Medical necessity has typically correlated with clinical effectiveness, he said, but that employers are more commonly interested in cost-effectiveness. "You'll find mention of cost-effectiveness in those contracts," he said, accompanied by an "expectation of medical necessity."

However, such clauses are not cast in steel, he said. "If there's something more cost-effective than is ordinarily covered, you can cover that" most of the time.

One change in this approach is greater emphasis on clinical effectiveness studies, traditionally involving a comparison of the use of a device vs. treatment with no device. A device-to-device comparison, though "more difficult," is becoming more common, he said.

Patric said that BCBS/T looks at many sources, including the Cochrane Library, an extensive medical database financed by the Cochrane Collection (Oxfordshire, UK). This database is designed to improve "healthcare decision-making globally by offering systematic reviews of the effects of healthcare interventions," according to the Cochrane web site.

The Cochrane Library, he said, "allows anyone who wants to contribute to it to give a complete review of a device or service ... but it has to review all the world's literature." He added, "In the U.S., we don't tend to publish negative results very often," but such data are available from other nations and included in the Cochrane Library.

Despite the seeming game-changing nature of such data, BCBS/T uses "the typical hierarchy of evidence," Patric said, including clinical trials and medical opinion, calling it "amazing how many times you don't get those large randomized controlled trials."

He said that as consumerism takes root, a key question concerning cost-effectiveness will be: "Cost-effective for whom?" Patric said that "unless incentives are fully aligned — which we all know they are not" — a specific intervention might not be cost-effective for some. And he referenced at least one plan that does not cover a generic form of Claritin (loratidine) but does pay for Allegra (fexofenadine) to treat allergies.

Coverage decisions are not necessarily constrained by exhaustive evidence, Patric said, but that coverage of therapies that lack a large body of clinical evidence must be championed by someone within the organization.

"Our case managers are the most important part of how we approach this," he said, citing their expertise and influence, for instance, in the coverage of negative-pressure wound therapy, despite its being backed with only limited evidence. Wound management clearly "looked better than the alternative," such as "a very expensive surgery."

"We put a lot of stock into educating our case managers," Patric said, allowing them to make some decisions without going up the chain of command. "In the end, we usually find they've made the right decision."

There are other pressure points on cost.

"The growing interest in cost effectiveness" is based in part the decision by the Centers for Medicare & Medicaid Services to stop paying for "never" events, a group of events that recently grew substantially larger. "That caused quite a stir in the commercial side of the business and most of us are moving toward" that kind of policy.

The trend "from the commercial side, particularly with large, self-funded accounts, [is toward] more definition in our contracts about what we cover and don't cover [and] more data about clinical and cost effectiveness," Patric said, and that BCBS/T is getting "more sophisticated questions from our larger accounts," than 10 years ago.

The plan is also more focused on centers of excellence, judging them "on their clinical effectiveness. Now we're going back and seeing if they're cost effective" as well, Patric said, noting that comparative effectiveness requires "lots of data," but is "where we need to go."

Patric told Medical Device Daily that payers are getting more creative with incentives for patients to be more proactive in their health.

"Part of what's driving that is the high deductible plan, and that more and more self-funded companies want employees to have a knowledge base and give them incentives to stay healthy and become healthier."

Patric said he knows of "a special program [in Nashville, Tennessee] for those with chronic illness, and if they participate in a program" that directs them to specific doctors and centers, they are eligible for major reductions in total cost sharing. "Instead of an 80-20 ratio, they get a 90-10," he said.

Some companies have toyed with the idea of disincentives" such as higher co-pays for those who refuse to manage their health more effectively, but "my understanding is they have been questioned" on the basis of the rules of the Employee Retirement Income Security Act.

"I personally like incentives more than disincentives," Patric said.