No news is good news for medical device makers when it comes to a possible probe into whether the federal Medicare system is paying too much for their products.
A promised effort by a Republican congressman to look into medical device pricing and cost-effectiveness in the program for senior citizens has yet to take shape.
Rep. Darrell Issa, who represents north San Diego County, took over leadership of the Oversight and Government Reform Committee earlier this year after the GOP won control of the House of Representatives.
Shortly before he became the committee’s chair, Issa said he was interested in looking at how Medicare pays for procedures that use medical devices, with an eye toward cost reductions.
A Senate Finance Committee report issued in late 2010 showed that Medicare paid more than $100 billion from 2003 to 2009 for 6.9 million procedures in which medical devices were used.
The report suggested that pricey cardiovascular and orthopedic implants may be overused by doctors, sometimes after aggressive promotion by device makers.
“They have got to come up with a system that doesn’t reward people for putting more metal in somebody’s spine,” Issa said in an earlier Wall Street Journal article.
That article quoted Issa as saying his personal doctor told him that Medicare gave incentives for doctors to implant artificial joints and screws.
Issa’s Washington, D.C., office did not return multiple requests for an update on the situation.
Device Maker Response
In the meantime, medical device makers and trade associations are refuting the notion that their products drive up overall healthcare costs.
Medtronic Inc., a Minnesota device maker with about 700 workers in Orange County and a corporate lineup that includes cardiovascular and orthopedic units, said it helps lower the cost of healthcare by addressing “serious unmet needs in chronic diseases like diabetes and heart failure,” spokesman Brian Henry said.
“I think if you look at the medtech industry generally, we’ve got a pretty good record with regard to our contribution to (controlling) healthcare costs,” said David Nexon, senior executive vice president of Washington, D.C.-based trade group AdvaMed.
AdvaMed’s current chairman is James Mazzo, president of Santa Ana’s Abbott Medical Optics Inc.
An AdvaMed study shows that medical device spending totals about 6% of national healthcare costs “despite a flood of new products,” Nexon said. He noted that the percentage hasn’t really changed much over the past 18 years.
AdvaMed doesn’t believe the key to controlling costs is “some sort of central authority making decisions (on) what medical devices doctors should or should not use,” Nexon said.
Instead, he said there should be a better understanding of the relative value of different treatments for different patients, among other things.
“Physicians make the decisions about using medical devices,” Nexon said. “We are suppliers, not medical decision-makers.”
The view that medical devices drive costs up “is of concern to us,” said Joseph Panetta, chief executive of Biocom, a San Diego trade group with local companies among its membership.
Biocom has talked with Issa’s staff about the situation, Panetta said.
One key goal is to ensure that any probes involving Medicare reimbursement fraud by doctors performing unnecessary procedures don’t drag down device makers, Panetta said.
Cost-Effectiveness
Issa has suggested that it might be time to allow Medicare to consider cost-effectiveness as well as efficacy in what it decides to pay for, as long as such decisions are made by doctors.
“We are strongly opposed to that, and I think most of the public and members of Congress oppose it as well,” Nexon said.
He compared any move toward decisions based on cost-effectiveness to the standard in Britain, where authorities “ration care based on somebody’s judgment that saving your life isn’t worth an extra $100,000.”
