BB&T Washington Editor and BB&T Staff Reports
The volume of medical imaging under the Medicare Part B program fed a lot of concerns about the sustainability of the program early in the past decade, a concern that led to cuts to Part B imaging under the Deficit Reduction Act of 2005 (DRA). According to a recent report, however, those efforts have yielded a flattening and even a reduction in imaging of more than 7% in 2009, and many feel that the pendulum has swung too far in the direction of too little imaging.
Further complicating the issue for some parties is that the Patient Protection and Affordable Care Act of 2010 seeks to trim $3 billion over the next 10 years from Part B imaging by upping the assumed utilization rate from 50% to 75%, an approach to cost constraint that has been tackled by a number of policymakers, including the Medicare Payment Advisory Commission.
Tim Trysla, executive director of the Access to Medical Imaging Coalition (AMIC; Washington) led a Feb. 9 conference call covered by BB&T and pointed out that DRA was not the last time Congress moved to trim imaging spending. Trysla said “there hasn't been a [Medicare] regulation or piece of legislation that didn't have a cut to Medicare imaging“ since passage of DRA, and the report on imaging conducted in 2009, produced by the healthcare consultancy the Moran Company (Washington) “shows medical imaging has been decimated by these cuts,“ Trysla said.
Don Moran, President of the Moran Company, said his firm's study was mostly focused on advanced imaging – which was also off, albeit by only 0.1% – remarking, “we've seen a marked deceleration of imaging in general and advanced modalities,“ adding that imaging performed under the physician fee schedule takes an undue amount of rhetorical abuse on the topic of costs. “In fact, advanced imaging [under Medicare Part B] is growing at only half the growth rate of medicine in general“ in recent years, he said. According to Moran's figures, advanced outpatient imaging grew 1.2% in 2009, substantially short of the 2.6% jump in overall Part B spending, Moran said.
The problem for policymakers is that despite the regional variations in healthcare spending, the data are not detailed enough to separate physicians who abuse Medicare from those whose numbers are higher than average for good reason. When asked whether CMS should adopt the use of radiology benefits managers to screen out needless imaging procedures, Trysla commented that AMIC is “adamantly opposed to prior authorization,“ a position he said CMS holds as well.
Another of the difficulties for policymakers is that while DRA and other mechanisms are seen as too blunt a set of instruments to deal effectively with inappropriate imaging, a widespread perception is that the only fix for tamping down on this problem that dodges blunt policy instruments is the electronic health record equipped with software that requires an override for imaging that falls outside guidelines. The difficulty there is that healthcare IT (HIT) has not made sufficient inroads to fulfill that role in an exhaustive manner, and HIT software that lacks an alert for imaging that falls outside the guidelines is no help.
Trysla said, however, “this is where we want to go“ with the imaging dilemma, adding that AMIC “want[s] to focus on what is appropriate.“ He noted that the definition of meaningful user, the fulfillment of which is a requirement for physician practices that want to use federal dollars for HIT systems, includes a requirement for software that performs such a function. “From a payment perspective, this isn't' happening fast enough,“ Trysla acknowledged.
FDA approves first 3-D mammography system
Hologic (Bedford, Massachusetts) recently won FDA approval for its Selenia Dimensions digital breast tomosynthesis system (Dimensions 3-D), marking the first FDA approval for a 3-D mammography system. “It's a technology that a lot of people have been dreaming about and thinking about for a long time,“ Jim Culley director of marketing for Hologic, told BB&T. “For the patient it will seem almost exactly the same, but for the doctors it will make a huge difference. They'll be able to see what actually is going on [in the breast].“
Hologic received an approvable letter from the FDA for the Dimensions system late last year, but final approval did not arrive until the second Friday of February. It wasn't the optimal time to release news, being the Friday afternoon before Valentine's weekend, Culley quipped, but the approval has garnered its share of media attention being the first 3-D mammography to win FDA approval. “It has gotten a lot of excitement . . . we think it will make a huge difference,“ Culley said.
A number of U.S. sites already have the firm's 2-D system installed, Culley said, which need only a software upgrade to go to 3-D. However, he added, there is a lot of training involved and a lot of work yet for sites to convert to the new system. Mammography systems using conventional 2-D imaging have limitations caused by tissue that overlaps tissue in the breast, which can hide lesions or cause benign areas to appear suspicious. Clinical trials using Hologic's Dimensions 3-D system showed measurable improvement in clinical performance over conventional mammography, but these trials also showed significant gains in specificity and improved lesion and margin visibility, as well as the ability to accurately localize structures in the breast.
The improvements in accuracy, clinical detection and sensitivity makes the Dimensions 3-D system a superior system vs. conventional digital mammography systems, Hologic said. “We are extremely proud to be the first company to receive FDA approval of a 3-D digital mammography system and to offer women this groundbreaking, superior imaging technology,“ said Rob Cascella, President/CEO of Hologic. Cascella said the firm is of the view that tomosynthesis “has the potential to change how screening and diagnostic mammography is performed, and over time will prove invaluable to the earliest possible detection of breast cancer and in the reduction of unnecessary diagnostic interventions.“ According to Culley, the Dimensions 3-D system is already available commercially in more than 40 countries in Europe, Latin America and Asia. Systems are already installed in Canada and Mexico as well, the company said.
As part of the review process, FDA reviewed results from two studies in which board-certified radiologists reviewed 2-D and 3-D images from more than 300 mammography exams. In both studies, radiologists demonstrated a 7% improvement in their ability to distinguish between cancerous and non-cancerous cases compared to viewing 2-D images alone. While the combination of the Selenia's 2-D and 3-D images roughly doubled the radiation dose the patient received, it improved the accuracy with which radiologists detected cancers, decreasing the number of women recalled for a diagnostic workup, the FDA noted in a Feb. 11 statement. There is, however, uncertainty for radiation risk estimates, the agency said. The increase in cancer risk from having both a 2-D and 3-D exam is expected to be less than 1.5% compared to the natural cancer incidence, and less than 1% compared to the risk from a second exam using conventional 2-D mammography.
Hospital execs expect reform to spur their spending
The good news in a recent report on the spending plans of U.S. hospitals by L.E.K. Consulting (Boston) is that spending on medical equipment, spurred by healthcare reform, is expected to increase substantially. The bad news? Well, their continuing economic trials have hospitals negotiating on price like never before, so making sales isn't going to get any easier, even with the anticipation of larger capital budgets.
But on balance, there's much in L.E.K.'s report, titled “Healthcare Reform Shifts Hospital Priorities, Creates New Opportunities for MedTech Companies,“ to encourage medical equipment suppliers who have glumly watched hospitals stretch equipment life cycles as a handy weapon in battling budget shortfalls. Stuart Jackson, a vice president of the consulting firm and co-head of its global med-tech practice, was one of three authors of the report, itself built on the company's second annual survey of nearly 200 senior hospital officials.
With the report saying that “the winds of change from healthcare insurance reform are causing hospital executives to reexamine their operations,“ Jackson said one of the key expectations is that millions of new patients covered under reform measures will substantially drive up the number of procedures at hospitals. He told BB&T: “I think what hospitals have been trying to do is increase efficiency so that they can handle more patient volume without more hiring and more infrastructure, so we're seeing a lot more spending on information technology, as we saw in the survey. That means more electronic medical record systems, more IT applications to manage specific parts of the hospital, for example, bed management software or operating room management software – tools that can help maximize the throughput and efficiency of different parts of the hospital.“
Sixty percent of the hospital execs surveyed expect to have increased budgets this year, compared to just 22% in the first edition of the study last year. An even larger percentage – 70% – expects increases over the next five years.
The report says that “hospitals are recalibrating their purchasing processes to focus on products that demonstrate the efficacy and support the monitoring required to track improvements in quality and patient safety while also reducing medical errors.“ The hospital executives who were surveyed ranked product quality first among the priorities behind their purchasing decisions, but that was followed closely by reimbursement. They gave equipment vendors low marks for their support on reimbursement issues. Clinical data and sales rep support tied for third place on the priorities list.
As for equipment vendors themselves, the survey also indicated that hospitals didn't see significant differentiation among companies, with narrow gaps between category leaders and also-rans. Becton Dickinson, Medtronic, Stryker, St. Jude Medical, GE Healthcare and Boston Scientific were cited as the leaders across a total of 11 key criteria hospital execs use to make purchasing decisions. According to Jackson, two of the key drivers are efficiency and “genuine improvements“ in patient outcomes. “That's important both from a 'good medicine' point of view,“ he said, “but also because of some of the new quality metrics that Medicare is implementing. Thirdly, it's about attracting premium patients, about having a reputation for having cutting-edge technologies and approaches. Hospitals have always wanted the new whiz-bang thing, but now they particularly want the whiz-bang thing that they can use in their ads and commercials to attract new patients.“
The biggest immediate focus is spending on information technology, “and also products to bring in more elective procedures because that's where the margins are.“ Jackson noted that if hospitals are going to be doing more procedures but government reimbursement for those procedures is down, “that's going to drive down profitability so they're going to be looking to make up for that with a more attractive patient mix.“ Down the road, he said, “there are some products presently in use that are just getting old – things like infusion pumps and beds. Hospitals have been extending the life cycles of a lot of equipment, but sooner or later they're going to have to replace those.“
On the question of tough negotiating on pricing of medical equipment, Jackson said, “if products from different manufacturers are exactly equivalent, then hospitals will naturally buy on price, and they can negotiate down pretty aggressively. But if there is genuine innovation and genuine differentiation, then it's much less about price.“ The report cited an expected 20% jump in use of group purchasing organizations by 2015. Jackson noted that GPOs are starting to play a role in the area of larger capital equipment, but added: “It's different from the old GPO model where you might have a single-source contract and hospitals were sort of locked into buying from a single manufacturer. Now we're seeing much more multi-source contracting.“
On the push for evidence-based medicine, he said, “I think hospitals are struggling with this. If you take an area like patient safety or hospital-acquired infections, they'll have 100 different sales reps calling on them, saying 'Buy this product and you'll have a solution.' I think they're looking for suppliers that can bring them more systems solutions where if you use these pieces from us and maybe these pieces from someone else, this is how you can build a system that genuinely is going to work to improve outcomes or improve efficiency.“ The L.E.K. report noted that hospitals of all sizes have indicated a willingness to pay a 10% to 15% premium for disposables that demonstrate an ability to reduce errors and infection rates.
With Medicare and Medicaid reimbursement rates seen as being a continuing challenge throughout this decade, Jackson said equipment providers “need to bring genuine evidence and studies from pilot hospitals to show how they can deliver real savings and real improvements in efficiency for the overall system. The supplier needs to show how spending more on a new product actually reduces overall costs in the long run.“
Asked whether product “bundling“ was still a key in making spending decisions, Jackson said, “What we saw, especially in the 1990s, was a lot of product bundling, but it was bundling for the sake of discounts rather than bundling because the products naturally went together and produced a solution. I think now bundling for the sake of product discounts is going out, but bundling of products into a systems solution where the supplier can show the clinical or efficiency benefits of using the system, that's where there is still substantial opportunity.“
As for the unmet hospital needs that med-tech companies could be addressing moving forward, he said: “There's always the unmet need of better outcomes and products that deliver better clinical solutions, so there's always that scope for innovation and I'm sure we'll continue to see that.“
For the device industry as a whole, Jackson offered this encouragement: “The scope of genuine healthcare improvements and patient benefits is actually more from devices now than from pharma. If you look at the rate of pharmaceutical innovation, there hasn't been that much in recent years. The global opportunity now is on the device side.“
He said the key for med-tech suppliers “is that it's not just about price. Yes, you're going to get all sorts of pressure on price, but put yourself in the shoes of the hospitals – it's a tough world for them. Suppliers that can genuinely become their partners, that can work with them to come up with systems solutions involving their own products and perhaps other people's products as well, I think those suppliers will be the ones who have an advantage going forward.“