Medical Device Daily Washington Editor

The announcement of a proposed physician fee schedule for Medicare Part B routinely sets physician societies abuzz, but the proposed fee schedule for next calendar year is already generating more ink and electrons than is typically the case.

One of the more controversial provisions is an adjustment to the assumed usage rate of imaging equipment owned and operated by Part B providers, which previously had been set at 50% of a 50-hour work week. That set point was again subjected to criticism by the Medicare Payment Advisory Commission in its March 2009 report to Congress as well as in a meeting held in November 2008 (Medical Device Daily, Nov. 11, 2008), and CMS responded.

Comments heard during the MedPAC meeting included an acknowledgement that regional variations in utilization rates hinged on population density and that consequently, rural imaging rates could not be assumed to match those in suburban or urban areas. One utilization rate that was floated by a MedPAC analyst at the hearing was 75%, but the commission did not come to any hard and fast conclusions during the meeting.

CMS's July 1 fact sheet, which accompanied the CMS statement, notes that a survey conducted in 2006 by the National Opinion Research Center at the University of Chicago (NORC; Chicago) indicated that physician-owned magnetic resonance equipment typically ran 52 hours a week and computerized tomography machines 42 hours a week. The survey covered only six major markets in the U.S., a point that was not missed by specialty societies and some members of MedPAC. The CMS fact sheet notes further that another source of data indicates CT usage at 50 hours a week, twice the 25-hour-a-week CMS assumption, and thus adding fuel to the reimbursement rate fire.

Pam Kassing, senior director of economics and health policy at the American College of Radiology (ACR; Washington), told Medical Device Daily that ACR members find the NORC numbers to be something of a stretch. "We were disappointed that CMS is pointing to the NORC data," she said, adding that a study conducted by the Radiology Business Management Association (RBMA; Fairfax, Virginia) indicated that the overall imaging rate for rural providers was more in the neighborhood of 48% and for providers across all population densities was about 58%.

Kassing also mentioned that a 75% utilization rate is being proposed, including in a draft of legislation that is currently under consideration in the House of Representatives. However, most in the imaging business also hasten to point out that imaging costs have more or less flattened after passage of the Deficit Reduction Act of 2005.

Contracting snags another device firm

Contract manufacturing has been a persistent issue in FDA warning letters for the past 18 months and the trend continued with the June 5, 2009, warning letter to Frantz Design (Austin, Texas), maker of mandible-adjusting devices designed to treat obstructive sleep apnea (OSA). The agency cited Frantz for a total of eight deviations from good manufacturing practices and two for medical device reporting (MDR) violations, casting a doubt on the company's overall compliance regime.

FDA led the warning letter with a citation for failure of management to ensure that an effective quality system was in place, noting that this class of violations accounted for 15 hits on the inspectional form 483. Among these problems was a failure to conduct quality audits of an unnamed contract manufacturer.

The issue of contract manufacturing popped up again in a citation dealing with validation of design changes to straps used to fix the device in place in the wearer's mouth. Frantz is said to have directed the contractor not to use a component – the identity of which was redacted – in the manufacture of the straps because of complaints that the straps were prone to breakage. This citation dealt with a lack of procedures for validation of design changes, but the same problem with straps was cited subsequently as a failure to validate the related design change as well.

FDA also cited Frantz for lack of procedures to set out the responsibilities of both parties in contract manufacturing arrangements, but also stated that the company had no contract with its then-current outsourcing company. At press time, the company had not responded to calls for comment.

Off-label promo slammed in warning

The March 11 warning letter to Best Vascular (Springfield, Virginia) cited the company for an ad that appeared in the November 2008 edition of the American Journal of Cardiology for the firm's Beta-Cath system, which the agency states is approved for radiological brachytherapy to treat restenosis in arteries into which a bare-metal stent (BMS) has been placed. FDA states that the ad, which highlights an analysis of data compiled in the Rescue registry, constitutes marketing of the device for a new intended use, specifically treatment of restenosis in patients with drug-eluting stents (DES).

The agency noted specifically that Best does not have an application on file that addresses the effect radiation might have on stent polymer and drug, and FDA voiced a similar concern as to how radiation might affect intimal tissue treated with anti-proliferative drugs. According to FDA, the offending passage in the ad describes the Beta-Cath as "adjunct therapy to PCI for patients presenting with [in-stent restenosis] of a DES" that is "safe and associated with low rates of recurrence" and major adverse cardiac events. The ad is also said to include the statement that brachytherapy for this condition "appears to be superior in efficacy in comparison to repeat" stent placement "and should be considered the therapy of choice for this difficult subset of patients."

At press time, the company had not responded to calls for comment.