The Centers for Medicare & Medicaid Services was particularly busy over the past two months, issuing a variety of proposed and final rules.

Following is a run-down of initiatives effecting med-tech:

The agency published its comopetitive bidding final rule designed to drive down Medicare costs for durable medical equipment (DME), off-the-shelf orthotic items and supplies. The program will roll out in 10 standard metropolitan statistical areas next year. Despite employing the acronym of DMEPOS (for durable medical equipment, prosthetics, orthotics and supplies), the regulation does not call for competitive bidding for prosthetics, and it calls for no competitive bidding for orthotics other than off-the-shelf items.

Among the Metropolitan Statistical Areas (MSAs) that will host the first 101 sites are the Charlotte-Gastonia-Concord area running between North and South Carolina; Miami-Fort Lauderdale-Miami Beach on Florida’s Atlantic coast; and Dallas-Fort Worth-Arlington, Texas. The MSA composed of San Juan-Caguas-Guaynabo, Puerto Rico is the only site not located in the U.S. “lower 48.”

Ellen Griffith, a public affairs specialist at CMS, told Biomedical Business & Technology that “the reason [CMS] left Los Angeles, Chicago and New York out of the initial 10 MSAs is that they were significantly larger and would have created a problem with the start-up” in terms of logistics, but that CMS “hopes to get them in next year.”

The accompanying press statement says that the competitive bidding program is mandated by the 2003 Medicare Modernization Act and that CMS intends to ensure that contracts “will be awarded to a sufficient number of winning bidders in each” competitive bidding area.

The agency also sought to assure beneficiaries that “this program will reduce out-of-pocket expenses while ensuring that they receive high quality items and services.”

CMS co-administrator Leslie Norwalk said in a statement that the program will save taxpayers $1 billion per year after 2010, when the program will be in full force. Norwalk described the program as “another way to use the competitive marketplace to bring the best possible and most efficient care to Medicare beneficiaries.”

The rule calls for small companies to make up 30% of the participating organizations, a move designed in part to help ensure that rural beneficiaries would not lose out.

The threshold for smaller companies is set at $3.5 million in annual revenues, but the agency will go out of its way to bring small firms into the fold only if they do not total 30% of the total winning bids. However, those suppliers will have to accept rates set by the companies that come in with winning bids, but the agency will allow small companies to team up in networks without fear of prosecution — that might suggest price-fixing or an anti-competitive ploy — and small suppliers will not have to submit bids for all product categories.

Also, healthcare professionals are exempt from the requirements so long as the items are “furnished as part of their professional services.” Among the grandfathering exemptions is one that allows beneficiaries to keep their rental equipment providers, even if that supplier does not post a winning bid with CMS.

CMS’s projected savings total is based in part on a pilot project conducted in Polk County, Florida, and San Antonio, Texas, between 1999 and 2003. According to the agency’s figures, the two rounds of bidding for oxygen equipment and supplies in the Florida site generated savings of 17% and 20%, bringing the total expenditure down to roughly $1.5 million. The original cost figure was not listed. The single round in San Antonio drove down costs for the same product category by 19%, to just less than $2.1 million.

On the other side of the ledger at CMS are operating costs that will run to “approximately $1 million in immediate fixed costs for contractor start-up and system changes” as well as routine staffing and maintenance costs, which were not listed in the announcement.

However, CMS said it expects to hire about 1,600 new employees to run the program.

The final rule failed to elicit much comment, perhaps because it was considered an accomplished fact or that no one wanted to go on record as bucking the CMS.

For instance, Bob Cohen, director of media relations at the National Association of Home Care & Hospice (Washington), declined to comment for the record.

However, Stephen Ubl, president/CEO of the Advanced Medical Technology Association (AdvaMed; Washington), said in a statement that any competitive bidding program “must ensure that all Medicare patients have access to the best available treatment for their conditions,” adding that he is “concerned that the final rule may not pass this fundamental test.”

The association raised questions about the effect of the rule on smaller companies, and Ubl indicated that AdvaMed had offered CMS “extensive comments representing the views of industry . . . and we are pleased that a number of our suggestions were adopted, but we remain concerned about some of the provisions and about the overall impact of the program.”

74 PQRI measures released

CMS has released information concerning how doctors will be measured for quality performance under the voluntary 2007 Physician Quality Reporting Initiative (PQRI). The 74 measures include aspects of treatment and screening for Medicare patients with diabetes, heart disease, depression, stroke, glaucoma, cataracts, osteoporosis, melanoma, end stage renal disease, asthma and pneumonia. CMS said it may expand specifications later to include additional eligible professionals.

According to a law passed last December, doctors who measure and report their performance from July 1-Dec. 31 of this year, based on the measures, will receive a bonus payment of 1.5% of total allowed charges under Medicare.

Medicare officials have made it clear that though physician pay for performance (P4P) is only in the voluntary stages now, CMS may one day make it a permanent aspect of Medicare.

As early as July 2005, Herb Kuhn, director for the CMS Center for Medicare Management testified before the Senate Finance Committee of the Bush administration’s plans “to explore and advance” P4P as a method of lowering Medicare costs.

Chris Weiss, president and CEO of Dynamic Clinical Systems (Hanover, New Hampshire) said he was encouraged to see signs of CMS’s progress. but he said he remained skeptical as to whether clinicians at even the larger institutions will be able to accurately measure, track, and report on the breadth of the measures.

“Certainly, without the help of robust healthcare IT, smaller offices will have no practical way to either stay abreast of the measures or to address them in an efficient way,” Weiss said. “The net impact will be to continue to keep too many clinicians and their patients on the sidelines.”

Medicare Advantage rates released

The CMS released its Medicare Advantage (MA) managed care payment rates in April, saying that “the aged and disabled capitation rates will increase about 3.5%” for MA, which is less than “the estimated Medicare growth trend for 2008 of about 4.3%.”

The calculation was based on a back-out of 3.9% from the 2007 budget neutrality factor and an application of the national per capita MA growth percentage, a.k.a., the minimum percentage increase, for 2008 of 5.7%, and an application of the budget neutrality factor of 1.7% for 2008. The minimum percentage increase for 2008 was, in turn, calculated by adding a 1.3% correction from prior years to the 4.3% growth trend rate.

In its March 2007 report to Congress, the Medicare Payment Advisory Commission (MedPAC) said that the federal government “should pay the same amount . . . regardless of which Medicare option a beneficiary chooses.” But despite the greater per-beneficiary payment to MA plans, MedPAC said that “changing MA plan payment rates too quickly to achieve financial neutrality may cause disruptions for beneficiaries and may have unintended consequences.”

However, some argue that minorities are disproportionately represented in MA enrollment.

According to a document published by America’s Health Insurance Plans (AHIP; Washington), figures drawn from CMS’s Medicare Current Beneficiary Survey (MCBS) indicate that almost half (49%) of MA enrollees in 2004 had incomes of $10,000 of $20,000, while 68% of minority enrollees had incomes in that range. Of African Americans and Latinos who were enrolled in 2004, 70% had incomes within the stated range.

The AHIP report also said that more than half of seniors with incomes exceeding $50,000 were enrolled in private, employer-based plans for 2004 and that 42% of seniors “say they would pay higher out-of-pocket costs if the option of choosing a Medicare Advantage plan was taken away.” Sixty percent “cited either better benefits or lower costs as their reason” for enrolling in an MA plan, according to the AHIP document.

AHIP President Karen Ignagni said in a March 21 hearing of the House Ways and Means health subcommittee that trimming the federal outlay for MA plans would reduce the benefits available to minority enrollees, but Rep. Pete Stark (D-California), who chairs the subcommittee, went on record as saying that “Karen Ignagni’s lying, using false information” to make her case.

During that hearing, Peter Orszag, PhD, director of the Congressional Budget Office (CBO), said that CBO numbers indicated that while MA plans “accounted for 13% of enrollment in Medicare, the lowest level since 1996,” enrollment has increased to about 19%, or 8.3 million beneficiaries, thanks in part to the boost in payment rates provided by the Medicare Modernization Act. CBO numbers suggest that MA enrollment “will continue to increase rapidly in coming years, to 22% of total Medicare enrollment in 2008 and 26% by 2017.”

Stark’s is not the only voice disputing the claim that minorities would lose out with a trimming of MA funding.

In an April 3 report, the Center on Budget and Policy Priorities (Washington) made the case that those with incomes below $10,000 are in a group “that constitutes fully one-fifth of all Medicare beneficiaries and a much larger share of African American (42%) and Hispanic (50%) beneficiaries.”

The report, authored by Edwin Park and Robert Greenstein, said that “these very low income Medicare beneficiaries are overwhelmingly enrolled in fee-for-service and rely on Medicaid, not Medicare Advantage, for supplemental coverage.” Park and Greenstein’s numbers said that “while 22% of fee-for-service beneficiaries are in the under $10,000 income category, only 14% of Medicare Advantage beneficiaries are.”

One of the reasons that MA plans are popular with enrollees is that they often incorporate Part D benefits, and eye care. Some plans offer free preventive services as well, such as cancer screenings.

On the Senate side, Finance Committee chairman Max Baucus (D-Montana) has not said he will seek to trim MA funding to boost funds for the Children’s Health Insurance Plans, but that such a possibility is “on the table.” The committee will hold a hearing Wednesday on MA plans, with a panel of witnesses that includes CBO’s Orszag and MedPAC chairman Glenn Hackbarth.

Stark said in a statement that where MA is concerned, “[t]he free market’s so-called ‘invisible hand’ is picking taxpayers’ pockets. Medicare’s overpayments to private plans cost taxpayers tens of billions of dollars.” Stark characterized “these overpayments” as “part of an effort to privatize Medicare” and promised that he will use his chairmanship of the Ways and Means Health Subcommittee to “pursue a more fiscally responsible course.”

CMS wants clinical trial data made public

If CMS has its way, any companies who receive Medicare dollars in the conduct of their studies may have to post clinical trial data in a public forum or forego those dollars. The policy is part of a decision memo, titled the Medicare National Clinical Trial Policy (MNCTP). The proposal is open to public comment for 30 days.

MNCTP is the outcome of a meeting last December of the Medicare Evidence Development and Coverage Advisory Committee. The decision memo lists a large number of changes to the guidance, but the two perhaps of greatest interest to the device industry are those outlining clinical trial information disclosure.

In one of these, CMS proposes to require that sponsors list all studies receiving Medicare money at the web site “prior to enrollment of the first study subject,” despite industry concerns that such a move might disclose proprietary information. Given the language referring to study subjects, this will likely apply to Phase II as well as Phase III studies.

CMS stated that this requirement “assures that beneficiaries will have pertinent information about clinical trial research that Medicare supports — an essential component of transparency to facilitate patient-provider informed decision making.” CMS stated further that while it “recognizes the industry's sensitivity to disclosing study information — including study results — to the public,” its position is that this sensitivity “must be balanced against the public's desire to obtain information about the studies that their Medicare premiums and tax dollars support.”

CMS also proposes to require that a study design include the method and date of release of “all pre-specified outcomes” to the public. The recommendation of MedCAC was that the results be published “regardless of outcome or completion of trial.” This would be a new requirement and, as a consequence, “the public was not asked to comment on this issue” up to now, according to the decision memo.

CMS sought input from the Agency for Healthcare Research and Quality (AHRQ; Washington), which took the position that this requirement should extend to data on all outcomes even “if outcomes are negative or study is terminated early.” CMS says it is "imperative that studies for which Medicare has made payment of any clinical costs” be published in part because unpublished study data “do not add to the clinical evidence base and cannot be used for medical decision-making.”

The agency is working with other entities to assemble "routine outlets for the release of these results,’ but in the meantime, “we are proposing that that the results for all primary and secondary outcome measures must be made publicly available as the analyses are completed,” either via peer-review journals or a web site.

CMS states further that it prefers a government web site for publication of study results, but that in the meantime, “a sponsor-supported database would be considered acceptable if it clearly [identifies] the sponsor, the relationship of the sponsor to the items being studied, and the method of scientific review.”

The final language of the decision memo is that the protocol “specifies and fulfills method and timing of public release of all pre-specified outcomes to be measured, including release of outcomes if outcomes are negative or study is terminated early.”

Leslie Norwalk, acting CMS co-administrator, said the policy proposal “will signal our continued support to provide access for services for beneficiaries by facilitating participation in the full range of qualified, scientifically sound research projects.”

As previously, this set of regulations is applicable to trials for devices or treatments that have a therapeutic intent, as opposed to a diagnostic intent. Also, such trials must enroll “patients with diagnosed disease rather than healthy volunteers.”

Among the features of the “highly desirable characteristics of any such trials are that the trial is designed to establish that the intervention potentially improves the participants' health outcomes” and that it does not “unjustifiably duplicate existing studies.”

Among the other imperatives stated in the decision memo is one for addressing health disparities by requiring inclusion of “a representative sample of Medicare beneficiaries by demographic and clinical characteristics” into any Medicare studies. CMS said that, in general, public comments were not in support of this proposal because of “the administrative burden for well-intentioned providers” and because the demographics of a study “should be driven by clinical characteristics rather than by a desire to mirror the universe of Medicare beneficiaries.”

MedCAC is said to have agreed with the CMS position that any study should “explicitly discuss consideration of relevant sub-populations.”

AHRQ went further, specifying demographic characteristics for consideration, such as race/ethnicity, age, sex and socioeconomic factors. According to the decision memo, CMS’ final word on this is that studies "must have explicitly discussed inclusion criteria and considered relevant sub-populations (as defined by age, gender, race/ethnicity, socioeconomic or other factors.

Large economic, financial impacts of diabetes reported

A new report, titled “State of Diabetes Complications in America,” paints a broad picture of the financial toll, as well as the clinical impact, of Type 2 diabetes, the more severe form of the disease, was released at the 16th Annual Meeting and Clinical Congress of the American Association of Clinical Endocrinologists’ (AACE; Jacksonville, Florida) in Seattle. The report looks at the prevalence and cost of the complications of Type 2 diabetes, made worse by the co-presence of other diseases among about 58% of those with Type 2 diabetes, the combination creating a massive financial drain on U.S. health spending.

In 2006, the nation spent an estimated $22.9 billion on direct medical costs related to diabetes complications, according to the report, which estimates costs as adjusted for inflation to reflect 2006 costs. The report says that the estimated annual healthcare costs for a person with Type 2 diabetes and its complications are about three times higher than that of the average American without diagnosed diabetes.

Such complications — heart disease, stroke, eye damage, chronic kidney disease and foot problems, frequently leading to amputations — costs a person with Type 2 diabetes almost $10,000 each year. And people with diabetes complications pay nearly $1,600 out of their own pockets for costs not reimbursed by insurance, such as co-payments and deductibles. That amount is significant, considering that according to the National Health Interview Survey, an estimated 40% of adults with diabetes reported an annual family income of less than $35,000 in 2005, indicating the significant financial consequences for some families.

The report was developed as a follow-up to a 2005 AACE study showing that two out of three Americans with Type 2 diabetes had elevated blood sugar levels, which can lead to diabetes complications.

And the report shows that an estimated 33.3% with the disease has one other serious health problem; about 10% with the disease have two other serious health problems; 6.7% with the disease has three other serious health problems; 7.6% has four or more other serious health problems — adding these, leading two the total of two out of three with co-presence of other disease.

“The report makes it clear that we have a major national issue when it comes to diabetes management, and that urgent action is needed,” said Daniel Einhorn, MD, secretary of the AACE board.

The report estimates that in people with diabetes, there are specific health problems that are more prevalent than in people with normal blood sugar levels:

  • Congestive heart failure occurs in 7.9% of people with diagnosed diabetes vs. 1.1% of those without.
  • Heart attack occurs in 9.8% of people with diabetes vs. 1.8% without diabetes.
  • Coronary heart disease occurs in 9.1% of people with diabetes vs. 2.1% of those without.
  • Stroke occurs in 6.6% of people with diabetes vs. 1.8% of those without.

In terms of microvascular complications, which relate to small blood vessels, the prevalence is as follows:

  • Chronic kidney disease occurs in 27.8% of people with diabetes vs. 6.1% of those without.
  • Foot problems such as foot/toe amputation, foot lesions and numbness in the feet occur in 22.8% of people with diabetes vs. 10% of those without.

While Type 2 diabetes is closely tied to the development of these complications, it is possible that some people may have developed these health problems independent of their diabetes, due to family history or other underlying medical conditions.

“Beyond the impact on quality-of-life, health complications from Type 2 diabetes also contribute to substantial national and individual healthcare costs,” said Willard Manning, PhD, professor in the Harris School of Public Policy Studies at the University of Chicago (Chicago). “My hope is that the report will call attention to the issue of diabetes-related complications and bring about change in the way we manage Type 2 diabetes to help reduce both the physical and financial burdens.”

Regarding annual healthcare costs for people with type 2 diabetes, heart attack is the most costly complication, at $14,150 per person, followed by chronic kidney disease ($9,002); congestive heart failure ($7,932); stroke ($7,806); coronary heart disease ($6,062); foot problems ($4,687); and eye damage ($1,785).

“As great as these financial burdens are, this is a conservative estimate, as it only includes direct medical costs,” said Manning. “Costs attributed to lost employment or productivity, premature death and disability have not been included, and if we factor in those costs, the overall burden would be far greater.”

The report was presented by AACE in partnership with the members of a diabetes complications consortium: the Amputee Coalition of America (Knoxville, Tennessee); Mended Hearts (Dallas), a support group; the National Federation of the Blind (Baltimore); and the National Kidney Foundation (New York); and supported by pharma giant GlaxoSmithKline (London).

FDA goes live with e-page list of post-approval device update

The tracking and verification of post-approval (PA) studies for medical devices has been a bone of contention between FDA and various stakeholders, with some of the agency’s critics charging that FDA is not doing enough to enforce compliance with PA study requirements. Finally responding to that criticism, the Center for Devices and Radiological Health (CDRH) at FDA has gone live with a web page for PA studies, listing more than 40 such studies in a format that can be downloaded into a spreadsheet. Criticism of the agency’s thoroughness in its PA strategy may not go away, however.

The page lists little more than general information about the studies and whether the reports are coming in on time. None of the listings include study data that tell anything about the impact of the study product. The listings include information on the schedule of reports and the dates of actual reports, including an asterisk if that report was filed late.

At present, FDA lists 44 studies, including descriptions of the PA studies and copies of the approval letter. The site also lists summaries of safety and effectiveness as well as product labeling. In some cases, FDA lists some of the standards used in designing the device.

For instance, in the listing for the Duraloc Option ceramic hip system, manufactured by Depuy Orthopaedics (Warsaw, Indiana), the listing describes briefly the standards for material integrity that the sponsor used in developing the device.

The American Society for Testing and Materials (ASTM; West Conshohocken, Pennsylvania) developed the standards in question, and Depuy has committed to a 10-year follow-up, which may reflect FDA concerns about the prospects for decay of ceramic material and its impact on health.

According to FDA, some sponsors had assumed “that there was a 30-60 day grace period past their due date to submit their reports,” but the agency addressed this in a December 2006 PA studies guidance document. As a nod to the widespread erroneous impression, the agency “has added an asterisk next to the Overdue/Received status for reports prior to April 6, 2007, to indicate that the delay was due to a temporary extension.”

The listing is for all post-approval studies stipulated after Jan. 1, 2005, but the data do not include clinical data “because the studies may be ongoing and include personal and confidential information.”

HHS seeks countermeasures to host of CBRN threats

Mike Leavitt, secretary of HHS, released for display in the Federal Register the agency’s roadmap for developing and purchasing countermeasures against a host of chemical, biological, radiological and nuclear (CBRN) threats. The “Public Health Emergency Medical Countermeasures Enterprise (PHEMCE) Implementation Plan for Chemical, Biological, Radiological and Nuclear Threats” prioritizes HHS’ acquisition of vaccines, drugs and diagnostic tests, including purchases made under Project BioShield. The plan is published online at

“Since the terrorist attacks of September 11, our mission has been to protect Americans by securing medical countermeasures for a range of threats. We have made significant progress to increase our preparedness in this area, but there is much more we must do,” Leavitt said. “This plan lays out our path forward in the coming years and will take advantage of our new authorities under the Pandemic and All-Hazards Preparedness Act to move forward with Project BioShield.”

The PHEMCE plan assesses the state of medical countermeasure preparedness and identifies priority R&D and acquisition programs to increase emergency preparedness. The plan identifies the proposed acquisitions HHS plans to make under Project BioShield during the remaining five years of the program as well as priority medical countermeasure programs that will be pursued up through FY23.

HHS said that funding support by the National Institutes of Health for basic research, product development, and clinical research of CBRN medical countermeasures has grown more than 30-fold from FY01 to FY06. Funding for the Strategic National Stockpile has increased over 10-fold in that same period. This growth in funding has led to the acquisition and stockpiling of medical countermeasures and supplies when public health emergency needs exceed or are otherwise unavailable through local supplies.

The public will be able to submit comments on the PHEMCE Implementation Plan through the Federal Register.

HHS will hold a workshop July 31-Aug. 2 in Washington for feedback and discussion of the plan.

E-prescribing fails user-friendly test

E-prescribing is frequently billed as a panacea for prescription drug errors, but a recent report in the journal Health Affairs suggests that the road to an electronic future is still a bit rough. The article, written by a team led by Joy Grossman, PhD, a senior health researcher at the Center for Studying Health System Change (HSC; Washington), said that while many doctors like the idea of e-prescribing, those programs “often lacked advanced features or, if they had them, physicians often did not use them because of implementation hurdles or the perception that the features did not add value,” according to an HSC press release.

Grossman said in the press release that “the gap between policymakers’ visions for e-prescribing to improve the safety, quality and efficiency of care and the reality in physician practices is pretty wide.”

The HSC study consists of “44 discussions conducted between November 2005 and March 2006 with representatives of 26 organizations,” including 15 medical practices that had the software and six that did not. Ten of the 15 with e-prescribing software used it as part of a suite of programs and the balance had purchased stand-alone programs.

One of the problems with e-prescribing software had to do with lack of patient prescription data from outside the doctor’s practice, and many practices had difficulty getting data on the drug formulary offered by the patient’s plan. Doctors in slightly more than half the practices “did not have access to formulary data electronically because either the system did not have the feature or because the practice had chosen not to enable it,” although the article did not enumerate the respective ratios of these two groups.

The remaining doctors were able to access formulary data for varying percentages of their patients, ranging from one in four to nine in 10, but many in this group “questioned the data’s reliability and “in many practices, physicians routinely ignored it.”

Clinical decision support (CDS) systems also got less than a warm welcome from doctors because of “general agreement that pop-up alerts were triggered too easily,” and “physicians typically overrode them.” And as usually the case when introducing a new technology into a business, physician practices ran into more headaches getting e-prescribing up to speed.

According to HSC’s statement, most office managers “were not prepared for the amount of interaction needed with outside parties, such as vendors, state regulators and local pharmacies, to implement and maintain the systems.”

Grassley wants look at services provided by not-for-profit hospitals

Sen. Chuck Grassley (R-Iowa) reportedly has sent a letter to the Government Accountability Office requesting an investigation of how not-for-profit hospitals comply with laws that require them to provide community benefits in exchange for tax-exempt status and other tax breaks.

Grassley asked GAO to investigate what community benefit standards states have established, as well as those established by the Internal Revenue Service, and what guidelines hospitals use to interpret the community benefit standard. In addition, He requested that GAO examine hospital executives’ and board members’ compensation and the extent to which they are involved with for-profit business ventures with the not-for-profit hospitals.

The investigation is part of a series of hearings on charities and the breaks they receive under the tax code. Grassley said that because of the “generous” tax breaks that non-profit hospitals received, there was a need to better understand how these hospitals are fulfilling the mandate for providing public service. He said that this is especially important with increasing discussion of medical care to the uninsured.

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