For only the second time since 1983, hospitals are receiving the full proposed increase in Medicare payments for inpatient care, effective this month. While the news is good for hospitals, the increase still leaves critical patient access issues for medical technology companies, critics contend. The Centers for Medicare & Medicaid Services (CMS; Baltimore, Maryland) posted the payment notice in the Aug. 1 Federal Register, and the changes became effective for hospital discharges on or after Oct. 1. Hospitals are getting a 3.4% increase, the full hospital marketbasket increase, for inpatient services rendered to Medicare beneficiaries. The marketbasket increase is a measure of inflation in goods and services used by acute-care hospitals, according to CMS.

"We applaud the agency's recognition that a new medical technology should for the first time be included in the new technology inpatient payment program. However, the eligibility threshold remains excessively high," said Carol Kelly, executive vice president for payment and healthcare delivery systems at the Advanced Medical Technology Association (AdvaMed; Washington). By way of example, Kelly pointed to CMS's approval of the add-on payment for new technology used in spinal fusion surgery. The bone graft device promotes bone growth and offers a less invasive alternative to traditional bone grafts. The add-on payment is a victory for patients in need of the procedure, she said But, she added, "Unfortunately, many patients likely had to suffer through chronic back pain or a bone-harvesting procedure while waiting for CMS to adequately reimburse this new technology." Patients waiting for other breakthrough and life-improving tests and treatments will face similar time hurdles because the eligibility threshold for special add-on payments is set too high, Kelly said. Medicare also typically takes two years or more to revise its inpatient reimbursement rates, she added.

CMS administrator Tom Scully viewed the add-on payment threshold differently, however. CMS is lowering the high-cost threshold for new technologies, he noted. The catch is that the lower threshold will apply to applications for new technology add-on payments in FY05. CMS did maintain the payment rates for diagnosis related groups (DRG) 526 and 527 drug-eluting stents. But the agency did not include provisions for additional costs in using the devices, Kelly noted. "We are encouraged by the changes in the final rule, but problems with it underscore the need for Congress to pass the inpatient provisions in the House Medicare reform legislation to address systemic problems in the way CMS covers and pays for new medical technologies," she said.

Medicare overall is expected to pay approximately $98 billion to around 4,087 acute care hospitals in FY04, which amounts to an increase of $4.1 billion from FY03. Approximately $1.8 billion of the total payments are due to payment rate and policy changes, and $2.3 billion is due to increases in inpatient services and increases in case mix, according to CMS. Under the increases, nearly all classes of hospitals will receive increases in total payments in FY04, Scully noted. When outlier overpayments are disregarded, urban hospitals are expected to receive a 2.8% increase for inpatient services, while rural hospital payments should increase 5.4%, he explained.

Not ready for biological attack

Shortly after concluding that U.S. hospitals are ill-equipped for the recurrence of severe acute respiratory syndrome (SARS), hospitals got another failing grade from the government. In a recent report, the General Accounting Office (GAO; Washington) said that hospitals in the nation's big cities aren't capable of caring for the thousands of victims who would pour in following a major biological attack. One key reason hospitals are ill-prepared, the report says, is a shortage of ventilators on hand in hospitals. The devices crucial to keeping patients alive should they fall victim to a respiratory disease are sorely needed in any biological emergency, the report concluded. In fact, one-third of all the nation's hospitals have five or fewer ventilators on hand, and 40% of all hospitals have fewer than 10, the report added.

The GAO's report, titled "Hospital Preparedness: Most Urban Hospitals Have Emergency Plans but Lack Certain Capacities for Bioterrorism Response," says that while most urban hospitals have reported basic planning and coordination activities for bioterrorism response, they do not have the necessary medical equipment for an adequate response to such an attack. Federal officials worry that a biological attack would swamp a hospital's "surge capacity." According to the report, "Officials are concerned that this surge in patients would be likely to overwhelm emergency departments in urban areas, where many emergency departments already operate at or above capacity."

The report cites emergency preparedness simulations conducted both before and after the Sept. 11, 2001, terrorist attacks as a basis for the conclusions. One simulation, called Topoff 2000, short for top officials, simulated the release of pneumonic plague bacteria at a single public event. By the third day following the potential attack, 500 patients were sick and taking antibiotics, and ventilator shortages were already noted, the report describes. "In the early stages of the simulated epidemic, hospitals were seeing two to three times their normal volume of patients and later in the exercise 10 times normal volumes were arriving at hospitals," GAO officials reported.

Organizations are trying to solve the problem, however, the report notes. "The Joint Commission on Accreditation of Healthcare Organizations [JCAHO; Oakbrook Terrace, Illinois] released a report in 2003 on strategies for creating and sustaining community-wide preparedness," the report explains. "The federal government has provided assistance for improving the bioterrorism preparedness of hospitals, which includes $25 million from the U.S. Department of Health and Human Services in grants that hospitals can compete for," the report said. "In addition, the government has established a stockpile of pharmaceuticals, antidotes and medical supplies that can be delivered to the site of a bioterrorist attack. Most hospitals, however, still lack equipment, medical stockpiles and quarantine and isolation facilities for even a small-scale response."

Study: address diabetic peripheral problems

Results of a new study presented last month during the 18th International Diabetes Federation (IDF) Congress in Paris suggests that annual healthcare costs could be reduced by interventions that can successfully treat, delay and/or prevent the long-term outcomes of diabetic peripheral neuropathy, a serious diabetic microvascular complication. The study noted that costs for managing diabetic peripheral neuropathy are on the rise, particularly in the United Kingdom, where 93% of the costs are due to long-term patient care.

"Over half of the more than 150 million people worldwide who have diabetes may suffer from diabetic peripheral neuropathy, which puts a considerable strain on healthcare systems," said Rhys Williams, professor of clinical epidemiology at The Clinical School, University of Wales Swansea. "A preventive strategy that could target underlying microvascular damage and reduce the risk of complications such as diabetic peripheral neuropathy could offer long-term healthcare cost savings and improve quality of life for people with diabetes," Williams said. He added that the study reported on at the Paris meeting "suggests that such a strategy in the UK might save up to 204 million, 29,000 patient life-years and 36,000 quality-of-life years over a 10-year period."

Other results estimate that long-term complications of diabetic peripheral neuropathy could cost the National Health Service an estimated 292 million over the next 10 years. In a similar abstract, the researchers estimated the total annual cost of diabetic peripheral neuropathy to be 252 million, with Type 2 diabetes costing six times more than Type 1 diabetes.

Diabetic peripheral neuropathy is associated with underlying microvascular damage that affects nerves outside the brain and spinal cord, especially in the hands and feet. Such damage can lead to foot ulcers and amputations. No medication currently exists to directly treat the underlying process of microvascular damage responsible for the development of diabetic peripheral neuropathy, with current treatment options generally limited to analgesic treatment of pain.

Reporting on the outcomes of the study was Eli Lilly and Co. (Indianapolis, Indiana). Lilly is conducting clinical trials to determine if its investigational compound, ruboxistaurin mesylate, can improve the symptoms of diabetic peripheral neuropathy and vibration detection threshold by targeting a key underlying process that leads to microvascular damage.

Breast implant review protested

Activist organizations Public Citizen and the National Organization for Women (both Washington) issued a statement to the FDA last month calling upon the agency to suspend any consideration for lifting the restrictions on the sale of silicone gel breast implants. Potential lifting of the restriction is on the agenda for the Oct. 14-15 meeting of the FDA's General and Plastic Surgery Devices Panel to consider recommending resumption of silicone implant sales by Inamed (Santa Barbara, California). Inamed filed its application for permission to relaunch commercial sales of the implants last December, with Public Citizen saying that the application includes data from only two years of clinical trials.

Dr. Sidney Wolfe, director of Public Citizen's Health Research Group, said that the use of two years of data flies in the face of an accumulating amount of research indicating that the implants create a large variety of problems the longer they are in place. Public Citizen is the organization that filed a petition in 1988 against using the implants, and succeeded in winning the moratorium that is now in effect. "The moratorium was put in place in 1991, based primarily on problems of long-term use," he said. "It was based on knowledge from patients who had problems after five, six, seven, eight years. It's ironic that there's a process now in play that would even consider their use after two or three years of data."

In their statement, NOW and Public Citizen said, "The FDA is using this data for its review even though its own researchers have found that problems dramatically increase seven to 10 years after implantation."

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