Even as losses mount in the sector, e-health industry revenues are expected to top $2.4 billion in 2001 and $3 billion in 2002, according to a recent report titled "Seizing the eHealth Market Opportunity," from the Corporate Research Group (New Rochelle, New York). According to the report, growth in 2002 and beyond will be driven by new federal Health Insurance Portability and Accountability Act (HIPAA) regulations and expanded use of the Internet as a front end for connectivity.

In 2000, the e-health industry generated revenues of approximately $1.77 billion, up nearly 80% over 1999, including revenues from electronic data interchange. Meanwhile, net loss within the sector rose four-fold to top $4 billion, according to estimates in the report. "Many more pure-play e-health companies will fail in 2001," said Carl Mercurio, president of Corporate Research. "The good news is that old-line health care organizations will increase their Internet activities, and in many cases, buy up stand-alone e-health companies at bargain prices."

Out of five distinct e-health industry segments – business to consumer content, business to business, business to consumer e-commerce, business to e-commerce and connectivity/productivity – the report lists the categories of connectivity and productivity as having the best chances for success.

"Companies like Athenahealth.com, MedUnite and WebMD are the biggest hope of the [e-health] industry," said Mercurio. "There's no guarantee that any one of those is going to be the one that makes it, but it's likely that somebody within that field is going to find a way to succeed."

MDMA: Abolish contractor workgroups

The Medical Device Manufacturers Association (MDMA; Washington) has called on the Health Care Financing Administration (HCFA; Baltimore, Maryland) to do away with local workgroups comprised of Medicare contractor medical directors (CMDs). MDMA termed these groups "one of the last vestiges of 'behind-closed-doors' Medicare policymaking." MDMA Executive Director Stephen Northrup charged that the workgroups "act as latter-day 'star chambers,'" referring to the movie about vigilante judges who take the law into their own hands. They act, he said, to pass judgment "in secret on important medical procedures and technologies." Northrup said the workgroups "wield significant power in determining how federal entitlement benefits will be administered, yet they are effectively accountable to no one. It's time for HCFA to do away with these clandestine workgroups and their arbitrary policymaking process."

In a letter to acting HCFA administrator Robert Berenson, MD, Northrup applauded HCFA's November memorandum to its contractors on the development of local medical review policies in the Medicare program. Northrup termed the memorandum "a long-awaited first step toward modernization of the local processes for determining Medicare coverage of medical procedures and technologies where no national policy exists." But he said HCFA should have gone one step further and abolished CMD workgroups, thus wiping out the role they play in developing local Medicare coverage policy.

AdvaMed proposes payment categories

The Advanced Medical Technology Association (AdvaMed; Washington) has provided HCFA with a list of pass-through payment categories that it says will help ensure patient access to the latest advances in medical technology in the hospital outpatient setting. AdvaMed President Pamela Bailey said that the proposed categories "will address many patient access barriers created by the outgoing by-brand system for identifying medical technologies eligible for pass through payment." She stressed the important issue of physicians and other health care professionals having the ability "to choose the most appropriate device for their patients because different medical devices can have features and capabilities that make them optimal for different patients."

AdvaMed's proposed pass-through category list consists of 198 categories that cover devices currently eligible for pass-through payment as of Jan. 1, 2001. It includes some categories for devices that HCFA removed from the pass-through list as a result of its interim final rule published Nov. 13, 2000. The organization said that the reasons why these items were removed is unclear.

The proposed list also excludes some categories for devices on the current pass-through list that are used only in the hospital inpatient setting. AdvaMed contends that the transitional pass-through period for a device category should not begin until the corresponding procedure is reimbursed on an outpatient basis.

In a letter to acting HCFA Administrator Robert Berenson, MD, Carol Kelly, AdvaMed's executive vice president for health care systems and federal legislative policy, said the organization is submitting the proposed categories list to assist the agency in meeting the statutory deadlines.