Device makers are rightly concerned about the viability of Medicare in the coming decades, but there’s a tremendous amount of pressure on the program right now. For instance, budget sequestration will shave 2% off the monies paid out for Medicare by the end of March unless our elected officials can come to some agreement, but we no longer talk about least costly alternative (LCA) because it’s purportedly kaput.

The idea that LCA is kaput, however, might not be accurate, and there are a couple of reasons industry should stay on top of this particular issue in this new year.

As many will recall, the current and previous occupants of the White House each lost a lawsuit to Ilene Hays, the first titled Hays v. Leavitt, decided in 2008, and the second decided the following year, Hays v. Sebelius. The lawsuit was over coverage of the use of a nebulizer designed to simultaneously provide two treatments for the patient’s COPD rather than two separate treatments. The U.S. District Court for the District of Columbia determined that because the notion of cost is not found in the statute that gave us Medicare, cost could not be used to determine coverage of treatment.

And so LCA was no longer the law of the land starting in early 2010, when the Centers for Medicare & Medicaid Services issued a policy bulletin to its regional administrative contractors instructing them not to take cost into consideration as had previously been done.

Fast forward to November 2012, when the Office of Inspector General at the Department of Health and Human Services published a report addressing LCA for cancer drugs covered under Medicare Part B. The report recommends that CMS “consider seeking legislative authority to implement LCA policies for Part B drugs under appropriate circumstances.” And it’s tough to believe it would stop there. OIG notes that LCA policies “may be a useful tool for conserving taxpayer funds,” a huge area of emphasis these days.

The Independent Payment Advisory Board, which came into being thanks to the Affordable Care Act, may play a role in all this, too. IPAB will start making recommendations to Congress regarding ways to constrain Medicare spending in January 2014, and the OIG recommendation cannot have been lost on anyone who is likely to sit on the IPAB panel. Remember that the IPAB recommendations must by law be addressed by Congress either by enacting the recommendation or proposing and enacting an alternative to provide the same net effect on Medicare spending, assuming Medicare spending growth outstrips GDP growth by a percentage point.

Republicans in the House of Representatives reacted recently to this issue in the form of a rules document authorizing the House to more or less ignore IPAB, so clearly the House at least recognizes the attendant hazards. Still, the rules change only forestalls the requirement to address IPAB recommendations. It does not wipe out the requirement. Should IPAB back the OIG recommendations, there’s going to be a huge fight on Capitol Hill, the outcome of which could change the landscape drastically for patients and device makers alike.

As the saying goes, stay tuned.