Transcript Medical Technology Market Research & Channels
Health Economics and Policy Overview
April 2013 MEDTRONIC INC.
Lindsay Bockstedt, Ph.D. Director, Global Health Policy, Reimbursement & Health Economics
AGENDA
• Medtronic’s role in health policy • Coverage of Medical Devices
– Medicare coverage – Emerging trends – Health technology assessment – Cost-effectiveness analysis
• Medicare Payment Systems
– Fee for service systems (FFS) – How new technology is accounted for in FFS – Emerging trends/Payment reform
• Economic Value
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MEDTRONIC’S ROLE IN PUBLIC POLICY
Consistent with our Mission, Medtronic maintains active Government Affairs & Health Policy teams dedicated to improving issues related to our:
Therapies Industry Patients Businesses Customers
Goal of Public Policy Efforts
– – Ensure regulatory, payment, tax, and trade policies support medical innovation and provide optimal patient access to care Focus on Congress, the Administration, key Federal agencies • HHS (CMS, FDA, NIH, AHRQ), USTR, State and Commerce Departments
Collaborative Approach
– Work with industry, AdvaMed, physicians, patient organizations, hospital groups, professional societies – Identify and address issues critical to patient access and medical innovation 3
MEDTRONIC’S PUBLIC POLICY ORGANIZATION
Government Affairs Health Policy & Payment Health Care Public Policy
Medtronic Business Units
Cardiac & Vascular Group Restorative Therapies Group Diabetes Group Regulatory 4
COVERAGE OF MEDICAL DEVICES
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WHAT IS COVERAGE? A KEY STEP TOWARDS MEDICARE REIMBURSEMENT
Regulatory approval (FDA) Benefit category determination (Congress)
Coverage
(CMS) Adapted from Phurrough, 2005 Coding (CMS) 6 Payment (CMS) 6
PAYER COVERAGE IS BASED ON EVIDENCE • • • • Work with the clinical team early on to identify endpoints and study design that are meaningful to payers and demonstrate the product value If Medicare patients are part of the target patient population, always include Medicare patients in the trial Even if Medicare is not the primary payer, it is still important – Largest payer in the U.S. (and growing) – Very influential to private payer coverage decisions Global coverage often requires additional evidence – – Country specific data Explicit economic evidence requirements
Economic Outcomes
-cost-effectiveness -utilization/cost changes
Improved Clinical Outcomes
-Technology
proven
to provide clinical benefits; well designed trials, relevant outcomes
Benefit > Risk
- Non-invasive modalities should be exhausted before surgical ones
Safety and Effectiveness
- Technology has FDA approval 7
MEDICARE’S EVALUATION OF EVIDENCE RELIES ON A VARIETY OF INPUTS
• To determine “reasonable and necessary”, CMS broadly focuses on: – methodological considerations – relevance of chosen outcomes and clinical endpoints – generalizability of study results to the Medicare population – qualitative assessment of net risks and benefits • CMS does not formally consider economic information in the coverage process, but there is rising pressure to do so • Medicare carrier medical directors also consider the expert opinion of clinicians in their area when developing LCDs 8
MOST COVERAGE IS LOCAL
National 10%
Adapted from Phurrough, 2005
Local 90%
Local National
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DETERMINE THE APPROPRIATE MEDICARE COVERAGE APPROACH
Local • Coverage is determined by local contractor Medical Director • Decentralized decision-making as policies vary from contractor to contractor (however transitioning to MAC structure may change this) • Responsive to community care standards • May allow prompt initial diffusion of innovations • Provides regional flexibility/variation in policy National • Limited capacity (historically less than 12 NCDs/year) and is lengthy (however, MMA provides tighter timeframes) • Coverage determinations must be adopted by all Medicare Carriers and Intermediaries • Appeal opportunities for negative coverage determinations are limited • Can be external or internal request • CED requires additional data collection in exchange for Medicare coverage 10
SOME OF OUR THERAPIES HAVE WITHSTOOD RIGOROUS COVERAGE REVIEW
Medicare NCD NICE Appraisal
ICD
CRDM
CRT Pacemakers = Positive coverage = Local covg/funds = Local/Potential risk = No coverage
CardioVascular
DES
Diabetes
Insulin Pump DBS SCS
Neuromodulation Spine & Biologics
InterStim (Urinary) BMP BKP Cervical Disc Lumbar Fusion 11
HIGH QUALITY CLINICAL EVIDENCE IS ESSENTIAL
Strength of Evidence Source: Tufts Medicare NCD Database 12
EMERGING TRENDS IN MEDICARE’S NATIONAL COVERAGE PROCESS
1 2 3 4 Increasing Application of CED CMS is increasingly applying CED in its NCDs CMS-FDA Collaboration Role of Professional Societies Evidence Standards and Stakeholder Engagement CMS is opening NCDs earlier, sometimes before FDA approval, encouraging enhanced coordination between the two agencies (e.g. on data-sharing) Professional societies are beginning to take a larger role in coverage decisions, requesting NCDs and informing its implementation CMS is demanding more rigor in trial design; stakeholders will need clear rationale to negotiate with CMS on appropriate trial standards in CED 13
THE INCREASING DEMAND FOR EVIDENCE THE RISE OF HEALTH TECHNOLOGY ASSESSMENTS
Increasing HTA agencies:
@ national level and within one healthcare system, with more resources & power, working in powerful global networks
Increasing evidence demands:
clinical need, efficacy/safety, cost-effectiveness, budget impact
Increasing sophistication:
in HTA evaluations and HTA decisions 14
HTAS OF MEDTRONIC THERAPIES GLOBALLY
DES, CABG, EVAR, TEVAR, TCV, PERIPHERAL ICDs, CRTs, IPG, ILR, RPM DBS, ITB, SCS BMP, BKP, CF
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THE COST-EFFECTIVENESS PARADIGM
Decreases Costs (Intervention is less effective and more costly) Decrease in QALYs Increase in QALYs (Intervention is more effective and less costly)
Laupacis A. et al., Can Med Assoc J 1992;146:475
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COMPARING THE COST-EFFECTIVENESS OF A VARIETY OF TREATMENTS/INTERVENTIONS
Common Threshold - $50k-$100k/QALY 17 Source: Cost-Effectiveness Analysis Registry, Tufts University
TECHNOLOGIES REJECTED BY NICE ON GROUNDS OF POOR COST-EFFECTIVENESS
Cost-effectiveness ratio Date of NICE decision
Gemcitabine for metastatic breast cancer Cinacalcet for secondary hyperparathyroidism in ESRD Pemetrexed for non-small-cell lung cancer Pegaptanib for age-related macular degeneration Drug-eluting stents for coronary artery disease* Bevacizumab for first-line treatment of metastatic breast cancer Cetuximab for metastatic colorectal cancer post-failure of oxaliplatin £38,699-58,876 £39,000-92,000 £458,000-1.8 million £163,603/QALY £183,000-562,000 Lacking evidence of cost effectiveness Lacking evidence of cost effectiveness 2007 2007 2007 2008 2008 2008 2008 * Final Guidance on DES recommends for use in percutaneous coronary intervention for the treatment of coronary artery disease, within their instructions for use, only if: • the target artery to be treated has less than a 3-mm calibre or the lesion is longer than 15 mm, and • the price difference between drug-eluting stents and bare-metal stents is no more than £300.
Source: Neumann, 2008; NICE Final Guidance, 2008.
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PAYMENT OF MEDICAL DEVICES
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REIMBURSEMENT PROCESS FOR MEDICAL DEVICES
Sells Product
Manufacturer
Submits Claim Customer/ Provider
Hospital/ ASC Physician
MPFS
Patient Medicare/ Insurer 1. Is it covered?
2. Does it have appropriate codes?
3. Payment (facility and physician) 21
MEDICARE PAYMENT SYSTEMS
IPPS OPPS ASC MS-DRG APC APC Payment Mechanism Basis for Payment Cost-based payment rates derived from historical claims data.
Diagnosis driven MPFS RVU Cost-based payment rates derived from historical claims data.
Procedure-driven Cost-based payment rates derived from historical claims data. Subject to budget neutrality scaling and adjustment. Procedure driven Based on three components: - physician work: reflecting the physician’s time, effort, and technical skill required to render a service; - practice expense: equipment, supplies, and office overhead items such as rent, employee wages, utilities; and - malpractice expense: insurance premiums Timing Proposed rule: April/May Final rule: August 1 Effective: October 1 Proposed rule: June/July Final rule: November 1 Effective: Jan 1 Proposed rule: June/July Final rule: November 1 Effective: Jan 1 Notes CMS began the process of transitioning to MS DRGs in FY 2008. Hospitals may receive increases in MS-DRG payments for DSH & IME. While the IPPS makes one bundled payment for all care provided during the inpatient stay, a hospital may receive multiple OPPS payments for a single outpatient encounter if multiple separately payable services are provided during that encounter.
While all APCs are subject to the ASC budget neutrality adjustment, for device-dependent APCs, only the procedural portion of the APC is subject to the reduction. The device portion of the APC is not subject to the budget neutrality adjustment.
The AMA RUC provides recommendations for RVUs. Voting members of the RUC include representatives from medical specialties and others. The RUC recommendations are subject to review by CMS staff, physicians, contractor medical directors, specialty refinement panels of physicians, and the public through notice and comment rulemaking. 22
HOSPITAL PAYMENT HAS BEEN STABLE FOR MANY OF KEY THERAPIES
Therapy
ICDs Pacemakers DES AAA Lumbar Fusion Cervical Fusion Kinetra/DBS Heart Valves
Average Medicare DRG Base Payments for Significant Medtronic Therapies* FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013
$29,811 $12,898 $12,519 $19,091 $18,466 $11,164 $23,092 $36,570 $30,010 $13,152 $12,068 $19,704 $19,329 $11,732 $31,094 $13,561 $11,528 $20,239 $20,614 $12,450 $23,825 $37,302 $24,904 $37,877 $32,439 $14,083 $11,928 $21,060 $21,891 $13,438 $24,783 $39,404 $32,630 $14,366 $12,191 $21,400 $22,475 $13,652 $25,928 $39,096 $33,058 $14,606 $12,470 $21,336 $22,562 $13,733 $27,541 $38,593 $33,901 $15,220 $12,960 $22,271 $23,311 $14,732 $27,465 $39,088
FY07-13 + 13.72% + 18.00% + 3.52% + 16.66% + 26.24% + 31.96% + 18.94% + 6.89%
*Volume-weighted average base payment across the main MS-DRGs involving the therapy, excluding teaching, disproportionate share, wage, and outlier adjustments to individual hospitals 23
PHYSICIAN PAYMENT HAS BEEN MORE TURBULENT BUT STILL RELATIVELY STABLE FOR MEDTRONIC THERAPIES
National Average Medicare Physician Payment Rates for Significant Medtronic Therapies Therapy/CPT Code
ICDs
(33249)
Pacemakers
(33208)
DES
(92980)
AAA
(34802)
Lumbar Fusion
(22630)
CY2007
$878 $485 $796 $1,252 $1,433
CY2008
$886 $512 $806 $1,226 $1,413
CY2009
$919 $532 $848 $1,261 $1,433
CY2010
$962 $554 $818 $1,318 $1,459
CY2011
$963 $556 $873 $1,338 $1,536
CY2012
$963 $556 $873 $1,311 $1,549
CY07-12 + 9.68% + 14.64% + 9.67% + 4.50% +8.09%
Cervical Fusion
(22554)
Kinetra/DBS
(61886)
Diabetes/CGM
(95251)
Heart Valves
(33405)
$1,221 $670 $38 $2,272 $1,196 $685 $38 $2,221 $1,200 $720 $40 $2,282 $1,205 $764 $41 $2,363 $1,270 $825 $42 $2,409 $1,281 $848 $42 $2,369
+ 5.78% + 26.57% + 10.53% + 4.27%
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WHY ARE ADDITIONAL PAYMENTS OPTIONS IMPORTANT FOR NEW TECHNOLOGIES?
New technologies encounter unique challenges under prospective payment systems • • Prospective payment systems often do not adequately account for new technologies – Hospitals are provided a fixed, prospectively determined payment – Typically, technologies are introduced without any changes to the PPS classifications or payments, leaving hospitals at risk for higher costs associated with new technologies Annual PPS updates are generally based on claims data from two years prior – Creates a two to three-year delay between market introduction of a new technology and recalibration of PPS payment rates – Recalibration delays could impact patient access to new technologies 25
ELIGIBILITY FOR NEW TECHNOLOGY PAYMENTS FOCUSES ON THREE GENERAL THEMES
Pass-Through Status (OPPS) New Technology APC (OPPS) New Technology Add-On Payment (IPPS) Newness Cost Threshold Clinical Improvement X The device is not appropriately described by any existing or previous categories established for pass through. Device was not paid for as an outpatient service as of December 31, 1996.
X The average cost of devices must be “not insignificant” relative to the payment amount for the procedure or services for which the device is associated.
X Device must represent a substantial clinical improvement over existing services as determined by CMS. General criteria to assess “substantial clinical improvement” are outlined in regulation.
X The service cannot be appropriately described with current HCPCS code(s) and is not adequately represented in the claims data used for the most current OPPS annual update.
No specific cost threshold requirement, but NT APC assignment is based on estimated service costs as outlined in the NT APC application.
No specific clinical improvement requirement, but application suggests that peer-reviewed articles be submitted to provide information on the clinical use and efficacy of the service.
X Generally, a technology is deemed to be “new” within 2 – 3 years following FDA approval and/or market introduction.
X Average charges for services involving new tech must exceed specific MS-DRG cost threshold.
X Technology must represent a substantial clinical improvement over existing services as determined by CMS. General criteria to assess “substantial clinical improvement” are outlined in regulation.
Payment mechanism Marginal cost (Hospital device charges*CCR)+APC Cost band Midpoint of a range of costs (e.g. $10-$50, $3000 - $3,500) Partial marginal cost MS-DRG payment + the lesser of 50% of costs of new technology, or 50% in excess of the DRG 26
NEW TECHNOLOGY ADD-ON PAYMENT AWARDEES
Technology Indication N Years Eligible Max NTAP Drotrecogin alpha proteins Bone morphogenetic proteins (BMP) Severe sepsis Spinal fusion 9,803 7,724 FY 2003, FY2004 FY 2004 $3,400 $8,900 FY 2005 $1,900 Cardiac resynchronization therapy (CRT-D) Bilateral deep brain stimulation (b DBS) Rechargeable spinal cord stimulation (r-SCS) Endovascular graft repair (EVG) Interspinous decompression system (IDS)* Temporary total artificial heart system IBV Valve System Autolaser Interstitial Thermal Therapy DFICD Heart failure Parkinson’s disease Chronic pain Thoracic aortic aneurysm Lumbar spinal stenosis Heart transplant Prolonged air leaks following lung surgery MRI-guided catheter for brain tumors Clostridium-difficle chronic diarrhea 33,700 483 381 3,613 4,093 NA NA NA NA FY 2005 FY 2005, FY 2006 FY 2006, FY 2007 FY 2006, FY 2007 FY 2007, FY 2008 FY 2009, FY 2010 FY 2010, FY 2011 FY 2011, FY 2012 FY 2013 $16,262.50
$8,285 $9,320 $10,599 $4,400 $53,000 $3,437.50
$5,300 $868 27
AGGREGATE HOSPITAL PAYMENT-TO-COST RATIOS FOR PRIVATE PAYERS, MEDICARE, AND MEDICAID 28
HEALTH CARE REFORM PROVISIONS WITH SIGNIFICANT IMPLICATIONS TO DEVICE INDUSTRY
Comparative Effectivenes s Research Payment and Delivery System Reform Insurance Expansion Independent Payment Advisory Board Sunshine Act Medical Device Excise Tax
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EMERGING PAYMENT METHODS IN THE U.S. SHIFTING RISK & INCREASING ACCOUNTABILITY
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AVERAGE RISK-ADJUSTED SPENDING FOR MEDICARE ADMISSIONS PLUS 30 DAYS POST DISCHARGE Congestive Heart Failure Comparing Hospitals in the Low and High Resource Use Quartiles
Service Low Average High Percent Dollars
Total Episode Hospital Physician Readmission Post-Acute Other $7,757 $4,837 $612 $1,102 $842 $363 $9,278 $4,826 $647 $1,986 $1,378 $441 $11,019 $4,824 $650 $2,965 $2,041 $539 42.0% 0.0% 6.9% 169.0% 142.0% 48.5% $3,262 ($13) $38 $1,863 $1,199 $176 Note: Spending for each service is based on standardized Medicare amount excluding IME, DSH, Wage Index Source: MedPAC, June 2008 31
PAYMENT & DELIVERY SYSTEM REFORM CMS IS PUSHING GROWTH IN ACOS & BUNDLED PAYMENT ACO Growth • •
Total # of Medicare ACOS: 259 >4 M Medicare Beneficiaries
Source: The Advisory Board Company Bundled Payments for Care Improvement Initiative • • •
Total # of Participants: >500 4 Care Models The largest voluntary Medicare payment innovation program
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BUNDLED PAYMENTS WILL HAVE TO BE DESIGNED CAREFULLY TO ACCOUNT FOR THE BENEFITS OF TECHNOLOGY
Therapy
CRT-D ICDs DES BMS
N
2,232 3,024 16,654 8,194
Average Annual Spend
$65,515 $66,978 $34,706 $40,697
Inpatient (%)
77.2% 75.7% 66.1% 62.9%
Physician (%) Outpatient (%) Home Health (%)
12.2% 12.3% 18.1% 18.6% 3.7% 5.0% 8.7% 8.8% 2.0% 1.9% 1.9% 2.5%
DME (%)
1.3% 1.0% 1.4% 1.3%
SNF (%)
3.2% 3.7% 3.4% 5.3%
Hospice (%)
0.5% 0.4% 0.4% 0.6% *CY 2009 Medicare inpatient and carrier standard analytical files. Cohort includes patients implanted within the first quarter of CY 2007; all cardiac-related physician, inpatient, and outpatient hospital utilization included in analysis.
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AVERAGE PER-PERSON MEDICARE SPENDING BY HIGH EXPENDITURE DRGS 30 Day Episode 365 Day Episode • Non-device intensive procedures use substantially more post-acute care over time suggesting a greater opportunity for care coordination and bundled payment methodologies • Over time device intensive procedures cost less on a per-person expenditure basis, making longer episodes of care more favorable 34 Medicare 5% SAFs, 2009; costs not yet risk-adjusted
MEDTRONIC IS ADAPTING TO THE CHANGING HEALTH CARE LANDSCAPE
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TRANSFORMING TO DELIVER ECONOMIC VALUE
Universal Healthcare Needs IMPROVE OUTCOMES EXPAND ACCESS OPTIMIZE COST and EFFICIENCIES
ECONOMIC VALUE IMPERATIVE
Key Medtronic offerings must: 1 Specifically address one or more of the Universal Healthcare Needs
+
2 Deliver a quantifiable financial benefit to the target customer
BROADENED CUSTOMER SET:
PHYSICIANS l ADMINISTRATORS l PAYERS l PATIENTS
CLAIMS DATA IS ESSENTIAL COMPONENT FOR HEALTH ECONOMICS ANALYSES
Health Outcomes
• Mortality • Readmissions •Constructed Outcomes (treatment/procedure migration, etc.)
Health Outcomes
•Readmissions •Constructed Outcomes (treatment/procedure migration, etc.) •
Patient ID
•
Race
•
Sex
•
Age
•
Location
•
Mortality Individual Characteristics
•
Patient ID
•
Facility & Physician ID
•
Procedures
•
Diagnoses
•
Length of Stay
•
Payments
•
Charges
•
Discharge Location/Stat us
•
Dates/Qtrs Physician And Facility Claims
•
Hospital ID
•
Cost to Charge Ratios
•
Quality Metrics
•
Ownership Facility Characteristics
•
Patient ID
•
Sex
•
Age
•
Location
•
Mortality
•
Patient ID
•
Facility & Physician ID
•
Procedures
•
Diagnoses
•
Length of Stay
•
Payments
•
Charges
•
Discharge Location/Stat us
•
Dates Individual Characteristics Physician And Facility Claims
• • • •
Drug Dispensed Quantity Strength Days Supplied
•
Dollar Amounts Pharmacy Claims
• •
Work Days Missed Lab results
•
(Hba1c, etc) Smoking
• •
Blood pressure Weight Productivity Lab Health Risks Entire Medicare Population (>65 yrs, disabled) N = 46 million Sample of Commercially Insured (working age & dependents) N = 40 million
Medicare Claims Data Commercial Claims Data
CLAIMS DATA USED TO GENERATE EVIDENCE & DEVELOP DATA-DRIVEN POLICY POSITIONS
1.
• • • Payment accuracy and reform Sustain payment amounts for products and procedures Shape payment reform policies to ensure value is recognized Estimate affects of payment policies 2.
• Comparative research Compare various treatment effects on available outcomes 3.
• • • Cost and utilization analysis Longitudinal cost and utilization of patients with diagnoses and procedures of interest Incidence and prevalence Inputs for cost-effectiveness models 4.
• • Pricing analysis Estimate market dynamics Linking account characteristics to internal pricing data
Questions/Answers
Thank You!
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