Thank you for the opportunity to talk with you about Medicare health
technology assessment issues. Over the past 30 years, the Medicare coverage
process has evolved from a relatively informal set of procedures to a
sophisticated process that includes extensive medical advice and
state-of-the-art technology assessments. This evolution has been
necessitated by the multiple changes that have occurred in the provision of
health care services in this country and the rapid growth of new medical
technologies. The goal of our coverage process is to assure that
beneficiaries have access to the best medical care, while protecting them
from services whose effectiveness is unproven. This is one of the greatest
challenges facing the Health Care Financing Administration (HCFA) today as
we try to keep pace with the myriad number of medical advances occurring
In order to face the challenge of making appropriate coverage decisions,
HCFA has moved toward the increased use of evidence-based decision-making.
We often rely on technology assessments done by agencies such as the Agency
for Health Care Policy and Research (AHCPR) as well as the advice of the
Food and Drug Administration, the National Institutes of Health, the
Department of Veterans Affairs, the Department of Defense, and on many
experts in the medical community and private sector. Obtaining
authoritative evidence of the value of individual services assures that
beneficiaries will receive high quality and effective care.
First, I would like to outline briefly the overall process for making
Medicare coverage decisions and then address more specifically the role
that AHCPR has in this process.
THE COVERAGE POLICY PROCESS
Medicare's coverage decisions are based on broad statutory authority given
to the Secretary of the U.S. Department of Health and Human Services. The law
says the following:
"Notwithstanding any other provisions of this title, no payment may be made
for items or services which are not reasonable and necessary for the
diagnosis and treatment of illness or injury or to improve the functioning
of a malformed body member."
This provision is the starting point for making coverage decisions and
gives HCFA the ability to make determinations about what Medicare benefits
are appropriate in the face of changing medical practice. National coverage
decisions are issued by HCFA after a thorough assessment of the clinical
issues and available data. These decisions are binding on Medicare
contractors. In the absence of national decisions for particular services,
contractors have the discretion to issue local coverage policies.
Although there is value to allowing the carriers to establish local
policies that reflect medical practice in their area, HCFA realizes that
there is a need to create greater consistency in coverage among the
carriers. In the past, HCFA attempted to foster greater consistency through
prompting carriers to coordinate their local policies. We now plan,
instead, to place a greater reliance on national coverage decisions. We are
also working to refine the national coverage process to provide for more
public participation from medical specialists, health industry
representatives, and other interested parties. We should have a new
mechanism in place allowing for this participation later this year.
The explicit criteria used by HCFA to determine that a service is
reasonable and necessary have been developed to assure the best care for
our beneficiaries. These criteria that now guide the coverage process are:
(1) demonstrated effectiveness; (2) appropriateness; and (3) comparability
to similar services. I will discuss each of these in turn.
Demonstrated effectiveness is the first criterion for determining that a
service or health care technology meets the Medicare coverage requirements.
This means that authoritative evidence must demonstrate that the benefits
of a service or technology to the patient outweigh its reasonably
anticipated risks. We look at whether the use of the service or technology
will result in improved patient management or health outcomes, such as
decreased morbidity or mortality, more accurate diagnoses, or significantly
increased quality of life. In addition, items or services that are
regulated by FDA must have received approval for marketing.
An often-asked question is: what constitutes authoritative evidence of the
effectiveness of a service? In general, we rely on the following:
- controlled clinical trials, controlled studies, or case studies published
in peer-reviewed medical or scientific journals;
- formal technology assessments from recognized government and private
entities, which examine both published and unpublished data;
- evaluations or studies initiated by Medicare contractors; and
- authoritative approvals of other agencies, such as the FDA.
With increasing frequency, HCFA relies on formal technology assessments as
a tool to aid in determining the demonstrated effectiveness of a service or
technology. These assessments focus on the effectiveness of technologies in
general medical practice and on patient outcomes, including morbidity,
mortality, health status and health-related quality of life. They are
valuable because they use systematic methods for evaluating the quality of
the scientific evidence available rather than relying on the less formal
examination of medical opinion or consensus. They also grade the quality of
the evidence based on the study methods.
In addition to demonstrated effectiveness, a service must be appropriately
provided. This means that the service must be suitable for, but not in
excess of, the beneficiary's medical needs and condition. The service must
also be furnished by personnel who are qualified through adequate training,
experience and licensure. And the service must be furnished in a setting
that is suitable for, but not in excess of, the beneficiary's medical needs
and condition and must meet any facility requirements established by HCFA.
Comparison with Similar Technologies
Finally, if a service is an alternative or a replacement for a currently
covered service, we consider how this new service compares with such other
service. The purpose of this comparison is to address payment rather than
coverage issues. Let me be clear: HCFA does not and will not refuse to
cover a service simply because it is costly. Nevertheless, as a prudent
purchaser of health care, if a service is an alternative or a replacement
for a currently-covered service for the same diagnostic or therapeutic
purpose, HCFA will examine both the relative costs and effectiveness in
determining what Medicare payment policy should be. For example, if a new
service is more expensive but equally effective as the currently-covered
service, it would still be covered but paid at the rate of the lower cost
alternative. If, however, the service is found to be more effective, it
would be paid at the higher rate. This criterion assures that the Medicare
program and its beneficiaries receive the best value.
ROLE OF AHCPR IN MEDICARE COVERAGE PROCESS
As Medicare increases it reliance on national coverage decisions to further
coverage policy, there is a greater need for technology assessments
performed by organizations such as AHCPR. I would now like to turn to a
discussion of the role of AHCPR in HCFA's coverage determination process.
The proliferation of new medical technologies on the market present an
almost overwhelming challenge for physicians, patients, and insurance
programs. AHCPR has provided valuable information to HCFA about
effectiveness of these new technologies (both high and low-cost), the
criteria under which services should be provided, the appropriate use of
services and technology, and technologies that have become outdated.
Prior to FY 1996, AHCPR received funding directly from the Medicare Trust
Funds, and HCFA requested a steady stream of technology assessments.
Beginning in FY 1996, however, HCFA began a more formal relationship with
AHCPR. In FY 1996, HCFA and AHCPR entered into an Intra-Agency agreement
for the acquisition of technology assessments. HCFA transferred funds to
AHCPR totaling $700,000 under these interagency agreements, and we expect
such funding to continue. Through this agreement, HCFA has been able to
purchase technology assessments on a task order basis through AHCPR's
As a means of understanding HCFA's reliance on AHCPR, I would now like to
provide you some examples of areas in the past where an AHCPR assessment
has aided in a Medicare coverage decision.
Lung Volume Reduction Surgery - The first example, with which many of you
are familiar, is lung volume reduction surgery (LVRS). LVRS is a relatively
new procedure that is intended to improve lung function and relieve
debilitating symptoms for emphysema patients. Beginning in 1993, LVRS began
to diffuse rapidly despite the many unanswered questions about risk,
appropriate selection of patients for surgery, differences in surgical
techniques, and qualifications of physicians performing the surgery.
In 1996, AHCPR completed a technology assessment of LVRS and concluded that
there was not sufficient evidence to make a scientific judgement about its
effectiveness. Although available data suggests benefits to some patients
in terms of improving lung function and exercise tolerance, the evidence is
insufficient to draw scientific conclusions about the overall risks or
benefits for Medicare beneficiaries. AHCPR recommended that Medicare
coverage be provided within the scope of a clinical trial.
Based on this recommendation, the National Heart, Lung, and Blood Institute
(NHLBI) and HCFA worked together to develop a mechanism whereby this
suggestion could be implemented. NHLBI has put an enormous effort into
developing the protocol for a clinical trial on LVRS, called the National
Emphysema Treatment Trial, and AHCPR is supporting the cost-effectiveness
component of the trial.
Although Medicare does not normally cover patient care costs associated
with clinical trials, Medicare will cover, in this instance, the cost of
care for individuals enrolled in the National Emphysema Treatment Trial,
which will take place at 18 clinical centers now participating under the
trial's protocol. This targeted coverage is an example of what we call
coverage with conditions. It is used when existing data suggest a potential
benefit to some patients, but when there is not sufficient information
available to determine the effect of widespread use or to determine
appropriate patient selection criteria. The data that will be received from
the National Emphysema Treatment Trial should provide additional
information about the effectiveness and risk of LVRS and assist HCFA in
determining whether this procedure should be covered for a broader group of
Magnetic Resonance Angiography - Magnetic Resonance Angiography (MRA) is an
application of magnetic resonance imaging that provides visualization of
blood flow, as well as images of normal and diseased blood vessels. Several
years ago, it was seen as a rapidly developing technology with the
potential for rapid diffusion, although its clinical effectiveness had not
yet been determined for all anatomical regions of the body. In 1994, HCFA
received a technology assessment from AHCPR on the use of MRA in the
measurement of blood flow and the determination of blood vessel morphology.
The AHCPR assessment recommended limited coverage of MRA, specifically for
evaluating blood flow in internal carotid vessels located in the head and
neck for certain indications. AHCPR also recommended that we monitor other
uses for potential coverage in the future.
As a result of this analysis, HCFA issued a national coverage policy in
October of 1995 for MRA generally consistent with AHCPR recommendations.
HCFA continued to monitor the development of this technology and
subsequently revised its policy to expand coverage of MRA to evaluate
peripheral vessels of the lower extremities under certain conditions. HCFA
is in the process of revising the policy again to cover MRA for abdominal
and chest uses.
Simultaneous Pancreas-Kidney Transplants - AHCPR also completed an
assessment of the clinical effectiveness and appropriateness of
simultaneous pancreas-kidney transplants and sequential
pancreas-after-kidney transplants for insulin dependent diabetics with
end-stage renal disease. AHCPR recommended in its analysis that Medicare
cover these transplants for Type I insulin-dependent diabetics with ESRD
who do not respond well to exogenous insulin. They also recommended that
coverage be limited to facilities that have performed at least 30 pancreas
transplants and be contingent upon the hospital's agreement to provide data
to be used for evaluation.
HCFA decided to cover pancreas-kidney transplants based on a model that is
similar to that of coverage for lung volume reduction surgery. HCFA is
collaborating with the National Institute on Diabetes, Digestive and Kidney
(NIDDK) Diseases to provide Medicare coverage for pancreas transplantation
for patients who receive their transplants at a facility participating in a
registry compiled and supported by NIDDK. Certain facilities will be
eligible to participate in the registry and will provide data on the
effectiveness of pancreas transplants through the International Pancreas
and Islet Transplant Registry. The Memorandum of Agreement between HCFA and
NIDDK is nearing completion, and it is anticipated that Medicare coverage
could begin in July of this year. Medicare will cover simultaneous
pancreas-kidney transplants and is considering the coverage of pancreas
after kidney transplants as well.
PET Scans Using Rubidium-82 - In 1994, AHCPR also did an evaluation of the
safety and effectiveness of positron emission tomography (PET) using
rubidium-82. Based on this report, HCFA issued a coverage policy in 1995
covering PET scans for imaging of the perfusion of the heart using Rubidum
82 under certain conditions and at certain facilities.
FUTURE TECHNOLOGY ASSESSMENTS FROM AHCPR
In the next few years, we look forward to receiving additional technology
assessments that we have requested of AHCPR, such as: the effectiveness of
cryosurgical treatment of the prostate, an evaluation of the use of the
prostate specific antigen test for benign prostate hyperplasia,
testosterone suppression for prostate cancer, and appropriate treatment for
dysphagia (swallowing disorders). In addition, we are continuing to
evaluate our need for advice in other areas and anticipate a continued
long-term need for further assessments.
HCFA today must react expeditiously to rapid advances and changes made in
medical science and technology and define and clarify the benefits under
the Medicare program. This is a challenge because, like all health plans,
Medicare often faces the dilemma of having inadequate data to make
evidence-based coverage decisions for new technologies and services. AHCPR
thus plays a crucial role in providing needed information on medical
effectiveness and outcomes, which assists in the adoption of appropriate
coverage policies. This, in turn, serves beneficiaries by assuring that
they have access to the current beneficial medical advances, are treated
appropriately, and are protected from ineffective and potentially unsafe