New Payment Models’ Impact on Innovation

The backdrop for this week’s feature article in Modern Healthcare by Jaimy Lee and Sabriya Rice is last week’s annual conference of the Advanced Medical Technology Association. Known as AdvaMed 2014, it is the leading MedTech Conference in North America, representing more than 1,000 companies. Commensurate with the event, AdvaMed released a new white paper that expresses concern over the potential impact risk-based payment models could have on provider adoption of emerging medical technologies.

The “Show me the data” headline connotes the growing demand of private insurers, as well as policymakers and governmental agencies, that the efficacy of such technologies be supported with evidence. And while AdvaMed, ”generally supports the movement toward new payment models that encourage providers to reduce costs through greater coordination of care,” its not too thinly veiled concern, of course, is whether and to what extent the demand for data will serve as a tactical smokescreen supporting cost control at the expense of patient care – as well as those companies’ financial success. Regardless of the relative priorities of those two objectives, pressure to control costs under risk-based contracting will certainly affect future provider decision-making impacting the adoption of un (or, at least, under) proven technologies.

I don’t think one has to belie their political persuasion to reasonably understand the pragmatically challenging conflict of this discussion. The overwhelming trends of transparency and evidence-based care in healthcare necessitate that manufacturers make the required investment to understand and be able to articulate their product’s cost/benefit story (i.e., the value proposition). The MH article shares the experience of Medtronic, a medical-device manufacturer whose research uncovered a tangential benefit of being able to reduce hospital readmissions that it could use to enhance market value.

But we also know from experience that data supporting patient benefit often trails substantial initial investment, trial and error and the ability to assess that benefit over years of a patient’s life. In a delivery system that has been able to support waste and largesse the need for patience has been a tolerable frustration. In a system where a major focus of all participants is now cost containment there’s a lot less patience.

The recurring policy challenge, as if there was just one, is in cutting through the individual agendas of industry participants to try and find some sense of balance between cost reduction and what is in the best interest of patients while not artificially stifling the enormous benefits we have enjoyed in this country from medical technology.

In Malcolm Gladwell’s latest jewel, David and Goliath, he profiles the work of Dr. Jay Freireich in the mid-50s through mid-60s. Freirech and his colleague, Dr. Tom Frei, pioneered the treatment of childhood leukemia by first transfusing patients with platelets to stop chronic bleeding. Following that they advanced the then novel approach of chemotherapy to include multiple drugs rather than a single drug.

In both instances, Freireich and Frei didn’t have to contend with whether or not insurers would underwrite the cost of their efforts. Rather, at the time they could not even get the support of their academic and clinical colleagues, so outlandish and absurd were their unorthodox approaches, which often caused great pain and hardship to their young patients. Except that in 1965 they published, “Progress and Perspectives in the Chemotherapy of Acute Leukemia,” in which they described their successful treatment of childhood leukemia. Today the cure rate is greater than 90 percent, and thousands of children’s lives have since been saved.

Is AdvaMed right to warn us against the impact risk-based payment models will have in the name of cost containment? Could the next Freireich & Frei team of innovators be kept from achieving a dramatic life-saving achievement because cost-containment will trump the patience needed to evidence results? Or is AdvaMed understandably overstating the case in doing what it is expected to do: advocate for the members funding that organization’s existence?

Cheers,
  Sparky