Note: this blog post was originally published on LinkedIn Pulse on February 28, 2017.
Medical technology companies have long been recognized for their life-saving contributions to diagnosing and treating patients – from medical imaging to genetic testing to implantable devices. In fact, medical technology advances are credited with helping to add five years to the average U.S. life expectancy since 1980 and slashing the number of days spent in hospitals by 59 percent between 1980 and 2010. The newest medtech innovations are truly astounding, from the use of 3D printing of tissue to diagnostics linked to smartphones, to innovations in medical robotics and nanotechnology.
Medical technology is already helping people lead longer, healthier lives. Now many medtech companies are looking at how they also can apply their expertise to promote value in the delivery of health care. Value based health care is transforming the health system by moving away from reimbursement based on the volume of health care services and towards rewarding better clinical outcomes, improved patient satisfaction, and lowered costs.
The initial focus of value-based care models has been incentivizing providers -- especially hospitals and physicians -- to work together to deliver higher-quality health care in a more coordinated and efficient manner. Congress and the Centers for Medicare & Medicaid Services (CMS) have already incorporated such clinical and financial accountability into several Medicare provider reimbursement policies and innovative payment models.
As value-based medicine matures, however, the next generation of innovation in the delivery and management of health care services could actually be driven by medical technology companies. This means a change in viewing medtech companies as simply manufacturers or “vendors” of devices, with a narrow role in providing the medical tools to be used by health professionals. Instead, medtech companies can play a broader role in more effectively integrating technology and related services into all aspects of patient care.
What makes medtech companies so critical to promoting value in the health care continuum? There are a number of factors, but perhaps the most important is data. Medtech companies amass tremendous amounts of clinical and economic information on how to optimally incorporate their products into a patient’s medical treatment, including matching patients with the most promising therapies, developing clinical protocols to improve patient outcomes, and managing post-procedure care. Furthermore, medtech companies can couple this knowledge with the capacity to offer services such as information technology, data analytics, and supply chain management that can bring efficiency to health delivery. Such services can be extremely valuable to hospitals, many of which are struggling to actually implement value-based practices in their own health systems.
There are already a number of exciting developments in this area. For instance, one leading manufacturer has just announced a comprehensive suite of services to promote value-based care in various therapeutic areas, including orthopaedics, cardiovascular, surgical oncology, and obesity. Another manufacturer has launched a major effort to incorporate value-based healthcare principles into its research and development, clinical studies, healthcare reimbursement, market development, and commercialization areas, including instituting an economic value training program that has educated 85,000 employees on the role of economic value in health care.
Despite this progress, we are now only scratching the surface of what is possible. Medical technology companies across the country are anxious to play a far greater role in improving the efficient delivery of patient care through value-based contracts. In particular, many medtech companies are eager to share the financial risk of meeting cost savings and quality improvement targets through formal roles in value-based contracts.
What is standing in the way of full medtech participation in this health care delivery transformation?
- Outdated legal restrictions (primarily the Anti-Kickback Statute and the Physician Self-Referral Statute) that were designed to address the Medicare fee-for-service system present significant roadblocks to innovative manufacturer collaborations with providers and payers. There is increasing recognition of the need for reform in this area. The Healthcare Leadership Council’s new white paper, “Health System Transformation: Revisiting the Federal Anti-Kickback Statute and Physician Self-Referral (Stark) Law to Foster Integrated Care Delivery and Payment Models” makes a compelling case for Anti-Kickback Statute and Physician Self-Referral reforms to allow all types of stakeholders to fully participate in value-based collaborations. Even CMS acknowledged in a report released last summer that “the fraud and abuse laws may serve as an impediment to robust, innovative programs that align providers by using financial incentives to achieve quality standards, generate cost savings, and reduce waste.”
- In addition, FDA restrictions on off-label communications, which prevent manufacturers from sharing with payers and providers some types of clinical and health economic information that are integral to effective value-based health arrangements.
The medtech industry is exploring ways to remove disincentives and restraints to full manufacturer participation in value-based health care arrangements. Yesterday, we filed comments with the HHS OIG proposing new safe harbor regulations that update archaic legal restraints and enable patients and providers to realize the full clinical, health, cost, and outcome benefits potential of medical technology value based arrangements.
I look forward to sharing more information about these exciting proposals, and seeing how they can promote the kind of collaborations that are critical to improving quality and outcomes in a cost-effective, patient-centered manner.