The medical device industry is pushing for a change in the federal anti-kickback law to allow companies to fully participate in the shift away from fee-for-service medicine to value-based care.
The device industry wants changes known as “safe harbors” designed to prevent medical device makers from running afoul of healthcare fraud laws that impose penalties if individuals knowingly pay for or induce a sale or referral. Such rules are applied to medical care providers, insurers and other companies that have their services, products and devices covered by government health insurance.
The value-based care form of payment rewards medical care providers by compensating doctors and hospitals that achieve the best health outcomes. That is in contrast to the traditional fee-for-service form of payment that is based on volume of medical care delivered and is known to increase healthcare costs in the form of unnecessary tests and procedures.
But device makers are limited despite the role of medical technology and devices in healthcare advancements. Thus, the industry Friday submitted suggestions to the U.S. Department of Health and Human Services’ Office of Inspector General, which is seeking input on rule changes related to value-based care payments.
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“Device makers cannot currently enter into certain value-based partnerships because federal rules prevent them from providing any incentives unless they fall within safe harbor or a waiver,” said Scott Whitaker, chief executive officer of The Advanced Medical Technology Association. The trade group represents some of the world’s biggest medical device makers including Johnson & Johnson, Abbott Laboratories, Medtronic, Stryker and Baxter International.
” The device industry wants clarity on how they can at least participate in a Medicare reimbursement structure that allows the company and the provider to share in savings should they create a system that led to a better outcome at a lower price,” Whitaker said. “The best way to accomplish this is through new value-based safe harbors for pricing arrangements, warranties, and risk-sharing arrangements.”
The medical device industry’s effort comes as health insurance companies like UnitedHealth Group, Aetna, Anthem, Cigna and others pay 50% of more of their medical claims via value-based payment models. The Obama administration also set a goal to have 50% of Medicare payments made by value-based models by 2018 and the Trump administration lately has been pushing new alternative payment models.
It’s a trend that’s not going away.
Just this week, for example, The Institute for Medicaid Innovation said half of Medicaid managed-care plans are “piloting population specific” value-based payment models and 15% are expanding pilots. But the institute expects such payment to take off once “barriers to adoption are removed,” authors of an institute report wrote.
In the case of medical device makers, AdvaMed is proposing three “value-based safe harbors.” They are:
- Value-based pricing arrangements safe harbor, which would allow for “price adjustments based on whether or not specified clinical and/or cost outcome targets were achieved,” AdvaMed said.
- Value-based warranties safe harbor, which would allow manufacturers to make “clinical and/or cost outcome assurances and provide an appropriate remedy where such outcomes are not achieved,” AdvaMed said. “The outcome warranty would allow a manufacturer to share risk by providing a payment, item, and/or complimentary or alternative service when a targeted clinical or economic outcome is not achieved.”
- Value-Based Risk-Sharing Arrangements Safe Harbor, which allow for “risk-sharing arrangements on outcomes-based terms among more diverse participants—such as payers, data aggregators, and multiple device companies—in a framework that is independent of the sale of products reimbursed by a federal health care program,” AdvaMed said.
Medical device makers hope whatever new rules emerge can be used under all insurance programs, including Medicare and Medicaid, so patients as well as the government insurers, benefit from any new value-based arrangement. Many value-based arrangements include “shared savings” models that divvy up any reimbursement dollars saved between the provider and the government.
“There has been some experience with value-based arrangements under private insurance,” said Terry Chang, AdvaMed’s vice president, assistant general counsel and director of legal and medical affairs. “We are hopeful for modernization of these public-pay rules to enable value-based care for all patients to deliver improved clinical outcomes, lower costs, and a better patient experience.”
Date: November 7, 2018
Source: Forbes
