Medicare’s Coverage of Life-Saving Treatments
In the New York Times today, liberal columnist David Leonhardt writes about ways to reduce Medicare spending, specifically by limiting access to new, costly treatments. Most of the column focuses on an article (subscription required) in this month’s issue of Health Affairs, which proposes a reimbursement regime whereby Medicare would pay for new treatments for three years, at which point a given drug or therapy would have to prove its worth relative to other, cheaper alternatives in order to justify higher payments from Medicare.
The Times article quotes the Commonwealth Fund’s approving comments that the proposal would “make the market work.” But there are numerous drawbacks to such an approach:
- Both the Times article and the Health Affairs piece note that three years could prove an insufficient time to gather evidence about a therapy’s worth (or lack thereof) when compared to other treatments. This problem would prove especially acute when analyzing long-term effects of drugs that may not be readily apparent in a few years’ time – or the effects on specific sub-groups (i.e., children, African-Americans, etc.) that may respond differently to treatments.
- Conversely, setting a different “approval time” for each drug or service to justify its use would lead to other inequities – to say nothing of possible political manipulation – and would probably lead to innovators choosing to focus on the fields in which higher Medicare reimbursements would be guaranteed for longer pieces of time.
- The Health Affairs piece admits that this proposed policy “would lead to much slower diffusion of more expensive interventions,” a policy the authors believe is justified because “limiting the rapid dissemination of…a service is likely to be in the best interest of most patients.”
Of particular note – and concern – is a final passage in the Health Affairs piece in which the authors note “our proposed payment model could be incorporated into Medicare processes without running afoul of the language” in the health care law. While it remains to be seen whether the Administration would seek to implement this policy in practice – and whether it would attempt to do so by administrative fiat, rather than through consultations with Congress, as the paper implies Medicare could do – such a new policy would be consistent with Centers for Medicare and Medicaid Services Administrator Donald Berwick’s prior support for “rationing with our eyes open.”