Medical Technologies & New Health Care Law

Volume 2, Issue 3 February 2011 the system. However; there are some provisions in PCORI

MASA Consulting & Training Services

Mohamed Ali,
MASA Healthcare

that limit CMS and DHHS from using the research results in structuring the reimbursement or cutting the

There is no doubt that healthcare reform, Patient Protection Affordable Care Act, PPACA, has created a great impact on our healthcare system and it will continue to impact the delivery of healthcare services. The new healthcare law that was signed by President Obama is addressing different issues with our fragmented healthcare system. The law is aiming to improve how healthcare is going to be delivered and financed. It is also addressing major factors of healthcare which are cost containment and controlling the overall healthcare expenditures. The law is structured in form of varies provisions and sub provisions that are addressing different aspects of healthcare delivery from providers side and insurance side. The main focuses of the reform are cutting the cost, improving utilization, and improving the oversight on insurance companies. It is very hard to address one provision in one article. The article is to address the issue of new technology through the comparative research effectiveness and its impact on healthcare delivery. The issue of comparative research effectiveness for new technology is considered to be a sub provision of improving quality and health system

reimbursement. The new provision is believed to impact the diffusion of such new technologies if it is proven to be ineffective clinically. In order for us to identify how much impact PCORI will have on new technologies innovation, development, and diffusion, we need to identify what really each one of them means. From this perspective, technology innovation refers to the motive and the intention to create a new innovative product that is new and doesnt exist to meet certain market demand. The expected profit is the main motive behind such innovation. Technology development refers to the phase in which the developing organization has decided to put the essential capital to develop such innovative new technology and conduct the essential research for it. Technology diffusion refers to the marketing phase and the phase of penetrating the system in order for the new technology to be recognized and requested by customers (patient) and to be prescribed by providers (physicians). The underlying assumption for addressing the issue is to control the cost of new technology and its impact on our healthcare system. Most of the recent studies that studied the factors that are contributing to the rise in healthcare cost, expenditure, and insurance premium came to the conclusion that advanced technology has a great impact on the current system. Usually advanced technology doesnt refer only to hardware technology but also refers to new drugs, medical interventions, or medical screenings. Such new technologies come at higher price comparing to the old ones or what the system already has in place. Most of the advanced technology developing companies and

performance. The provision is covering varies issues such as new technology and research, Medicare, Medicaid, primary care, and health disparity. When we summarize the section of new technology and comparative research effectiveness, we find out that it addresses how important it is to establish an oversight board in form of Patient Centered Outcome Research Institute, PCORI. PPACA established PCORI to act as the gatekeeper but not by eliminating patients from going to specialists but by eliminating new technologies that dont have proven clinical outcomes from penetrating

pharmaceutical companies rely heavily on their marketing

All Rights Reserved. MASA Healthcare 2009-2011. MASA Consulting & Training is a division of MASA Healthcare 1
Medical Technologies & New Health Care Law

campaigns to improve the new product diffusion. Such marketing campaigns have a great impact on influencing the patients interest in such new technology. They dont really emphasis or provide proven studies in regards the scientific effect and the clinical effectiveness of such new technologies. As long as patients see what kind of miracles these new technologies can do on the TV while not seeing how much it really cost, patients tend to demand them at whatever price. Also, since these new technologies are covered by insurer and that the patient doesnt have to pay for it out of his/her pocket that makes the patient insist more on demanding it (moral hazard). However; in this scenario the government is the major payer, in form of Medicare and Medicaid, which makes sense that the government is aiming at cutting the cost by eliminating these unnecessary new technologies. When we look at the benefits and the risks that are associated with the new provisions, we find that it can contribute positively in improving the quality of healthcare delivery while controlling the cost of the new technology but it can also kill innovation and new technology development. As we look at these segments of introducing a new technology to the market, we can see that PCORI is intending to hinder any clinically unproven new

organizations that are involved in developing innovative new technologies that offer proven clinical outcomes, these organizations will excel. They will have less effort marketing their product since it will be supported by the PCORI Board Panel and the results will be available to the public. That way PCORI will be promoting only clinically proven new technologies and encouraging its

development, innovation, and diffusion while eliminating or hindering the unproven ones which could impact controlling the rise in healthcare cost eventually. In order for us to ensure the expected outcomes from the proposed provision, an implementation plan will need to be developed. The implementation plan should address four main components; (1) Diverse Evaluation & Advisory Committee that combines Healthcare Executives, Patients Representatives, Clinical Representatives, Small Business Representatives, Large Business Representatives, and FDA Representatives. The committee should combine different thoughts and inputs from all stakeholders when addressing any new technology to ensure that the decision is fairly made and it had a sound foundation. The main role of this committee is to study any new technology and make recommendations. The main second role also would be studying the elimination of existing technology that can be replaced by effective new technology to reduce the cost; (2) Studying what we currently have in place of new technology that cost the system a great amount of money and analyze their clinical effectiveness. The study should have many components such as cost effectiveness analysis, cost benefit analysis, patient satisfaction analysis,

technology. Meaning that if the developing company is going to rely mainly on their marketing Champaign to allow its product penetrates the system. Such companies wouldnt be able to function under PCORI since they will be eliminated based on the results that will come from conducting the required research that would prove that their technologies are not effective. That will definitely hinder their innovation phase, development phase, and diffusion phase, and may eventually put them out of business unless they offer clinically proven outcomes. On the other hand when one looks at other

reimbursement analysis, and clinical outcomes and benefits analysis. It should also incorporate public evaluation and public demands; (3) Creating a submission and an evaluation system where any new technology has to go through prior it is being advertised to the public/providers.

All Rights Reserved. MASA Healthcare 2009-2011. MASA Consulting & Training is a division of MASA Healthcare 2
Medical Technologies & New Health Care Law

It is a great way to control the penetration of new technology to the market and to eliminate the direct consumer advertisement. Only upon studying the new technology, it can be used, recommended or warned against; (4) Supporting Sub Committee that would provide the needed public support and endorsement to the clinically approved technology and warn the public and clinical about clinically unproven new technology. The aim is to control the direct consumer advertisement cost indirectly as it impacts the cost of new technology indirectly. It is also aiming to address consumer and create well educated patients that can make informed decisions. Upon following the implementation plan, there will be a great impact on how healthcare is being delivered, financed, and organized. The provision, if it is implemented as recommended, should lower the contributing factors of the continuous rise in the cost of healthcare expenditure that is related to new technology. Not only that, but it will also ensure the delivery of healthcare services is following certain quality and clinical outcomes standards. The system then will stop paying for any current technologies that is going to be replaced by new ones. The system will also pay for new technologies that will have higher cost benefit results and cost effectiveness outcomes. In terms of healthcare organization, the PCORI will be a very good initial step towards better healthcare coordination. Coordination between what to be paid for and what to incorporate clinically is a very important component to create a system from sub systems. It will also provide a great input regarding the expectations of the public and if controlling the cost can be obtained. It will also serve as a great tool for patients and providers education. Patient will be informed of what is effective and what is not which could help greatly in making an informed purchasing decision.

References: 1- Bittle, M. (2010, Fall). Healthcare and Business Theory and Practice. Lecture presented at Johns Hopkins University, Carey School of Business. 2- Halvorson. G & Isham. G (2003). Epidemic of Care. Jossey-Bass. 3- AAMC. (2010, March). Summary of Patients Centered Outcomes Research Provision. AAMC Government Relation. Retrieved from http://www.aamc.org/reform/summary/pcorsum mary04022010.pdf 4- Kaiser Family Foundation. (2011, April) Focus on Health Reform. Summary of the New Health Reform Law. Retrieved from http://www.kff.org/healthreform/upload/8061.pd f

All Rights Reserved. MASA Healthcare 2009-2011. MASA Consulting & Training is a division of MASA Healthcare 3
Medical Technologies & New Health Care Law