Innovation: Risk Among the Algorithms

In a much-discussed recent article, “Why Software is Eating the World,” Netscape co-founder Marc Andreesen says we’re in the midst of “a dramatic and broad technological and economic shift in which software companies are poised to take over large swathes of the economy.”

Andreesen sees health care as ripe for software-generated disruption — a point that will not be new to Hombre readers. But while the benefit of better HIT in health care has gotten splashy policy and media attention (e.g., use of IBM’s Jeopardy!-tested Watson for clinical decision support), there’s a subtle risk to health care innovation that seethes just below the surface.

Providing appropriate reimbursement for the fruits of innovation is hard, even in the best of circumstances. On the one hand, innovations are by definition dynamic, representing something different from what’s come before. Reimbursement systems, in contrast, are by nature static, flexing forward only grudgingly, through update mechanisms often as complex as they are lethargic. When moving forces meet static systems, collisions occur.

Software runs the risk of accelerating these collisions by using algorithms to hard wire into health care’s infrastructure misguided or outdated clinical care assumptions. Long gone are the days when HIT was viewed as being about the mere transmission of information. Today, the hardware itself is revealed as just so many dumb pipes; what counts are the outcomes that result from the content that flows through those pipes.

The HHS HIT Policy Committee’s current drawing board, for example, includes requirements for meaningful users of electronic health records to satisfy measures aimed at cutting 30-day all-cause hospital readmission rates, ensuring the appropriateness of a variety of imaging services, and fostering the use of certain named drugs in identified clinical circumstances. Right or wrong, these and other measures embody assumptions about which health care interventions are sufficiently meritorious to earn providers economic incentives.

None of this need be bad, but certainly it is different. Say what you will about CMS, CPT codes, and cost-effectiveness analysis. At least those familiar theaters of contention appear in relatively plain view, with tangible issues and well-worn trails.

The new virtual venues suggest collisions along a hazier, more challenging pathway — one for which innovators may need new capabilities to stake their claims and protect their flanks.

Coverage Policy Provocateurs

Anyone curious about potential future directions in Medicare coverage policy, or simply looking for a detail-packed treatment of this complex subject, can check out the topic via a newly posted Urban Institute report, which includes as authors former CMS coverage policy officials Sean Tunis (pictured below) and Steve Phurrough.

The report rattles around the known world of coverage and evidence, with attention to history and the authors’ own perspectives on what’s worked and what hasn’t. As one measure of the report’s scope, the assorted policy points are illustrated by health care interventions that range from PET, to implantable defibrillators, to Provenge, to alternative prostate cancer treatments, to ESAs, and on and on. The footnotes and cited sources are alone worth the price of admission.

Most provocative are the policy prescriptions, which, in the view of the authors, spring from the role of technology as “the leading cause of health spending.” Seeking to install coverage policy as one pillar in a new conception of value-based purchasing, the report calls for, among other steps, changing the Medicare statute to effect three changes, which, in ascending levels of policy departure, are as follows:

  • Establish explicit legal authority for CMS to undertake coverage with evidence development.
  • “[R]estore and expand” Medicare authority to apply Least Costly Alternative policies.
  • “Allow Medicare to explicitly consider costs as part of the national coverage process.”

Depending on your perspective, these and other recommendations may seem policy nirvana, the ultimate chamber of horrors, or something in between. But whatever your view, give the authors their due: They’ve taken on a nuanced and controversial subject, and they haven’t pulled their punches.

OIG Report is One “Mole” Some Stakeholders May Want to Whack

As the Congressional “Super Committee” moves forward with debt/deficit-reduction efforts over the next three and a half months (the panel holds its first meeting today), look for health groups to reach deep into their playbooks, deploying studies, PR, advertising, grass roots campaigns, and similar exotic tactics to make their case against Medicare and other policy changes. Included, of course, is a much-discussed “run out the clock” option in which health lobbyists help the Committee fail to meet its targets in the allotted time, thus triggering across-the-board (but likely less onerous) Medicare cuts.

In this environment, anything that moves could be significant, so stakeholders intent on keeping a grip will be engaged in an energetic game of “whack a mole,” bringing down the full brunt of their advocacy on any troublesome policy idea that raises its head. We think we spotted one of the furry little creatures Wednesday, when the OIG released a report on Medicare Part B payments for Avastin and Lucentis for age-related macular degeneration.

In a nutshell, the OIG found that the two biologics had “equivalent effects” clinically, but that, over the two years of the analysis, Medicare paid $1.1 billion for Lucentis, versus $40 million for off-label use of Avastin, despite a substantially larger number of reimbursed Avastin treatments.

The OIG noted that Medicare likely lacks legal authority to apply a Least Costly Alternative policy and that Medicare Part B, unlike Medicaid, cannot extract drug rebates. In commenting on the report, CMS, while expressing comfort that “our coverage policies accurately reflect the available published evidence on the use of these agents,” also said that “we will continue to actively monitor the evidence and will, if appropriate, implement changes to our policies as the evidence base continues to grow.”

Hard to say what the OIG report means in the greater scheme of things. But one point is almost certainly understated, and that is, as the OIG put it, that any CMS policy tilt toward utilization of Avastin “could be controversial.” You can count on it, just as you can count on multiple mole sightings over the next several weeks.