Implantable devices, such as hip replacements and heart valves, are a central part of medical treatment today. Americans receive about 370,000 cardiac pacemakers and about 1 million total hip and knee replacements per year. Despite how common the use of implantable devices is, little information is publicly available on the prices paid for these devices in the United States. Limited information about prices and performance of many implantable devices has raised concerns that providers, consumers and insurers may be paying too much for these devices.
Insight on an Important Issue
A recently published AARP Public Policy Institute Insight on the Issues examines the market for implantable devices. It looks at financial incentives for manufacturers, hospitals, physicians, and payers, and the impact of the current market structure—especially the lack of price transparency—on competition.
The report, “Understanding the Market for Implantable Devices,” finds that a dearth of relevant information makes it difficult for buyers to assess the value of many implantable devices. While hospitals are the primary direct purchasers of most high-cost implantable devices in the United States, consumers and insurers pay for these devices indirectly as part of the procedure to implant them and thus, are also concerned about the cost of these devices.
Lack of price transparency makes it difficult for buyers to get comparative data on prices and limits their leverage to negotiate lower prices. Through the use of restrictive contract provisions that act as “gag clauses,” manufacturers can obscure device prices.
Meanwhile, buyers are often unable to get data on quality and clinical outcomes associated with implantable devices. This means that hospitals, physicians, and patients are unable to compare the performance or value of comparable devices.
The issue is more complex than one might think. Some have suggested that mandatory public price disclosure would strengthen the bargaining position of buyers and help drive down the prices of implantable devices. Advocates argue that the public availability of real cost and quality information can affect the market, promoting competition that can lower costs and improve quality. Critics have suggested transparent pricing could result in higher device prices. Manufacturers, some experts say, could use publicly available price data to collaborate and raise prices, especially in highly concentrated markets for implantable devices. To address these concerns, approaches like restricting access to pricing data to buyers may prove more successful that full public disclosure. However, even restricted price data could leak out to manufacturers. In any case, without more information about prices and performance, buyers are likely to remain in the dark about the value of implantable devices.
Further, the incentives of hospitals and physicians often diverge, sometimes sharply. Although hospitals typically pay for implantable devices, the surgeons who insert them in patients typically make decisions about which devices to use. Physicians frequently have a close working relationship with a device manufacturer and may exhibit strong personal preferences for devices sold by the manufacturer.
Conflicts of interest can undermine competition in other areas as well. High-volume surgeons may receive payments from device manufacturers for activities, such as consulting and promotional speaking engagements. For instance, from August 2013 to December 2015, 10 larger implantable devices manufacturers and their subsidiaries paid over $1.3 billion to physicians and hospitals for consulting and research, promotional talks, and similar services according to federal government statistics. These financial relationships can cross the line to become illegal kickbacks to promote the use of a manufacturer’s device. While some industry trade groups have adopted a code of ethics that prohibits manufacturers from paying physicians for expenses that are unrelated to scientific and educational purposes, compliance is voluntary.
Toward Greater Competition
This PPI Insight on the Issues concludes that, for the benefit of consumers, buyers, and payers, policymakers should consider a number of options that would help strengthen competition in the market for implantable devices. Some policy options include:
- Increasing device price transparency by restricting gag clauses and requiring manufacturers to disclose prices.
- Improving availability of information on implantable device performance and clinical outcomes.
- Requiring disclosure or imposing restrictions on abusive marketing practices.
- Encouraging containment of device prices through payment and delivery reforms.
- Increasing competition among device manufacturers.
No question, policymakers’ careful consideration of the topic is in order.
In another blog post, I discuss another Insight on the Issues that explores the FDA’s process for approval and oversight of implantable devices. That paper suggests policy options that could both strengthen and streamline the process to better protect public health and safety while also encouraging the development and marketing of devices that will benefit patients.
Keith Lind is a Senior Strategic Policy Adviser for the AARP Public Policy Institute, where he covers issues related to Medicare and medical devices.
Earlier this week, AARP named HomeEXCEPT Inc. the Grand Prize winner of the AARP Innovation Champion Awards competition. The team was awarded $10,000 in cash for designing a homecare sensor that allows caregivers to monitor loved ones by using thermal sensors used to track movement.
The AARP Innovation Champion Awards was created to recognize and celebrate the extraordinary efforts of companies that are aligned with AARP’s core mission – to empower people to choose how they live as they age.
The AARP Innovation Champion Awards also honored six finalists, one in each of six categories: Health and Safety Awareness, Daily Essential Activities, Caregiver Quality of Life, Care Coordination, Social Well-being, Transition Support. Finalists came from Canada, Israel and Korea in addition to the United States and all demonstrated the importance of ageless design with their submissions.
The finalists and Grand Prize winner were selected by AARP’s panel of judges: Bill Horne, Executive Editor, AARP The Magazine; Rich Tehrani, Group Editor in Chief, TMC: Technology Marketing Corp.; Robin Raskin, Founder, Living in Digital Times; Patricia Moore, President, Moore Designs; Amy Goyer, Author and AARP’s Family and Caregiving Expert.
For the full list of winners per category, product descriptions and prizes, log onto www.aarp.org/innovationaward.
Recent policy conversations related to the American Health Care Act (AHCA) have focused on proposals that would eliminate the Affordable Care Act’s critical protection for people with preexisting conditions. This controversial proposal has drawn a lot of attention for good reason. Eliminating this important protection, which keeps insurance companies in the individual (non-group) market from considering health status when making coverage decisions, could hurt millions—especially older adults who tend to develop more health conditions as they age.
But the preexisting condition protection is not the only serious concern. The proposed legislation would also make huge cuts to Medicaid by taking almost $1 trillion (or 25 percent of all Medicaid dollars in 2016) out of the program by 2026. How? By fundamentally changing the way the program is funded. Under the AHCA, Medicaid funding would move from a federal guarantee to match all legitimate state expenditures on health care and long-term services and supports (LTSS) for eligible beneficiaries, to a capped payment system that would give states a fixed dollar amount per enrolled beneficiary [i]. Although per enrollee caps respond to changes in enrollment, they do not respond to increases in health care costs attributable to medical or pharmaceutical innovation, nor do they respond to other changes in the health care environment that could affect per enrollee spending. Health care costs, we all know, are notorious for their rapid rise. The result: an ever-widening gap between cost and funding.
The impact of such a huge loss of federal Medicaid funds on people with disabilities and poor seniors will be devastating—especially for 11 million Medicare beneficiaries who are also eligible for Medicaid. These individuals—called dual eligibles, or duals—are the poorest and sickest of all Medicare beneficiaries and rely on Medicaid for critical LTSS services, like help with toileting, bathing, and eating.
Faced with major losses of federal funding for their Medicaid programs, states would have limited options. They could plug the funding hole with state revenues, which is unlikely given competing demands on state budgets. States could also cut provider rates, which could lead to significant access problems for beneficiaires because many providers may choose not to serve the Medicaid population. States could also eliminate optional eligibility categories, including some that provide access to LTSS. Finally, states could reduce or eliminate access to optional services, including home and community-based LTSS. Limiting access to needed LTSS for dual eligibles will most surely result in increased use of emergency room and hospital services, ultimately shifting costs to the Medicare program—creating a “pay me now or pay me later” situation for the federal government.
Rather than take millions of dollars out of Medicaid and shift significant costs to Medicare, it is time to have a reasoned conversation about how to improve the program in ways that don’t leave gaping holes in the health care safety net that millions of people and their family caregivers rely on.
[i] States have the option of receiving block grant funding for children and non-elderly, non-disabled adults. Block grants are fixed amounts of money that do not respond to changes in enrollment or program costs.
Lynda Flowers is a Senior Strategic Policy Adviser with the AARP Public Policy Institute, specializing in Medicaid issues, health disparities and public health.
Screening for osteoporosis among high-risk populations, including postmenopausal women, is essential. Women found to have low bone density due to osteoporosis or osteopenia (a precursor to osteoporosis) can reduce their risk of future bone fracture with lifestyle changes and drug therapies. The United States Preventive Services Task Force (USPSTF) recommends that all women ages 65 years and older undergo bone density testing to screen for osteoporosis, and that some younger women receive targeted screening based on individual risk assessments.
In addition, fragility fracture events, when they do occur, represent important opportunities to identify and treat previously undiagnosed osteoporosis in order to prevent subsequent fractures. In fact, the National Committee for Quality Assurance (NCQA) tracks utilization of bone density testing and initiation of osteoporosis pharmacotherapy among women within six months of hip fracture as a key indicator of health system performance.
Unfortunately, these guidelines are often not followed. Despite osteoporosis being a leading cause of disability and loss of independence among older Americans, especially women, this bone disease frequently goes unrecognized and untreated. A colleague and I recently investigated these missed opportunities.
Although poor adherence to evidence-based guidelines for osteoporosis screening and post-fracture management has been previously documented among some populations, few studies have looked at contemporary trends in utilization of these services among a nationwide sample or have considered patient-level predictors of utilization other than age.
Findings show guidelines collect dust
Pam Morin of OptumLabs and I recently published two reports looking at trends and disparities in utilization of osteoporosis-related health services between 2008 and 2014. Our research focused on American women age 50 and older who have medical and prescription drug coverage through private commercial or Medicare Advantage plans. We found that evidence-based guidelines for both the prevention and treatment of osteoporosis are not being widely implemented in practice. Below are some of the key insights from our investigations of osteoporosis screening1 and post-fracture care2:
- Fewer than one in four privately insured women age 65-plus utilized osteoporosis screening for primary prevention during a two-year period, despite USPSTF recommendations for universal routine screening in this age group.
- Between 2008 and 2014, there was almost no improvement in osteoporosis screening among women ages 65-79, and while screening rates increased 38 percent among women 80 and older, they remain unacceptably low in this age group.
- Fewer than 1 in 5 privately insured women age 50-plus receive recommended osteoporosis care within six months of a hip fracture, contrary to guidelines.
- Hip fractures disproportionately occur among women age 80 and older, yet this group is least likely to receive recommended care, thus remaining at unnecessarily high risk for subsequent fracture. In fact, Pam and I previously reported findings3 linking failure to adhere to recommendations for post-fracture care to a significantly higher risk of second hip fracture among women in this age group.
But our research uncovered good news, too:
- Between 2008 and 2014, osteoporosis screening among women 50-64 declined 31 percent — in line with the Choosing Wisely campaign, which highlighted the lack of cost-effectiveness of universal screening among this younger age group.
- Disparities in screening utilization based on sociodemographic characteristics, though apparent, narrowed substantially over time.
- There were no significant disparities in post-fracture care by race/ethnicity, although women of lower socioeconomic status in our cohort were somewhat less likely to receive the recommended services.
- Primary care played a key role. Having any primary care encounters within the six-month period following fracture was the strongest and most consistent predictor of recommended post-fracture services.
For more details, please see the full text of our papers, which are available to the public using the links in this blog post.
- Gillespie CW, Morin PE. Trends and disparities in osteoporosis screening among women in the United States, 2008-2014. American Journal of Medicine. November 2016:(epub ahead of print). doi:10.1016/j.amjmed.2016.10.018. Available online.
- Gillespie CW, Morin PE. Osteoporosis-related health services utilization following first hip fracture among a cohort of privately-insured women in the United States, 2008-2014: An observational study. Journal of Bone and Mineral Research. February 2017:(epub ahead of print). doi:10.1002/jbmr.3079. Available online.
- Gillespie CW, Morin PE. Few Hip Fracture Patients Receive Osteoporosis Care. Washington, DC: AARP Public Policy Institute; 2016. Available online.
Kate Gillespie is an epidemiologist and senior adviser at the AARP Public Policy Institute. She spends much of her time studying health services utilization in order to identify opportunities to improve health care delivery in the United States.
Medicaid is the country’s largest public health insurance program, providing access to needed health care and long-term services and supports (LTSS) to millions of low-income Americans, including more than 17 million children with disabilities, adults with disabilities, and poor seniors.
Right now, states and the federal government share the cost of Medicaid in a way that guarantees services to all who are eligible. Under this arrangement, federal funding increases (or decreases) in response to changes in enrollment, service costs and service use.
That could change, and the implications are significant. Recent proposals would limit federal Medicaid funding by giving states a lump sum of money to cover the cost of their entire program (a block grant), or by giving them a specified amount of money for each enrolled person (a per capita cap). Because both approaches aim to save federal Medicaid dollars, it is likely that neither will adjust over time to reflect increases in cost. This means that the funds will pay for less and less over time and states will need to find ways to deal with the significant loss of federal dollars.
Under these proposals, states would have several choices. They could allocate more tax dollars to Medicaid, which is unlikely, given competing pressures on state budgets for education, law enforcement and other essential functions. They could cut back on the amount of money they pay health care providers, which could cause providers to stop serving the Medicaid population and thus create access problems. They could also stop covering certain groups of people.
Finally, states could limit or eliminate services they are not legally required to provide (also known as optional services) — like home- and community-based services (HCBS). The result would mean that millions of poor seniors and people of all ages living in community settings could lose access to HCBS — like help with dressing, bathing, toileting and eating — to meet their daily needs. These individuals would end up with unmet needs or be forced to rely on costly institutional care (e.g., nursing homes).
The result would be a bad deal for these vulnerable individuals, the vast majority of whom prefer to remain in their homes and communities as long as possible. It would also be a bad deal for states. States pay nearly three times as much per person in institutional settings than they do for each individual receiving LTSS in the community.
Under the current shared financing structure, many states have elected to provide optional services (e.g., HCBS) because they recognize that providing such options best meets the needs and preferences of their residents, including those who require LTSS — not to mention that it can even save them money by keeping people out of institutions. Shifting costs to states through block grants or per capita caps could lead states to cut the critical services and supports that millions of people count on.
Lynda Flowers is a senior strategic policy adviser with the AARP Public Policy Institute, specializing in Medicaid issues, health disparities and public health.