Every year, the Medicare program pays for nearly 500,000 hip and knee replacement surgeries for America’s seniors. At the same time, approximately 25,000 patients undergo procedures to remove and replace a previous artificial joint, sometimes because it failed before the end of its expected useful life. Remarkably, and largely due to inadequacies in the systems that collect data through routine billing, the Medicare program is unable to identify product failures and patient safety problems, or to measure and promote high-value care with medical devices. This problem is serious, but can, and should, be fixed.
A number of recent cases illustrate the benefits of better data for identifying safety issues For example, data from Australia and the United Kingdom show that certain types of metal-on-metal hips were found to fail at much higher rates than conventional implants. And last year, the Food and Drug Administration (FDA)—also relying on data—issued a safety alert about blood clots and stroke risk for two types of left ventricular assist systems used in patients awaiting heart transplants. Similarly, the agency has issued alerts on implanted cardiac defibrillators, surgical mesh, and a device used to fix small holes in patients’ hearts.
Along with causing patient harm, unsafe medical products have financial costs. Medicare spends $21,000 for each revision surgery for a failed joint replacement; the associated rehabilitation and follow-up adds further costs. In fact, the inspector general of the U.S. Department of Health and Human Services—the official auditor of the Medicare program—found that device failures probably cost taxpayers “several billions of dollars on monitoring, hospitalization, surgeries, imaging, post-acute care, and physician costs.”
Yet the Centers for Medicare and Medicaid Services (CMS), which administers the Medicare program, collects no information on the specific types of medical implants that beneficiaries receive. Instead, CMS knows only what procedure occurs, such as a hip replacement or stent insertion.
Medicare could remedy this deficiency in data collection by requiring that the specific device implanted in a patient be recorded on the health insurance claims forms used to reimburse hospitals. Medicare already uses information from the claims forms to help monitor the quality of the care for which it pays. But without this additional piece of data, Medicare can’t do the same for devices.
An opportunity to add device information to claims and benefit Medicare
Only recently has there been a standardized way to identify devices. Regulations finalized in 2013 establish a unique device identifier (UDI) to provide each product with a code corresponding to its make and model. FDA required all implanted devices to have one of these identifiers by September 2015.
While Congress mandated development of the UDI system to improve patient safety, CMS could use this new tool to enhance quality, accountability, and costs within Medicare in a number of ways.
Utilization and outcomes analyses
Researchers, including those at health plans, use Medicare claims data to evaluate issues ranging from mental health and recurrences of cancer to hospital infections and dental care. Furthermore, private health plans have established subsidiaries devoted exclusively to developing evidence that supports quality, safety, and value. And Congress passed legislation in 2015 expanding the use of claims data by qualified organizations.
CMS recently launched an unprecedented initiative to release claims information to patients, medical product manufacturers, clinicians, and researchers to improve care, reduce costs, and facilitate innovation. The agency argued that these data—including on the most widely prescribed drugs reimbursed through Medicare—are an “essential ingredient” to reduce costs and improve care. Earlier this year, when expanding access to Medicare claims, the acting CMS administrator indicated that these data would “make it easier for stakeholders throughout the healthcare system to make smarter and more informed healthcare decisions.”
Adding UDI to the claims form would let CMS detect device failures and inform coverage and payment decisions for procedures involving devices, much as the agency does for drugs, surgeries, and other procedures.
Enhancements to alternative payment models
In addition to significantly influencing quality of care, better information on device performance is essential to the implementation of alternative payment models. CMS has stated that it intends to shift 90 percent of traditional Medicare payments to value-based models by 2018. The agency has already launched the Comprehensive Care for Joint Replacement model, an initiative involving implants, in which hospitals are responsible for costs and quality of care for 90 days after patient discharge.
While this gives hospitals and health care systems an incentive to detect device problems on their own, the program could also encourage the use of lower-cost implants — even if those products may not be the most clinically appropriate or have shorter-than-expected lifespans. Only the consolidated Medicare data are likely to include enough patients—followed across time and different care settings—to perform rigorous analyses of the devices needed to make the best use of value-based models and determine that the most appropriate products are being used.
Reduction of costs when devices fail
Under existing Medicare policy, hospitals must seek financial credits from device manufacturers when products fail prematurely. CMS recovers the amount of those credits by reducing payments to the hospital. This policy exists so that the manufacturer—not Medicare—pays for device failures and recalls.
However, the inspector general who oversees the Medicare program has found that hospitals often neglect to request the credit from the manufacturer or report that payment to CMS. In a small, targeted investigation, the inspector general found that approximately 14 percent of claims related to cardiac implant procedures in 2011 did not include a manufacturer credit that should have been reported. Given the potential costs to Medicare of both unreported credits and associated costs due to rehabilitation and complications, the inspector general’s office indicated that it is expanding its investigation into the financial ramifications to Medicare of failed medical implants.
Collecting UDI data would allow CMS to proactively analyze its claims data and notify hospitals when they should request credits for failed implants, thus reducing taxpayer costs associated with faulty products.
While making the UDI available in claims would offer these enhancements to the Medicare program, it would also offer similar benefits to private health plans, accountable care organizations, and health care providers generally. Yet, because the same claims form is used across providers and health plans, private sector organizations cannot unilaterally add UDI to claims and implement innovations that could improve safety and quality; the change must be made to the standard claims form used by CMS and other payers.
Best opportunities to improve the device-specific data that Medicare can receive and use
The claims form is the best of several potential methods hospitals could use to transmit information to health plans on implanted devices. Providers and health plans already use the same claims transactions, meaning these data could be aggregated within CMS and across health plans. Because providers already use claims forms to give information—such as which drugs are prescribed—to CMS and private health plans, the forms are an existing and ubiquitous way for CMS and hospitals to communicate about patient care.
Alternative methods of transmitting UDI data to CMS, such as using new registries or claims attachments, would be less efficient than using the existing claims forms. New registries would be difficult to establish for many types of implanted devices, in large part because of significant costs associated with starting and running a registry. The claims attachment is effectively an extract from the patient’s medical record that travels with, but is distinct from, the claims form.
However, because attachments are not standardized, the information they contain cannot currently be aggregated and analyzed, rendering them essentially useless for monitoring device quality and safety on a large scale. Although Congress has required CMS to standardize the claims attachment, it is not clear when the agency will act. Moreover, experts testifying at a recent federal hearing indicated that once the attachment is standardized, attachment data may be unstructured — in other words, collected and organized in a way that cannot be readily accessed. Using unstructured data would significantly hamper the ability of health plans to integrate UDI information into their databases for research (Note 1). Finally, CMS has not indicated whether attachment data would be as accessible to researchers as claims data currently are.
Recognizing the value of UDI information, many organizations have already urged the incorporation of UDI into claims—including large health plans, such as Aetna, and clinical and provider organizations such as Mercy, Intermountain Healthcare, Geisinger Health System, Duke Medicine, the American College of Cardiology, the Society of Thoracic Surgeons, and the American Academy of Orthopaedic Surgeons (Note 2). However, because the same claims form is used by all providers and payers, these organizations cannot take advantage of UDI unless the form is updated for everyone — including CMS.
Next steps for updating the claims form to enhance Medicare data
Both the organization that maintains the claim form—the Accredited Standards Committee X12—and Congress can take action to incorporate UDI into the claims form as part of the next scheduled update, which is likely to take effect around 2021. The Accredited Standards Committee X12 is composed primarily of hospital and health plan billing administrators and includes representatives from CMS.
In 2014, The Pew Charitable Trusts petitioned the committee to support the transmission of UDI to health plans, but the committee has not publicly explained how it will meet Pew’s request. In Congress, Republicans and Democrats in both houses have expressed support for adding device-specific information to the claims form. At this time, only legislation to require the addition of UDI to claims forms would ensure that this data would be available to further our understanding of device performance and improve patient safety.
With Medicare spending billions of dollars annually on joint replacement procedures alone, the program’s administrators and taxpayers should, at the very least, know which brands of products are being purchased and implanted. Making this information available will help improve the quality of implanted devices, reduce costs to the taxpayer, and improve patient outcomes. Until UDI is integrated into claims, CMS—and Congress—will be unable to effectively administer and oversee health care for American seniors who rely on medical devices.
Note 1
Josh Rising, letter to the National Committee on Vital and Health Statistics, March 1, 2016.
Note 2
Deborah Templeton, letter to Accredited Standards Committee X12, June 3, 2014; Vance Moore and Joseph Drozda, letter to Accredited Standards Committee X12, April 3, 2014; William Fulkerson, letter to Secretary Sylvia Mathews Burwell, July 8, 2015; Sign-on letter to Chairman Kevin Brady, June 11, 2015.
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