Medicare Coverage, Medicare Costs, and Medical Technology

Abstract

One possible approach to containing Medicare costs involves explicit changes in Medicare's coverage policy with respect to medical technology. This paper first describes the development and diffusion of medical technology in general and then describes how technologies are identified, assessed, and approved for payment by Medicare. Currently, cost is neither a criterion nor an explicit issue in coverage decisions, although coverage policy is an integral part of payment policy. A combination of policies to reduce the rates of adoption and use of certain technologies is needed--including cost considerations in technology assessments for coverage decisions, limiting diffusion of technology to certain providers and sites, limiting utilization to certain indications, and tightening administrative processes. Finally, the interaction between coverage policy and DRG payment needs to be explored more thoroughly.

Pediatric Neurosurgery: Guidelines and Cost Containment

“…Technological advances in medicine have been both an advantage and a burden to physicians, patients, health care planners and third party payers [5]. The final mar ginal increase in diagnostic accuracy may come at an extraordinarily high monetary cost.…”

Coverage and Reimbursement for Heart Transplantation

“…Medicare coverage policy has not yet reached a steady state because it is developed and implemented in a decentralized manner. National coverage policy has developed largely as a result of questions from individual contractors about whether they should pay for specific technologies, and, as noted by the Office of Technology Assessment, HCFA's coverage instructions have no standing in law or regulation, so each individual contractor's compliance is essentially voluntary (42).…”

“…It is readily apparent that there is considerable variation among Medicare contractors in terms of their coverage policies (42). These are largely attributable to the fact that HCFA coverage determinations traditionally have been based on what is considered "reasonable and necessary" for the care of the patient.…”

Analysis of The National Institutes of Health Medicare Coverage Assessment

“…Part A of the Medicare program primarily covers hospitalrelated expenditures, and Part B concentrates on outpatient services. Because benefits are provided under very broad categories, decisions on whether specific medical technologies should be covered by Medicare have required individual technology assessment (7). Coverage decisions at the national level are made at the central office of the Health Care Financing Administration (HCFA).…”