Financial

Payment reform puts medical-device industry on the defensive

By Sabriya Rice

Posted: October 7, 2014 – 7:45 am ET

Medical technology companies are warning that burgeoning pay-for-performance and risk-based reimbursement models will motivate providers to block access to clinically important innovations.

Healthcare economists and quality experts, though, counter that the new models appropriately put the onus on manufacturers to prove their products are worth the cost.

The tension was the centerpiece of a news conference held by the leaders of AdvaMed, the industry’s trade group, at the start of its annual conference in Chicago Monday.

“We have to ensure these new payment models include safeguards to protect patients from unintended consequences,”AdvaMed CEO Stephen Ubl said. Ubl, flanked by AdvaMed Chairman and Covidien CEO Joe Almedia, said too many of the contracts put too much emphasis on cost targets over quality benchmarks.

New payment models have proliferated quickly in recently years, nurtured by provisions of the Patient Protection and Affordable Care Act. More than 360 accountable care organizations have signed contracts with Medicare, agreeing to strive for cost and quality targets to earn some of the savings achieved (or in some cases return money to the government if they fail). Many providers are striking similar agreements with private payers—Blue Cross and Blue Shield Association recently said that it’s now paying one in five dollars under incentive-based contracts—or assuming financial risk with their own insurance products.

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Josh Sandberg

Josh Sandberg is the President of Ortho Sales Partners and Partner for The De Angelis Group. He also serves as Co-Founder and Editor of OrthoSpineNews.

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