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Health Care Costs an Important Factor in Evidence-Based Medicine

By Greg Vadala, CQ Staff

June 19, 2007 -- Health care costs must be factored into medical decision-making in order to save money and improve quality, according to evidence-based medicine experts in a discussion posted Tuesday on the Web site of the health policy journal Health Affairs.

During a wide-ranging conversation, Dr. Sean Tunis, founder and director of the Center for Medical Technology and Policy in California, and Dr. David Eddy, founder and medical director of Colorado-based Archimedes Inc., discussed how the health care system is not required to take economic considerations into account when making decisions about medical coverage and about the consequences for the public—specifically a lower quality of health care—if such costs continue to be ignored.

"I believe that our failure to explicitly consider costs in medical decision making is the single greatest flaw in our health care system," Eddy said.

By not addressing costs, Eddy said, quality is being diminished and financial resources are being wasted. The result is a system that is too expensive and that benefits those whose incomes are based on costs, such as cardiologists and device manufacturers, he said.

Tunis, who was the former chief medical officer at the Centers for Medicare and Medicaid Services (CMS), said in an e-mail that one of the obstacles to instituting cost consideration is that there is a reluctance to have a serious policy discussion about economics and health care decisions. The reason, he said, is that policy makers fear they will be accused of trying to "ration" care.

"My view is that there will continue to be downward pressures on health care spending, and they will either be done with information about value or they will be insensitive to information about value, and I think that the former is preferable from a public health perspective," Tunis said.

Although there is no law that prohibits Medicare or Medicaid from considering health care costs in coverage or payment decisions, Tunis said Medicare has a longstanding practice of not explicitly considering health care costs in coverage decisions. Because of this, he said, it is likely that a statutory or regulatory change would be necessary in order for the program to begin to do so.

However, there are instances when consideration of health care costs does play a part in coverage decisions, Tunis said. He pointed to a recent Medicare decision to expand coverage for implantable cardioverter-defibrillators at a cost of more than a billion dollars per year as an example of how health care costs, even when not explicitly considered, play a less visible role in coverage decisions.

Tunis discussed how CMS reconsidered its coverage policy for implantable cardioverter-defibrillators (ICDs) following the release of a study showing that many additional beneficiaries might benefit from ICDs. CMS expanded it coverage, but not to the extent previously recommended by a joint committee of the American College of Cardiology and American Heart Association.

"The potential impact on Medicare spending or cost-effectiveness of ICDs was really not discussed much within the agency or within the Department of Health and Human Services when the decision was made," Tunis said.

Tunis said he and others at CMS understood that ICDs were expensive and that there were many additional people who might be eligible for an ICD, which in turn added up to a large amount of money.

"I think that our implicit level of concern about costs was different and perhaps influenced the analysis of evidence and the conclusions drawn by each organization," Tunis said.

He and Eddy agreed that pay-for-performance programs and the public reporting of quality measures will not save money without consideration of health care costs. To save money, Eddy said, performance measures must be based on value and not just on the evidence of benefit.

Congressional Budget Office Director Peter R. Orszag is now looking to evidence-based medicine as a way to mitigate rising health costs. During an industry conference last month, Orszag outlined his concerns about Medicare and Medicaid spending and the lack of resources dedicated to cost analysis. He proposed the creation of a new research entity that would use evidence-based medicine to control escalating health care costs, similar to the United Kingdom's National Institute for Health and Clinical Excellence (NICE).

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