Kaiser Health News Oct 06, 2010

Medicare reimbursement rates should be based on how cost effective the treatment is for a particular illness, according to a piece by two policy experts in the October edition of Health Affairs.

"Steven Pearson and Peter Bach also suggest that Medicare could hold off for up to three years on reviewing any new service that is added to the benefit package for which there is no evidence that it is as good as current treatment," CQ Healthbeat reports. "Pearson is the founder and president of the Institute for Clinical and Economic Review at Massachusetts General Hospital's Institute for Technology Assessment, which evaluates the comparative effectiveness of medical interventions. Bach, a former top adviser for the Centers for Medicare and Medicaid Services, is a pulmonary and critical care physician." Because of the need to control the growth in Medicare spending, "it seems inevitable that comparative effectiveness research will be considered an important potential tool in this effort," they say.

"The pair says that even though Medicare does not typically use comparative effectiveness research now in deciding whether to cover a treatment, the agency should incorporate the work. They propose basing payments for a new treatment on whether it is superior, comparable, or inferior to the alternatives. The higher the treatment is rated, the more money Medicare would pay for it. … The suggestions for tying Medicare rates to comparative effectiveness research comes despite restrictions in the health care law about how Medicare can use research funded" (Adams, 10/5).