Spine Surgery Coverage for New Technology Post Healthcare Reform: Q&A With Dr. Gunnar Andersson of Midwest Orthopaedics at Rush FeaturedWritten by Laura Miller | February 21, 2013
Spine Surgery has rapidly advanced over the past few decades to include many new minimally invasive devices and procedures, revolutionizing the field. However, not all advances have been reimbursed by insurance companies, and device companies find continued challenges in bringing new ideas to the market.
Gunnar Andersson, MD, chairman emeritus of the department of orthopedic surgery at Rush University Medical Center in Chicago, is a Board Member of the International Society for the Advancement of Spine Surgery and is vice chair of its patient advocacy group, International Advocates for Spine Patients. He discusses the primary issues facing new innovation to gain clearance from the Food and Drug Administration and reimbursement from insurance companies, post healthcare reform.
Q: Where does the relationship between spine surgeons and the device industry stand today?
Dr. Gunnar Andersson: The relationship between the industry and the physician community has been under considerable scrutiny in recent years. In fact, many of the companies have paid large penalties and accepted review from independent representatives of the government although they haven't agreed they did anything illegal. This happened widely in the joint industry, but the spine industry hasn't been spared.
I think all parties agree that relationships between surgeons and device companies are important because physicians are the ones who identify problems and weaknesses and opportunites for improvement. Physicians also have unique knowledge about surgical techniques and instrumentation. On the other hand, the surgeons can't solve the problems alone; they need support from industry to develop ideas and produce new products and to advance new products through the regulatory process. We need each other, but we also need to manage conflicts of interest appropriately.
Q: There are several new regulations from the FDA with healthcare reform. How has this process affected innovation?
GA: It has generally become more difficult and expensive to obtain FDA approval. The bar has been raised. Further, FDA approval is no longer a guarantee for commercialization. It used to be that when products were approved by the Food and Drug Administration they were also reimbursed by the payor community; that is no longer the case. In many instances, not only do we have to provide sufficient information for the Food and Drug Administration to approve a new technology, but we also need to have additional scientific information about the efficacy of the product for third party payors to reimburse.
One stumbling block to reimbursement has been the ability for a company to get a CPT code that can be attached to the use of a new product. In some cases the AMA, which is in charge of the CPT process, has approached products in the Category III group, which is considered experimental and therefore often not reimbursed. To move from Category III to Category I you must collect additional information and convince the CPT committee a change is appropriate. It's a long and cumbersome road and we at ISASS want to do what we can to make the process as simple and fair as possible in the interest of our patients.
Q: What will it take for device companies and surgeons to meet FDA approval and receive adequate reimbursement in the future?
GA: The criteria to become FDA approved are different from the criteria to be reimbursed, but both require high quality clinical research. The FDA does not by statute require evidence of superiority (although sometimes they will want a trail to be a superiority trial), but they do require proof that a product is effective and that it is safe, meaning that probably benefits outweigh probable risk. The third party payor community on the other hand has comparative effectiveness and superiority requirements. This is a problem for industries who even though they have an FDA approved products cannot introduce the product to the market because it is not reimbursed.
If you are a small company it may not be possible to go back to your investors and ask for additional funding to run another study, and without the cash flow there is no other source of funding for a superiority trial, which may cost $10 million to 20 million. It is an unfortunate circle because there is no question that many existing products can be improved on and there are many new ideas, which never become reality because of the cost.
Game changing technology is even more difficult to introduce because it often raises the cost to third party payors who are reluctant to pay a premium for something that already can be accomplished with a less expensive solution.
There are some good examples, such as the lateral lumbar interbody fusion procedure, which was a game-changer and has received wide acceptance for reimbursement by the majority of payors. There are however, many examples of terrific ideas, which never made it to the patient.
Q: How are insurance companies reacting to the increased costs for medical devices? What are their primary concerns?
GA: There is no question that technology is a major cost driver in healthcare. Insurance companies are concerned with at least two things when looking at new technology: the increase in cost for management of a disease which is already managed by other methods and an increased use of a procedure in patients who actually marginally qualify. In both cases there is an increase in cost which needs to be justified in terms of benefit to the patient community they insure.
Insurance companies do technology assessments when new devices arrive on the market and they should. It's no secret that we are gradually getting to the point where we can't allow healthcare costs to grow further. At the same time new products have to be given an opportunity in the best of our patients.
I have my own ideas about how to address the problems discussed. FDA approval is an important step for a product because that's the method by which the product is determined to be reasonably safe and efficacious. Once FDA approved, the third party payors should give the product a chance, but at the same time industry cannot expect to charge a high premium for new technology that replaces existing technology until the new technology has documented its value, at which time the market will decide. These products should not be considered experimental and should receive a temporary code. If a new product is better or safer or easier to use than the existing alternative, it will be successful.
Q: How is ISASS partnering with the industry to overcome reimbursement issues?
GA: So we will argue that introducing a new product to the market at the same price as the technology you are replacing does not cover the cost of development, regulatory approvals, legal costs, intellectual property costs and marketing, but it allows the product to be tested. There are many products that aren't available in the US because companies haven't been able to raise money to get them approved, while they are successfully used outside the US.
Additionally, some of the venture capital in the area has dried up because the investment community is looking at the US market and concluding that if you cannot get a product to the market and reimbursed, it does not make any difference how good the idea is. According to some sources, taking a product to the European market is $5 million to $10 million while the cost to obtain FDA approval could be $50 million to $75 million.
Q: What are your goals for proactively approaching coverage changes in the future?
GA: We strongly believe in having an open dialogue with industry and listening to their concerns. We want to present the physician community's views on new technology and technological development. We want to aid in obtaining appropriate CPT codes and reimbursement for products our members consider essential to optimal patient care. We consider it important to create access to new technology so surgeons can determine for themselves whether they think it is beneficial or not once it has been appropriately approved by the FDA. I think we need to be realistic in our expectations; major changes will likely not occur in reimbursement, but we would like to work with all involved parties in developing reasonable standards of accepting new technology and help develop better guidelines than the ones that currently exist.
ISASS is a patient-centered organization. Our goal is to provide the best possible outcome for patients with spinal disorders. We strongly believe that current treatment can be improved on and that there is an important place for new developments and new technology. Pain relief and improved function should go hand in hand and results should be consistent and durable. Further, the surgical procedure should be safe and cause the least possible pain and suffering to our patients. We also strongly believe that our members should have access to the best possible tools to manage their patients.
More Articles on Spine Surgery:
8 Payor Trends for Spine Surgery to Watch
7 Spine Surgeons With New Leadership Positions
5 Observations on Spine Surgery Heading to Outpatient Procedures
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