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Summary
Medical care has changed dramatically
in recent decades. It has become more am-
bitious and much more effective, but it
also has become more costly. The cost both
strains our financial resources and attracts
attention to other aspects of medical
care- safety, efficacy, quality, and ethical
implications. All these considerations
make it increasingly necessary that we be
able to choose knowledgeably the health
care technologies to be made available and
the conditions of availability.
One might hope that such selection pro-
cesses would be guided by an orderly, well-
conceived, unified system of testing and as-
sessing the new, comparing it with the old,
and moving forward as warranted by
valid, reliable, evaluative information. At
present that hope is only partially fulfilled.
The nation requires a systematic ap-
proach for technology assessment. We
need to have a strategy and an organiza-
tion for setting priorities. Given the priori-
ties, we need mechanisms for actually
making the assessments and implementing
the findings. And finally, we need a
method for paying for many of the needed
assessments. As with any large-scale tech-
nological enterprise, we need to maintain a
strong body of professional personnel to
carry out the assessments, and they must be
encouraged to conduct work of high qual-
ity and develop new techniques as re-
quired. Although some parts of this overall
process are in place and are contributing
well to the health of Americans, the system
as a whole has major gaps and deficiencies.
The questions of who should carry out
assessments, how they should be done, and
who should pay for them are complicated
and political and have no simple answers.
Consequently, a committee of the Institute
of Medicine was established to study these
issues. This report addresses the present
state of the assessment of medical technol-
ogy; gives attention to processes, problems,
interested parties, and successes and fail-
ures; and finally points to some needs and
opportunities for improving the present
system of medical technology assessment.
Medical technology is a term that em-
braces a wide range of activities. For con-
sistency we shall follow the usage of the
Congress's Office of Technology Assess-
ment (OTA), which employs the term to
refer to "techniques, drugs, equipment,
1
OCR for page 2
2
and procedures used by health-care profes-
sionals in delivering medical care to indi-
viduals, and the systems within which such
care is delivered."
We shall use the term assessment of a
medical technology to denote any process
of examining and reporting properties of a
medical technology used in health care,
such as safety, efficacy, feasibility, and in-
dications for use, cost, and cost-effective-
ness, as well as social, economic, and ethi-
cal consequences, whether intended or
unintended.
ASSESSING MEDICAL TECHNOLOGY
dical problems and technologies. Each
consensus was widely reported. The Amer-
ican College of Cardiology, the American
Hospital Association, the American Col-
lege of Physicians, and the American Medi-
cal Association are among those profes-
sional and provider associations that have
instituted new assessment programs. The
independent medical device evaluator
ECRI (formerly the Emergency Care Re-
search Institute) has an implant registry
and a device-experience reporting network
and is expanding its assessment services
Technology assessment ideally would be with new publications. More drug compa-
comprehensive and include evaluation not
only of the immediate results of the tech-
nology but also of its long-term conse-
quences. A comprehensive assessment of a
medical technology after assessment of
its immediate effects- may also include an
appraisal of problems of personnel training
and licensure, new capital expenditures for
equipment and buildings, and possible
consequences for the health insurance in-
dustry and the social security system.
Technology assessment provides a form of
policy analysis that includes as potential
components the narrower approaches to
technology evaluation. Most assessments
stop with a partial effort. Not all technolo-
gies warrant the full assessment, nor is it
feasible to provide comprehensive assess-
ments for all technologies. As we shall see,
various participants in the health care sys-
tem find different properties to be salient.
THE SCOPE OF U.S. MEDICAL
TECHNOLOGY ASSESSMENT
Heightened interest in medical technol-
ogy assessment has prompted a wide vari-
ety of responses in recent years as one or
another organization tries to meet its needs
for assessment information. The scope of
these responses is given in Chapter 2. Since
1977, the National Institutes of Health
(NIH) have conducted 50 consensus devel-
opment conferences on a variety of biome-
nies are instituting permanent drug sur-
veillance and cost analysis programs.
Many organizations arrange for the ex-
change of assessment information. Blue
Cross and Blue Shield Association and
other major insurers increasingly seek assis-
tance from medical associations such as the
American College of Physicians, the Amer-
ican College of Radiology, and the Ameri-
can College of Surgeons in formulating
coverage policies. At congressional re-
quest, the Office of Technology Assessment
has in recent years produced more than 60
reports and case studies of medical technol-
ogy that have been widely circulated and
cited throughout government, industry,
and the public. The Department of Health
and Human Services (DHHS), NIH, and
the Veterans Administration are among
those agencies that have instituted coordi-
nating committees to enhance the ex-
change of information about technology
assessment and to make recommendations
regarding their assessment policies. The
U.S. General Accounting Office issues an
increasing number of reports touching on
technology assessment in federal pro-
grams. The Stevenson-Wvdler Technolo~v
Innovation Act of 1980 (P.L. 96-480) re-
quires DHHS to report annually to the De-
partment of Commerce regarding its
health technology assessment and transfer
activities.
But the recent flurry of attention to as-
~J
OCR for page 3
SUMMAR Y
sessment has not been accompanied by a
fitting increase in new assessment informa-
tion. Notwithstanding the national invest-
ment in health care and the diversity and
scope of assessment needs, current assess-
ment activities are inconsistent in quality
and are poorly funded. Organizations are
scrambling for limited available informa-
tion and are relying heavily upon expert
opinion to fill wide gaps in the data. The
bulk of all resources allocated for technol-
ogy assessment is in premarketing tests of
drugs for safety and efficacy. Although
current premarketing assessment of drugs
and devices appears adequate, insufficient
attention is given to postmarketing studies.
Even less attention is paid to evaluating
medical and surgical procedures for safety
and effectiveness. Among all technologies,
existing assessment activities are concen-
trated on the new technologies and not on
those that are widely accepted and possibly
outmoded. Assessments of cost-effective-
ness and cost-benefit are few; assessments
for ethical, legal, and other social implica-
tions are rare.
Varieties and Expense of Assessment
Medical technology assessment can be
described according to many different as-
pects, including the type of technology, its
application, the stage of diffusion, the con-
cerns of assessment, the methods of assess-
ment, and the assessors. Various combina-
tions of these aspects account for the great
diversity among assessment programs.
Some programs devote most of their assess-
ment resources to one type of technology,
such as ECRI for medical devices; others
may address a variety of technologies, as
does the congressional Office of Technol-
ogy Assessment.
The total dollar level of effort in technol-
ogy assessment including clinical trials,
health services research, and synthesis ac-
tivities such as consensus development con-
ferences, state-of-the-art workshops, and
3
formulation of coverage decisions is
small compared with the national effort in
research and development (R&D) of tech-
nologies. In fact, assessment spending can
be lost in the rounding error for national
health expenditures, as is evident in the rel-
ative magnitudes of the following esti-
mates for 1984.
National Health Care
Health R&D
All Health Technology
Assessment
Clinical trials
Health services research
Other technology
assessment
$384.3 billion
1 1.8 billion
1.3 billion
1.1 billion
under 0.2 billion
under 0.05 billion
Federal Government The federal gov-
ernment conducts and supports medical
technology assessment to serve its functions
in biomedical research, health services re-
search, health care delivery, payment, reg-
ulation, legislation, and defense. Federal
government expenditures for medical tech-
nology assessment were approximately
$450 million in 1984. That included $280
million for clinical trials (primarily NIH
support), roughly $100 million-150 mil-
lion for health services research, and $30
million for other assessment activities, in-
cluding consensus development confer-
ences and other syntheses and special stud-
ies by many agencies. Federal expenditures
for medical technology assessment in-
cluding health services research expendi-
tures- constitute about 7 percent of fed-
eral health R&D expenditures and 0.4 per-
cent of federal health care expenditures.
Drug Industry Data are lacking for di-
rect estimates of drug industry expendi-
tures devoted to technology assessment
activities such as clinical trials and post-
marketing surveillance; company budgets
do not generally show line items for such
activities. However, indirect estimates can
be made from survey data.
Based on a recent survey of its members,
the Pharmaceutical Manufacturers Associ-
OCR for page 4
4
ation (PMA) estimated that clinical evalua-
tion (including controlled and uncon-
trolled trials in phases I, II, and III and in
phase IV postmarketing studies) accounts
for 23.1 percent of R&D expenditures. Ad-
justing for non-PMA firms that may devote
a smaller proportion of their R&D dollar to
clinical trials would mean that $700 mil-
lion-$750 million of the $3.3 billion hu-
man-use drug R&D in 1984 was devoted to
clinical evaluation, including postmarket-
ing studies. (Members of the association
number about 130 of the more than 1,000
U.S. drug companies and primarily are the
larger, brand name drug firms, accounting
for more than 90 percent of total U. S. drug
sales.) A rough estimate of expenditures for
postmarketing studies is $100 million per
year, most of which is spent by industry.
Premarketing assessment of drugs for
safety and efficacy in the United States,
regulated by the Food and Drug Adminis-
tration (FDA), is perhaps the most com-
prehensive and well-funded area of medi-
cal technology assessment in the world
today.
Medical Device Industry Medical de-
vice industry expenditures for clinical eval-
uation (Chapter 2) were probably on the
order of $35 million in 1984, or about 4
percent of the industry's R&D expendi-
tures. At least half of this amount may be
accounted for by clinical trial expenditures
associated with devices submitted for FDA
premarket approval application (PMAA).
Clinical evaluation costs other than those
for devices submitted under PMAA include
costs for devices tested under investiga-
tional device exemptions but not carried
through the entire premarket approval
process and for those few thousand devices
that annually bypass the PMAA process be-
cause they are substantially equivalent to
devices already on the market. However,
few of these entail costly, if any, clinical
evaluation.
ASSESSING MEDICAL TECHNOLOGY
PMAA is a comparatively new and infre-
quently used regulatory pathway. Based
on an FDA survey of 20 manufacturers of
various types of medical devices, the cost of
bringing a new device to market through
the PMAA process including device de-
velopment, clinical trials, manufacturing
and controls, application preparation, and
other activities conducted during review-
ranges from $370,000 to $1,02S,OOO.
Medical device assessment has yet to
emerge from a shakedown period, partly
because of the relative newness of the 1976
Medical Device Amendments (as com-
pared with the 1962 amendments to the
Food, Drug, and Cosmetic Act) and the
great diversity of devices subject to regula-
tion. Many thousands of devices from
implantable, programmable, dual-cham-
ber cardiac pacemakers and diagnostic re-
agents using monoclonal antibodies to
snakebite kits, ice bags, and bed boards—
must be properly classified and regulated
so as to protect consumers and to be re-
sponsive to provider needs and manufac-
turers' concerns.
Rigorous clinical evaluation of medical
devices largely is confined to the final regu-
latory step of premarket approval. As is the
case for drugs, resources for device assess-
ment are limited and too narrowly fo-
cused. Device assessment rarely extends
beyond safety and efficacy to matters of
cost-effectiveness and broader social impli-
cations and devotes few resources to post-
marketing surveillance. ECRI and, to a
lesser extent, the American Hospital Asso-
ciation are among the few organizations
that provide comparative information on
technical performance, cost, hazard re-
ports, and other valuable information for
device procurement and maintenance.
Other Private Sector Assessment Activi-
ties There is widespread and increasing
interest in technology assessment among
organizations in the private sector, in addi-
tion to those in the medical products indus-
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SUMMAR Y
try. Private insurers, medical associations,
professional and industry associations, hos-
pital corporations and other major ~ro-
viders, policy institutes, and voluntary
health agencies conduct and sponsor assess-
ment activities to suit their varied needs.
These include making coverage and reim-
bursement policies and procurement deci-
sions, responding to practitioner inquiries,
setting voluntary standards for manufac-
turing and practice, providing guidance to
regulatory agencies and other policy-
makers, and improving medical practice
and service delivery.
Despite this heightened interest, current
private sector activity remains limited in
several important ways. Other than ECRI,
none of these organizations has as its pri-
mary purpose the assessment of medical
technologies. Few of the evaluations un-
dertaken in these private efforts involve
original work that generates primary eval-
uative data. The scope of evaluations is
limited" most evaluations are concerned
only with matters of safety and effective-
ness and do not move further to examine
cost-benefit and cost-effectiveness or ethi-
cal, legal, and other broad social issues.
Safety and effectiveness are addressed only
indirectly in some evaluations; payers gen-
erally rely on a determination of a technol-
ogy's diffusion, i.e., whether it is standard
practice rather than experimental or inves-
tigative, as an indicant of a physician's
judgment of its safety and effectiveness.
The predominant assessment methods are
literature reviews and consultation with
experts. Assessments are generally con-
ducted on a reactive, ad hoc basis rather
than by systematic review and nrioritv .~et-
ting. Evaluation activity by insurers
largely is to assist the insurance claims pro-
cess; assessments by medical associations
generally are conducted in response to in-
quiries by third-party payers and practi-
tioners. The magnitude of expenditures
made by providers and insurers for the ex-
traordinarily varied array of new, emerg-
5
ing, accepted, and outmoded health care
services makes associated efforts in tech-
nology assessment appear small.
Lags in Assessment
The total of nearly $400 billion spent in
1984 for health care tends to distract atten-
tion from the relatively small amount spent
for R&D to support the health enterprise (3
percent of the total) and the nearly vanish-
ing amount spent for technology assess-
ment to substantiate the R&D (0.3 per-
cent). It is difficult to determine whether
that proportion of investment in medical
technology assessment is in rough agree-
ment with the spending by other sectors of
industry for such assessments because esti-
mates of expenditures for that purpose are
nearly impossible to assemble with confi-
dence. However, figures are available for
R&D investment by many enterprises, and
R&D expenditures in the health field are
low compared with those in other technol-
ogy-intensive industries.
A particular shortcoming is seen in clini-
cal trials for medical and surgical proce-
dures. OTA estimates that randomized
clinical trials have been applied to 10 or 20
percent of medical practices. The Office of
Health Technology Assessment (OHTA)
has had to base its recommendations to the
Health Care Financing Administration
(HCFA) regarding coverage issues on evi-
dence that is sorely lacking in rigorous ex-
perimental findings. Of the 26 full-scale
assessments conducted by OHTA for
HCFA in 1982, results from randomized
clinical trials were available for only 2.
Current NIH support for clinical trials (ap-
proximately $276 million in 1985) is pro-
vided for only a portion of those clinical
trials that have been identified as being
worthy of support.
Less than $50 million is spent on tech-
nology assessment devoted to the synthesis
and interpretation of primary evaluation
data for determining how best to apply in
OCR for page 6
6
practice new and currently available tech-
nologies. Examples are consensus develop-
ment conferences, coverage decisions by
third-party payers, medical and industry
association assessment programs, congres-
sional studies, and studies by nonprofit
policy institutes.
Recommendations
The descriptions in Chapter 2 of what is,
and is not, being accomplished in a wide
variety of medical technology assessment
efforts in the United States prompted the
study committee to make the following
recommendations (in italics).
· Greater commitment in medical tech-
nology assessment should be given to (1J
the generation of primary data on safety
and efficacy of medical and surgical proce-
dures, (2) the determination of cost-effec-
tiveness and public policy implications of
those procedures, and (3) postmarketing
surveillance of drugs and medical devices.
· Create a central clearinghouse to
monitor, synthesize, and disseminate in-
formation about all medical technology as-
sessment. Several organizations already
serve that function, but each only for a cer-
tain constituency, such as pharmaceutical
manufacturers, hospitals, or medical de-
vice users, and there is little information
flow between organizations.
· Increase funding for medical technol-
ogy assessment by $300 million in 1984 dol-
lars primarily by instituting new contribu-
tionsfrom payers and providers for health
care. This would be phased in over a 10-
year period. The increased support should
come from the health dollar because
groups such as the Health Care Financing
Administration and private health insur-
ance and service plans, as well as provider
groups, would see the first savings from
improved technology.
ASSESSING MEDICAL TECHNOLOGY
METHODS OF MEDICAL
TECHNOLOGY ASSESSMENT
Technology assessment offers the essen-
tial bridge between basic research and de-
velopment and prudent practice 1 applica-
tion of medical technology. Fortunately,
we have a substantial body of methods that
can be applied to the various tasks of assess-
ment, and their availability makes possible
the acceptance, modification, or rejection
of new technologies on a rational basis.
That rationality, however, depends on
many factors that go well beyond safety
and efficacy, including economics, ethics,
preferences of patients, education of physi-
cians, and diffusion of information. The
methods that have been developed can
take into account most of these factors, al-
though combining the results from exami-
nation of different factors is a major task
and one that is far from settled or solved.
The existence of these assessment methods
provides a foundation for building a sys-
tem of technology assessment for the na-
tion.
Few people are acquainted with more
than a few of the methods used for assess-
ment. Usually investigators are acquainted
only with the methods most frequently
used in their own specialties. Conse-
quently, Chapter 3 provides descriptions of
the more widely used assessment methods
and what they are most useful for study-
ing.
For the purpose of evaluation through
data acquisition, randomized clinical trials
are highly regarded. For generating hy-
potheses, case studies and the series of cases
have special value. Registries and data ba-
ses sometimes produce hypotheses, some-
times help to evaluate them, and some-
times aid directly in the treatment of
patients. Sample surveys excel in describ-
ing collections of patients, health workers,
transactions, and institutions.
Epidemiological and surveillance stud-
es are well adapted to identifying rare
it
OCR for page 7
SUMMAR Y
events that may be caused by the adverse
effects of a technology.
Quantitative synthesis and group judg-
ment methods give us ways to summarize
current states of knowledge and bridge the
gaps among research findings. Similarly,
cost-effectiveness and cost-benefit analyses
offer ways of introducing costs and eco-
nomics into these assessments. Modeling is
a way to simulate the future and still in-
clude complicated features of the real life
process to reveal what variables or param-
eters seem to produce the more substantial
effects. When backed with strong empiri-
cal investigations, it may add much
breadth to an evaluation.
Although randomized clinical trials of-
fer the strongest method of assessing the ef-
ficacy of a new therapy, we recognize that
it is not possible to have randomized trials
for every version of every innovation.
However desirable that might be, it is not
feasible. Consequently, often it is neces-
sary to depend on other methods of assess-
ment; of course, some technologies actu-
ally require other methods. This in turn
means that steps need to be taken to
strengthen the other methods. These steps
have two forms. First, where possible, ap-
ply the known ways of improving studies,
such as observational studies (for example,
have a careful protocol, use random sam-
ples, use blindness where possible, and so
on). Second, many of these methods could
be improved if research were carried out to
find new ways to improve them. There-
fore, it is often suggested that specific re-
search be carried out that could lead to
stronger results from the weaker methods
of assessment.
At the same time that we recognize the
need for improving the weaker methods of
assessment, we also recognize that the
methods we already have are not applied
sufficiently often. As pointed out in Chap-
ter 2, the Office of Health Technology As-
sessment evaluates the safety and effective-
ness of new or as yet unestablished medical
7
technologies and procedures that are being
considered for coverage under Medicare.
Requests for these evaluations come from
the Health Care Financing Administra-
tion. OHTA carries out its evaluations by
reviewing the literature and by getting ad-
vice from various agencies and professional
organizations. The information so ac-
quired is synthesized to reach some conclu-
sion. OHTA does not gather primary data
itself. Again and again, it turns out, and
OHTA notes, that the primary data are al-
most nonexistent and that primary data
would be required to reach a well-
informed conclusion. Similarly, at the con-
sensus conferences, speakers frequently
point out the lack of primary data. Thus,
the most important need is to gather more
primary data.
To gather primary data, however, more
primary research is needed. This effort will
have to be led in part by research physi-
cians with training in quantitative meth-
ods and will have to be supported by
doctoral-level epidemiologists and biosta-
tisticians. All three groups are in short sup-
ply. At the least the development of meth-
ods will also require epidemiologists and
biostatisticians. Therefore, on the grounds
of both research and methodology, funds
will be needed to train research personnel.
A component of medical technology as-
sessment is the examination of the social,
ethical, and legal questions raised by the
use of technology in clinical practice. Such
questions do not always lend themselves to
quantitative measurement and analysis,
but they can be systematically identified
and evaluated.
The committee's findings in reviewing
research methods and myriad assessments
in Chapter 3 led to the following three rec-
ommendations.
· Increase research activity to improve
and strengthen the-variety of methods that
are applicable to the assessment of medical
technology.
OCR for page 8
8
· lacrease the resources for training re-
search workers in medical technology,
troth for advancing the methodology and
for applying those methods to the many
unevaluated technologies.
· Invest greater effort and resources
into obtaining evaluative primary data
about medical technology already in use.
(This recommendation also flowed from
our analysis of the scope of technology as-
sessment in Chapter 2.)
EFFECTS OF EVALUATION ON
DIFFUSION OF TECHNOLOGY
Many forces influence the adoption or
abandonment of a medical technology.
Chapter 4 examines whether the method
used to evaluate a technology has an effect
on its diffusion. The emphasis is on physi-
cian practices and the influence of various
types of clinical evaluation in changing
those practices.
Diffusion and Its Determinants
Diffusion refers to the spread of an inno-
vation over time in a social system. Built
into the notion of diffusion is the expecta-
tion that social change is not instantaneous
and that some difference in practice
among physicians at a moment in time is
therefore reasonable and likely. Of the fac-
tors that bear on the adoption and aban-
donment of medical technology, four
(prevailing theory, attributes of the
innovation, features of the clinical situa-
tion, and the presence of an advocate) are
relatively insensitive to change by policy-
makers. Three others (practice setting, de-
cision-making process, and characteristics
of the potential adopters) may be subject
over time to some policy influence. An
additional three factors (environmental
constraints and incentives, conduct and
methods of evaluation, and channels of
communication) are relatively susceptible
to influence by policymakers. These are
described in Chapter 4.
ASSESSING MEDICAL TECHNOLOGY
Types of Evaluation That Precede
Accepted Medical Practice
Many studies have attempted to assess
the effects of different types of evaluation
in the period before general acceptance of
a medical practice. Of special interest are
studies that compare the influence of ran-
domized and nonrandomized clinical
trials.
In some cases the patterns of practice
over time conform partially to the findings
of randomized controlled trials (RCTs).
For example, for coronary artery surgery,
treatment of breast cancer, and the use of
lipid-lowering drugs it seems highly likely
that RCTs have influenced clinical prac-
tice. When multiple RCTs, and possibly
other studies as well, suggest changes in
practice in a similar direction, it may be
difficult to discern the particular effect of a
single study; yet, circumstantial evidence
supporting the eventual influence of the
collection of studies can be strong.
In the opinion of many oncologists and
researchers involved in evaluations of can-
cer treatment, randomized trials have gen-
erally been more useful than nonran-
domized trials in the development of
cancer therapies. But, some studies that
have looked quantitatively at the origins of
current therapeutic practices in several
types of cancer also have found nonran-
domized studies to have played a dominant
role in the development of therapy. For ex-
ample, nonrandomized trials, more fre-
quently than RCTs, were the source of cur-
rently accepted treatments for acute
leukemia, although these were later veri-
fied by RCTs.
Clinical evaluation, being only one
among many factors bearing on the diffu-
sion of medical technology, often seems to
be overwhelmed by the other nine deter-
minants of physician behavior discussed in
Chapter 4 Improving the care of patients
requires both improved methods of evalua-
tion and more effective translation of the
results of evaluation into practice. Evalua-
OCR for page 9
SUMMAR Y
tions are likely to exert a greater impact on
diffusion if they are buttressed by attention
to other controllable factors, such as chan-
nels of communication and environmental
constraints and incentives, that affect the
adoption and abandonment of medical
technology.
Recommendations
The discussion in Chapter 4 led the
study committee to make the following
recommendations (in italics).
· Strengthen the weaker methods of
evaluating medical practice and increase
the use of the stronger methods. Methods
such as case studies, consensus develop-
ment, and nonrandomized trials can be
improved through research, and such
proved mainstays as randomized con-
trolled trials can be more widely applied.
Chapter 3 also supports this recommenda-
tion.
· Study the diffusion of medical prac-
tice concepts and procedures to understand
how to speed up the adoption of good prac-
tices and discourage the use of those that
are less effective or harmful. Such research
should place emphasis on factors of diffu-
sion, e.g., channels of communication and
environmental constraints or incentives,
that lend themselves to some control by
public policy and organizational decisions.
· Establish lines of responsibility for
making better medical practice a conse-
quence of the evaluation of medical tech-
nology. The connection between favorable
assessment of a technology and its subse-
quent diffusion into practice is a wander-
ing path among clinicians, educators, re-
searchers, professional bodies, journal
editors, hospitals, drug and device manu-
facturers, third-party payers, regulatory
agencies, and others. Their various per-
spectives obscure responsibility for the dif-
fusion of technologies. The diffuseness of
the responsibility for translating the results
of evaluation into improved health care is
9
one motivation behind proposals for a pub-
lic-private entity sponsored by the Institute
of Medicine and for additional forms of or-
ganization discussed in this report.
REIMBURSEMENT AND
TECHNOLOGY ASSESSMENT
Spending for health care in the United
States rose from 6 percent of the gross na-
tional product in 1965, the year Medicare
was created, to 10.8 percent in 1983. With
public money being used for more than 40
percent of that spending, policymakers are
searching for ways to reduce health care
costs. Some analysts blame the use of new
medical technologies and the overuse of ex-
isting technologies for up to 50 percent of
the increases in expenditures for health
care over recent years. From that perspec-
tive, one way to reduce costs would be to
reduce the use of the technologies. That,
however, would require that we be able to
identify the technologies that are relatively
ineffective, or even harmful, and discard
them.
The primary purpose of medical tech-
nology assessment is to improve patient
care. But it also is important to both pri-
vate and public payers, receiving greater
attention as its potential for cutting costs of
health care has become apparent.
Chapter 5 traces the applications of
medical technology assessment as they
have evolved from a context of retrospec-
tive payment for health care to one of pro-
spective payment. At first, when assess-
ment was used largely by insurers and
government to make informed decisions
about coverage of health care services, its
application was only partially designed to
control health care costs. However, tech-
nology assessment now is seen as an aid to
cost containment because it can help to de-
termine relative cost-effectiveness of diag-
nostic and therapeutic procedures. The
success of that application of assessment as
an adjunct of economic policymaking will
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10
depend on many factors, including how to
cover the costs of the assessment itself.
There are many examples of the ability
and interest of private health insurers in
conducting technology assessment, but
there are no national or regional stan-
dards. Medicare claims recommended for
payment, or subscribers covered benefits,
vary across the nation.
Despite assessment activities by the
Health Care Financing Administration,
insurers, and others, spending for health
care has continued to rise. There are some
legal reasons that technology assessment
has not restrained costs. Antitrust chal-
lenges arise when insurers attempt to limit
payments to certain providers. The author-
ity to apply reimbursement sanctions to
implement the findings of assessment, even
if quality is at stake, must be clearly spelled
out in the law. Obstacles for private insur-
ers also lie in market forces. Buyers of pri-
vate insurance policies want the widest ar-
ray of benefits for the least outlay, and
competition among various private insur-
ers is fierce. Also, there are political consid-
erations that blunt the effects of technol-
ogy assessment. Public programs have not
regulated physicians' fees or rationed
costly services such as hemodialysis.
However, even if these constraints on
the application of technology assessment
were to be removed, the data bases on
which insurers have to depend to make
coverage decisions are inadequate. There is
a growing need by payers for more infor-
mation that could be used for technology
assessment as well as for full analysis of the
basis for differing costs for patients with
different illnesses.
Assessment in the New Era of Cost
Containment
Today's emphasis on cost containment is
reflected in plans for altering reimburse-
ment (payment methods) to induce and
even reward cost-saving behavior. Radical
changes in federal reimbursement policy
ASSESSING MEDICAL TECHNOLOGY
have occurred through amendments re-
lated to Medicare. Until recently, most
major payers such as Medicare reimbursed
hospitals retrospectively on the basis of
costs incurred. Under that system, the ac-
quisition and use by hospitals of new tech-
nology and of all medical procedures (if the
coverage decisions had already been made)
could be fully covered regardless of their
cost.
Cost-containment advocates devised a
different way of calculating reimburse-
ment. The Diagnosis-Related Group
(DRG) became the product definition for
hospitals. The DRG for each of hundreds
of ills is the result of the distillation of pa-
tient discharge abstracts to find group
characteristics that were clinically sensible
and statistically clustered for cost, length
of stay, and other measures of resource
consumption. The Social Security Reform
Act of 1983 will move Medicare payments
toward a prospective reimbursement sys-
tem based on an average DRG specific
price.
The new reimbursement policy would
appear to encourage the assessment of
medical technologies for their safety, pa-
tient benefit, and costs, but the strength of
demand for technology assessment will de-
pend on many factors. These factors in-
clude (1) the dependence of a hospital on
Medicare revenues, (2) the present and
eventual restrictions on a hospital's capital
acquisition, (3) the presence or absence of
incentives for cost-efficiency in the reim-
bursement system, (4) how the DRG is
priced and how much an institution knows
about its cost variances from some norm,
(5) whether and how cost performance
data are used to change patterns of physi-
cian practice, and (6) incentives for assess-
ment and appropriate use of technology.
Paying for Technology Assessment
Many authors and conferees have ad-
dressed the question of reimbursement for
technology assessment. Clinical trials and
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SUMMAR Y
similar studies have been proposed, and
most of the proposals envision funds for as-
sessment coming from the health care dol-
lar. Chapter 5, in emphasizing the uses of
technology assessment as a part of chang-
ing reimbursement policy, asks: "If the
need for medical technology assessment
couples so fully with the need for rational
cost containment, a major policy issue is
posed for lawmakers: Should reimburse-
ment regulation be used to enforce scien-
tific decisions about the safety, efficacy,
and cost-effectiveness of technologies?"
Recommendations
In Chapter 5 it is argued convincingly
that, for technology assessment to reduce
the cost of medical care, the assessment
process and the reimbursement system
must become more congruent. Toward
that end, the study committee made the
following recommendations (in italics).
· Decisions about payment for medical
care should be based on more than safety,
efficacy, and research status of the care. A
beginning in expanding the criteria exists
in the new prospective payment system,
which encourages the cost-effectiveness of
care.
· Data collected for claims purposes
should be made more usefulfor technology
assessment. Again, the advent of prospec-
tive payment, which includes diagnosis
and characteristics of care in the informa-
tion needed for claims, may possibly con-
tribute to technology assessment.
· Payment for medical technology as-
sessment should he made through the sys-
tem that pays for medical care. The pro-
spective payment system already includes
set-aside funding for technology, which
could be earmarked for assessment. An-
other possibility is to pay for the use of ex-
perimental technology if the result would
be the collection of data on safety, effi-
cacy, and cost-effectiveness. Still another
way is to set aside for assessment a percent-
11
age of the health care dollar, as handled by
third-party payers and both public and
private providers.
MEDICAL TECHNOLOGY
ASSESSMENT ABROAD
Medical technology increasingly is the
object of public scrutiny not only in the
United States but also in other industrial-
ized countries. A review of the current ap-
proaches and policies of different countries
for assessing drugs and devices and for con-
trolling equipment purchases shows that
there is increasing concern for safety, effi-
cacy, costs, and social and ethical issues.
This has led to some new institutional
mechanisms for technology assessment.
However, the institutional arrangements
that exist to regulate medical technology
and carry out assessments vary substan-
tially from country to country, as de-
scribed in Chapter 6.
Most industrialized countries have con-
sistent national policies and institutional
arrangements for evaluating the safety and
efficacy of drugs. These appear to have
been strengthened in recent years, influ-
enced to some extent by the U. S. Food and
Drug Administration's example and assis-
tance to other countries. The current
World Health Organization program to as-
sist countries that want to improve their
drug regulatory systems reinforces this
trend.
However, systematic regulation of de-
vices has been established only in the
United States, Sweden, Japan, and Can-
ada; most assessment of devices elsewhere
proceeds on an ad hoc basis. Even in coun-
tries that have policies for the assessment of
devices, the procedures are of more recent
origin and less systematic than are those for
drugs.
Sweden is one of the few countries to de-
velop a national policy or institutional ar-
rangement for the assessment of devices,
equipment, and procedures used in medi-
cal care. The Swedish Planning and Ra-
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12
tionalization Institute of Health Services
(SPRI) was established in 1968 by the
Swedish government and the Federation of
County Councils (which are the health
care authorities in Sweden) and has been
involved in the conduct of technology as-
sessment since 1980. The organization has
a mandate to solve problems confronting
those who work in the health care sectors
and to promote better use of existing health
services resources. Additional tasks include
information dissemination, establishment
of standard specifications for hospital
equipment, and planning.
Collaboration and exchange of informa-
tion in a systematic way among countries
may well provide governments with op-
portunities to review their policies on these
matters and to draw on other countries' ex-
periences when considering different ap-
proaches. Most countries do not yet have a
coordinated coherent system for medical
technology assessment. Until coordinated
systems are developed within countries, it
will be very difficult, if not impossible, to
develop any international system of medi-
cal technology assessment.
However, most countries do appear to
have a system for determining the safety
and efficacy of drugs. Therefore, it is not
surprising that more progress appears to
have been made toward international col-
laboration in the assessment of drugs than
in the assessment of devices or medical
practices. The presence of national organi-
zations charged with drug evaluation pro-
vides a focus for these activities and facili-
tates international collaboration. The
presence of formal mechanisms for the as-
sessment of drugs in developed countries is
evidence of international interest in tech-
nology assessment that may be extended to
devices and procedures. This shared inter-
est may prompt standardization of meth-
ods, data exchange, and other forms of
collaboration, especially if it leads to de-
velopment of formal systems for such ef-
forts. Several international organizations,
ASSESSING MEDICAL TECHNOLOGY
most particularly the Organization of Eco-
nomic Cooperation and Development and
the World Health Organization, have
made an important beginning to system-
atic approaches to the international assess-
ment of drugs.
Recommendations
The information collected in the prepa-
ration of Chapter 6 prompted the study
committee to make the following recom-
mendations (in italics).
· International collaboration among
the industrialized nations is necessary for
the fullest establishment of a comprehen-
sive system of medical technology assess-
ment in any one of them. A first step should
be collaboration in gathering data on such
technologies and on research concerning
their assessment.
· Aninternationalclearinghouse should
be established to serve as an information
pool of data gathered on medical technolo-
gies and research concerning their assess-
ment. The World Health Organization
network is a beginning. In the United
States, the proposed Institute of Medicine
consortium, whose initial function would
be as a clearinghouse, could be part of an
international union of information sources
on medical technology assessment.
· Aninternationalclearinghouse should
be established for information about clini-
cal trials. A possible model is the British
National Perinatal Epidemiology Unit at
Oxford, which promotes clinical trials and
conducts research on their effect on medi-
cal practice.
· Industrialized nations with compe-
tence in medical technology assessment
should work with less-developed countries
to help them fill their special needs for
information.
.
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SUMMAR Y
CONCLUSIONS AND
RECOMMENDATIONS
Over the years many organizations have
developed assessments of medical technol-
ogy in response to specific needs. Taken
singly, each program fulfills a particular
purpose; for example, the Food and Drug
Administration's premarketing approval
process protects the public from unsafe and
inefficacious drugs. Taken in combination,
however, these various responses do not
constitute a coherent system for assessing
all types of medical technologies.
The lack of a systematic approach causes
some obvious problems:
13
technologies are not applied, or if ineffec-
tive technologies are.
The worth of technology assessment in
medicine reaches beyond its warranty to
the patient and its utility to the health pro-
fessional. The results of assessment also are
needed by hospitals and other facilities
that buy and apply technologies; by indus-
tries that develop technologies; by the pro-
fessional societies that disseminate infor-
mation to health care practitioners; and by
the insurance companies, government
agencies, and corporate health plans that
pay for the use of technologies. A strategy
for assessing medical technology therefore
must take into account not only the meth-
ods of assessment but also the needs de-
· The information base for technology
assessment often is inadequate; collection
of primary data about medical technolo-
gies has not kept pace with their develop-
ment.
· The information that has been col-
lected is not easily available; no one office
monitors, collects, indexes, and dissemi-
nates such information.
· There are no consistent and reliable
procedures for identifying emerging tech-
nologies that may have major conse-
quences.
· No one entity is responsible for setting
priorities among the technologies to be as-
sessed.
· Some technologies may be assessed too
late or never.
· New uses of established technologies
may escape assessment.
· Some valuable procedures are under-
utilized.
· Findings of assessment can move too
slowly in affecting practice.
The principal objective in assessing med-
ical technology is the improved health of
people. The primary costs of the lack of an
adequate system for technology assessment
are to human well-being patients do not
receive optimal care. But there also are
economic costs if the most cost-effective
mends, and resistances of the participants
and beneficiaries in the process.
The Challenge
We believe that it is possible and desir-
able to establish a coherent system for tech-
nology assessment. Many elements of such
a system already are in place and can be
built on. Numerous agencies and organiza-
tions are supporting or conducting assess-
ments. The committee endorses this plural-
ism, believing that it contributes to the
richness and variety of assessment activities
and it serves as a system of checks and bal-
ances. Furthermore, practical methods of
inquiry into medical technology exist,
methods that are well developed, widely
accepted, and often reliable and that have
practitioners in place to apply them.
The challenge to this committee was to
devise one or more strategies for medical
technology assessment, built on current ef-
forts, but in addition to strengthen and
supplement them.
Key Functions for Assessment
Functions that must be well executed to
ensure adequate medical technology as-
sessment include the following:
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14
.
selecting and collecting information,
· combining information from different
sources,
· disseminating information,
· identifying lacks in knowledge that
require research,
· acquiring data for needed research,
· setting priorities for assessment,
· training technology assessors, and
· developing methods for assessment.
Building a System
Results of this inquiry have indicated
that existing institutional arrangements,
and probably existing legislative authori-
ties, are inadequate to support an orderly
system for technology assessment. Ways
must be found to organize and finance the
functions we have described. In addition,
because some elements of an effective sys-
tem already are in place, we must be alert
to opportunities for building and strength-
ening functions that exist as well as for es-
tablishing new institutional arrangements
when warranted.
In a 1982 report OTA described several
possibilities for institutional arrangements:
(1) congressional establishment of a pri-
vate-public body, (2) re-establishment of
the National Center for Health Care Tech-
nology, or (3) encouraging the secretary of
DHHS to apply the existing powers of the
office to develop a technology assessment
system. An additional possibility would be
the creation of a new federal institution.
The advantages and disadvantages of the
four arrangements are discussed in Chap-
ter 7.
However, the committee acknowledges
that today's most reliable health care tech-
nology assessment is being conducted as a
regulatory activity for drugs and medical
devices. The success of that assessment re-
lies on the authority of the Food and Drug
Administration to demand the collection
of high-quality data as a prerequisite to
marketing; and, of course, the profit
ASSESSING MEDICAL TECHNOLOGY
motive encourages fulfillment of that
requirement.
The committee encourages nonregula-
tory approaches to technology assessment
in the belief that better cooperation will be
inspired by offering incentives, for in-
stance, forms of reimbursement that en-
courage the needed collection of primary
data.
Financing
The estimate that public and private
spending on medical technology assess-
ment totals over $1 billion yearly makes it
seem like a big and costly enterprise. Yet
this is a generous estimate for a broadly de-
fined category that embraces controlled
and uncontrolled clinical trials, health ser-
vices research, and a wide variety of syn-
thesis activities. Even so, it is only 0.3 per-
cent of the money that is spent for health
care. The committee believes that the im-
portance of better assessment is sufficiently
great to warrant expending on it a bigger
share of the health care dollar.
Various proposals have been advanced
to fund more medical technology assess-
ment in health care and are reviewed in
the full report. The committee believes
that, whatever methods are chosen, there
is an immediate need for $30 million to im-
prove some of the technology assessment
functions described earlier. That sum is
only for "first steps," the committee states,
believing that the total should grow in
10 years by about $300 million in 1984
dollars.
Recommendations
We wish to promote the development of
a coordinated system for medical technol-
ogy assessment that both would capitalize
on the strengths and resources of the free-
market economy and would meet society's
needs for safe, effective medical care. The
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SUMMAR Y
following recommendations (in italics)
constitute a stepwise approach to achieve
that purpose.
· The monitoring, synthesizing, and
disseminating functions of medical tech-
nology assessment should be established in
some entity with a chartered mission and
financing. A private-public organization
seems most appropriate.
· The same entity should develop the
research agenda for filling gaps in kno~vl-
edge relevant to assessment, as well as as-
sign responsibility for carrying out the
needed research.
· There should be a substantial increase
in the accumulation of primary data for as-
sessment.
· A portion of the health care dollar
should he allocated to existing Public
Health Service components that already
have the task of supporting research in
medical technology assessment. These
components should solicit and fund re-
search designed to fill gaps in knowledge
about technologies where the profit motive
15
does not operate to catalyze the collection
of primary data, such as occurs in the drug
industry.
· Those organizations that support re-
search in technology assessment also should
engage in developing it as a scientific field,
such as improving methodologies and sup-
porting education and training of assess-
ment personnel.
· Support for medical technology as-
sessment should rise over the next 10 years
to reach an annual level $300 million
greater (in 1984 dollars) than at present.
In casting its recommendations, the
committee was aware that statements of
generality are of little help, but that too
much detail can entangle an enterprise. It
recognizes that political action will be re-
quired. Building a system of medical tech-
nology assessment will require not only pa-
tient attention to improving the key
functions, but also a steady emphasis on
continuity and stability of effort and fund-
ing to ensure a firm foundation for its con-
struction.
Representative terms from entire chapter:
clinical trials
