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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
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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
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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-
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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 boardsó 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
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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
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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.
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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-
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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: