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BACKGROUND "... in medicine, it is characteristic of our technology that we do not count the cons, ever, even when the bills begin coming in....It is, in part, explainable by our history, by the brand newness of any kind of technology at all in this field, and our consequent unfamiliarity with any methods, or indeed, any incentive in the first place, for technology assessment in medicine." (Thomas, 1972) In a relatively short span of recent years medical technology* has developed at an awesome rate, presenting new ways to prevent, detect, and treat disease. But those same technological developments also have alerted us to the necessity that we "count the cost," in Lewis Thomas's phrase, and have provided ttincentive...for technology assessment in medicine." Hundreds of new technologies enter the health care system each year, and the pace of their development indicates no slackening in the foreseeable future. The benefits of the new technologies often are clear and convincing. Computed axial tomographic (CAT) scanners can reveal more clearly than prior techniques the anatomic abnormalities of a brain tumor, and now positron emission tomographic (PET) scanners can trace the chemical abnormalities created by disease. Antibiotics and vaccines have removed infectious diseases from their paramount position as a cause of death in industrialized nations. Surgical equipment and procedures enable the res "oration of a damaged heart or the replacement of a failing kidney. In many instances the new tech- nologies have improved the results of care, have reduced the cost of care, and even have increased access to care. In other instances the new technologies have posed risks to patients. Some risks are intrinsic to the technology; others 'are related to the skill with which it is applied or to the setting in which it is used. Some new technologies are increasing the cost of health care, sometimes dramatically (Altman, Blendon, 1979; Moloney, Rogers? 1979~. Health care costs are now at an all-time high, repre- senting more than 10 percent of the gross national product (U.S. Public Health Service, 1982~. Costs of the Medicare program and the federal *For purposes of this report ~ medical technology is defined as a drug, device, medical or surgical procedure, or combination of the above and the knowledge necessary for their appropriate use in the delivery of patient care. 1

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portion of Medicaid increased from $31.5 billion in 1976 to more than $70 billion in 1981 (Health Care Financing Administration, 1983~. Although there are many explanations for the increase in expenditures, some of it is related to the use of technology. More costly care, particularly in a time of economic strain, should force attention on the appropriateness of all health care procedures, including the tech- nologies involved. A new technology is not necessarily synonymous with an improved technology, but its use can spread rapidly and widely. Only later may well~esigned research validate that new is better--or show that it is less ef ficacious (Of f ice of Technology Assessment, 1978~. There clearly is a need to develop better methods and better organizational strategies for distinguishing useful new medical tech- nologies from those that are wasteful or even harmful. The principal objective in assessment of medical technology is the improved health of people (Institute of Medicine, 1977~. A timely scientific assess- ment of new medical technologies can help (~) to promote the use of technologies that have been shown to be more ef f icacious or equally efficacious but less costly than others' (2) to ensure that new techno- logies are made available only af ter they are shown to have benef its that outweigh their risks, (3) to curb the use and spread of techno- logies that lack efficacy or cause preventable hem, and (4) to provide evidence to guide appropriate use of all technologies, new and old (Institute of Medicine, 1979~. The worth of technology assessment in medicine goes far beyond its warranty to the patient and its utility to the health care profession- al. The results of assessment are also needed by the hospitals and other facilities that buy and apply technologies, by industries that develop technologies, by the professional societies that disseminate information to health care practitioners, and by the insurance com- panies 5 government agencies, and corporate health plans that pay for the applications of technologies. A strategy for assessing medical technology' therefore, must take into account not only the methods of assessment ~ but also the needs ,, demands, and resistances of the parti- cipants and beneficiaries in the process and products of assessment. The fairly recent appreciation of the need for medi Cal technology assessment has created numerous efforts to satisfy that need. In the private sector, for example, professional societies such as the American Medical Association and the American College of Physicians developed formal mechanisms for accumulating evidence on the proper use of technology and for d inseminating this information. Hospital groups and associations such as the Alliance for Engineering in Medicine and Biology and the Association for the Advancement of Medical Instrumentation have an interest in and contribute to the assessment of technologies in clinical practice. 2

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In the public sector, the Food and Drug Administration of the U.S. Public Health Service has as a principal activity assuring the safety and efficacy of pharmaceuticals and medical devices. The National Institutes of Health several years ago began efforts in technology assessment by means of awarding grants for clinical trials and consensus development conferences. The Office of Technology Assessment (OTA), an arm of the U.S. Congress, operates a program to assess medical technology for the main purpose of providing accurate information and practical alternatives for congressional decision makers in developing health policies. Other federal agencies whose activities include health care, such as the Veterans Administration and the Department of Defense, also have become engaged in medical technology assessment. Congress passed legislation in 1978 establishing the National Center for Health Care Technology (NCHCT) to conduct, sponsor, and coordinate the assessment of new and existing technologies. The government's Health Care Financing Administration, as well as other third-party payers used the information generated by the NCHCT to help in making decisions about coverage and payments. However, the NCHCT was abolished in 1981. The Office of Health Technology Assessment, based in the National Center for Health Services Research of the U.S. Public Health Service, has assumed some functions of the NCHCT. The end of the NCHCT, however, did not signal an abatement of congressional interest in new approaches to assessment of medical technology. The 1983 amendments to the Social Security Act (P.L. 98-21) authorize the creation of a Prospective Payment Assessment Commission, appointed by the director of the congressional Office of Technology Assessment, and give it broad powers, including medical technology assessment and the evaluation of the appropriateness of medical practice patterns. The commission, recently activated, could have considerable impact on technology assessment and its relationship to federal payments for health care. The body already has gained the sobriquet of "DRG Commission" for its planned relationship to the diagnosis-related groups that will form the basis for prospective payments for health care services under the federal Medicare program. Specifically, the DRG Commission is to collect and assess information on costs, productivity, technological advances, and cost-effectiveness of hospital services. The commission is expected to synthesize existing data in framing its recommendations on reimbursement rate setting, where those data are available, but it is also empowered to carry out research and to award grants and contracts for research purposes, specifically research that will inform its judgments about diagnosis related groups and prospective payment rates. A major provision of this legislation allows the commission to obligate Medicare Trust Fund resources for external research activities, with the approval of the DHHS Secretary. The range of responsibilities of the commission, and its power for 3

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awarding external grants and contracts for projects in technology assessment, make it likely that the proposed body will become a major contractor for assessment projects. Two other recent and germane Congressional developments may be cited. Rep. Henry Waxman, Democrat of California and chairman of the House Energy and Commerce Subcommittee on Health and the Environment, introduced a bill (H.R. 2350) to reauthorize the National Institutes of Health that included a $4 million item to re-establish the National Center for Health Care Technology. And Ben. Edward Kennedy, Democrat of Massachusetts and ranking minority member of the Senate Committee on Labor and Human Resources, introduced a bill (S. 814) to "control health's escalating costs," which also would create an "Advisory Committee on Health Care Technologies and Procedures" under the admin- istrative supervision of the Institute of Medicine and funded as an administrative cost of the Medicare program. Although there are many agencies and organizations conducting programs in assessment and dissemination of information about medical technology, there currently is no private or public sector entity char- ged to coordinate and synthesize information produced by the various agencies and organizations and to provide a meeting ground apart from the regulatory framework for purposes of technology assessment. Most existing entities are not positioned to approach technology assessment with both a scientific and a social perspective. For example, govern- ment agencies such as National Institutes of Health (NIB), Food and Drug Administration (FDA) , Centers for Disease Control (CDC), and the Health Care Financing Administration (HCFA) are limited in their mandates. in their mandates FDA's legislative charge is the safety and efficacy of drugs and devices; it does not deal with procedures or with economic and ethical issues. HCFA, on the other hand, is a major payer whose efforts are-addressed primarily to cost issues associated with the Medicare and Medicaid programs. Private sector organizatione--American Medical Association, American Hospital Association, the Blue Cross and Blue Shield Association, the Health Insurance Association of America, and others--nerve constituents with a variety of focused concerns. University faculty and research groups conduct many of the assessments of medical technologies based on primary data, principally by means of controlled clinical trials. Several university research units conduct other types of quality medical technology assessment, but, their ef forts tend toward detailed examinations of a few areas of intere st . Consequences of these many and varied approaches to medical techno- logy assessment include hampering the emergence and application of potentially valuable new technologies and tardiness in retiring obsolete technologies, as well as compromised credibility with the health profes- sions and the public. Promotion of promising procedures and techniques 4

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in health care may be more likely to depend on perceived marketability than on potential or proved contributions to patient care. The identification of an outmoded technology is cumbersome at best, and depends on the gradual accretion of reports in the literature and at professional society meetings until they constitute a consensus for change. Poor dissemination of information from good technology assessment contributes to the ris ing cos ts of health care. Conversely, the Blue Cross and Blue Shield Association, for instance, estimates that its Medical Necessity Program has saved premium payers as much as 500 million dollars in its first five years. Studies at UCLA and Harvard commissioned by the NCHCT estimated that 100 to 200 million dollars per year could be caved by the Medicare program if NCHCT recommendations not to reimburse for six technologies were followed (Harvard, 1981; UCLA, 19813. Also, in the training of health professionals, the lack of coordinated dissemination of valid technology assessment information means that curricula quite possibly will not include current clinical knowledge. The lack of an organization with the credentials to coordinate and complement existing efforts in medical technology assessment has prompted several proposals for the formation of an entity that could assume those functions (Bunker, 1982; Perry, 1982; Relman, 1980, 1982~. Government officials, members of the Institute of Medicine, practicing physicians, and other health industry leaders have requested at various times that the Institute call together the parties appropriate to a discussion of the feasibility of a new entity to lead medical technology assessment efforts. Further, there were suggestions that the conferees consider a role for the Institute in the establishment of such a new entity. The Institute was viewed as an appropriate convener partly because it is designed by its charter to have a membership of expertise and authority in many disciplines of health care and the related profes- sions. One of the Institute's principal functions is the assembling of the most appropriate and knowledgeable persons from the membership and elsewhere to conduct studies and produce objectively balanced reports on issues of health policy. The Institute for a decade has provided a neutral forum where representatives of public and private interests can meet, removed from parochial involvements, to discuss mutual concerns. In addition, the Institute has a long history of activities in the assessment of medical technology, beginning with a policy statement in February 1968 that heart transplantation was a research venture and not an accepted routine clinical procedure (Board on Medicine, 1968~. Later the Institute (1973) produced reports cautioning against the adverse economics of the artificial heart, setting an application and payment framework for computed axial tomographic (CAI) scanning (1977), examining 5

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policy and research issues basic to the impacts of new technology on the health care system (with the Assembly of Englneering) (1979~, and developing research methods for evaluating technologies in clinical use 1981~. Also$ the Institute recently convened ~ conference on cost- effective medical cares part of wbicb centered on increased efficiency in practice through the application of new technologies. . . 6 #