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Wanda Moebius
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October 6, 2014

Study Shows Insurers Tightening Coverage Evidence Requirements, Adopting New Provider Payment Models

FOR IMMEDIATE RELEASE                                                                                   Oct. 6, 2014

Study Shows Insurers Tightening Coverage Evidence Requirements, Adopting New Provider Payment Models

Analysis Shows Need for Policies Protecting Patient Access to Innovation

WASHINGTON, D.C. – A new study by the Analysis Group shows that private insurers are rapidly adopting new provider payment models – including pay-for-performance and financial risk-sharing arrangements – and tightening coverage evidence requirements for new technologies.

The peer-reviewed study, entitled “Evolving Provider Payment Models and Patient Access to Innovative Medical Technology,” has been accepted for publication by the Journal of Medical Economics. It is based on comprehensive interviews with nine private insurers responsible for insuring approximately 110 million Americans.

Among the key findings is that insurers are rapidly adopting provider payment models which, through their emphasis on cost reduction, can have the effect of discouraging providers from using new technologies that may bring value to patients and the health care system but add to near-term costs. Insurers are also raising the bar for approving coverage of new medtech.

“This study highlights that patient access to innovative medical devices and diagnostics is facing a double hit. Insurers are adopting new payment models that emphasize cost reduction and raising evidence requirements for coverage,” said Stephen J. Ubl, president and CEO of AdvaMed.

“The medtech industry generally supports the movement toward new payment models that encourage providers to reduce costs through greater coordination of care, as it continues to develop advanced technologies that will facilitate better health and reduced costs. But it would be a mistake for policymakers not to address the potential for unintended consequences such as stinting on needed care or discouraging innovation.

“The most troubling finding in the new study was that more than 40 percent of respondents admitted that it will be more difficult for clinically appropriate but costly technologies to gain coverage,” Ubl said.

According to the Analysis Group, adoption of pay-for-performance and financial risk-sharing arrangements is growing rapidly. Just three years ago, only 46 percent of respondents’ beneficiaries were involved in these new payment programs. Now that figure stands at 62 percent and is expected to rise to 75 percent three years from now.

With regard to approving coverage of new technologies, over half of respondents indicated they have become more selective in approving new technologies over the past three years, and more than 40 percent of respondents believe that in the next three years the evidence requirements for approval of a new technology will be higher still.

Furthermore, the study highlights the fact that new pay-for-performance and risk-sharing arrangements may have the effect of incentivizing providers to abandon their traditional role as advocates of patient access to new technologies.

“This study dovetails with previous findings by others on declining Medicare coverage approval rates and rising evidentiary thresholds. We need to ensure that new payment models – being adopted by private insurers and Medicare alike – include safeguards that protect patients from potential unintended consequences, whether that be stinting on patient access to care or discouraging innovation,” Ubl said.

“We look forward to sharing the results of this new study with policymakers and other stakeholders as we continue to work with insurers, CMS, patient groups and other allies, in Washington and around the country, so that provider decisions are based first and foremost on what is the best option for the patient.”

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AdvaMed member companies produce the medical devices, diagnostic products and health information systems that are transforming health care through earlier disease detection, less invasive procedures and more effective treatments. AdvaMed members range from the largest to the smallest medical technology innovators and companies. For more information, visit www.advamed.org.