Regulatory Update: October 2010

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The FDA’s review process for medical devices still needs clarification, and the link between user fees and performance needs strengthening, representatives of medical device manufacturers testified at a public hearing. The FDA held the public hearing in September before beginning its update of the Medical Device User Fee and Modernization Act (MDUFMA), which is up for renewal in 2012. The law imposes user fees on medical-device companies in order to provide the FDA with sufficient resources to review the safety of medical devices and approve them in a timely manner. The act was first passed in 2002, and it was renewed for a five-year period in 2007. Dave Fisher, executive director of the Medical Imaging & Technology Alliance, says, “The general perception, among our members, is that the link between user fees and FDA performance is broken.” Medical-device companies provided nearly $300 million in user fees between 2008 and 2010 to help fund the program. Review times for the 510(k) evaluation process have lengthened during the past several years, according to the Office of Device Evaluation’s 2009 Annual Performance Report. In 2005, the average total elapsed time from receipt to final decision was 87 days. By 2007, that figure had risen to a high of 117 days; it dropped to 98 days in 2009. Mark Leahey, president and CEO of the Medical Device Manufacturers Association, testified at the public hearing. He says, “I think 2005 was kind of the high-water mark, as far as performance goes, and since then, it has deteriorated a bit, in some areas.” Leahey also points to a 2006 FDA-commissioned report that found that almost 76% of responding device manufacturers perceived that MDUFMA goals have not resulted in meaningful improvements in either the predictability or the timeliness of medical-device review. Although many of these issues predate the current FDA leadership, Leahey adds, “If we pose the same question right now—based on the feedback we receive from members—that 70% number, I think, will be a bit higher.” More and more anecdotal examples demonstrate where interactive collaboration and coordination among manufacturers and FDA reviewers might be falling short, hindering the review process, Leahey says. Fisher points out one new process that needs clarification: The FDA issued guidance, last year, that was intended to clarify the review process for the use of contrast agents with imaging equipment; however, the end result appears to have made the process more complicated. “The technology has stopped in its tracks,” Fisher says. “Companies are taking some features out of their products to eliminate any chance that contrast agents might be used with their products.” This leaves physicians to rely on older equipment that allows the use of contrast agents or to purchase new products that don’t include innovations involving contrast agents, Fisher says. The FDA notes that it has met many of the goals outlined during the last renewal of the act and that its workload has increased over the years, putting a strain on the agency’s resources. In addition, the FDA recently issued two comprehensive evaluations that look at, and make recommendations about, the agency’s 510(k) review process and the use of science in the decision-making process. Jeffrey Shuren, MD, director of the FDA’s Center for Devices and Radiological Health, says, “Taken together, these preliminary reports show a smarter FDA—an agency that recognizes both sides of our mission to protect and promote public health. The agency is ready to make necessary improvements to support device innovation while ensuring patients receive safe and effective devices.” In-office Ancillary-service Exception The Medicare Payment Advisory Commission (MedPAC) began discussions at its September meeting on whether to turn any of the growth-reducing strategies that it has researched for imaging services into a formal recommendation for a future report. These strategies were outlined in MedPAC’s June report, Aligning Incentives in Medicare, as part of the commission’s review of the in-office ancillary-service exception outlined in the Stark self-referral law. In addition to imaging services, this exception applies to in-office therapy services and laboratory tests. Some of the suggested growth-reducing strategies include requiring certain physicians to get preauthorization for procedures, reducing payment rates for self-referring physicians, and limiting services allowed under the exception. Glenn Hackbarth, JD, MedPAC chair, notes that he prefers a targeted approach, such as packaging services wherever feasible, using targeted prior authorization, and reducing payment rates for self-referred services to reflect potential duplication. “My starting point on all this is that the problem is not self-referral, per se,” Hackbarth says; he previously ran a large multispecialty group. “The toxic combination is self-referral combined with fee-for-service payment, often combined with mispricing of the services. It’s when you get the three of those together that you have the risk of abuse,” he adds. More overarching changes, such as a prohibition on referral for therapy, are not appealing for several reasons, he says. These include the potential to slow efforts to organize care delivery by bringing services under one roof, which might be counter to other things that Medicare is trying to accomplish. Other commissioners echo Hackbarth’s comments, with several expressing cautious support for the idea of prior authorization. Some point out that physicians need feedback and information in order to make good decisions—and prior authorization might be appropriate for those who fall outside the normal practice patterns. Scott Armstrong, MBA, a MedPAC commissioner, says, “I’m not uncomfortable with prior authorization. I think it’s less about approving procedures and more about creating a kind of transparency around what is it we’re doing, and why.” Herb Kuhn, a MedPAC commissioner, notes that some thought should go into the impact on beneficiaries that it would have if prior authorization is implemented, particularly since Medicare patients have never really been told such a thing when they go to a physician’s office. “On the fee-for-service side, prior authorization, to my knowledge, is not used anywhere in the program except in the area of fraud,” Kuhn says, “so for a management tool, this would be very groundbreaking in terms of the Medicare program.” Prior authorization would need to be done carefully in order to ensure appropriate outcomes, according to Karen Borman, MD, a surgeon and MedPAC commissioner. In instances where her practice needed to get prior authorization, everyone learned quickly which buzzwords were needed to ensure a yes answer, particularly since the person on the phone was not always knowledgeable. Borman also notes timing issues. A new procedure, laparoscopic cholecystectomy, required prior authorization by the Medicare intermediary, but its office wasn’t staffed 24 hours a day. She says, “If you needed to do a cholecystectomy for acute cholecystitis at 2 in the morning, there wasn’t anybody to talk to; it was a little bit of a problem.” Commissioners also discussed the possible effectiveness of bundling imaging into a global package under a single payment, and they explored the idea of paying for an imaging service only if it was performed on the same day as an office visit. On bundling, Mitra Behroozi, JD, a MedPAC commissioner, says, “There’s the risk of stinting—that people won’t get the regimens of care that they need or the diagnostic tests that they ought to have. It’s not that we shouldn’t go into bundling, but it won’t really work unless you have robust quality measurement and enforcement, and all of that, and we’re a long way from that.” MedPAC also examined data that compared the growth of diagnostic imaging in the physician’s office and in other outpatient settings. Between 2003 and 2008, the data showed that diagnostic imaging grew 4.3% under the Medicare Physician Fee Schedule, but only 0.4% in hospital outpatient departments. MedPAC holds its next meeting this month. Jane Cys is a contributing writer for ImagingBiz.com.