A middle ground between unlimited coverage and no coverage at all, CED wasn’t developed with bio logic therapies in mind. But healthcare players and payers are watching CED’s application carefully, as well as its effect on coverage and drug development.
Abstract
Is ‘coverage with evidence development’ a happy medium between ‘no evidence, no coverage,’ and the sky-high promise of some new biologic therapies, diagnostics, and devices? Medicare plans to find out. The application of CED raises a number of questions, the answers to which may determine whether it is a suitable model for private payers trying to answer the value equation.
Over the years, public and private insurers have had the expectation that if they are to pay for medical services within a covered benefit category, then those services must be medically necessary. Such coverage usually ends up excluding treatments and technologies that are considered experimental. Often, the myriad emerging uses of biologic therapies fall somewhere in the middle — past the point of being experimental, but with uses so new that in many cases medical societies have not issued consensus guidelines on their use — creating a quandary for payers.
Commercial insurers have countered this by gravitating toward evidence from scientific studies and away from a sole reliance on physician opinion. A primary reason, of course, is the significant expense often associated with experimental treatments. This approach poses a challenge in making coverage decisions for promising new medical treatments and tests, especially those that involve biologics. In many cases, biologic therapies end up getting “prior authed,” and coverage is determined on a case-by-case basis.
Private payers almost always have followed Medicare’s lead, and CED will be no exception to that rule, believes Richard Stefanacci, DO, MBA, founding executive director of the Health Policy Institute at the University of the Sciences in Philadelphia.
PHOTOGRAPH BY DON TRACY
A new Medicare policy is attempting to offer some structured guidance. How well it will work and how often it will be used, though, remains to be seen — as does whether private insurers will follow similar guidelines.
CED AND SUBTYPES
In recent years, Medicare has come under pressure to find a way to address the conflict between coverage based on strict evidence-based standards and appropriate coverage for innovative technologies that have not yet been subjected to evidence-based standards.
In response to this challenge, the Centers for Medicare and Medicaid Services in 2005 created draft guidance for a policy called “Coverage with Evidence Development.” CED proposes a way to consider covering promising drugs, biologics, diagnostics, devices, and procedures that would not otherwise meet Medicare’s previous requirement for “reasonable and necessary.” In essence, CED is a middle ground between unlimited coverage and no coverage at all.
“As we see more limited resources available for Medicare and Medicaid, and with baby boomers soon turning 65 and straining the system, there is a tendency to want to ration such that services are provided only to those who will actually benefit,” explains Richard Stefanacci, DO, MBA, founding executive director of the Health Policy Institute at University of the Sciences in Philadelphia. “I think CED is one of the first inroads in this area.”
Steven Pearson, MD,1 a senior fellow at America’s Health Insurance Plans and a staff member at the National Institutes of Health, thinks CED “is in everyone’s best interest because it designs a way for early entry to market to occur in the context of gathering further evidence.”
Medicare updated its 2005 CED guidance on July 12, 2006, clarifying several key statutory, regulatory, and operational issues. Just the new title of the program — “National Coverage Determinations With Data Collection as a Condition of Coverage: Coverage with Evidence Development” — suggests how CMS intends to bridge the gap between evidence and coverage. For some therapies, devices, and services, the development and capture of patient data above and beyond standard claims data would be a condition of payment.
CED is designed to generate data so that Medicare can do three things: verify the appropriateness of the use of an item or service; consider future changes in coverage for an item or service; and generate clinical information that will improve the evidence base for or against a specific item or service. When CMS applies CED to a specific use of a product or service, a beneficiary might need to agree to disclose certain clinical data not normally be found in claims data as a condition of coverage.
CED was not developed with biologic therapies specifically in mind, but biotech manufacturers, physicians, and patients are watching its application carefully. Their concern is that CED might ultimately limit the use of biologics — especially in oncology, where off-label use is common and often leads to better methods of care for very sick populations. By requiring additional data collection, however, CMS may be establishing a way to preserve off-label use.
Of great importance in its 2006 update, CMS made it a point to present two subtypes of CED — each with different goals, methods, and statutory authorities.
The first of these is coverage with appropriateness determination, or CAD. Under this policy, if CMS agrees that an item or service is “reasonable and necessary” but needs to see clinical data not generally available on claims forms to ensure appropriate use, CMS may apply CAD. This would require providers to submit additional data to registries set up specifically for collecting them. In other words, CMS will begin gathering data to ensure that a treatment is being provided according to clinical criteria specified in the coverage decision.
The second is coverage with study participation, or CSP. If coverage does not qualify under CAD, CSP might come into play. In this case, CMS would ask that the additional data come from a research setting. That makes CSP essentially a continuation of clinical trials, and requires that care be delivered in settings that have data-collection processes and patient protections similar to those at research facilities.
Earlier this year, CMS went through a second version of the guidance to delineate differences between CAD and CSP. “We are in the process of clarifying how the two policies interrelate,” says Steve Phurrough, MD, director of CMS’ Coverage and Analysis Group.
Stefanacci believes there will be much more use of CAD than CSP. “This will be the case not just for experimental treatments, but also for other treatments, such as implantable defibrillators, which are rather expensive undertakings,” he suggests.
PRIVATE PAYERS
According to Stefanacci, private payers have almost always followed Medicare’s lead, and he believes CED will be no exception. “Medicare will make the heavy investment to move the market, and the private payers will probably follow.”
John Watkins, RPh, MPH, pharmacy manager for formulary development at Mountlake Terrace, Wash.-based Premera Blue Cross, says he is “intrigued by this concept,” because Premera supports the concept of “value-based medicine. When we review drugs, we focus on safety, efficacy, and value.”
The real future of CED may hinge on what happens in Washington, says John Watkins, RPh, MPH, of Premera Blue Cross. “There will be a point at which more rigorous standards of technology assessment will need to be applied” because of federal budget constraints, he says.
PHOTOGRAPH BY JON BRUNK
The challenge, as Watkins sees it, is that a lot of promising things in the medical arena can be done for people, but many of them lack sufficient evidence to assure that they are safe and effective. “In addition, it is difficult to know for sure, on a more detailed level, what their cost-effectiveness and their incremental value are compared to whatever else we could do for that person.”
Watkins views the CED concept as a potential way of reaching a practical compromise. “It is difficult to say, ‘[Go] run a long-term outcome trial, and then come back when it’s completed.’ This can delay access for several more years.” CED, as Watkins sees it, is a way of saying that third-party payers can allow some access while additional data are collected to help policymakers get the real answers to the questions.
“CMS carries a lot of weight, so what it does will influence what a lot of other people do,” he says.
Watkins is also watching CED developments in the context of non-pharmacologic, high-tech medical procedures. “One trend is that there is a blurring of once-siloed boundaries, so there will come a time when we won’t be sure whether something is a drug or a device or both,” he explains. In fact, Watkins is involved with a group that is looking at health technology assessments for nondrug interventions. “Our policy, at this point, is established only for drugs,” he points out. “The work group is creating a more full-featured health technology assessment program.”
USE OF CED
Whether private payers follow Medicare’s lead with CED may not be as important as some people might think, though. The reason is that CED coverage decisions may not come into play all that often.
“As to whether private insurance companies will follow Medicare’s lead on CED, the jury is still out,” explains AHIP’s Pearson. “It is difficult for private health insurers not to cover something that Medicare covers. However, this is a new kind of coverage.” He goes on to note that what is important to remember is that CED is unlikely to be applied to that many technologies as they come through Medicare’s national coverage determination process. “In other words, there aren’t that many new decisions every year.” Currently, national coverage decisions look at drugs that are not self-administered in the hospital or in an outpatient setting. Medical devices and procedure are also eligible for CED coverage, but Part D drugs are not. All of which narrows the field of what might be considered for CED.
6 questions raised by the application of CED
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ADAPTED FROM TUNIS SR, PEARSON SD. HEALTH AFF. 2006;25:1218–1230.
Given the momentum of the positive Medicare decision, Pearson believes private health plans will be likely to cover new therapies and other technologies. “Most private health plans are moving slowly but deliberately in this general direction, trying to explore ways to gather further evidence on new innovations as they come into practice,” he states.
CMS’ Phurrough also envisions possible limited use of CED. “As noted in the guidance document we published a few months ago, we don’t expect to use the CED concept very often,” he states. “In fact, we haven’t even done one since the guidance document came out.”
REGISTRIES
One thing for sure, though — registries will come into existence as coverage for promising but unproven treatments is considered. The majority of registries will be hosted by CMS, and private insurers will likely have a role in these. Private insurers may also host their own registries.
CMS’ Phurrough can’t say whether private insurers might be apt to follow CED and agree to cover what CMS does, but adds, “We think it makes sense that private health insurers at least encourage their members to register with a CED registry. We have somewhat of an example with this with the ICD registry [National Cardiovascular Data Registry], in that about half of the submissions in this registry have not been based on Medicare requirements. As such, we assume that either hospitals or other payers are urging patients to register.”
Pearson is more certain of private insurer participation. “I think private health plans will encourage members to join the CMS registries,” he states. “Overall, they are supportive of efforts to gather further evidence.”
On a larger scale, Pearson notes, Medicare and commercial insurers are actively thinking about how to work together to determine how much evidence they will want to see when CED is the most appropriate mechanism for coverage. “There is some concern that manufacturers will be looking for a floor along the lines of, ‘We really don’t have much evidence at all, but if we do a registry, maybe payers will provide coverage,’” he explains. “As such, there are efforts to think about the levels of evidence — the level below which the answer is ‘no coverage,’ and above which is an unqualified ‘yes.’” It’s the middle ground that needs to be identified, according to Pearson, and this is where CED will make the most sense.
Tanisha Carino, PhD, director of the Center for Evidence-Based Medicine at Avalere Health, a Washington, D.C.-based health strategy consultancy, sees an even wider scope. “People shouldn’t think of CED as a concept limited to Medicare,” she suggests. “More and more these days, payers are becoming interested in encouraging research.” Some private payers, according to Carino, may encourage members to participate in CED registries. Others that are large enough may even do their own registries. “Still others may become part of multi-stakeholder collaboratives to develop registries,” she states.
THE FUTURE
In terms of what kinds of treatments will end up being part of the CED concept, CMS’ Phurrough thinks consideration for coverage under CED is more likely to be based on frequency of condition rather than a specific category. “We don’t see any specific kinds of treatments or conditions that will be more prevalent than others. I suspect that heart issues and orthopedic issues may be quite common, but only because they are common in the Medicare population as a whole.”
CED could come into play for a routine treatment of any condition, though it may involve a new use of that treatment — such as an off-label use or in combination with an unproven therapy — that would require CMS to have more information. “Another situation may be that we get new information about a current treatment that makes us think we need to evaluate it further,” Phurrough notes.
According to Carino, the essence of CED is that Medicare wants information on which it can base coverage decisions, especially in the absence of well-designed clinical trials. Manufacturers, she says, “need to understand … how their product’s value proposition will play out in the payer community, over and above FDA approval,” she suggests. “It often surprises me just how often biotech companies and general medical product companies are caught flat-footed because they haven’t done the type of clinical-trial development that focuses on payer expectations.”
Then there is the question of how manufacturers may go about trying to gain approval for new treatments. There is a line of thinking that drug developers may attempt to exploit the CMS policy by trying to gain FDA approval through a “quid pro quo,” where the manufacturer says, “Approve Drug X for this use, and we will agree to the CMS registry, and you can see how it works.” While this may seem prudent, once a drug gains widespread use, it is difficult to deny coverage — even if that drug is ineffective for most patients.
Stefanacci, in Philadelphia, says, “I would agree with the first part of that statement. I think pharmaceutical companies and device manufacturers will use CED to gain access to the market quicker. I would disagree with the second part, though.” The reason is that unlike years past, when this type of strategy led to widespread coverage, CMS will now restrict payment to specific uses, he says. “In other words, just because you gain access to the market, this doesn’t mean that CMS will allow treatments to be used off label in the traditional sense of the wording.”
According to Watkins, at Premera, the impact of CED on medical technology is even more critical than on drugs, because FDA standards for approval are not as rigorous for devices as they are for drugs. “For example, once you create a drug, it is that molecule forever,” he states. “However, a device may come out with a new model next year. The question arises: Can you apply the results of the trials of the old model to the new one?”
The real future of CED and the response of private payers, though, may hinge on politics, Watkins concludes. “Right now, we are holding our breath to see what [the new] Congress will do this year and waiting to see what will happen with the presidential election in 2008,” he states. “Obviously, there will be a point at which more rigorous standards of technology assessment will need to be applied because of the budgetary constraints that the government is facing.”
Footnotes
Pearson’s involvement with the development of CED occurred in 2005–06 during his term at CMS as a special advisor for technology and coverage policy. His comments do not represent AHIP policy.