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Let's Face Retirement

October 29, 2013

What a Major Coverage Denial Says About Medicare's Future

The Center for Medicare and Medicaid Services (CMS) recently issued a controversial draft decision to disallow reimbursements for a newly FDA-approved amyloid positron emission tomography (PET) scan. This could have widespread ramifications for patients needing such tests in the future.

“The PET scan technology empowers doctors to more accurately diagnose patients that may be suffering from hard to diagnose forms of dementia,” wrote Dr. Wayne Winegarden, Senior Fellow at the Pacific Research Institute, in a critique of the decision. “With this more accurate diagnostic tool, doctors are better able to design appropriate treatment plans for patients.”

If finalized, the decision would require additional clinical trials and further CMS review of the process, during which only trial participants would receive full reimbursement from Medicare. “Ironically, the review program used by CMS—officially known as the Coverage with Evidence Development (CED) program—was designed to incent medical innovation,” wrote Winegarden. “More often than not, however, the CED program has been used to obstruct innovation rather than incentivize it.”

Reactions to the decision have varied among researchers, medical manufacturers and Medicare recipients. The United States Alzheimer's Foundation and Eli Lilly and Company, manufacturer of an FDA-approved amyloid tracer for the imaging process, have objected to the draft and urged the CMS to reconsider. However, several Alzheimer's researchers have applauded the decision, voicing caution and skepticism regarding the use of amyloid imaging for Alzheimer's detection.

The FDA-CMS disagreement also raises broader questions  regarding coverage, funding and widespread access to new treatments. While critics such as Winegarden see the CED as inherently stifling to senior healthcare, others view it and similar review processes as necessary in a taxpayer-funded system.

“Medicare and Medicaid are not specifically looking to stifle innovation, but in the end it boils down to only so many dollars to go around,” said Chris Orestis, senior care advocate and CEO of Life Care Funding. “This country is so rich in technological innovation, and there are so many treatments and techniques you could make cases for. These programs are backstops; they're not intended to get you anything and everything.”

Given the limitations of government funding, then, it may be necessary to keep the CED and other review systems in place. “CMS should be able to decide what it will and won't cover by going through the appropriate processes,” Orestis said. “If they're going to invest billions of dollars through reimbursements, they have a legitimate interest in reviewing a process for potential cost savings.”

Issues of cost and coverage aside, the CMS decision also contributes to concerns that growing government involvement in healthcare will ultimately limit innovation altogether. The FDA is often ridiculed for its own stringent review policies, and the CMS's involvement in the approvals process now adds layers of complexity for medical manufacturers. “The CED program exemplifies the problems created when large federal bureaucracies excessively expand their regulatory power in the healthcare market,” said Winegarden. “Due to the adverse impact that the CED program is having on medical innovation and patient welfare, both a short-term and a long-term fix are necessary.”

Still, other health experts and senior advocates aren't as worried about the future of medical technology. “Innovation will continue because there will always be a combination of private and public dollars to be spent on it,” said Orestis. “Medicare and Medicaid may have to be selective in what they can support, but the private market will always be there, and prices will be established by supply and demand.”

Of course, demand is consistently high among the nation's growing population of seniors and dementia patients, and the supply of Medicare money isn't keeping up. Treatments for Alzheimer's and other forms of dementia may continue to improve, but current and soon-to-be retirees will need to set aside their own funds to ensure they have access when they need it. “Someone who relies solely on Medicare for their health coverage is just not going to get as good a coverage as someone with Medicare, Medigap, private life insurance and a long-term care policy,” Orestis said.

This content has been developed by a third party not affiliated with Nationwide Financial and is made available for informational purposes only. This information does not constitute a recommendation nor should be construed as a solicitation to purchase any investment product. Nationwide Financial and Summit Professional Networks are non-affiliated companies. Nationwide, Nationwide Financial and the Nationwide framemark are service marks of Nationwide Mutual Insurance Company. ©2014 Nationwide Financial Services, Inc. All rights reserved.

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