Medical Technology Assessment

Section Editor: Peter G. Duncan. In attempting to address the issue of medical technology assessment, it is important to define technology. There are numerous definitions of technology. From the broadest perspective, John Kenneth Galbraith defined it as organized knowledge. The United States Congress Office of Technology Assessment defines medical technology as "the techniques, drugs, equipment, and procedures used by healthcare professionals in delivering medical care to individuals, and the systems within which such care is delivered." Assessment of medical technology therefore is the process of examining and reporting properties of a medical technology, such as safety, efficacy, feasibility, effectiveness, and indications for use. The past century has witnessed an explosion of new medical technologies. Once, medical care was relatively inexpensive because interventions were rare and personnel costs were low. As treatments became effective, new drugs and operations were integrated into routine medical practice, increasing the costs of medical care. Increased usefulness and cost led to the development of medical insurance to pay for new technologies. Payment of traditional medical insurance was retrospective; i.e., physicians and hospitals were reimbursed for procedures that had already been performed. Retrospective payment fueled the development of technology because increased use of technology led to increased reimbursement (Figure 1), and technology, especially in the surgical arena, was left to develop unfettered by scientific proof. Every innovative procedure that could be conceived and tried was reimbursed in the 1960s and 1970s.Figure 1: Driving force for technology development. Traditionally, a new technology is developed from a basic science discovery. This new technology would be reimbursed in a retrospective payment system, which further fuels development of other new technologies. In the prospective payment system (e.g., Diagnosis-Related Groups), new technologies do not lead to increased reimbursement, and only those technologies that are proven to be cost-effective will be adopted. Adapted from Weisbrod B. The nature of technological change: incentives matter! In: Adopting new medical technology, Washington, DC: National Academy Press, 1994.Recently, there have been dramatic changes in the method of medical reimbursement. Increasingly, medical bills are reimbursed on a prospective payment system, involving disease-related groups (Diagnosis-Related Groups DRG), accepted procedure codes (Current Procedural Terminology CPT-4), and capitated payments 1-3. Increased use of technology and innovations does not yield reimbursement beyond that for existing DRG procedures and codes. Technologies that add cost without benefit reduce resources for others in the medical systems. Conversely, technologies that decrease overall cost are encouraged. Although, in theory, technology innovation may be expected to slow under the capitated system, further research is required to determine whether theory will be transformed into practice. Assessment of medical technology has emphasized the evaluation of new technologies for both outcomes and costs as a means of making policy decisions for clinical care and reimbursement. Approval of Medical Technology Virtually all countries have some form of approval process before new drugs or devices can be sold to the public, although their exact process and requirements differ. In the United States, the Food and Drug Administration (FDA) is responsible for approving new drugs and devices used for medical care. There are several excellent reviews on the FDA approval process; therefore, the topic is discussed only briefly herein 4,5. The safety and efficacy of a new drug must be demonstrated before its approval. The label (package insert) can be written so that it guides physicians in administering or prescribing a drug with an acceptable benefit to risk ratio. Classically, the drug approval process has three phases. In the last decade, phases II and III have been merged, and phase IV (postmarketing) studies are now frequently required for continued approval. Phase I trials seek to find the dose limits to evaluate toxicity with pharmacodynamics and pharmacokinetics. These are usually trials of nontoxic drugs in healthy volunteers. In patients with advanced disease or conditions that do not respond to other therapies, toxic medications, such as new chemotherapeutic drugs, may be used in phase I trials. Phase II studies are traditionally small (<300 patients), carefully controlled clinical trials in a tightly defined patient population designed to determine the effectiveness of a drug for a particular indication. Phase II studies focus on efficacy, common short-term side effects, and risks associated with a drug. Phase III studies are expanded controlled and uncontrolled trials of effectiveness in less tightly controlled patient populations. The studies gather additional information about effectiveness and safety and involve from a few hundred to several thousand subjects; patients in Phase III studies often have comorbid conditions. A drug's effectiveness, pharmacokinetics, and pharmacodynamics are defined with such disease entities. There are different requirements for FDA approval of drugs and devices. Traditionally, the primary requirement for approval of a new device was safety. Only recently has there been a requirement to prove that a device performs its stated function. There are two distinct methods of demonstrating that a new device is safe. The first is to demonstrate that the device is substantially similar to an already approved device. Many monitoring devices are in this category. If a device cannot be shown to be substantially similar to an approved one, then a formal evaluation process must be performed. A recent example of a device that required and obtained formal evaluation is the BIS monitor, for which new guidelines were developed for a "depth of anesthesia" monitor 6. Interestingly, surgical procedures do not require an official approval process. However, reimbursement plays a critical role in the adoption of a new surgical procedure. If a procedure is deemed experimental, many medical insurance policies will not cover that episode of care, although there is a great deal of interest in the legislatures to require coverage of patients enrolled in clinical trials. Medicare plays an important role in this area because the third-party payers frequently follow Medicare's lead in reimbursing a specific procedure under an existing CPT code and for a specific DRG. New CPT codes can be obtained, but their inclusion under a specific DRG is a longer bureaucratic process that encourages fitting new procedures into existing CPTs. Because existing CPTs do not recognize innovation with financial rewards, innovation may be discouraged. Traditionally, the Health Care Finance Administration (HCFA) allowed local and regional carriers, e.g., Blue Cross/Blue Shield plans, to make coverage decisions without requiring full evaluations. In 1993, the HCFA reduced its number of carriers and has taken a more active role in coverage decisions, more frequently limiting expensive technologies by time or provider. For example, heart transplants are reimbursed by the Medicare program only at specific sites and often require that specific data be submitted by the provider of the service. Despite these limitations, new technologies could be widely adopted, greatly adding to the cost of the Medicare program. An example of the importance of evaluating new surgical procedures is lung reduction surgery. Several centers throughout the country began performing this procedure in selected patients and reported excellent results, but there was no comparison group to determine the procedure's true efficacy 7. Federal officials calculated that widespread-use of lung-reduction surgery would cause a great financial on the HCFA and This led officials to a on reimbursement for this procedure. from the medical a was organized to the efficacy of lung-reduction surgery. 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