Private Payers Disagree With Medicare Over Medical Device Coverage About Half The Time

Sources of regional variation in spending for prescription drugs under Medicare Part D are poorly understood, and such variation may reflect differences in health status, use of effective treatments, or selection of branded drugs over lower-cost generics.

Medicare legislation mandates that the program not pay for items and services that are not "reasonable and necessary" - terms that are open to interpretation and easily politicized. In today's fiscal environment, "reasonable and necessary" warrants a closer look.

We examined Medicare national coverage determinations for medical interventions to determine whether or not they have become more restrictive over time. National coverage determinations address whether particular big-ticket medical items, services, treatment procedures, and technologies can be paid for under Medicare. We found that after we adjusted for the strength of evidence and other factors known to influence the determinations of the Centers for Medicare and Medicaid Services (CMS), the evidentiary bar for coverage has risen. More recent coverage determinations (from mid-March 2008 through August 2012) were twenty times less likely to be positive than earlier coverage determinations (from February 1999 through January 2002). Furthermore, coverage during the study period was increasingly and positively associated both with the degree of consistency of favorable findings in the CMS reviewed clinical evidence and with recommendations made in clinical guidelines. Coverage policy is an important payer tool for promoting the appropriate use of medical interventions, but CMS's rising evidence standards also raise questions about patients' access to new technologies and about hurdles for the pharmaceutical and device industries as they attempt to bring innovations to the market.