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Thanks to one of our readers for sending the following. . .Myrl


Medicare Covers New Treatments With a Catch
By GINA KOLATA

Published: November 5, 2004


or the first time in its history, Medicare has systematically begun to
make payments for new and expensive treatments and diagnostic tests
conditional on agreement by companies or other groups to pay for
studies on whether these new methods actually work on the Medicare
patients who get them.

The move was decided by the agency's recently appointed director, Dr.
Mark McClellan, who said the goal was better and more cost-effective
medicine.

The new initiatives began this year when Dr. McClellan, who is both an
internist and an economist, decided that evaluating treatments for
elderly Americans falls under Medicare's purview to pay for whatever
is medically necessary. If the treatment does not work, he argues,
then it really is not medically necessary, and Medicare should not be
paying.

Over the past six months, he has been fundamentally transforming
Medicare's scope by offering to pay for a number of new and expensive
treatments and diagnostic tests - ranging from $30,000-a-dose cancer
drugs to brain scans to diagnose Alzheimer's - but with a catch.
Patients can only have them if they enter into studies that evaluate
how well they work. And someone other than Medicare will have to pay
for those studies.

In the past Medicare just paid the bills or said no to treatments.
Now, with a flood of promising but astronomically expensive treatments
and little data on how they work in the real world, Medicare has
decided to use its 41 million beneficiaries to get some answers. And
it is using the threat of refusing to pay unless patients are in a
study as a cudgel to get companies or foundations or professional
groups to pay for the research.

The goal, Dr. McClellan said, is better and more cost-effective
medicine.

"Instead of having 10 to 20 percent success rates over a broad
population, we want to get to 80 to 90 percent who will benefit, and
with fewer side effects," he said.

At issue are questions that will determine the future and price of
health care: Do new cancer drugs costing $10,000 to $20,000 a dose
help in many situations where they are now being prescribed? What are
the long-term effects of weight-loss surgery, costing $30,000 to
$40,000 per operation even when there are no complications? How well
do implantable defibrillators for heart patients, each costing
$35,000, work? Will PET scans to look for early Alzheimer's disease,
costing $1,670 per scan, make any difference?

"It's a whole new role for Medicare," said Dr. Sean Tunis, Medicare's
chief medical officer.

In many ways, Medicare officials say, they are forced to take the lead
because their beneficiaries are the biggest users of the new drugs and
medical devices and no one else is getting the information that
patients and doctors need to decide on treatments. Medicare itself has
no research budget, the National Institutes of Health can only do so
much with its budget and private companies often have a narrow focus
in studies they pay for.

Now, with medical costs soaring, with Medicare's budget at $320
billion and with estimates that a third of all medical expenditures
are for unnecessary or ill-advised treatments, the stakes are
enormous.

And with Medicare the dominant payer for elderly Americans, who are
most likely to need the treatments, its clout, when it insists on
studies, is substantial.

When Medicare says it will only cover treatments for patients enrolled
in such studies, that's "a pretty big stick," said Dr. Stephen
Hammill, president of the Heart Rhythm Society.

Reaction among those who may end up paying for new research has been
mixed. Some are going along; others are arguing why them? But Medicare
holds a powerful hand - its beneficiaries are the biggest users of
drugs and medical devices, and private insurance companies often
follow Medicare's lead on coverage decisions.

The problem arises because while drugs and devices are tested and
evaluated by the Food and Drug Administration before they come on the
market, those tests often leave huge gaps in doctors' knowledge of how
well they work, and for whom.