New Therapies Pose Quandary for Medicare
The federal Medicare program is expected to decide this week
whether to pay for an aggressive and expensive lung operation
that could offer a lifeline to tens of thousands of elderly
But health economists and medical experts say the
treatment, however alluring, is part of an unsettling trend:
new and ever pricier treatments for common medical conditions
that are part and parcel of aging — procedures that could
potentially benefit tens of thousands of patients, at a total
cost that would far exceed the kind of prescription drug
benefit now being considered by Congress.
The questions, these experts say, are how much Medicare can
or should pay, and whether cost-effectiveness should enter
into the decisions.
The procedure under consideration this week is an operation
for people with severe emphysema, whose lungs are so scarred
that they are constantly out of breath. In keeping with its
policies, the government's Center for Medicare and Medicaid
Services has consulted with medical experts and professional
societies and says it expects to issue its decision as early
The story of the operation, health economists say, is a
case study of the troubling and thorny questions that Medicare
administrators face as they try to live within the constraints
of the $267.8 billion-a-year federal program.
Some say the operation can transform patients' lives.
"If your parents had this condition, you would seek
this operation for them," said Dr. Joel Cooper, a lung
surgeon at Washington University in St. Louis who developed
the operation. Others point to a recent study indicating that
its benefits are modest, at best.
But all agree that the patients are severely ill, with no
other options. And all agree that the operation is expensive.
A recent analysis showed that patients who had the operation
had medical bills averaging nearly $63,000 the first year,
compared with $13,000 for similar patients who had not had it.
Estimates of the number of potential patients vary from 1
percent to 15 percent of the nation's two million emphysema
patients, or as many as 300,000 people, at a total cost of $1
billion to $15 billion.
For now, said Dr. Sean Tunis, the chief medical officer at
the Center for Medicare and Medicaid Services, "nobody
has a good estimate on how big this population of patients
Complicating the issue are other similarly expensive
procedures that are on the horizon or have been approved
recently. For example, Medicare is to decide next month on
devices for patients with congestive heart failure, whose
hearts are so damaged they can barely pump.
The devices, known as L.V.A.D.'s, for left ventricular
assist devices, can help failing hearts pump. Dr. Annetine
Gelijins and Dr. Alan Moscowitz of Columbia University, who
did an economic analysis, said they expected about 5,000
Medicare patients a year to get the devices at first, but that
as many as 60,000 have heart damage so severe that they might
At $60,000 per device, and with an additional $150,000 in
hospitalization charges, the price for L.V.A.D.'s could range
from $1.05 billion to $12.6 billion a year.
A recent clinical trial involving very sick people
indicated that the devices were effective. But Dr. Alan
Garber, a physician and economist at Stanford University, said
the question was not whether they worked.
"The big question is, `In whom else does it work?'
" he said. "The people in the trial had
extraordinarily severe congestive heart failure and were being
kept alive in intensive care units. That's the tip of the
iceberg in congestive heart failure."
"We seem to be getting new technologies that are
effective for common conditions, like congestive heart
failure, like emphysema," he went on. "If you are
talking about a treatment for a rare genetic disorder that
affected 500 or even 1,000 patients a year it would not make
much difference. But in the case of L.V.A.D.'s, or with lung
volume reduction surgery, the potential number who will get it
is quite large so it will force the issue. How are we going to
make it available to Medicare beneficiaries without wrecking
the Medicare budget?"
New Therapies Pose Quandary for Medicare
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Dr. Tunis, of the Medicare services center, says he
understood that the costs of new technologies can be
staggering. But he adds that cost has traditionally not been a
consideration in deciding what to cover.
"If the technology was effective, we would find a way
to pay for it," he said. "There is no dollar value
per life per year at which Medicare would decline to
But costs are mounting.
The agency just approved implantable defibrillators, which
can shock a failing heart, preventing sudden death. They cost
$30,000 per patient.
Medicare restricted the devices to patients with specific
patterns of disease, denying payment for them to about half of
the million or more patients who could benefit, according to a
large study. But now it is under intense pressure from
doctors, patients and professional societies to expand its
coverage to all those who met the study's criteria.
Then there are coated stents, tiny cages coated with drugs
to prop open arteries and prevent the blood vessels from
closing again. Each costs $3,200, compared with about $1,000
for the older, uncoated stents.
The million patients a year who get stents typically get
more than one, with some getting four or five, said Dr. David
Hillis, an interventional cardiologist at the University of
Texas Southwestern School of Medicine, who called the
increased use of defibrillators and coated stents "a good
way to bust the budget wide open."
Medical experts say that in addition to the legitimate
costs of each of these procedures, they fear technology creep
— an increasing use of expensive procedures to wider and
wider groups of patients, many of whom may not benefit and may
even be harmed.
"I think it is huge, I think it is pervasive. And it
is a major driver in Medicare's cost growth," said Dr.
Scott Ramsey, a health economist at the University of
Washington who analyzed the cost of lung volume reduction
surgery. "The reason Medicare is cutting payments to
doctors is that its expenses for technology are expanding so
The emphysema operation, lung volume reduction surgery,
sneaked up on Medicare about a decade ago.
Medicare never agreed to pay for the procedure. But
unbeknownst to the agency, pay it did.
"None of the contractors in the Medicare system was
aware that the operation was becoming more popular until it
began being reported in journals," Dr. Tunis said.
In 1996, Medicare learned that it had paid for 3,000
patients and the numbers were growing fast. But there was a 17
percent mortality rate and no good evidence that the operation
In response, the federal government started a clinical
trial involving 1,218 patients. Medicare would pay for the
operation only if patients participated in the trial, and if
they joined the trial there was a 50 percent chance that they
would be assigned to a control group that did not get the
Dr. Tunis says the outcome of the trial will determine
whether Medicare will cover the operation. But Dr. Ramsey, the
University of Washington health economist, said the agency
never stopped to consider "what would happen if the trial
came out with uncertain results."
The data, published in May, were not quite the ringing
endorsement that many had hoped for.
The study found a subgroup that seemed to benefit —
patients with emphysema located mostly in the upper lobes of
their lungs and little ability to exercise. They survived
longer and could exercise more after they had the operation.
But that is not rigorous evidence, since any set of data
will include small subgroups that benefit and others that are
harmed. In evaluating trials of new drugs and procedures, the
Food and Drug Administration does not accept such subgroup
analyses, requiring a second trial for the subgroup that may
But a second trial of the lung operation is unlikely, many
medical experts said. The first one was so controversial that
some doctors would not participate, saying it would be unfair
to their patients to deny them the surgery if they fell into
the control group.
New Therapies Pose Quandary for Medicare
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"We felt it was not possible for us to look a patient
in the eye and say, `We honestly don't know whether you are
better off with this operation or without it,' " said Dr.
Cooper of Washington University. He encouraged his Medicare
patients to sue. "I went to court 28 times and won 28
cases," he said.
While some, like Dr. Ramsey, say that the clinical trial's
results were far from a ringing endorsement of the operation,
many lung surgeons disagree, saying that for the 25 percent of
patients in the subgroup, the operation was a huge success.
Dr. Barry Make, who directs the emphysema program at the
National Jewish Medical and Research Center in Denver, was
struck by the survival benefit in the subgroup. "That
result is stupendous," Dr. Make said, adding that many
patients also felt better.
Dr. Ramsey and others worry that if Medicare approves the
operation for the restricted group of patients like those in
the subgroup, technology creep may lead to many more having
Seventy percent of the nation's estimated two million
emphysema patients have upper lobe damage. How will Medicare
know whether a particular patient also has poor exercise
Dr. Cooper says the solution is to restrict the operation
to a few centers of excellence where experienced surgeons will
assess patients and decide who should have the operation.
Dr. Tunis agreed but said there were limits to how much
policing Medicare could do, or wanted to do.
"We don't have a direct way of enforcing compliance
with coverage, particularly in patient selection
criteria," he said. "It's sort of an honor system.
But a lot of these patient characteristics are somewhat
subjective or qualitative."
And that, says Dr. Garber, is almost guaranteed to lead to
There is pressure from patients, doctors and hospitals to
cover expensive new procedures, even if their benefits are
modest. And that is understandable, Dr. Garber said. "If
you the patient are insulated against the cost consequences of
your decision, why not get the latest and greatest?" But,
he added, there is a price to be paid.
One solution would be to greatly increase Medicare's
budget. But that would mean tax increases. Another would be
for Medicare to consider cost-effectiveness, rather than just
effectiveness. But, Dr. Tunis said, every time that has been
proposed, the agency has had to back down.
"This is the fundamental problem hidden behind the
broader discussions of health care reform," Dr. Tunis
said. "At the end of the day, somebody has to make the
decisions one at a time about what people are going to get.
But the reality is that we can't afford to pay for absolutely
everything that provides some benefit."
So, Dr. Garber said, "Medicare is in a bind."
"The real question," he said, is "how can we
inform the public better that, when they want to have access
to health care, someone will pay and it will be them?"