IHA to assess value of medical devices and improve use

6 June 2008

The Integrated Healthcare Association (IHA) of California has been awarded a $1.3m medical technologies grant by the Blue Shield of California Foundation (BCSF) to implement statewide collection of comparative data, evaluate purchasing and payment systems, and develop a new episode-based payment method for medical device purchasing.

The grant will help to align physician and hospital interests that are now divided through the practice of direct-to-physician vendor incentives, and is part of the foundation's health and technology programme strategy to promote evidence-based clinical best practice and technology adoption among California providers.

Medical device purchasing processes have received greater national attention regarding physician conflicts of interest with medical device companies. Hospitals want benchmarking data and need to adopt best practice strategies to lower medical device costs. Health plans also find it difficult to keep pace with the increasing hospital costs for orthopaedic and cardiac implants, especially when their contracts carve out the device.

"By improving the quality and transparency of the data available regarding medical device use, the IHA project will incentivize surgeons, hospitals, health plans, and the medical device industry to work collaboratively to enhance the value of specialty care delivery in California and throughout the nation," stated Kevin J. Bozic, MD, Associate Professor in Residence University of California, San Francisco Department of Orthopaedic Surgery and Institute for Health Policy Studies.

Although IHA is better known for its California pay-for-performance (P4P) program, it recently completed a two-year value assessment and purchasing project in Orange County, also funded by BSCF, to improve data transparency and payment methods for high-value medical devices, including orthopaedic and cardiac implants, in the California healthcare system.

Crystal Hayling, President and CEO, Blue Shield of California Foundation commented, "IHA has a successful history of multi-stakeholder collaboration among hospitals, physician organizations, and health insurance plans." Hayling added, "The grant is awarded to IHA to evaluate medical technology used in cardiology and orthopaedics, providing California hospitals with information that will be used to help improve quality of care, purchasing methods, and payment systems."

The grant allows IHA to:

  • Aggregate comparative data for benchmarking quality and costs;
  • Identify best practices strategies for value assessment and a statewide hospital technology collaborative;
  • Explore new financial incentives, potentially including payment methods for hospitals when purchasing devices for manufacturers and for health insurers when reimbursing hospital claims, eg, through bundled "episode of care" pricing.

The episode-based payment method will be piloted by at least one health plan with participating hospitals, and these experiences will be documented and disseminated to health plans and providers with statewide support from key stakeholders.

"Most hospitals simply don't have evidence-based and comparative data they need to make sound medical device purchasing decisions or reasonably negotiate with medical device companies," stated James C. Robinson, PhD, Kaiser Permanente Distinguished Professor of Health Economics, UC Berkeley; Washington, DC.

"Surgeons make the device purchasing decision, but costs are paid by the hospital and ultimately passed on to the purchaser and consumer." Dr Robinson is a member of the board of directors at IHA and chairs the medical technology project.

With greater focus on value-based purchasing practices and rising trends in medical device costs and utilization, IHA and the California Hospital Association recently convened leaders at the "Pursuit of Value for Medical Devices" conference in Irvine, California. The May 2008 conference brought together representatives from the hospital, medical device, physician, and insurance sectors to discuss ways to improve coordination and align incentives among the principal stakeholders in the technology-intensive cardiac, orthopaedic, and spine care services.

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