Paying the Pauper

The neurotechnology industry, like the entire medical products industry, depends greatly on the outlook for health insurance reimbursement. As we discuss in our article on page 1 of this issue, when it comes to reimbursement, there is no greater force than the U.S. Centers for Medicare and Medicaid Services (CMS). This agency’s decisions and policies impact far more than the 40 million elderly and disabled Americans who participate in Medicare. Private insurers and state and foreign government agencies look to CMS for guidance on complex financial and technology issues. And both established healthcare firms and startups alike depend on CMS’s coverage decisions as endorsement—or rebuke—of their business plans and product development strategies.

So when an agency as powerful as CMS contemplates changes, be they sweeping reforms or just minor modifications in categorization of procedures, device manufacturers must stand up and take notice. Though several categories of neurotech vendors—most notably in neurosensing markets—have taken it on the chin when it comes to 2006 Medicare outpatient reimbursement rates, many other categories of vendors have fared well.

Indeed, the leadership and expertise at the highest levels of CMS stand out as bright spots in an administration marked by ineptness in so many other areas. CMS Administrator Mark McClellan has done a good job of following the mandate of the Medicare Modernization Act of 2003 (MMA) to expedite review of new technology devices. He has implemented an effective information dissemination and feedback process and established a Council on Technology and Innovation comprised of experts on clinical, coverage, and payment issues.

At least one other aspect of MMA should appeal to both neurotech vendors and users and that is the “pay for performance” initiatives promoted so vigorously by McClellan. A pilot chronic care improvement program is paying vendors in three states a bounty if they can save the government 5 percent of the cost of treating individuals with chronic disorders such as congestive heart failure or complex diabetes. A similar initiative seeks to restore mobility to homebound Medicare beneficiaries suffering from severe chronic conditions—and from stifling regulations that currently punish them for getting out of the house.

This should be music to the ears of commercial firms developing products for relatively small markets such as spinal cord injury and other debilitating neurological disorders. Initiatives such as MMA sections 702 and 721 offer—finally—the promise of a payday for entrepreneurs who can help restore function and independence to these very deserving and appropriate user communities.

James Cavuoto
Editor and Publisher



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