Medical Devices Must Show Value Other Than Price

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By Michael D. Williamson

Oct. 18 — Medical technology companies must demonstrate the value of their devices on aspects other than price as bundled payment models become more common, a Magellan Health executive said Oct. 18.

For example, device manufacturers need to prove their products shorten hospital stays and reduce complications, David Hodges said at the Advanced Medical Technology Association’s (AdvaMed) annual conference in Minneapolis. Hodges is the chief medical officer of Magellan Health, a for-profit managed care company based in Columbia, Md.

Bundled payment models are one way the Centers for Medicare & Medicaid Services is trying to reduce variations in treatment costs among hospitals while improving outcomes. With bundled payments, hospitals receive one payment for an entire episode of care that spans acute and post-acute care instead of receiving separate pay for individual services under the fee-for-service schedule. Hospitals could face a financial downside for not coordinating follow-up care and some are looking to derive more value from the devices they use, which may prompt medical technology companies to change how they design and sell their products.

Manufacturers could help hospitals succeed in bundled payment models by sharing device performance data with providers, the American Hospital Association’s Joanna Hiatt Kim told Bloomberg BNA Oct. 18. Kim is the vice president for payment policy in the AHA’s Washington office.

Work Ahead for Providers

Providers also should work on identifying potential procedures and services that could go into a bundle before payers require them to participate in a bundled payment model, Thomas Talley, the chief operating officer of the Minneapolis Heart Institute, said at the AdvaMed conference. For example, the Minneapolis Heart Institute, which is part of the Minneapolis-based Allina Health System, has prepared cardiac care bundles that Allina could present to payers should they require bundled payments, Talley said.

In July, the CMS released the cardiac bundled payment model. Under that proposal (RIN:0938-AS90), the CMS plans to mandate cardiac care bundled payments for hospitals in 98 metropolitan areas randomly selected for participation by the Medicare agency.

Heart and valve stents are examples of the types of devices that will be included in the cardiac care bundled payment model once it is made final, the AHA’s Kim told Bloomberg BNA.

Preparing for Cardiac Bundled Payments

It is a good idea for hospitals to prepare now for the cardiac care model, even if they aren’t picked to be part of it, Jessica Walradt, lead for value-based care models at the Association of American Medical Colleges (AAMC), an industry group for teaching hospitals, said Oct. 18. AAMC is based in Washington.

Walradt outlined several steps hospitals could take now to prepare for the model, such as:

  •  educate clinical staff about bundled payments;
  •  find a doctor who believes in bundled payments to serve as a cheerleader for the program;
  •  seek out colleagues who have experience with Medicare bundled payments and discuss the challenges they had with the program; and
  •  estimate how much of their volume will be subject to the program.

Knowing the volume level is important, because hospitals with low volume will see a great degree of variation in outcomes and financial results measured by the program, Walradt told Bloomberg BNA. Conversely, hospitals with a high volume of procedures subject to the bundled model can begin to rethink how they should align their resources for succeeding in the program, she said.

These high-volume hospitals should also dedicate a program manager to work on the cardiac bundled payment program at least half of the time, according to Walradt. She said it would also be helpful for hospitals to develop a job description for this program manager, so human resources has it ready to post should the facility be picked for the cardiac care model.

Kim told Bloomberg BNA the AHA feels preparing for the cardiac care model now will be a worthwhile path for hospitals looking to transform care. Even if they don’t participate in the model, working to get ready for it will allow hospitals to more easily prepare for other bundled payment models in the future. That’s important because “I’m sure at some point bundles will be expanded,” Kim said.

To contact the reporters on this story: Michael D. Williamson in Washington at mwilliamson@bna.comTo contact the editor responsible for this story: Brian Broderick at

For More Information

Details about the AdvaMed conference are at cardiac care bundled payment proposed rule is at

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