Medicare Spent $1.5B Replacing Failed Medical Devices, OIG Says

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By Alex Ruoff

Oct. 3 — Medicare has spent $1.5 billion replacing seven types of failed or recalled medical devices implanted in cardiac patients, according to early findings from an ongoing government watchdog analysis released Oct. 3.

Medicare beneficiaries spent an additional $140 million in copays and deductibles to replace recalled or failed devices, the Department of Health and Human Services Office of Inspector General said in the alert directed to the Centers for Medicare & Medicaid Services.

The cost of replacing the devices—and for the surgeries and other services needed for people whose cardiac devices failed—could have been lower if researchers and health-care providers could track medical devices through insurance forms, the OIG said. The agency advised acting CMS Administrator Andrew Slavitt to continue supporting the addition of unique device identifiers on Medicare claims forms.

The OIG is the first federal agency to address the possible cost savings for introducing unique device identifiers to insurance claims. Supporters of identifiers have long touted the patient safety benefits possible by adding them to claims forms, but have been forced to acknowledge that updating Medicare databases could be expensive.

“This reinforces the importance of acting,” Josh Rising, director of health care programs at the Pew Charitable Trusts, told Bloomberg BNA Oct. 3. “We know there were $1.5 billion spent on just these seven devices, so there's likely significant savings to be found here.”

Having identifiers on claims forms would help reduce Medicare costs primarily by identifying poorly performing medical devices earlier than is currently possible to prevent them from harming those using them, the OIG said in its preliminary findings.

Finding medical devices already given to patients, particularly those implanted in patients, such as cardiac devices, is a painstaking process that requires analyzing medical record and insurance claim databases, the OIG said.

OIG investigators are analyzing Medicare data to determine the Medicare costs associated with defective medical devices and flagging ways to reduce those costs.

The OIG doesn't generally publish these early alerts, meant to give the public agencies involved in the investigations time to react to their findings, but the OIG has done so in the past, Tesia Williams, a spokeswoman for the OIG, told Bloomberg BNA in an e-mail Oct. 3.

CMS Support for Identifiers

The CMS in July reversed its long-standing opposition to including unique device identifier data on Medicare claims when it asked the standards organization responsible for updating insurance claims forms to include a new field for the electronic capture of identifiers for certain medical devices, namely implantable devices.

The letter signified that the CMS's parent agency, the Department of Health and Human Services, supports adding identifiers to claims if Congress provides funding to update Medicare claims processing systems.

The CMS warned previously that adding a field for identifiers to claim forms could be expensive for clearinghouses, providers and Medicare, which would each have to update their claims processing systems to accept the new field.

The Food and Drug Administration, responsible for issuing device identifiers, has long supported their use and established the unique device identifier system in 2013, which requires the labels and packages of devices distributed in the U.S. to include an identifier, unless the agency grants an exception or alternative.

Implementing an updated claims form that collects UDI for implantable devices would cost Medicare roughly $300 million, the CMS said in its July letter to the McLean, Va.-based ASC (Accredited Standards Committee) X12, which is exploring ways to exchange the UDI data among manufacturers, providers, payers and regulators. There would also be additional costs to state governments to implement the updated claims form in their Medicaid claims processing systems.

To contact the reporter on this story: Alex Ruoff in Washington at aruoff@bna.com

To contact the editor responsible for this story: Kendra Casey Plank at kcasey@bna.com

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