HCFA has dusted off a 7-year-old regulatory proposal that would use cost-effectiveness as one criteria in determining whether Medicare will pay for a procedure or treatment.
The proposal, expected to be published as a final rule sometime this year, is receiving lukewarm support from provider groups. They say they want cost-effectiveness to be used but fear how HCFA will implement it.
Under existing law, Medicare may not pay for any medical devices or services that are not "reasonable and necessary for the diagnosis and treatment of illness or injury."
The proposal HCFA now is pushing forward is a revision of a 1989 proposed rule that defined "reasonable and necessary" as meaning that services are safe and effective, appropriately furnished, cost-effective and not experimental or investigational.
The 1989 proposed rule spurred objections from provider groups that the cost-effectiveness criterion could lead to rationing or denial of needed and appropriate care.
HCFA decided to resuscitate the issue because of concern about coverage decisions in Medicare managed-care plans and in the privatized Medicare system envisioned in 1995 in now-stalled balanced-budget legislation.
In the final rule, HCFA plans a revision that will define a reasonable and necessary service as one that is "cost-effective when compared to an equivalent Medicare-covered service."
Provider groups said the revision probably would result in fewer denials than the original proposed rule. But they cautioned that it still could cause HCFA to deny coverage to more expensive technologies that also are more appropriate in certain cases.
Others cautioned that determining cost-effectiveness of treatments or technologies will increase government red tape.
"I think they still haven't answered the question: `Is it really workable?' " said Randy Teach, a lobbyist for the Medical Group Management Association.