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PMA/HEALTH CARE QUALITY ALLIANCE REPORT ON COST CONTAINMENT

Executive Summary

PMA/HEALTH CARE QUALITY ALLIANCE REPORT ON COST CONTAINMENT issues cites Genentech's experience with reimbursement coverage of Activase (TPA) as an example of the effect of health care cost controls on patient access to new technologies. The report was released at a March 22 conference held by the alliance in Washington, D.C. The alliance was organized by PMA as part of an effort to seek out areas of common interest among health care groups. The conference was the first public meeting conducted solely under the auspices of the Health Care Quality Alliance. The formation of the alliance was announced by PMA at its annual meeting last May. In addition to distributing the report at the conference, PMA is planning to send out between 10,000 and 15,000 copies of the report through members of the alliance including copies to state legislatures and consumer organizations. The Health Care Quality Alliance report refers to magnetic resonance imaging and shock were lithotripsy along with TPA as expensive technological advances now subject to cost controls, maintaining that "under earlier cost-based and charge-based reimbursement systems, a physician could order these procedures with concern only for the patient's well-being and little concern for the cost." The report adds, however, that "new payment mechanisms contain financial disincentives to use new and expensive technologies." The Prospective Payment Assessment Commission, an advisory body for the Health Care Financing Administration, recommended at a Jan. 13 hearing that the government reimburse hospitals for half of TPA's projected costs. The adjustment target was based on an estimate that TPA could raise Medicare costs in fiscal 1989 by $80 mil. and that full reimbursement of TPA costs could encourage use of TPA over streptokinase, which costs less than one-tenth the price of TPA to hospitals. The alliance contends that changes in reimbursement methods "that discourage the development of new technologies," will achieve only "short-term gains in cost savings," ultimately costing more in the long-run, "if patients are denied access to important new treatments." Entitled "Quality Health Care: Critical Issues Before the Nation," the report was developed by the alliance with the assistance of former PMA Policy Analysis Director Michael Pollard and the Lewin/ICF Consulting firm. PMA President Gerald Mossinghoff highlighted the conclusions reached in the report in a separate presentation at the conference. He said that PMA's challenge "is to make the case for innovation when short-sighted cost-containment pressures threaten to overwhelm all other considerations. To do this, we will need to document our arguments in more detail, particularly with respect to the incremental nature of technological progress and the cost-effectiveness of new technology."
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