Health Affairs: Biomedical Innovation: CMS’s Next Frontier for Value Transformation

“The past decade in US health care has been defined by the “value” movement—an industrywide effort to redesign reimbursements to reward patient outcomes instead of service volume. The tremendous progress to date includes the creation of new policy infrastructure to support innovative payment and delivery models, a systemwide realignment of financial incentives, and promising reports of cost reductions. However, the other variable in health care’s innovation equation—the biomedical sciences—has lacked the analogous attention and reforms needed to unlock value from transformative scientific advances.”

“Executive order 13890, released in October 2019, provides a policy window for the Centers for Medicare and Medicaid Services (CMS) to extend the ‘value’ movement to biomedical innovation. This post outlines the implications of the executive order, describes a potential policy agenda for CMS, and identifies the additional bipartisan legislative support structures needed to accelerate the uptake of value-based payment models for biomedical innovation…”

“The executive order highlights that the regulatory road for biomedical innovations—drugs and devices—has two stops: one at FDA for evaluating safety and efficacy, and one at CMS for evaluating Medicare and Medicaid coverage. Both agencies are working to respond to the policy challenge of regulating in an era of unprecedented biomedical innovation. Although the bipartisan 21st Century Cures Act equipped the FDA with new tools such as the Oncology Center for Excellence, CMS still lacks the resources needed to modernize its coverage and payment systems for the new wave of transformative diagnostics and therapies.”

“The executive order cites several of the pain points for innovation as a result of outdated policy. These include the time lag between FDA approval and CMS coverage decisions (attributed partly to differences in evidence standards between the two agencies), the challenges that have plagued coverage decisions (local inconsistencies, missed national deadlines), and the flaws of the Parallel Review program (only two successful approvals in eight years). These pressures on CMS will soon reach a tipping point with the FDA poised to approve 40 gene therapies in the next three years. Consequently, policy makers and legislators must act now to modernize CMS policies for the new era of biomedical innovation…” Read the full article here.

Source: Biomedical Innovation: CMS’s Next Frontier For Value Transformation – By Kushal T. Kadakia, December 18, 2019. Health Affairs.

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