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Utilization drives costs for medical devices

Lack of price transparency coupled with other factors, such as physician preferences and confidentiality clauses in contracts with manufacturers, could result in some hospitals paying substantially more than other hospitals for the exact same implantable medical device (IMD), says a study by the U.S. Government Accountability Office.

The GAO looked at IMD procedures for Medicare fee-for-service beneficiaries at 60 randomly selected hospitals from June 2010 to December 2011. The five devices studied were primary total knee implants, primary total hip implants, coronary drug-eluting stents, automated implantable cardioverter defibrillators, and cardiac resynchronization therapy defibrillators.

The difference between what the highest- and lowest-paying hospitals paid for one type of automated implantable cardioverter defibrillator was $6,844. For another type, it was $8,723.

The GAO launched the study, in part, because it discovered that utilization, rather than an increase in unit cost, accounted for a 62 percent rise in expenditures for orthopedic IMD procedures between 2004 and 2009. The report might give clinical executives at Medicare Advantage plans cause for concern, says James C. Cosgrove, a GAO spokesman. “We did not look at other payers, but depending on how they contract with hospitals, the same result might apply.”

Percent of contribution toward expenditure growth

Source: “Lack of Price Transparency May Hamper Hospitals’ Ability to Be Prudent Purchasers of Implantable Medical Devices,” U.S. Government Accountability Office, January 2012

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