US healthcare reform: implications for health economics and outcomes research

The newly enacted Patient Protection and Affordable Care Act will bring sweeping changes to the US healthcare system. The legislation’s main objective is to expand health insurance coverage to tens of millions of Americans who currently go without it for part or all of each year. The law also attempts, in a variety of ways, to put the USA on a more sustainable spending trajectory and to achieve better value. Contained among the legislation’s 1000 or so pages are many provisions that will affect the generation and the use of evidence in the US healthcare system. In this editorial, we focus on three provisions: comparative effectiveness research (CER), a new payment board and a focus on prevention.

Comparative effectiveness research and cost–effectiveness analysis

Perhaps most importantly for health economics outcomes research (HEOR), the legislation advances the use of CER with the creation of a Patient-Centered Outcomes Research Institute (PCORI). The role of this Institute will be to coordinate CER studies, assisting in the funding of these studies and disseminating study findings. The provision heralds the maturation of the comparative effectiveness movement and should prove a boon for outcomes researchers in the USA, both in terms of providing a steady new stream of public funding and in terms of heightening the importance of evidence for pharmaceutical, device and diagnostics companies.

Comparative effectiveness research could even prove to be a ‘gateway’ of sorts to cost–effectiveness analysis. For one thing, clinical CER helps to provide evidence of an intervention’s value in that it identifies treatments that, despite being more costly, are no more effective than alternatives. In addition, it seems conceivable that, over time, CER might begin to embrace cost considerations directly and address whether cost-increasing interventions represent good value for money, particularly as the nation’s fiscal situation – driven largely by unsustainable Medicare spending – worsens. Unlike some previous versions of proposed legislation, the final law does not prohibit consumers of CER (e.g., Medicare) from using the information in reimbursement decisions.

Still, the legislation does provide some important constraints that will likely influence the kind of CER and cost–effectiveness analysis that is produced. For example, the Section states that evidence or findings from CER shall not be used to determine coverage, reimbursement or incentive programs in a manner that:

“…treats extending the life of an elderly, disabled, or terminally ill individual as of lower value than extending the life of an individual who is younger, nondisabled, or not terminally ill”. [1]

It also bars cost/quality adjusted life year thresholds from its purview, stating that:

“[The PCORI] shall not develop or employ a dollars per quality adjusted life year (or similar measure that discounts the value of a life because of an individual’s disability) as a threshold to establish what type of healthcare is cost effective or recommended. The Secretary shall not utilize such an adjusted life year (or such a similar measure) as a threshold to determine coverage, reimbursement, or incentive programs…”[1]

Independent Payment Advisory Board

Second, the law establishes an Independent Payment Advisory Board, which could prove to be one of the most important legacies of the 2010 health reform. The Board will have authority to recommend changes to Medicare payment rates. Critically, Congress must accept the recommendations unless they muster a three out of five majority vote against them. Thus, the Board may emerge as the USA’s version of NICE, although with important differences in that it will focus on payment issues and will not rely on cost–effectiveness analysis thresholds. It seems unavoidable that the Board will encounter decisions regarding how to incorporate evidence – including evidence of value – into payment recommendations. These recommendations may well extend to how Medicare covers new medical technology. Although this provision may still be modified, it has the potential to provide an environment in which cost–effectiveness evidence would play an important role. Although the primary aim of the Board is to reduce the growth in Medicare spending, an additional consideration is to ‘improve the healthcare delivery system and health outcomes’. Just how the remit to improve health outcomes will be interpreted is unclear.

Prevention

Preventive care is an integral part of the new law. For example, the CDC will have the authority to award grants for:

“[The] implementation, evaluation and dissemination of evidence-based community preventive health activities in order to reduce chronic disease rates, prevent the development of secondary conditions”[1].

In addition, the law states that incentives will be offered to patients to encourage the greater utilization of preventive care. As of September 2010, some preventive treatments must be free from copayments and deductibles. Those preventive interventions that have received a rating of ‘A’ or ‘B’ from the United States Preventive Services Task Force will be offered without cost-sharing requirements.

These provisions may also encourage the use of cost–effectiveness evidence. The Medicare Improvements for Patients and Providers Act (MIPPA) of 2008 already authorizes the Centers for Medicare and Medicaid Services (CMS) to ‘conduct an assessment of the relation between predicted outcomes and the expenditures for such services’ when considering preventive interventions. The MIPPA legislation has already been used to support the use of cost–effectiveness evidence in two Medicare National Coverage Determinations [2,3]. The law could build upon this foundation by continuing to incorporate cost–effectiveness evidence into coverage decisions for preventive care.

Implications for the health economics outcomes research community

The move towards a more extensive use of comparative effectiveness evidence, greater utilization of preventive care and the establishment of the Independent Payment Advisory Board will likely provide an environment in which evidence – including evidence of value – will become more important to US healthcare decision makers. With the law now passed, the healthcare industry will need to respond. Health economics and outcomes researchers should recognize these developments and be prepared to adapt accordingly. When attempting to secure reimbursement from CMS or other payers, manufacturers should take care to ensure that they have sufficient evidence of value. This will involve careful consideration of the evidentiary requirements prior to study initiation. Although the precise role that comparative effectiveness evidence will play is unclear, the HEOR community should work to participate in the research agenda as it seems certain to play a large part in the coverage of technologies in the future.

Healthcare reform shows that the USA is joining the rest of the world in providing universal health insurance and in beginning to centralize health technology assessment (although with a uniquely American flavor). However, as many have noted, legislation marks a beginning rather than an end. Implementing reform will bring many challenges. There will be many opportunities for the HEOR community to participate.

Financial & competing interests disclosure

The authors have no relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript. This includes employment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending, or royalties.

No writing assistance was utilized in the production of this manuscript.