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MEDICAL DEVICE PRICE NEGOTIATIONS BETWEEN MANUFACTURERS AND GOVERNMENT

This article was originally published in The Gray Sheet

Executive Summary

MEDICAL DEVICE PRICE NEGOTIATIONS BETWEEN MANUFACTURERS AND GOVERNMENT would be established under a single-payer national health reform proposal, entitled the American Health Security Act, introduced March 3 in both the House and Senate. The proposed legislation would establish a national health security standards board whose responsibilities would include establishing payments for medical devices and equipment. According to the bill, the board, consisting of the Secretary of HHS and six other presidential appointees, "may conduct negotiations, on behalf of State health security programs, with equipment and device manufacturers and distributors in determining the applicable prices." The board would establish a list of approved durable medical equipment and therapeutic devices, including hearing aids, prosthetic appliances and eyeglasses, deemed "necessary for the maintenance or restoration of health or of employability or self-management," which are eligible for coverage. In creating the list, the board would be required to "take into consideration the efficacy, safety and cost of each item," and it would be allowed to attach any conditions regarding both "the circumstances under which, and the frequency with which the item may be prescribed." The provision also accounts for the exclusion of products from the list of covered items if they are found "ineffective, unsafe or overpriced" and alternative products are available. The bill is a comprehensive reform proposal under which all health care would be paid for by the federal government and administered by the states. In turn, states would be allowed to establish their own health care delivery system and patients would be able to choose their own providers. The measure's principal sponsors are Sen. Paul Wellstone (D-Minn.) and Reps. James MacDermott (D-Wash.) and John Conyers (D-Mich.). Sponsors say they view the bill as a complement, not a "challenge" to the White House reform effort, which so far has stayed away from the single-payer approach in favor of the principle of managed competition. The legislation also would provide for an approval process for capital expenditures to be administered by each state's health security program. Capital expenditures are defined in the proposal as "expenses for the purchase, lease, construction or renovation of capital facilities" and equipment. Capital equipment would be "valued at at least an amount (specified by the board)" or be of a kind "specified by the board." This provision aims both to "meet the need for covered health services that are consistent with state budgets" and to establish a balance between the need and delivery of services, particularly in underserved areas. Among the factors that would be considered by a state in approving capital reimbursement applications are: the population distribution and risk factors in different geographic areas of a state, the capital needs of the different geographic areas of a state, and the "need to correct for historical maldistribution in the allocation of health care capital."
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