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John M. Eisenberg, MD, Administrator, AHCPR
Before the House Ways and Means Subcommittee on Health, April
Technology and the Cost of Medical Care
Good afternoon, Mr. Chairman and members of the Subcommittee.
It is a pleasure to appear before the Subcommittee in my first
full week as the new Administrator of the Agency for Health Care
Policy and Research (AHCPR). I enjoyed my work for you as Chair
of the Physician Payment Review Commission, and I look forward to
working with you in the years to come. I especially want to thank
you for giving me the opportunity today to address the issue of
evaluation science and how it relates to coverage decisions in
our health care system.
Market forces have spawned unprecedented changes in our health
care system. The health care market today is characterized by
intense price competition, with purchasers demanding greater
accountability and value. These pressures are leading health
plans and facilities to give increasing scrutiny to capital
investments and decisions to cover new medical procedures or
services. In an atmosphere of constrained resources, it is hardly
surprising that we are facing increasing demands to prove that we
are getting real value for the health care dollars we spend.
Unfortunately, decisionmakers often lack the scientific evidence
on effectiveness that would help them judge the relative value of
alternative health technologies.
One result of our shortage of scientific evidence is our
health care system's wide variation in use of services. Often,
this occurs when there is ambiguity on the effectiveness of the
procedure or service. There is also variation in what services
are covered. For example, a recent study on laser therapy
demonstrated that there is substantial variation in coverage on
new technologies. A 1994 General Accounting Office Report found
substantial variability among Medicare carriers with respect to
denial rates for services screened for medical necessity (GAO Report, 1994).
Variation also exists in medical practice among states and
local jurisdictions. For example, the rate of prostate biopsy in
Dallas, Texas is 29.6 per thousand of Medicare enrollees,
compared to McAllen, Texas, where it is 8.3 per thousand of
Medicare enrollees (Wennberg, 1996).
Health services research has shown that these differences can be
attributed in large part to a lack of knowledge regarding the
efficacy and effectiveness of medical technologies. (Steiner, 1996 & 1997).
A study examining the high variability in the use of
electroconvulsive therapy found that a primary cause was the lack
of knowledge regarding the effectiveness of the procedure (Hermann, 1995).
Another consequence of inadequate evidence on effectiveness is
that old technologies linger even when they have been surpassed
by better ones. In 1989, I published a study that examined old
and new technologies in hospitals and found that new technologies
did not replace older technologies, but were simply added to the
hospital regimen. For example, we found only a small reduction in
one older technology, oral cholecystogram, after the introduction
of a new and clearly better technology, gallbladder ultrasound (Eisenberg, 1989).
The lack of scientific evidence on the effectiveness of
medical procedures and technologies is troublesome: it
complicates the treatment decisions physicians and patients face,
makes it difficult for plans to make appropriate coverage
decisions, and can lead to appeals of coverage decisions in
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Technology and the Cost of Medical Care
Mr. Chairman, let me make two points at the outset. First,
when I refer to technology, I am not only referring to expensive
high-technology devices such as magnetic resonance imaging, but
also to the vast array of "little ticket" technologies,
such as pap smears and other common medical procedures and
services. These small-cost technologies can add up to big
expenses. For example, an AHCPR-funded recommendation for
preventing pressure ulcers led to the finding that use of
low-tech treatments for pressure ulcers could, in just two
states, New Hampshire and Vermont, result in Medicare savings of
over $1 million annually.
Second, as my earlier prostate example suggests, the need for
scientific information related to the appropriate use of
technology does not end with a medical coverage decision. Even
when medical coverage is not an issue, clinicians and patients
need the latest scientific information to determine whether the
procedure or service is appropriate in each specific instance.
They need to balance carefully the risks and benefits of every
medical intervention and any alternatives for each individual
This is critically important because there is a growing body
of scientific research that demonstrates that patients often
receive services that are not clinically indicated. For example,
researchers at the RAND Corporation found that up to 30% of
patients whose medical records they reviewed received medical
procedures that were not appropriate when measured against
rigorous clinical standards established by experts. They also
concluded that the appropriateness of another 10% of procedures
was equivocal (RAND Studies). Other
researchers have estimated that only 20% of technologies now used
in the practice of medicine have been specifically evaluated (OTA Report, 1994).
When medical technology is used appropriately, it can improve
health, and in some instances, reduce costs. For example, in
1991, AHCPR conducted a technology assessment on laparoscopic
cholecystectomy on behalf of Health Care Financing Administration
(HCFA). Based on AHCPR's recommendations, HCFA covered this
procedure, which has subsequently resulted in reduced hospital
length of stays. This finding is borne out in a recent study
funded by AHCPR, in which patients with laparoscopic
cholecystectomies had hospital stays that were one-third less
than those who underwent the standard surgical procedure.
Another example is AHCPR's assessment of routine laboratory
tests in end stage renal disease (ESRD) for patients undergoing
dialysis. In 1994, there were 200,000 individuals receiving
dialysis at a cost of $7 billion annually. An AHCPR health
technology review found that there was little scientific data to
support the routine use of some of the tests performed in
patients undergoing dialysis. Clearly, millions of dollars can be
attributed to the cost of testing—some of which is
At the same time, technology can increase costs. Excessive and
inappropriate use of new drugs, devices, and other services is
driven by many causes—economic incentives for physicians and
hospitals, the practice of defensive medicine, and insurance
systems that pay for technological interventions more generously.
Poor understanding concerning the effectiveness and outcomes of
medical technology is also a contributing factor.
Another problem is the use of ineffective technology, which
can raise costs but not improve patient outcomes. Also, the rapid
rate of development and diffusion of new and promising
technologies often means that timely data are not available to
make a scientific judgment regarding their effectiveness. A
recent study found that a majority of medical directors of health
plans cited the lack of timely data on the safety, effectiveness,
and cost-effectiveness as the major barrier to establishing
optimal coverage decisions. As a result, we need to develop
innovative approaches to acquire the necessary data (Steiner, 1996).
AHCPR's technology assessment on lung volume reduction surgery
(LVRS) is a case in point. This technology assessment concluded
that there was insufficient evidence on which to make a
scientific judgment regarding the effectiveness of LVRS. AHCPR
recommended that coverage be granted within the scope of a
clinical trial, which is now being conducted by the National
Institutes of Health. AHCPR is supporting the cost-effectiveness
component of that trial. It is significant that this study will
also include measures of patient preferences and of quality of
life, because the role of these factors are an important
component of the scientific knowledge we hope to derive. It is
our hope that the collaborative efforts between the NIH and AHCPR
will yield the information needed to make an informed coverage
decision on LVRS.
Another mechanism that should be explored as a complement to
clinical trials to evaluate technologies is the "Centers of
Excellence" approach that was used in coverage of cardiac
transplants. These Centers are defined by having a demonstrated
expertise in performing a given procedure or technology.
Additionally, patients are registered and outcomes and
effectiveness data are collected throughout the episode of care
to help further refine the technology or procedure being
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Approaches involving cooperation between an insurer (in this
case, Medicare), the scientific community, and advocates of new
technology will become increasingly essential in the years ahead.
Unless we address the need for solid, scientific evidence on the
benefits and costs of medical technology, we run the risk that
future efforts to contain health care spending will inhibit
innovation. This could mean that better technology—even more
cost-effective technology—will not be developed, and
American leadership of a global industry could be lost.
The role of the government is pivotal in this regard. It is
the largest purchaser and provider of health care services,
accounting for at least 45% of all health care spending. For some
procedures federal dollars account for the lion's share of
expenditures. For example, Medicare and Medicaid expenses for
coronary artery bypass graft procedures exceed $8.7 billion and
represent 56% of the total expenditures for this procedure (AHCPR, 1992). As a purchaser of medical care,
the federal government has a compelling interest in technology
assessment and those decisions need to be based on the best
scientific information available.
Through the work of the National Institutes of Health and
AHCPR, the federal government also helps to build the underlying
research, the basic science for technological innovation and its
assessment. In addition to conducting technology assessments for
HCFA and the Department of Defense, AHCPR supports work that is
critical to the field of technology assessment, such as:
- The effectiveness and cost-effectiveness of alternative
treatments and services provided in community settings
(including stroke and cardiovascular disease, prostate
disease, diabetes, and pneumonia and other common
- Research on the functional outcomes of treatments for
patients and the importance of involving patients in
treatment choice. For example, an AHCPR research project
developed a "Shared Decision Making Program,"
which included an interactive videodisc for use in
helping patients with benign prostatic hyperplasia make
informed choices among treatment options. Pilot studies
have shown that patients who view the vidoeodisc choose
surgery less often than other patients.
- The development of medical information technologies such
as computerized patient records, computerized decision
support systems, hospital and ambulatory care data
systems that provide the ability to conduct this research
while providing additional resources to clinicians. For
example, an AHCPR-supported study found that AIDS
patients who use the Comprehensive Health Enhancement
Support System (CHESS) had fewer visits to doctors
office, or spent 17% less time in doctors' offices. These
patients have lower health care costs and fewer and
shorter hospitalizations. AIDS patients using CHESS had
20% lower treatment costs overall; and
- Research to improve the methodology underlying technology
assessment. For example, AHCPR supports the development
of outcomes and effectiveness measures such as the
"VF-14," an index of functional impairment in
patients with cataracts.
Our research demonstrates that technology assessments, done
scientifically (1), can provide the
infrastructure to help reduce practice variation and to allow for
informed decision making. This summer we will implement our new
Evidence-based Practice Center program through which we will
provide public and private sector organizations with scientific
information to improve the quality, effectiveness, and
appropriateness of clinical practice. The Centers' evidence
reports will provide critical evaluations of the available
scientific literature regarding clinical interventions and
technologies. The topics for the evidence reports will be
selected from nominations by the private and public sectors. With
the support of the Appropriations Committees, we have set aside
funds for this effort and will fund about 10 evidence-based
practice centers this summer. The Centers will better enable
AHCPR to serve as a "science partner" for both the
public and private sector. These reports will also assist HCFA,
Department of Defense, Veterans Administration, states, and
private-sector purchasers to make informed decisions on the
effectiveness or appropriateness of specific health care
1. Technology Assessment Criteria
- Use of an explicit and defined process.
- Careful selection and definition of the topic.
- Public participation.
- Comprehensive search for the highest quality evidence
- Review and rating of the evidence.
- Use of analytic techniques appropriate to the level of
- Review of the draft assessment both by experts and
- Update of the assessment when appropriate.
- Evaluation of the process and its results.
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Mr. Chairman, from my work in the area of technology
assessment and the experience of AHCPR in technology assessment,
I conclude that we face a number of important challenges in this
- Both the public and private sector need to devote more
resources to technology assessment. Choices are being
made everyday in the health care system. These choices
run the risk of being determined solely by cost
considerations, unless we assure that the scientific
evidence is available to make informed decisions. Failure
to address this will put medical innovation at risk. It
is interesting to note that, as a proportion of national
health care expenditures, total funding for technology
assessment in other nations is 18 to 160 times higher
than in the U.S. For example, technology assessment
expenditures in France are 22 times higher (Holohan, 1996), despite the fact that
its population is 2 times greater than the Medicare
- The results of technology assessments need to be in the
public domain so that all potential users of the
technology or service can be informed. The important
methodological details of publicly funded research are by
definition available to all those interested in how
results were reached. Interested parties may include
patients/consumers, providers, plans, and providers. The
same access may not be granted for research done for
proprietary reasons. Additionally, small firms such as
biotechnology start-ups, may not have the resources to
conduct effective outcomes studies alongside their basic
science and clinical investigations.
- We need creative collaborations between plans, the
scientific community, and developers of innovative
technology to collect data on patient outcomes and costs.
Without better approaches to securing these data in
timely manner, we will never be able to assure that
medical coverage decisions are based on science rather
than economics. We can't ignore patients in this mix. One
of their concerns is that cost may limit their access to
the latest medical technology. The President's Advisory
Commission on Consumer Protection and Quality in the
Health Care Industry, on which I serve as deputy chair,
is likely to address this issue as it develops a
patient's bill of rights.
- We have a responsibility to provide the latest scientific
information on technologies to clinicians and patients as
well as to those making coverage decisions. This
information is critical to the appropriate use of
technology in day-to-day practice. There already is a lot
of health related information in the public domain
through the Internet and popular media. Unfortunately,
much of it is conflicting and anecdotal. Patients need
unbiased science-based information to help them make
better health care decisions in consultation with their
Mr. Chairman, I believe that increased collaboration between
the public and private sector is critical to ensure that we
increase innovation, while at the same time maintain high quality
and value in our health care system. By doing this, we can build
the evidence and science base to provide the public and private
sector with timely, accurate, science-based information to make
informed coverage decisions.
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Agency for Health Care Policy and Research.
Nationwide Inpatient Sample (NIS) Release 1, 1988-92.
CD-ROM set. NTIS No. PB95-503710. Springfield (VA): National
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Eisenberg JM. Clinical Economic. A
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GAO Report GAO/T-PEMD-94-17. Medicare
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Current as of April 1997