Opinion

Shaking up Medicare Could Lead to Greater Innovation in Kidney Care

The state of medical device innovation in health care is best described as the land of the “haves” and “have nots.” While some areas of clinical care are swimming with new devices on an annual basis, others appear frozen in time, relying on equipment from a generation, or more, before us.

Unfortunately, for the over 500,000 adults in this country with end-stage kidney disease receiving dialysis, the treatment they may need for the rest of their lives falls into the category of “have nots.” Here’s why. 

Innovative drugs and devices often emerge from startups. With an eight- to 10-year average time from concept to commercialization, and more than a $150 million price tag to get there, startups don’t survive long without a continuous flow of investment capital.

Investors flock to health care areas that offer at least two, and ideally three, of the following: 1) a large patient population that can benefit from the device; 2) a reimbursement model that can accommodate payment for new technology; 3) health care providers who are open to technology-enabled change. The scorecard for dialysis: 1 out of 3 (it’s a large patient population).

As a result, the dialysis space has suffered from a comparative paucity of investment capital compared to its wealthier clinical care brethren in cardiology, neurovascular and orthopedics that have benefitted from dramatic advances in robotics and minimally invasive therapies. The ultimate losers in the equation are patients who miss out on the life-enhancing benefits of new devices, and our national piggy bank, Medicare, which misses out on the cost-reducing benefits of new devices. In this case, Medicare spends over $35 billion on the care of less than 1 percent of Medicare beneficiaries with end-stage kidney disease.

But, two recent executive orders may serve to inject what investors need to see in order to jumpstart investment into the dialysis space: a new technology payment pathway and health care providers willing, and empowered, to embrace new technology and service models.

The president’s vision for advancing American kidney health is to empower more patients to do dialysis at home and spur innovation in new technology. However, under the current payment system, new technology that improves outcomes and the dialysis patient experience isn’t eligible for incremental reimbursement as is the case in the hospital and outpatient settings. As a result, dialysis companies have little financial incentive to invest in new technologies.

Recently, CMS proposed adding the transitional add-on payment adjustment for new and innovative equipment and supplies to the end-stage renal prospective payment system. However, as proposed, the add-on payment excludes capital equipment, including dialysis machines.

Dialysis machines are the most vital equipment to improving patient experience and outcomes. In addition, adding the payment for only two years does not provide enough time for smaller organizations to scale up and build the infrastructure necessary to commercialize an innovative device.

Technology innovation is not the only thing needed to improve patient experience and outcomes and reduce the cost of care. It is critical to develop new care models that meet and treat patients on their terms.

This is likely to take the form of locations and treatment models that look very different from the traditional in-center model that 90 percent of patients use today. However, physicians, health systems and payers that want to create new models of kidney care face significant regulatory hurdles in the form of the ESRD Conditions for Coverage that have not been updated in over a decade.

Revising these antiquated rules, while incentivizing new technology, will enable innovative providers to empower patients to take a more active role in their own care, whether that’s in a clinic or in their own homes. The recent Medicare executive order, which includes a call for changes in the Conditions of Participation for health care providers, could address this regulatory burden and expand options for providers.  Allowing providers who participate in the new voluntary kidney care models, announced over the summer, to waive some of these requirements would accelerate change.

An increased focus on driving innovation in the kidney space is coming not a moment too soon. TPNIES and the recent executive orders hold promise, and with the benefit of fine tuning, have the potential to move kidney patients from the “have nots” to the “haves.”

 

Leslie Trigg is the CEO of Outset Medical.

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