Technology Assessment and Medical Coverage Decisions

HEHS-94-195FS: Published: Jul 20, 1994. Publicly Released: Jul 20, 1994.

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Pursuant to a congressional request, GAO provided information on the Agency for Health Care Policy and Research's (AHCPR) medical technology assessment resources and activities, focusing on the AHCPR role in the Health Care Financing Administration's (HCFA) process for making: (1) Medicare coverage decisions for new medical technologies; and (2) hospital payments that account for the use of new technologies.

GAO found that: (1) AHCPR has few resources for its technology assessment activities; (2) AHCPR staffing levels have allowed, on average, fewer than 10 technology assessments per year; (3) recent legislation could reduce the number of assessments AHCPR performs; (4) HCFA makes few national coverage decisions each year and does not devote substantial resources to technology assessments; (5) HCFA relies on its claims processing contractors to make coverage decisions for their local areas; (6) in making local coverage decisions, some contractors develop their own assessment criteria and processes, some use criteria developed by national insurers, and others do not use any formal assessment criteria; (7) HCFA hospital payments are adjusted to account for a number of factors, including the overall effect of new technology; (8) HCFA annually revises its hospital payment rates to account for the specific effects of new technologies; and (9) HCFA makes separate payments to hospitals for capital-related costs, including those associated with new technology.

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