Report: Medicare Should Weigh Cost In Coverage Decisions

According to a new report by the RAND Corporation, the agency that oversees the Medicare program should be able to consider the cost effectiveness of drugs and medical devices when making coverage determinations. However, researchers note that this recommendation is drastically different from the current practice in which the CMS is barred from considering cost, and does not have a great chance of being implemented without Congressional action.

The report, Redirecting Innovation in U.S. Health Care, considers options to decrease spending and increase value within the healthcare system. Researchers also recommend creating a Food and Drug Administration public-interest investment fund that would support research to produce less costly drugs and devices. In addition, RAND suggests that CMS transition from the current fee-for-service model into a model that pays doctors or hospitals a set amount for each episode of care for a given time period.

RAND believes these recommendations, if implemented, would drive market forces to control costs.

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