1

Regulating and financing health technologies: a comparison between

Italy and Spain

Elio Borgonovi

Giulia Cappellaro

Giovanni Fattore

Aleksandra Torbica

CeRGAS – Università L.Bocconi

European Health Technology Institute for Socio-Economic Research

2008 Ehma Annual Conference

ATHENS, June 2008

2

Regulating and financing health technologies: a comparison between Italy and Spain

- Summary -

Background and rationale of the research Research objective and design Results Discussion Conclusion and directions for future research

3

• Technological innovation is conceived as one of the major reasons for the growth of health care costs

• The trend is likely to increase in the future due to supply and demand factors

• In order to counterbalance the trade off between universal access and cost containment needs, European countries are adopting different policies to regulate the access and the financing of medical technologies.

• Scholars often underline the influence of financing mechanisms on the diffusion of medical technologies. Few studies are nevertheless based on empirical analysis.

Background and rationale of the research

4

Background and rationale of the research Research objective and design Results Discussion Conclusion and directions for future research

Regulating and financing health technologies: a comparison between Italy and Spain

- Summary -

5

Research objective and design 1 out of 2

• The research investigates the current financing arrangements for selected medical devices in different European countries on the basis of pre-defined dimensions.

• The study is part of a research program carried out by the new European Health Technology Institute for Socio-Economic Research (EHTI), whose partners are Bocconi University, TU Berlin and London School of Economics.

6

ITALY

SPAIN

Laparoscopic Colorectal Surgery

Assistance for professionals

Urinary Incontinence Pads

Negative Pressure Therapy

Medical Aids

Coronary Stent

Implantable Cardioverter Defibrillator

Knee endoprosthesis

Artificial body part

COUNTRY MD ANALYSED DIMENSIONS OF ANALYSIS

Research objective and design 2 out of 2

Coverage

Utilization

Procurement

Reimbursement

?

7

Research methods

Published and grey literature review on both national health basket and the selected medical devices;

Institutional sources analysis: Official national and regional legislative and normative documents;

National and regional web sources;

Other professional and specialised sources.

Semi-structured interviews: Carried out to a select expert panel of market operators in both Italy and Spain;

More than 18 interviews were performed during the period September 2007 -

April 2008 to both health professionals and industry representatives;

Interviews were performed on the basis of a predefined protocol.

8

Background and rationale of the research Research objective and design Results Discussion Conclusion and directions for future research

Regulating and financing health technologies: a comparison between Italy and Spain

- Summary -

9

ITALY

SPAIN

Laparoscopic Colorectal Surgery

Assistance for professionals

Urinary Incontinence Pads

Negative Pressure Therapy

Medical Aids

Coronary Stent

Implantable Cardioverter Defibrillator

Knee endoprosthesis

Artificial body part

COUNTRY MD ANALYSED DIMENSIONS OF ANALYSIS

Results : Artificial Body Parts (I)

Coverage

Procurement

Reimbursement

10

Results: Artificial Body Parts 1 out of 4

- Coverage -

ITALY• Implantable devices are not explicitly mentioned in the national benefit basket (LEA) among the list of services available under public coverage

• Implicit recognition that all services deemed to be appropriately delivered at hospital level must be available to citizens

• The grade of explicitness with which inpatient devices have been recognized in the Italian NHS has evolved concurrently with the evolution of DRG classification systems adopted in the country

SPAIN

• System in transition: redefinition and systematization of the health benefit package with the Real Decreto 1030/2006

• All the three medical devices are explicitly included in the benefit catalogue, with the indication of the list of model

11

Results: Artificial Body Parts 2 out of 4

- Financing aspects concerning procurement -

In both countries artificial body parts implanted on a public hospital basis:

Are purchased through open public tender procedures;

Negotiations take place at local level with single service providers defining volumes and unit prices with manufacturers;

Differences appear in regards to :

Regulation of prices at national level:

In Italy reference prices have been recently set by the Government in accordance with the Medical Devices Committee (CUD) for a selected list of medical devices

Trends regarding the institutional framework for the purchasing process :

In Italy establishment of Regional agencies in charge of centralised procurement

mechanisms .

12

Results: Artificial Body Parts 3 out of 4

- Financing aspects concerning procurement -

Tenders already adjudicated

Adjudicated Price (AP) < Reference Price (RF) ok

Adjudicated Price (AP) > Reference Price (RF) Service Provider can renegotiate the contract

Tenders already published

Economic Offer < RF ok

Economic Offer > RF Price non adequate. A new tender should be published

Tenders still to be pulished

Follow the Ministerial Decrees

In Italy FL 2007 introduced reference prices as maximum price ceilings for future tenders.

Possible scenarios:

CND CODE DESCRIPTION TECHNICAL SPECIFICATION

UNIT OF MEASURE

REFERENCE PRICE (euro)

P0704020101 BMS Stainless steel Piece 505

P0704020101 BMS Chrome or cobalt-chrome

Piece 572

P0704020102 Covered Coronary stents

Carbon Piece 557

P0704020103 Drug eluting coronary stents

----- Piece 1486

Reference Prices for coronary stents (MD 11/10/07)

13

Results: Artificial Body Parts 4 out of 4

- Financing aspects concerning reimbursement -

ITALY

• Devices are prospectively reimbursed through DRG tariffs

• The level of reimbursement is affected by:

1. Inter and intra regional variability in the regional fee schedules;

2. Introduction of different weights for different types of device;

3. Introduction of add on payments for the reimbursement of the specific device.

SPAIN

• Hospital provider and regional authorities negotiate the program contract on an annual basis;

• Program contract contains the catalogue of services to be supplied and volume of activity agreed;

• Existence of differences at AC Level (i.e. Andalucia)

• Devices implanted on an impatient basis are reimbursed through global budget

• DRG not specifically used for reimbursement

14

ITALY

SPAIN

Laparoscopic Colorectal Surgery

Assistance for professionals

Urinary Incontinence Pads

Negative Pressure Therapy

Medical Aids

Coronary Stent

Implantable Cardioverter Defibrillator

Knee endoprosthesis

Artificial body part

COUNTRY MD ANALYSED DIMENSIONS OF ANALYSIS

Coverage

Procurement

Reimbursement

Results: Medical Aids (II)

15

Results: Medical Aids 1 out of 2

- Coverage – - Financing aspects concerning procurement -

ITALY

Most medical aids (ie urinary incontinence pads ) are included in the list of benefits regarding prosthetic assistance (Ministerial Decree 332/99), last update in 2001.

Currently under revision: introduction of new Official List foreseen (FL 2008 )

Procurement for both outpatient and inpatient patient with public tender procedures (limited exception for pharmacies)

SPAIN

Medical Aids are covered by the Social Security and NHS system (Real Decreto 9/1996)

Classification (types and features of the ) dates back to late ’80s and since then no relevant updates have been made.

For devices sold in outpatient settings prices are set at national level, even though regional agreements are on force.

Devices in inpatient settings are subject to public tender procedures

16

Results: Medical Aids 2 out of 2

- Financing aspects concerning reimbursement -

ITALY

• Prescription required to be eligible for reimbursement

• Reimbursement ceilings based on quantities

• No copayment required to patients..

• ..Modification foreseen?

SPAIN

• Prescription required to be eligible for reimbursement

• Reimbursement ceilings based on prices set for pre defined categories of products

• Co-payment system for pads sold in out patient settings: 40% for non retired people and

MUFACE insurers; free of charge for retired people.

17

Background and rationale of the research Research objective and design Results Discussion Conclusion and directions for future research

Regulating and financing health technologies: a comparison between Italy and Spain

- Summary -

18

Discussion 1 out of 2

• The two healthcare systems appear similarappear similar as they are based upon a National Health Service undergoing a profound decentralization process.

• In theory, in both countries the Health Basket is conceived as a tool to clarify national health rights and to keep regions accountable

• In practice, however, the implementation of the system experienced two main obstacles: a) The difficulties to operationally define the benefit package;b) The introduction of a system to make regions/ACs

accountable.

19

Discussion 2 out of 2

• Relevant differences emerge between the two countries when specific technologies are investigated:

– Coverage: different degree of explicitness• But, what implications? Differences should be analysed together with other dimensions of

financing;

– Reimbursement mechanisms: • DRG reimbursement schemes vs. global budget for hospital based technologies

(different incentive schemes in place?): – global budget appears to be more “flexible” for diffusion of innovation (distribution

across different areas of care);– DRG tariffs need regular update to allow for introduction of innovative devices (difficult

to implement in practice).• Co-payment mechanisms for outpatient aids

– different patient access (between and within country) to innovative products

– Procurement: • Increased role of regional/national governments in regulating the markets:

– databases /registries of medical devices – introduction of reference prices in Italy (too early to estimate the impact)– tendency for central (regional) procurement but with difficulties

20

Contribution and directions fur further research

The research is a first attempt to compare the regulation and financing arrangements of specific medical devices in two decentralised systems

The next phase:

to investigate the impact of financing of medical devices on their uptake (diffusion, utilization)

Important issues to be considered in further research: Appropriateness in use of medical devices Equity (geographical and generational) Cost effectiveness of medical devices

21

Thank you for the attention!

Contacts:

Giulia Cappellaro, CERGAS Bocconi – Milano (I)

giulia.cappellaro@unibocconi.it

22

Annex 1: Research Protocol

Actual coverage status of selected technologies -          Is the technology covered in the national benefit basket (if existing), regional benefit baskets, benefit baskets of

statutory insurance schemes ?-          In which benefit catalogue(s) is the technology listed or included?-          Has there been an assessment and formal decision? If yes, by whom, based on which criteria and evidence …?-          Are all variations of the technology analysed included in the benefit catalogue or are some variations excluded?

Which ones?Financing aspects concerning procurement-          What are the main characteristics of price regulation/setting/negotiations?-          At which level are prices set, regulated or negotiated? Are there fixed update appointments? Is actual cost

information available/ taken into account for price setting?-        Is it possible for a manufacturer to get different prices/payments from different service providers and/or goods

distributors?-          Which actors are involved in the establishment of prices? Is there central procurement?Financing aspects concerning reimbursement -          What are the main characteristics of reimbursement regulation structured for the selected technology ? -          What is the unit for payment ? -     At which level are reimbursement rates set or negotiated? Which actors are involved in the establishment of

reimbursement rates? Are there fixed update appointments (how often)? Which cost information is available/ taken into account?

-          Is it possible for a manufacturer to get different payments from different service providers and/or goods distributors or do all pay the same price?

-          Is it possible for a purchaser to pay different rates to different providers?-          What does the reimbursement rate include?-          What does the Third-party payer pay?-          Is there a reference “price “(reimbursement rate); are innovations captured by the reference “prices”? If so “how”?

23

Annex 2: Taxonomy of Knee Prostheses (RD 1030/06)

Cemented

Cementless

Cemented

Cementless

Hybrid

Cemented

Cementless

Hybrid

Primary

Revision

Unicompartimental

Total

Total

Shoulder prosthesis

Wrist prosthesis

Hand prosthesis

Ligament and tendon

Ostearticular

Knee prosthesis

Hip prosthesis

Ankle prosthesis

Feet prosthesis

Elbow prosthesis

Therapeutic surgical implants Diagnostic surgical implants

Surgical implants External Prosthesis Wheel chairs Special ProsthesisOrtesis

Orthoprosthetic services