Medtronic VP unveils the complexities of the prostheses list reforms

MedTech News: The MedTech sector recognises the public health system pressures and the important role that Private Health Insurance (PHI) has in alleviating these, particularly in light of the increasing burden of chronic disease, the ageing population and declining rates in privately insured patients in Australia.

The Prostheses List (PL), which covers the cost of a prostheses as part of a treatment for privately insured patients, has undergone a number of changes since it was introduced in 1985. The current reform considerations were initiated in 2017, when the Australian Government entered into a Strategic Agreement with the Medical Technology Association of Australia (MTAA). The Government subsequently commissioned reviews and constituted a number of Industry Working Groups to inform options for improving the PL.

In December 2020, the Department of Health released a consultation paper seeking stakeholder feedback on the proposed options for the Prostheses List (PL) reforms with submissions due on 15 February 2021

In an interview with Health Industry Hub, Liz Carnabuci, Vice President of Medtronic Australia and New Zealand, discussed the complexities of the PL reforms and the challenges of ensuring an outcome that is in the best interests of patients, the MedTech sector and the Australian healthcare system.

Health Industry Hub: How has Medtronic been involved in shaping the current Prostheses List (PL)?

Liz Carnabuci: Health systems around the world are facing very complex issues and challenges including aging population, rising costs and the burden of chronic disease. As a result, there have been continued conversations on the future of private health insurance, particularly around reductions in private health insurance membership rates in Australia.

Analysing the current PL model includes looking in to the time and process of listing new and innovative medical devices – from regulatory approval through to reimbursement. It helps us question where improvements are required to ensure Australian patients have access to innovative technologies sooner. That is really important for a company like Medtronic as we are all about innovation. Our mission is to restore health, alleviate pain and extend life.

As a member of MTAA, Medtronic has been involved in shaping the PL by actively engaging in the Prostheses List Revised Benefit Setting & Review Framework Industry Working Group (BSRIWG) that examines what the future of the PL looks like and the contributions it is going to make to private health services.

We want to be part of the conversation together with MTAA. We wish to be involved in addressing the key concerns relating to rising costs and diminishing value of health insurance.

Health Industry Hub: What are the strengths and issues of the current PL framework?

Liz Carnabuci: Medtronic is supporting the PL review and looking at the model that best fulfils the objectives of patient access, innovation and choice of medical devices.

The strength of the current PL is that the model allows that review of medical devices by expert clinicians and surgeons. The PLAC (Prostheses List Advisory Committee) monitors quality, safety and efficacy beyond the TGA registration. Access to innovative medical technologies brings value to patients and clinicians which is imperative to maintain.

The current PL also provides the incentive mechanisms to support that private hospital system which is an integral part of the Australian healthcare system.

There needs to be more open conversations regarding the value of private health insurance and private healthcare in Australia.

Private health insurers often give the MedTech sector a hard time around cost of medical technology. When you think about it, cost effectiveness is an essential part of the process for all medical devices that are approved and accepted on the PL.

Health Industry Hub: What are the merits and potential obstacles relating to the two PL reform options put forward by the Department of Health as part of the consultation process?

1. Consolidate the PL using Diagnosis Related Groups (DRGs) prostheses subcomponents, and revise benefit setting, with administration of benefit setting moved to the Independent Hospital Pricing Authority (IHPA).

2. Consolidate and redesign the PL with extensive changes to pre- and post-listing assessment and benefit setting processes, with administration maintained by the Department of Health.

Liz Carnabuci: Medtronic is keen to remain part of the conversation where every perspective is included in reviewing the variations to the existing PL model with the clear objectives of patient access, MedTech innovation and medical device choice for surgeons.

The first proposed PL reform option, the Diagnosis Related Groups (DRG) model, bundles payments to incentivise the low-cost options and therefore limits choice and undermines the value of innovative medical technology. We have to carefully think about whether the DRG option has the patients’ best clinical interests at heart.

For example, in considering Medtronic’s advanced tissue stapling devices, the current PL system allows the surgeon to manage the clinical needs of the patient. Patients having surgery are anatomically different. The current PL provides the surgeon the choice of the right medical device to enable the best patient outcome based on the patient’s clinical needs. With a DRG system that choice will be lost and potentially to the detriment of the patient.

The DRG system will erode what we have all been working towards in terms of value – access to innovation and novel technology and clinical choice of medical devices – that the current PL accommodates. The reduced value of medical technology may potentially lead to less innovative technologies being launched in Australia which impacts not only the MedTech sector but also patients, hospitals and the healthcare system.

The second option for the PL reform put forward by the Department of Health requires more detail. Medtronic is working collaboratively with MTAA on considering this option. In addition to MTAA’s submission to this consultation, Medtronic will put forward our submission with focus on the company’s particular therapy areas.

Health Industry Hub: Is there a more optimal PL reform option to consider?

Liz Carnabuci: It is important to look at a PL model that is going to really understand the choices that are being made by surgeons for enhanced patient outcomes. Additionally, Medtronic’s technology is advanced and we want to ensure the recognition of its value. For example, we have novel technology around deep brain stimulation which is only funded in the private healthcare space at the moment. If we no longer have access to that kind of technology, we are limiting clinical outcomes for Australian patients.

Health Industry Hub: What are the important points that must be considered by all stakeholders to ensure Australian patients continue to benefit from innovative medical technology and that surgeons are able to choose the most appropriate medical devices for their patients based on their clinical expertise?

Liz Carnabuci: Medtronic is focussed on access, choice and innovation to benefit patients, surgeons and the Australian healthcare system.

We want this consultation to be collaborative and meaningful, and conducted in a manner that is really focussing on the key objectives and what the PL stands for within the Australian healthcare system.

We also need to carefully consider how patients are utilising their private health insurance and the value they are receiving as a member.

Choice of surgeon and choice of prosthesis are fundamental benefits of private healthcare cover and reduced choice will impact on the patient’s perception of the value of their private health insurance.

While Medtronic is supportive of the PL reforms and improvements, we need to ensure that choice, access and the value that sits behind medical technology innovation is not diminished in any way.

The Australian MedTech sector is playing an important role in enhancing the health of Australian patients and as such it is critical to support a sustainable and innovative medical device sector.