Holding the Government Accountable

IG Calls for Detailed Reporting on Medical Device Failures

A new report from a federal watchdog calls on the government to require hospitals to provide more detailed reporting on medical device problems to the Centers for Medicare and Medicaid Services (CMS). Better reporting could help the government identify malfunctioning devices more quickly to save lives and help affected patients get more timely follow-up care, as well as to reduce both out-of-pocket costs to patients and Medicare spending.

Meanwhile at CMS’s sister agency within the Department of Health and Human Services (HHS), a new law points the Food and Drug Administration (FDA) in another direction. The latest FDA Reauthorization Act signed into law in recent months loosens industry reporting requirements to the FDA on medical device malfunctions and failures, as reported by the Project On Government Oversight previously.

The HHS’s Office of the Inspector General (OIG) issued a new report on Monday that reviewed a sample of seven cardiac devices produced by three manufacturers that have been recalled or had prematurely failed, and estimated the cost to taxpayers in Medicare claims paid for replacing these deficient devices. A malfunctioning cardiac device can be deadly, and patients spent an estimated $140 million on out-of-pocket expenses, such as deductibles and copays, for replacing the deficient cardiac devices over that period. Additionally, in a “conservative estimate,” the OIG found that Medicare spent at least $1.5 billion in taxpayer dollars for replacement and other costs related to the devices between 2005 and 2014.

The OIG also found that “the lack of information impedes the Food and Drug Administration and CMS's ability to identify poorly performing devices as early as possible.” These delays could put more patients at risk and increase costs to taxpayers and patients.

The report only examined costs associated with these seven devices. Last year, there were 117 Class I recalls of medical devices, including the seven sampled by the OIG, according to an FDA database. Class I recalls happen when there is a “reasonable probability that the use of, or exposure to, the product could cause serious health consequences or death.” Thus, the potential medical risks and costs created by insufficient reporting related to all medical device problems is likely far greater than the $1.5 billion associated with the sample examined by the OIG.

The OIG recommended that Medicare claim forms include a place to identify malfunctioning devices, and require hospitals to use distinct identifying codes to specify if a device replacement procedure “resulted from a recall or premature failure independent of whether there was a device provided at no cost or with a credit.”

In the CMS’s response to the OIG’s findings, it agreed to the recommendation to use appropriate coding to identify premature device failures and recalled devices “in cases where payment is impacted.” But it was noncommittal on another recommendation to include medical device information on claim forms: “Similar to other policies under review by the new Administration, this policy is also under consideration.” CMS cited “the potential that this policy would impose burden on physicians unnecessarily.”

At the FDA, their new law loosens reporting by industry when there are medical device problems. The new law, as we previously reported, came about through negotiations with the medical device industry.

While the potential burden on industry should always be assessed when the government considers policies and regulations, the burden on taxpayers and patients should receive at least as much consideration by policymakers. The OIG report makes the case that strengthening medical device reporting could lead to better care for patients, and save billions for both patients and Medicare.