EP411: Getting Paid (or Paying) for New Innovations Used in Hospitals as Part of a Procedure or a DRG—Also Bloodstream Infections and Dialysis, With Secretary David Shulkin, MD, and Erin Mistry

For a full transcript of this episode, click here.

Just taking a moment here to thank our Relentless Tribe for really getting yourselves involved in the work that I had originally kicked off to improve the outcomes for CKD (chronic kidney disease) patients in this country.

With the momentum that we have so far, this Relentless Tribe of ours, we are really (for reals) going to produce measurable improvements for patients with CKD—so many of you, not just talking but actually out there, actively doing what you need to do so that patients do better, and it’s making a difference.

I have talked to doctors, other clinicians, administrators, IPAs, other provider organizations big and small, payers, societies, a great data company, a number of you who are consultants. It’s crazy what we have been able to build so far, and we’ve been doing this for less than a year. The Relentless Tribe … let me tell you, we move mountains.

We get patients properly diagnosed. We get them into appropriate treatment plans. What restores my faith in these rough times, we have encountered one PCP, one clinician after another; and the second that we show them the “as per the guidelines” way to accurately diagnose and stage chronic kidney disease (which is not just using eGFR for those clinicians who might be listening), yeah, that’s it! These are great doctors, and they switch it up. They switch up what they are doing, and that makes my heart warm. These are doctors across the board, from ones in independent practices to ones maybe employed by academic medical centers. And once they have the right information, they use it.

And it’s a wonderful thing, and I cannot thank everybody who has contributed enough. We are making real differences in patients’ lives. If what I am doing speaks to you in any way, please hit me up, because we’re cooking with gas and I could not be prouder of this community of change agents that we have built here.

You’re amazing. You know what needs to be done, and you’re not afraid to do it.

Now, back to our regularly scheduled programming. In this healthcare podcast, I am talking with Secretary David Shulkin, MD, and Erin Mistry. Here’s the first reason why I was interested in taking this interview after their public relations firm contacted me. We were at the thINc360 conference in DC earlier this summer, and I heard them talking about a new innovation to help patients on dialysis not die from infections, which … didn’t realize how common that was and it seemed like a nice adjacency to our ongoing CKD work.

I also thought this might be an opportunity to learn a little bit more about what’s going on with hospital-acquired infections and infection control. Superbugs are hella scary, but one thing I’m just gonna point out—and, small sidebar here, but listen to the show with Bruce Rector, MD (EP300) for more on this—in recent times, I don’t think there has been a pharma company who has managed to launch an antibiotic and achieve commercial success. So, what can easily wind up happening under the current payment model is that instead of just using the new antibiotic to treat resistant cases, there’s this perverse incentive to push for the drug’s use more broadly because more prescriptions, more money. But when the new antibiotic is used more broadly, that actually reduces its effectiveness against those resistant infections that it is here to treat.

Okay … back to bloodstream infections now, which is the topic of the conversation today. If a patient has a central line infection and then gets sepsis, their chances of readmission within 30 days is almost 99%. This is not a little cohort. It’s not small potatoes we’re talking about here either. As Secretary Shulkin says during this interview that follows, if you’re gonna make a preventative care economic case study, do it on hospital-acquired infections and, most particularly, those with central lines that lead to sepsis. Even with very short time horizons, you can make that case.

So, that was two reasons for this interview. The third: I’ve been extremely intrigued by how and why decisions get made in hospitals for whether or not to buy and use potentially expensive new innovative things—specifically, innovative new things which are used during inpatient goings-on paid for with a DRG.

DRG stands for Diagnostic Related Group. Medicare (and others a lot of times) pays hospitals a flat sum to care for a patient coming in with heart failure or sepsis or needing dialysis, regardless of what services are actually delivered. There are something like 13,000 diagnoses and 5000 procedures that Medicare pays for with a DRG lump sum payment. It’s up to the hospitals to make sure they buy low and sell high.

So, you can see where this is going. A hospital can’t go tell Medicare, “Hey, we just got some fancy new equipment or a better IV drug, so now we’re gonna charge more.” The DRG is what the DRG is, and if the hospital chooses to spend more on the cost of goods, then the hospital makes less money.

This is kind of along the same lines as Marty Makary, MD, MPH, talks about in his book Unaccountable. The purchasing department or some administrator somewhere is making decisions about what monitors to put in the ORs, and they pick the cheap ones that don’t have the color contrast that the surgeons need to do a good job. But the monitors are cheaper, and the hospital can’t pass on the costs. So, from a strictly purchasing perspective, it seems like fiscally solid purchasing, even if doctors are not on board with the decisions and patients have worse outcomes.

Seems like somebody over at CMS figured this out, and to solve for the “purchasers or administrators or whomever who are not willing to lose money by using new stuff,” Medicare introduced this extra payment opportunity, which we’ll get into in the interview today. But the short version is this: Biotech companies, device companies, others who are innovators can apply to get Medicare to pay a so-called NTAP to healthcare delivery organizations who use the new product.

NTAP stands for new technology add-on payment. Again, these are additional Medicare payments in the inpatient setting that may be available to those who use certain qualifying new technologies as part of services rendered that are normally part of a DRG.

Here’s my assessment of the tension between hospitals and plan sponsors because, yeah, when hospitals get paid more for something, that is coming out of somebody’s wallet.

If we assume that we’re talking about an innovation that actually produces better patient outcomes, I don’t know how anyone can say there’s a right answer here. If the innovation is expensive, you’re gonna have payers worried about the money, and fair enough. I can easily hear them saying something like, “We’re already paying however much to the hospital, and now there’s an additional charge that’s allowed on top of the DRG?” On the other hand, if I’m a patient, yeah, it would kinda suck to not get the innovation that’s gonna save my life or whatever because the payers insist on paying no more than the DRG and the hospital won’t pay out of their own pocket.

Really enjoyed my conversation today with Secretary David Schulkin. Secretary Shulkin spent his career running healthcare systems, mostly in the Northeast. A number of years ago, he entered the Obama administration to run the VA (Veterans Affairs) healthcare system. In the Trump administration, Dr. Shulkin was in the Cabinet as the Secretary of the Department of Veterans Affairs. Secretary Shulkin now has a consulting firm and is working with CorMedix.

Erin Mistry, my second guest today, spent her career in health systems and then in biopharma. She now works for CorMedix.

My sincere thanks for helping validate a couple of facts in this intro to Scott Haas, Autumn Yongchu, and Erik Davis from USI. For more on the topic of hospitals getting paid to administer drugs through a patient’s medical benefit, listen to the show with Autumn Yongchu and Erik Davis (EP370). They cover the ways hospitals sometimes can figure out how to charge plan sponsors and patients 6x the cost of the drug.

Acronym alert! CVC, which comes up a couple of times in the interview that follows, stands for central venous catheter, which is something that many dialysis patients have.

Second Acronym Alert! QIDP stands for Qualified Infectious Disease Product. A QIDP qualifies for a special NTAP incentive specifically for infectious disease products.

So again, just recapping what an NTAP is. It’s a new technology add-on payment, and it’s paid for by CMS, who has studied the new technology thing and determined that they actually want hospitals to be using it. So, they’re willing to pay more than the DRG if a hospital uses this thing, because they recognize if they don’t pay more, then the hospital won’t eat the cost. And just because of all the focus on infectious disease right now, these qualified infectious disease products have some prioritized status over at CMS relative to getting the NTAP designation.

Oh, hey, some unexpected news. This interview is unavailable at this time. One of these days we may be able to make it available, and if so, this will be announced in our weekly email. So please subscribe by going over to our website at RelentlessHealthValue.com.

You can learn more by connecting with Secretary Shulkin, Erin, and CorMedix on LinkedIn.

Honorable David J. Shulkin, MD, was the ninth Secretary of the US Department of Veterans Affairs (VA), having been appointed by President Trump. Secretary Shulkin previously served as Under Secretary for Health, having been appointed by President Obama and confirmed twice unanimously by the US Senate. As Secretary, Dr. Shulkin represented the 21 million American veterans and was responsible for the nation’s largest integrated healthcare system, with over 1200 sites of care serving over 9 million veterans. Prior to coming to VA, Secretary Shulkin was a widely respected healthcare executive, having served as chief executive of leading hospitals and health systems, including Beth Israel in New York City and Morristown Medical Center in northern New Jersey. As an entrepreneur, Secretary Shulkin founded and served as the chairman and CEO of DoctorQuality and has served on boards of managed care companies, technology companies, and healthcare organizations. Since leaving government, Secretary Shulkin has been the University of Pennsylvania Leonard Davis Institute Distinguished Health Policy Fellow and Professor at the Jefferson University College of Population Health. He is a board-certified internist and received advanced training in outcomes research and economics as a Robert Wood Johnson Foundation Clinical Scholar at the University of Pennsylvania. Over his career, Secretary Shulkin has been named one of the “100 Most Influential People in American Healthcare” by Modern Healthcare.

Erin Mistry is executive vice president and chief commercial officer of CorMedix, appointed in January 2023. She served as senior vice president of payer strategy, government affairs, and trade from 2020 to 2022. She leads the company’s commercial strategy and execution. Erin brings over 15 years of industry experience at the executive level, from consulting to in-house executive management. Prior to joining CorMedix, Erin was vice president of market access at Intarcia Therapeutics, responsible for pricing, coverage, access, real-world evidence (RWE), and channel strategy for a competitive product in type 2 diabetes. Erin was also senior managing director at Syneos Health, where she was responsible for the global P&L of the Value Access Practice. In this capacity, Erin consulted on commercial strategy and market access with emerging, mid, and large biopharma across a broad range of therapeutic categories. Erin holds an undergraduate and master degree in biomechanical engineering from North Carolina State University.

You can learn more by connecting with Secretary Shulkin, Erin, and CorMedix on LinkedIn.

@DavidShulkin and Erin Mistry of @CorMedix_News discuss payment for #innovation in #hospital procedures and #DRG on our #healthcarepodcast. #healthcare #podcast #digitalhealth #hcmkg #healthcarepricing #pricetransparency #healthcarefinance

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