Summary

Thousands of medical procedures, devices, and drugs are available for patient care in this country. Each year, public and private health care insurers make coverage decisions for these medical technologies. To make these decisions, insurers increasingly rely on formal technology assessments, which evaluate a technology's safety and effectiveness. In this fact sheet, GAO provides general information about the technology assessment resources and activities of the Public Health Service's Agency for Health Care Policy and Research, the resources and processes of the Health Care Financing Administration (HCFA) for making Medicare coverage decisions, and HCFA's process for making hospital payments that account for the use of new technologies.

GAO found that: (1) AHCPR has few resources for its technology assessment activities; (2) AHCPR staffing levels have allowed, on average, fewer than 10 technology assessments per year; (3) recent legislation could reduce the number of assessments AHCPR performs; (4) HCFA makes few national coverage decisions each year and does not devote substantial resources to technology assessments; (5) HCFA relies on its claims processing contractors to make coverage decisions for their local areas; (6) in making local coverage decisions, some contractors develop their own assessment criteria and processes, some use criteria developed by national insurers, and others do not use any formal assessment criteria; (7) HCFA hospital payments are adjusted to account for a number of factors, including the overall effect of new technology; (8) HCFA annually revises its hospital payment rates to account for the specific effects of new technologies; and (9) HCFA makes separate payments to hospitals for capital-related costs, including those associated with new technology.