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The Medical Technology That Could Save the US Billions Each Year

Michael Hodin
Japan Leads the Way on the Treatment of Alzheimer’s

The British medical journal The Lancet reports that the average life expectancy in the OECD nations could surpass 80 by 2030. South Korea will have overtaken Japan as “the oldest nation” on the planet, where a girl born in 2030 will have a 57 percent chance of living past 90.

But our longevity brings with it demands for profound changes in the operation of society – how we work, what transportation and education look like, and, perhaps most urgently, what we do about health care spending and long-term care models.

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In the U.S. as elsewhere, age-related health care costs are already huge – and growing. Those over 80 account for 24 percent of Medicare beneficiaries, but 33 percent of Medicare spending. In fact, average Medicare spending per person doubles between the ages of 70 and 96. Much of this cost is driven by chronic conditions like COPD, heart disease, diabetes and dementia, which often develop with age and account for nearly 90 percent of U.S. healthcare costs.

Now that the average citizen in the U.S. and the rest of the industrialized world will stretch past 80, the 20th century approach to health spending can no longer hold.  

What can be done?

One of the most promising solutions to improve care, reduce costs and create efficiencies is found in the technology innovation of remote patient monitoring. RPM helps patients, physicians and caregivers monitor and manage ongoing care, especially in a patient’s home. Specific applications include tablet-based patient education, videoconferencing with health care providers, and devices to prompt and track diet, exercise and medication adherence.

These tools greatly improve on the traditional go-see-the-doctor-when-you’re-sick model, and enable better and more consistent care. 

Multiple studies have shown that RPM reduces costs and improves health outcomes. The Veterans Health Administration, a pioneer in this area, found that these solutions can reduce hospitalizations by as much as 40 percent for some diseases, and realize annual savings of $6,500 per patient. Overall, it’s estimated that widespread adoption of remote patient monitoring could save the U.S. as much as $6 billion annually.

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But there’s a problem: Medicare currently reimburses for RPM only in a few narrow cases, such as when a patient lives in a remote area. This limits utilization and savings, discourages ongoing product innovation and keeps millions of patients from improving their quality of life. If technology can be so widely applicable in our daily life across social media, why are we so reluctant to enable its widespread dispersal for health care applications?   

No doubt, changing policy at CMS -- the government body that determines pricing and reimbursement models for Medicare and Medicaid -- to encourage RPM will require disruptive 21st century thinking across government, including the Congressional Budget Office, which influences spending through its traditional budgeting analysis. Yet, RPM, like so many other innovations in health, can be understood not as a cost to be avoided, but a valued investment that saves all of us billions through avoidance of more expensive forms of acute hospital and direct physician care. Moreover, RPMs can make those currently caring for their frail parents more productive.

Childhood vaccinations, which have long been seen as an investment rather than a cost, offer an illuminating example of this kind of approach. The childhood immunization program has been around for decades, and it took on even greater urgency more recently when the Vaccines for Children program was created in 1993 to help provide vaccines to low-income families. From 1994 to 2013, it’s estimated that this program prevented 21 million hospitalizations and 700,000 deaths – generating net savings of $295 billion in direct costs and $1.4 trillion in societal costs.

Yet CBO seems to apply short-sighted, green eyeshade analysis to RPM. Like childhood vaccine immunization, RPM reimbursement under Medicare and Medicaid would entail up-front spending, but it would enable patients to avoid ER trips, nursing home placement and other costly forms of eldercare.

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If the CBO embraces this vision of value, then taxpayers, older patients and the American health care system will be able to take full advantage of the pioneering tech-industry solutions that are beginning to emerge.

RPM platforms are entering the U.S. and global markets that can enable patients, caregivers and providers to share customized health data, educational materials and best practices. Hospital admissions and readmissions as well as ER visits will be reduced. We will substantially improve management of chronic conditions and cut overall costs even as we improve quality of lives.

As The Lancet reminds us, continued gains in life expectancy are not only a cause for celebration, but an impetus for change. Outmoded approaches and assumptions – that you must see your doctor in-person, or that ER visits are unavoidable after 80 – are both technologically anachronistic and financially unsustainable. If we want to continue to increase longevity, but with a quality of life to match, then we urgently need public policy hospitable to 21st century innovations such as remote patient monitoring. The CBO, legislators and CMS should embrace these technologies that offer a cost-effective solution to one of the greatest dilemmas facing our nation and world.

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