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Major CMS decisions not always a cost-effective use of resources


Tufts Medical Center researchers find agency could cover care more efficiently

BOSTON – A Tufts Medical Center study of National Coverage Determinations made by the Centers for Medicare and Medicaid (CMS) shows that CMS is covering a number of treatments that do not appear to be cost-effective. By incorporating cost-effectiveness research in these major decisions, the agency could allocate its resources more efficiently, the study suggests.

National Coverage Determinations (NCDs) grant or prohibit Medicare coverage for particular medical interventions on a nationwide basis. Since Medicare is the largest single purchaser of healthcare in the U.S., these decisions are extremely influential on the development of treatments. These decisions are often issued on interventions that are controversial or expected to have a significant impact on Medicare’s budget. CMS, however, has a stated policy against incorporating cost-effectiveness research into its NCD decisions.

“This research demonstrates that the CMS is covering a number of interventions that do not appear to be cost-effective by traditional standards,” said James D. Chambers, MPharm, MSc, the lead author of the study. “A redistribution of funding from relatively cost-ineffective interventions to more cost-effective ones could lead to better care for patients while spending Medicare’s dollars more wisely.”

The study, published in the Online First edition of Medical Decision Making on June 15, reviewed 103 decision memos and analyzed 64 individual coverage decisions for which some cost-effectiveness information was available. Of those 64 decisions, 49 approved the use of the treatment in question. Of those approvals, only 20 - fewer than half - were associated with a cost effectiveness analysis that showed the treatment offered an increase in quality-adjusted life years and a cost savings. Another 12 were associated with a cost of less than $50,000 per quality-adjusted life year, a threshold often viewed by health economists as being cost effective. Some 17 positive coverage decisions were made for treatments with a cost of more than $50,000 per quality-adjusted life year.  For example, the use of ventricular assist devices as destination therapy for chronic end-stage heart failure sufferers is associated with an estimate of approximately $821,000 per QALY gained.

Although several instances of cost-effectiveness evidence cited in NCDs were identified, the authors identified, they found no clear evidence of an implicit threshold.

The study was funded in part by The Commonwealth Fund.

“Does Medicare Have an Implicit Cost-Effectiveness Threshold?” James D. Chambers, MPharm, MSc, Peter J. Neumann, ScD, Martin J. Buxton, BA, Medical Decision Making, June 15, 2010.


About Tufts Medical Center and Floating Hospital for Children

Tufts Medical Center is an exceptional, not-for-profit, 415-bed academic medical center that is home to both a full-service hospital for adults and Floating Hospital for Children. Conveniently located in downtown Boston, the Medical Center is the principal teaching hospital for Tufts University School of Medicine. Floating Hospital for Children is the full-service children's hospital of Tufts Medical Center and the principal pediatric teaching hospital of Tufts University School of Medicine. Tufts Medical Center is affiliated with the New England Quality Care Alliance, a network of more than 1,800 physicians throughout Eastern Massachusetts. For more information, please visit

Media Contact: 
Julie Jette
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