MOD: We’ve gotten this far, we’ve gotten our UDI, we’ve got it on our devices, we have a database, maybe, I don’t know, we’ll still work to that one, and we’ve talked I think around this last issue quite a bit, but I don’t think we’ve really addressed it directly, which is why we have this fourth panel, we’re going to address it directly, which is the issue of adoption and implementation. So let’s just be clear, FDA’s role here, our regulatory authority is over medical device manufactures. As of today we don’t have any traceability authority, who knows what the future will bring, but for now UDI is about identifying devices.
And in order for us to see the kinds of benefits that we talked about way back in the beginning, whether we talk about adverse event reporting or recalls or need to have information about products, improved track and trace, all this kind of stuff, people have to use it. And so from the device manufacturer, once that device leaves the manufacturer, everyone needs to use this UDI, UDI system in order for us to see the kinds of benefits that we all want to see.
So how do we do this? How do we facilitate adoption throughout the rest of the whatever we want to call this medical device system, again it leaves the device manufacturer, maybe it goes directly to a health care facility, maybe it goes through a distributor, it gets into a health care facility, the health care facilities as we’ve heard need to manage on this level, so how do we do this?
So that’s what we’re going to talk about. And we have an esteemed panel, as usual who is going to help us understand this issue. And Gene I think you’re up first, yes?
GENE KIRTSER, SISTERS OF MERCY
MS: Thank you Jay. Hi, I’m Gene Kirtser, and I’m the Chief Operating Officer at ROI, which is a supply chain division of Sisters of Mercy, a provider. We are network of 20 hospitals in Kansas, Oklahoma, Arkansas, and Missouri. We have about $4 billion in revenue, 30,000 employees, and we purchase approximately $500 million in supplies and pharmaceuticals per year. So we’re a pretty good size. We’re here really because we have a foundational belief that health care is too complex, it’s too costly, and it’s not safe enough. Other than that it’s just a great place to be.
But we do believe that standards can help us tremendously make improvements. So let me start off at a very high level. For us in the provider setting there are three things that keep us up at night and drive our behavior. And the first and foremost is we need to have very good patient outcomes. And the application there of data standards is really around the recall management and safety.
Are we sure that when we give, use a product on a patient that product does not have latex? I’m not sure whether we’re sure of that consistently today. When the recall is issued can we retrieve that product quickly and efficiently and prevent it from being used on the next patient? I’m not sure we can do that efficiently today.
From a disaster planning standpoint, you know, God forbid another disaster like a Katrina happens, but are we really prepared? And I can tell you in the provider world we believe we’re not. If a disaster happened where our hospitals are I would want to pick up the phone and call everyone that I know from manufactures to distributors to other providers and ask for critical product that I need and we would call that product all differently. And that is foundationally flawed.
The second thing that keeps us up at night and is very important is we need to have efficient, productive and happy caregivers. And really their needs are very simple; they need to have the right product at the right place, at the right time. Today we struggle with ensuring that that is taking place, because of the difference in nomenclature of all the products and the inability to quickly access the product when you need it.
And the third very importantly is it is for many of the manufacturers and other entities that are represented in this room we need a positive bottom line. We need to be sustainable. And as you probably know providers in general have a very thin margin, most operate in the one to three percent range and best in class providers will operate in the four, five percent range. So that doesn’t leave a lot of room for error.
And because the supply chain is so inefficient because of the lack of standardization of data, we are spending an inordinate amount of time and money. And I’ll give you a couple of examples where the inefficiencies are coming in. Every day within Sisters of Mercy there are phone calls and meetings taking place between end users and our corporate staff around what we call things, what we call products. What are the numbers that we use? What are the unspec codes? And it is a complete waste of time because it should start up stream and we should just be given that information.
Since many of the manufacturers name their products the same thing, and I think we saw some examples of that where different products will have the same name, we’re forced to rename the product. And what happens in our facilities is we sticker these products, so if you can imagine these products are coming in, we unbundled them, and at a single unit of measure we over sticker them. Those products go into an operating suite and in that suite the stickers are peeled off and applied to a patient charge sheet for charging.
Unfortunately the OR suite is a very busy place and if you ever walk through one you’ll see stickers on the floor, you’ll see stickers on patients or people’s, staff’s gowns. And so we’re clearly missing charges because of the inefficiency that starts again upstream with not having data that is normalized, that’s fed to us, and when we pick up a product in that operating room it shouldn’t have a sticker, it should be scan-able and immediately go to the patient’s bill.
Now we realized a lot of these inefficiencies as we started to do some due diligence around data standards some time ago. We’re probably one of the early, I guess adopters of the belief that data standards can help. And so we’ve had a lot of activity over the last I’d say 18 months in trying to understand what data standards really mean for us, the provider. And our education process has been participation in committees, many of them you’ve heard about here. We initiated some early, or participated in some early pilot programs.
We actually, we drank the Kool-Aid of standardization and so we modified our contracts. And I’ll show you here in a minute what we have done and what we’re taking out to the vendor community around data standardization. That’s how important we believe it is. We have an active pilot going on right now with BD around synchronization of our data and transferring that data. And we’ve started working with the software vendors because we clearly recognize that a lot of the software systems that we have today are not able to utilize the UDIs and some of these other data standard elements in a productive manner. But we can move the market, we can move the market. And we need to have those discussions.
So in particular to the contract you can’t see all the verbiage, but that’s not what’s important, we put into our contracts and we are now communicating to all of our manufacturers that they have to comply with GS1 standards. In particular, we need clarity around or we need agreement around the GLN, we need use of the GLN, which is a location number, so what we call a shipping location should be called the same exact shipping location upstream with the manufacturer.
We need the UDI or the G10. We need to transact using some kind of a utility, like a GDS sense so that we can transfer data efficiently. And we need unspec coding. Now we know that in the industry, you know, money talks, and so we are driving our manufacturers if they want to sell to us to make sure that they’re complying with these standards because it takes a lot of the inefficiencies that we bare with very thin margins out, such as what I mentioned earlier around having the sticker products or on having to have conference calls and just excess staff to normalize and analyze dirty information.
So what we wrote into our contracts is very straightforward, we said a vendor’s failure to provide product identification shall result in a fee of a half a percent of all products provided by the vendor under this agreement. And such fee will be debited from the vendor’s account on a quarterly business. So we’re very serious about this. It’s very important to us because quite frankly at the end of the day we don’t want to go back to the same manufacturers year after year and ask for price reductions.
So that’s not going to get us where we need to be. We need to drive inefficiencies out of the supply chain. And this is an element that we can collaboratively if we can have all the trading partners agree upon we can start to drive some of those inefficiencies out. So you guys can, I shouldn’t say you guys, manufacturers can keep their margins up where they need to be and we can as well.
So here’s what we’ve learned around implementation. I don’t know if you’re going to see anything here that’s unique, that you haven’t seen before, but here’s what we believe. First of all, we need very clear definition around what UDI means. And that definition needs to include regulatory, clinical and supply chain elements. And there’s been a lot of discussion around bar coding and what’s the right level of bar code.
And we think that there should be some clear criteria around real estate of the product. You saw some products on the screen where the real estate simply isn’t there to accommodate the bar code. There should be criteria around cost. Does it make sense to label a penny widget? I don’t know.
And there should be criteria around risk, because quite frankly if you look at a stunt, a stunt is no larger than many of the devices you saw on this screen, smaller than a penny, but costs $2,000. Would we want that labeled? Would we want that charge to make sure it gets on the patient’s bill? Would we want to be able to recall that device? Absolutely. So those to us would be the three criteria; real estate, cost and patient safety risk.
We really believe that health care is too complex. I said that in the very beginning. And as a result we are proponents of one standard. I think you’ve heard that universally from pretty much every provider that has been up here today. It’s just too complicated and multiples, if multiple standards prevent adoption that’s a bad thing. We think that there should be penalties for lack of adoption, up and down the entire supply chain continuum. We need to be held accountable. We need providers or excuse me distributors, GPOs, manufacturers, everyone should be held accountable.
And if the FDA does the right job with mandating what the standards should be around UDI the industry will respond appropriately. And if you think about NDCs no one was able to process NDCs when the regulation came out. If you fast forward 20 year later industries have built themselves around the ability to process NDCs. We will all respond appropriately. And we need to be held accountable just as much as any of our trading partners are held accountable.
We think that standards need to be comprehensive and impactful. Now in other words, for us the UDI is not enough. There are other data elements that we need to have, so we can streamline our work. An example of that is unspec; we need to be able to analyze information, we need to be able to compare products effectively. When we’re running out of a product we need to know what that product crosses to. And that is today incredibly cumbersome because there is no standardized information on product nomenclature.
We clearly recognize a software vendor’s need to catch up. We think that the mandate from the FDA will again force the industry to adopt. I can tell you right now today our software systems will not be able to accept some of the data standards that we need. But in discussions with our ERP vendor, Lawson, and with our warehouse management system vendor, Texas, and with our electronic medical record vendor, Epic, I can tell you this is very important to them. They understand that this is a wave that is moving in the industry and they’re working very aggressively to make sure that it is included in the next versions of software.
So I am very confident that as we sit here, you know, 24 months from now, hopefully not even that long, the software systems will be able to accept this information, and then we won’t be able to point the finger to them to say they couldn’t do their job. It will be our inability or hopefully ability to use that information effectively within these software programs.
We really need education of the stakeholders on the value of the standards. I think there was a statistic I read the other day that analysts believe that an improved recall system could save health care $35 million a year. Those are staggering numbers. Unfortunately health care, at least in the provider world is very much a cottage industry; we’re not connected, we’re not unified, we’re very disparate. And we don’t have a big market mover, like a Wal-Mart in retail, so we can’t independently move the industry.
We all need education. And educating a hospital that’s in the middle of New York that’s very large and educating a small rural hospital in the middle of Kansas is very different. But both need education to buy off on the value of standards and so they can start using the data effectively in their every day work.
So I would encourage the FDA, I would encourage GS1, and anyone else who is promoting standards that there has to be an all out marketing and education effort to the provider community because we’re not connected and there’s no easy form to educate us. But you have to educate us on the value of standards, so we can all adopt and use them.
And then, lastly, and I think you’ve heard this repeated, is take this in phases; we’re not going to be able to bite the elephant off in one time. It’s too big, it’s too complex. We need to start small and we need to gain wins. And in the provider setting I can tell you it’s a herd like mentality; there’s not enough leaders, there’s a lot of followers, and providers respond extremely well to case studies and to demonstrated results.
And so if we can gain some early wins with adoption of UDI, with adoption of other data standards, and we can document the value that these data standards are driving around reducing those first three elements that I talked about; inefficiencies, improving patient safety, improving the bottom line, if we can document that, you will have a herd mentality in the provider world of adopting and utilizing the standards very effectively.
And the last thing I want to say, it’s not on the slide, is we really need the FDA’s help here, because we are siloed. This industry is siloed and the stakeholders in each silo have their own unique agendas. And so there is absolutely no way in our opinion that we can organize ourselves effectively to do this. That’s why we need the FDA and we need their guidance and leadership to put something out there that’s concrete, well defined, with timeline for implementation so each one of the stakeholders can respond appropriately and effectively. That’s it. Thank you very much. (Applause)
MOD: Thank you Gene. That was great. Joe I think you’re next.
JOE PLEASANT, PREMIER
MS: Thanks Jay. And thanks to the FDA for having us. Jay’s been great over the last two or three years. I get frustrated that it’s taken so long. But at the same time I appreciate how long he’s been studying this stuff; he has a real good understanding of the issues. And so I’m pleased that we’re getting together.
A little bit about Premier before I talk about what we’re doing in this area. Many of you probably know we’re represented or actually owned by 200 plus not-for-profit hospitals. We have over 2,000 hospitals that we do group purchasing or other services for. And we do about $33 billion a year in annual GPO volume. We have 1,400 employees. And then we certainly have a GPO business which most of you are familiar with. But we also have an informatics business that looks at clinical data. And we get clinical information from our hospitals.
And so while standards are important for our GPO business they’re also important for us when we are working with our hospitals, looking at benchmarking their clinical practices and how they compare with one another, because if you don’t have that common data it’s very difficult at times to really compare that information and allow them to benchmark themselves.
We also have an insurance business, which you may not know. We actually do risk management and own an insurance liability business for our hospitals. And so on that side we see the safety issues and we see the issues associated with errors that occur in the system. So we kind of see it from all ends and we see standards, very important for GPO supply chain, but really as we’ve talked about for safety in general. And we see it in all of our businesses.
We’re all about looking at low cost and our objectives and visions about that. So this is right in our sweet spot. And then our purpose is really to help improve the health of communities. And we think we can do that through operating our hospitals at low costs and at high quality. And we’ve been able to show in some of our studies that the two are achievable. Many times low cost hospitals have the highest quality. We’re a Malcolm Baldrige winner, so we’re all about the quality, green, very much in our purchases. And then we last year were elected one of the most ethical companies in the world. So we’re very proud of that.
Now what do we believe? It’s already been said. We are all about UDI. We think that UDI is important. But I’m a firm believer that you can’t accomplish some of the things that I think the FDA wants to accomplish without having things beyond just identifying the product. GTN, we’ve talked about, you could call it the HIBIG number, or whatever, but you’ve got to have that. And I think we’ve been referring to that as UDI.
I believe you also have to have a way to identify each other in the supply chain; how we locate each other and who we are. If you’re going to track the product and you’re going to identify where it came from or who manufactured it, you better have a common way of knowing who everybody is.
And then lastly and the thing I think that messed us up in UPN many years ago, is we didn’t have a common database. We’ve talked about this. We’ve studied looking at just what works and doesn’t work. In other industries the common denominator was a common database. And most other industries are using a GDS and a global data synchronization (ph.) network. And it’s working in other industries. And that’s the reason I don’t know why we should necessarily re-invent the wheel. And I know Jay’s looked at it, FDA to really look at that as a basis in what we do in health care.
So my opinion you have to have the GTN or a way to identify the product. You have to have a way to identify who we are and more importantly you have to have a common database that allows all of us to synchronize and have the same information. If you don’t have that then we’re going to still have an automated way to really be confusing in the industry because we’re going to all have different information about product.
So if you had that then you’re really able to get to some of the things that I think are important which are really ways you save the money; traceability, asset tracking, use of RFID effectively, other types of automated ID. And if you don’t have those bases then we’re just really building inefficiencies in really being able to do those things. That gets us to the safety as well as the efficiency part. And unless we have that base we won’t get to that in my opinion. So we have to have all three. And I think the FDA has to really consider that in doing a UDI system.
A little bit about our role and kind of where we’ve come from. We’ve been involved in this since the early 2000s, involved in Chaz (ph.), GS1, HS, CSC, HIGBA (ph.), lots of organizations, been involved with the arm (ph.) organization, etc. And we’ve learned a lot. We’ve been an early advocate. We were involved in the DOD studies and pilots.
And as we talk about this being panel four and how do we really adopt and get implementation, I can tell you that it’s really important to get involved in these work groups, it’s really important to get involved with pilots and see how close you are to being effective and being able to implement these things. And so we’ve learned a lot from these pilots. We were involved with the GTN pilot back in 08. And there are white papers and there are findings from each of these studies that are out on different sites that you can get to.
We also were involved with the GLN pilot. We wanted to not just say GLN will work, just because it works for Wal-Mart doesn’t mean it works for health care. So we actually tested that with a group of hospitals and some manufacturers up in Fairview, up in the Minnesota area and other areas. So we’ve done the GLN pilot. We’re also involved with the GDSN, actually testing this database and can we actually pass information from a master database and all supply chain partners use it.
And then most recently, much like Mercy ROI we have put it in our contracts, as of July we will begin writing our contracts for purchases in the future to require standards. Those will require GLN to be in place at year 2010, for all transactions and will require G10s or products to be in place using a G10 by 2012 and also that we will get our information from manufactures from the GDSN. So not only will we have G10s but they will need to deposit that information in the GDSN so that we can get that information out of there and essentially have a consistent database going forward.
So that’s kind of where we are and what we’re up to. We’ve kind of plotted what this adoption timeline will look like for both suppliers and members. And we’ve also begun an education process. We’re working with our members to actually have them assign GLNs to all their hospitals. We’ve done that ourselves for all of them. But really they ought to own their locations. They ought to be responsible for that. And we’re working with them to have them take that ownership. They ought to identify for their supply chain who they are and how they want to be seen.
So we’re about 54 percent complete. Our intent would be within the next 12 months to really go back through that process and have a significant number of our hospitals actually using GLNs and owning their GLNs going forward. So that takes care of the location. At the same time we’re working with GTNs and working with our suppliers. We’re having routine meetings and training sessions onsite. We’re actually had 86 suppliers in our offices or over web exes, from 51 companies and we do web exes every month or as often as necessary, because we think it’s education.
We think it’s about all speaking the same language and understanding. So we’re not just putting a requirement out there, we think it’s important to educate, train and work with manufacturers. There are some things that maybe we don’t know right now that we both need to work on that we need to change. And we’re all about doing that as we go forward.
We’re kind of tired of pilots. We’re beginning to move into production. We’re actually working with some of our manufacturers now to actually get data put into the GTSN and begin receiving that data. So we’re trying to move to production at this point. And so our intent is to get as many manufacturers as possible actually using that system and us being able to use that system, so we can report back out what we’ve learned from that.
I’ll leave you with this. We believe it’s important to have no more than one standard. We have lots of standards as you can see in this electrical example, and, yeah, they work, but by gosh how much does it cost for us to get all of those plugs and so forth and have to deal with that. So I think it’s important to have one standard. We also think we have to work together.
This is not just one group saying you’ve got to do something. If we all do separate things and don’t work together and team together we’ll end up building a railroad that won’t kind of come together. And then lastly I’ve been working on this forever. Many of you have. And by gosh you can’t give up. It’s not easy and we got to keep working hard at it. Thanks. (Applause)
MOD: Alright, who’s up next on my list? Greg?
GREG STIVERS, McKESSON CORPORATION
MS: Good afternoon. My name is Greg Stivers and work for McKesson Corporation and I want to thank Jay as well for the invitation to join this panel. I’ve worked with Joe in the past and I always have slide envy so I thought I would skip the slides today, because he always has much better slides than I do. But also I really won’t take a lot of time here.
From a McKesson perspective, first of all, I run our customer technology organization for McKesson, and if you don’t know McKesson’s a $100 billion company that is the leading pharmaceutical distributor. We’re the leading med surg distributor in the ambulatory space. And then we have the largest health care software footprint in the industry as well. So clearly standards are very important to us. And clearly they’re very important to our customers. And that’s really from our perspective what drives us.
And we’ve heard a little bit about GS1 and HIBIG. Both standards we support, because both standards our customers require. In the pharmaceutical space more of our customers use the GS1 standard. In the medical surgical space more of our customers use the HIBIG standard. And obviously in the software arena we support both, because many customers, different customers use both as well. So it’s a very important point for us.
And we believe that fundamentally, for us to get adoption in here we really do believe the FDA needs to mandate this. Clearly when you think of a distributor you think of someone that is running on fairly thin margins that the whole game in our business is to turn product as quickly as possible and move that as efficiently as possible. The only way to do that is through automation and standards. And that’s what we do.
So obviously those products that come through our channel that are not bar coded, that are not standardized become an exception for us and become more cost for the industry. Now at the same time I would say that from an adoption perspective we’ve heard a lot today from a lot of different presenters that really the HIBIG and the GS1 standard both work. We clearly are proof point of that because we use them all day, every day.
We do believe that if we were to, if the FDA were to mandate a standard that shows one of those, that that in and of itself would not only slow down adoption but dramatically increase cost for those manufacturers that have chosen one or the other standards. The UDI is really, I think the other point we heard a little bit from Corwin Hee earlier but as we look at some of the benefits that we’ve talked about today the UDI is really the tip of the ice berg.
Clearly it’s very, very important and we’ve got to take that step. But make no mistake for anyone in this room if you believe that we’re going to get to some of the disaster recovery elements and some of the other benefits that we’ve mentioned up here today, that’s not going to happen with just UDI. That’s going to happen with total system integration across the supply chain, which is very important and clearly will be another component of what the FDA needs to help us all derive.
So again as I mentioned, or I guess I should talk about obstacles. Jay asked about obstacles. I think the fundamental obstacle that has been in place today has been really the lack of education. I think we’ve had some political bickering industry-wide around the different standards that exist out there. I think we’ve heard today they really both work; they’re part of one same standard. And so I think that has been driven by a lack of education. So that’s clearly an area where we in conjunction with the FDA need to assist.
So in closing I guess I would say from a McKesson perspective our goal really is patient safety. And that’s through total supply chain efficiency for all of our customers and trading partners. Thank you. (Applause)
MOD: Alright. There you go.
NAPOLEON MONROE, CONSULTANT
MS: I’m Napoleon Monroe. I’m a consultant to Henry Shrine and work with the Dental (ph.) Trades Alliance, with HIDA (ph.), HIBIG, engaged with GS1 licenses in some of our divisions. We’re here today at the invitation of FDA and Jay and we greatly appreciate being here. Personally 40 years in the pharma business I’ve managed Henry Shine’s private labels. Why does that matter? I saw CE Marketing (ph.) when it first came and I’ve seen a lot of factories, smaller factories often, who are manufactures for Henry Shrine and for many of you.
Active in several health care associations. And AIDC, Automatic Identification and Data Capture, has been an area of personal interest. Why does that matter? What is that acronym? That’s pedigree and that’s UDI. Background. Last day meeting, October 2006, we discussed alternative site health care providers, smaller manufacturers, distributors need to be included as stakeholders. Thank you once again for having us here.
Stakeholders have information requirements, roles and opportunities not yet widely recognized, still not yet widely recognized. If I listened today I hear large manufacturers and hospitals primarily. You go to your MD and your dentist far more frequently I hope than you go to the hospital. It’s good for Henry Shine’s business.
The requirements as they evolve should be well reasoned, logical, easily understood, cost effective, harmonized and allow adequate time. I think like apple pie that’s been widely discussed in its specifics. What hasn’t been discussed is the relationship of electronic medical records and telemedicine to automated data capturing. So we’ll talk about that a little bit.
There are many, many people under the tent. Some we’ve talked about. Again the practitioners outside the hospital have not been a focus, especially. When I say administrators nobody in the Food and Drug over stamps (ph.) anyone anything. So this is an inappropriate graphic. Neither do the payers. But there are many classes of administrators who are engaged whose needs need to be considered as well.
Large businesses and small businesses. Smaller distributors. Associations. I mentioned the Dental Traders Alliance. They have a role. This will eventually go to the level of the practitioner. It’s not there yet. It’s not even to the level of large institutions. But to capture the information necessary and desired by Food and Drug and by all of us it has to go to the level of the practitioners.
Some of the alternate, site alternate care views that I hear. A lot of people say tell us what to do and we’ll do it, grudgingly in some cases. Some of the alternate site providers say it’s coming, let’s get ready, let’s find how we can profit. Investment is still very limited and the focus on unique device identifier is far less well formed than for pedigree. Some still hope UDI will go away or say not in my lifetime. I think they’re wrong or they don’t anticipate living very long. Everyone agrees non-compliance with regulations is not an option.
There’s a business rationale, I won’t go deeply into this, it’s known. But everyone in the supply chain has unmet information requirements, under appreciated information. Continuous improvement is key to long term profitability. As of recently there is a lot of emphasis on innovation in health care. Perhaps you’ve heard of the stimulus package. It hadn’t been mentioned yet today, but I think that may be a driver for change. The specifics have yet to be determined. It’s going to depend on what comes out of the conference committee. But there’s a lot of money there.
There are proven technological developments in UPM, whatever standard, data capture, 3G cell phones that are widely disseminated. Global positioning satellites. All those take information management into areas not previously appreciated. Costs on a lot of these technologies have declined. Businesses, (unint.) the right time to maximize value and competitive advantage as early as practical time.
There are related initiatives. We’ve heard about a lot of these already today, UDI and pedigree. There’s also a lot of, potential a lot of surveillance requirement the secretary shall develop, similar to the UDI that hasn’t been discussed to any great extent. There’s other federal legislation. (unint.) is going to be introduced again. There’s state legislation. That’s what drove us all into the pedigree camp so quickly, Florida, California, and others.
The Europe Commission has just proposed a pharma directive which includes serialization. Almost all the companies in this room are multinational. Again we appreciate the work towards harmonization. There are other international regulations which are coming out constantly. Health care cost containment, entitlement management. This and the infrastructure improvements are very definitely part of a stimulus package.
Customer requirements. Our friends at Premier, DOD, Henry Shine is engaged in the DOD pilot as well. But then there’s some off the wall things that we see happening. The International Federation of Animal Health required, demanded that we sticker vet pharma in Europe. So we were adding a GS1 label on vet pharma. There are product safety initiatives coming in a number of ways.
Example, country of origin was required on food as of September. It didn’t require a bar code. There’s no legislation that requires a bar code yet. But if you go to the grocery you’ll find bar codes on many products, because companies are looking for efficiencies. The best case and the alternate site, they’re developing an understanding of requirements, they’re investing very, very selectively because of the environment in tentative plans for compliance, systems improvements and new products. They’re unsure which way to go. And the telemedicine community is ecstatic. They’ll say we’ll have money now to do things that we couldn’t do before.
Identity and data capture is key to telemedicine. How to progress? I think it was encapsulated very well. Educate. And that can be done in meetings like this. It can be done through trade associations. It can be done through professional associations. ADA, the American Dental Association is deeply engaged in informatics. I don’t think they’re engaged in UDI. So we’re going to try and help with that.
The doc (ph.) requirements many people don’t understand them. The stimulus consensus has $20 billion around health care, including incentives for individual doctors. And there many advantages. So formulate the proposals, we’ll look forward to proposed rulemaking and showing the specifics. But even before that, help people understand, inform the stakeholders. Examples of opportunities. Cost reduction. Some of these wouldn’t be legal today. Warranty tracking. That’s legal. Automated rather than physical lot separation. I think our warehouses still have physical lot separation, perhaps longer term we’ll be able to do automated segregation.
Reducing administrative costs. You have a cost for recalls, we have a cost for recalls. If we can verify electronically we’ll be better served. Improved products and services, including practitioner and patient support. You all print a number of languages, perhaps again at the edge perhaps eventually we’ll be able to disseminate those languages electronically rather than through a hard printed copy.
So all of this could be integrated with product and storage information into tele health systems and other systems, giving notices based on storage and use and would allow us to better determine outcomes. Electronic medical records, practice management and telemedicine capabilities are all wound into this. Examples. We’ve covered the concerns already; I’m not going to step through all of this. There are too many concerns but broadly I’d spread it throughout the industry.
But the good news is they’re the same for almost everyone; alternate sites, hospitals, FDA, the payers, the concerns are essentially the same. We’re concerned about cost, especially for smaller companies, because they are, they’re drivers of the industry. There’s been a lot of consolidation since ECR I published, but still it’s dominated by smaller companies. I’ll go on. I’m open for comments. Open for remarks. And I appreciate the ability to come. Thanks. (Applause)
STEVE PLURROUGH, CMS
MS: Good afternoon. I’m Steve Plurrough. I direct the coverage and the analysis group at Medicare, CMS, and I’m here to give you some thoughts from the CMS perspective as to the device identifier. First of all, I’m not going to talk about the code. I don’t particularly care what it is. I’m not going to talk about how you collect the code. I don’t particularly care. I have marginal interest in the database, mainly from a professional point of view and not from a CMS point of view.
Those are all important things. All we’re interested in is there’s a simple number and there’s a simple process from getting that number from a device into a provider’s database. So you all figure that out and you figure out sooner rather than later. We do have interest in a product identifier. We think there are a number of benefits. The major benefit that’s been discussed here today is patient safety.
We think there’s a vital role in patient safety. One of our concerns in patient safety is the recall issue. That’s why we have less of an interest in the database because unfortunately a national database does not necessarily make a recall simple, since if a particular device was provided to a patient at some time in the past, hospitals may have no way of identifying where that patient is. We do. We’re pretty good at knowing where our patients are. And so we think there needs to be some other source that and we’ll talk about that in a minute. But we think safety is important. Lots of examples around this.
We spent a lot of time, was it in 2006, around the ICD (ph.) issue with leads where we couldn’t find patients. And our problem was we could find the patients, but we didn’t know which ones had what devices. And so we think that’s a fairly simple solution if we have those identifiers available. We think that identifiers are going to give us evidence of benefit. We’ve not had a lot of discussion around that, at least this afternoon. You may have had that discussion this morning. I was not here for this morning. And I think there’s some examples of that.
In some of the Scandinavian countries around hip implants they were able to identify some benefits of some implants and lack thereof in some other implants. And so we think that has a significant potential that has had little discussion. We’ve spent some time in the agency requiring devices that have been implanted to enroll our beneficiaries in registries that include some identification of those devices. We did that with ICDs, we did that with ventricular cyst devices. And we think there is some interesting information coming from that.
Is that information of sufficient quality that we can make effectiveness decisions based upon that? Currently, no. But I think as we develop more knowledge around how we use these kinds of databases we can simplify some of those issues. We also required in a joint work with the FDA certain beneficiaries getting corroted (ph.) stunts to be enrolled in a registry. And to, if those patients were only cover those stunts in certain post surveillance studies where device identification could have been I think extremely helpful and much more simple than some of the extraordinary means you have to go through to put that information into a registry.
We think for a payer point of view, at least for Medicare there’s some reimbursement issues. And for those of you who don’t spend your life in reimbursement the Medicare system on an inpatient basis doesn’t look at charges, it looks at what diagnosis you have and what was done to you. And you have to fit that into a bundled payment called a DRG and we pay based on that DRG. And then we require hospitals to submit on a recurring basis actual charges and every two years we use those charges to recalibrate all of those DRGs. It seems like device identifiers would be an extremely useful means to make that process much more simple.
So we think there are some benefits to doing it. And what do we think ought to happen? Well, let me back up just a minute and tell you that the positions that I am addressing today were positions of the agency as of January 19. We don’t have a secretary. We don’t have an administrator. To be real blunt I don’t know what the agency policies are going to be around this issue or most other issues. We’re going to pay bills in the manner that we pay bills now until such time as we get different guidance.
So what I’m telling you today is not necessarily an agency position. It was an agency position. And if I am asked I will tell the new folks just what ought to be the agency position. I mean, I may not get asked, but you know who knows. Though, in fact, this device identifier issue has revolved in my particular area. So hopefully if they’re interested they would ask the covers (ph.) group about that.
I believe that CMS ought to establish a date certain in the future, let’s choose January 1, 2011, and say that as of that date every device that’s used on a patient for which you expect Medicare reimbursement has the device identifier placed on the claims form. Do you think that would stimulate some work to occur? And I choose 2011 because somewhere in that timeframe ICD10 is going to happen and ICD10 is wrapped up in some of the systems issues that we have.
What should be the scope of that? Interesting question. I think at a minimum it ought to be devices that are implanted in patients. Should it be everything that touches a patient? Well, I think there’s lots of room for discussion around that. But I think at a minimum things that patients leave the hospital with in their bodies ought to be, we ought to know what they are and we ought to be able to identify those devices in those patients and that we ought to be able to collect that in our claims forms.
We, in fact, have been discussing this particular issue at the Agency or a long time, a number of years. We’ve had a number of entities who have asked us to begin collecting device identifiers on claims forms for a number of years. Now the problem is there was not a place on claims forms to put that particular information. There has been now for a couple of years. There is an additional line below every identified service on the claims form, inpatient and outpatient, where you can enter information that’s not required for paying the claim.
And it’s not the CPT code or the ICD10 code or the DRG number. It’s been there. Well, the problem is, at least for our part, our systems can’t read that line. You can put whatever information you want in there, but you got to change your computer when a new line shows up in a form, whether it’s electronic or not, you got to tell your system to read that line. And for Medicare that is a significant change.
And Medicare is going through lots of issues around how it reads claims, particularly around the ICD10 issue and as part of that we have been addressing how to read that particular line. And I’m optimistic that that’s not going to be that long in the future that we’ll be able to do that. And so there is the potential that while we have been talking about wanting to do this for a while, in fact that we’ll be able to read that line and may make some pronouncements about wanting to be able to see some additional information on that particular line.
Now the problem is that that is a space on the claims form for anybody to use. What would be preferential is that there is a specific place on the claims form for device identifiers. So it’s not used for anything else. Now there are a lot of people besides Medicare involved in that. I’ve not heard that discussion here, but I encourage this group, Jay, to spend a lot of time having this discussion with NUBC, National Uniform Billing Committee, who decides what is and isn’t on claims forms, and they need to understand what it is that’s going to be there because we’re going to have to go to them and say we want the claims forms to be able to do this.
That’s not an overnight process. That’s not a group that we manage, we’re part of. And they need to know what this code looks like, so that you can tell your system are you reading a ten digit code or a 75 character alpha numeric. You’ve got my computer knowledge now, but something on the order. So that needs to be decided soon. And to implement this process you got to know what that is so that you can tell the computer people exactly what they’ve got to code their systems to do.
We got one of our systems folks here today whose only goal was to find out what that number is, so we can start computing. Obviously we failed in that aspect, but you know hopefully pretty soon that will change. And we also, not just that particular issue, but we have other claims electronic data systems and we’ve got to be able to code those systems to accept the number. And that is our major focus right now in this particular issue is what is the number, so that we can get our systems to work in reading that particular number.
And it’s obviously necessary if we’re going to tell providers that as a condition of reimbursement for particular services that you’ve got to put a number in, they’ve got to know what that number is so that the vendors can create the systems to automatically enter that number from however you capture that into their database and then into the claims database.
Not difficult to do, just got to know what the parameters are, so that the vendors can change those. Not a difficult thing to change, just got to know what it is. So that’s what I’m going to tell my bosses if they ever ask me the question.
Now how would that be implemented? Well, in general if CMS is going to implement something like this it would be through one of the payment systems and it would have to be both inpatient and outpatient systems. And if you’ve ever been involved in that you know we put out proposed rules every year, both on the inpatient side and the outpatient side, it goes through public comment, they come out final somewhere towards the end of the year to be implemented at the beginning of the following year.
That’s typically how the system works and I assume that’s how the Agency would want to implement this if we’re going to globally say if you’re sticking a device in a patient here’s the number. Historically, looking how new processes happen within the Agency that won’t be a one year rulemaking process. It will be well, let’s think about it for next year and then next year well, we thought about it so we’re going to propose this, so it will be a several year process. It would be nice if that wasn’t the case, but that’s historically what’s happened.
So what’s some of the alternatives? Well, I do coverage decisions. My coverage decisions say I have found enough evidence to do something, but I need you to document for me that whatever it is that I am paying for has enough information for me to be comfortable that it’s paid for correctly or there’s not enough information and I want some more information and if you want me to pay for that then you’re going to need to provide me some more information. And that all falls under what we’ve called coverage with evidence of element.
And so we have a number of processes where we have said you’re not going to get paid unless you provide us some additional information, either through a clinical trial or in some cases an observational study with submission of that data to a registry. The ICD world, you implant an ICD in a Medicare patient for certain indications, you enroll that patient in a registry. And ventricular cyst devices if you want Medicare to pay for your implantation of that device, a Medicare patient you belong to the intermax (ph.) registry.
I can envision once I am able to read that line that I’m going to say for a whole host of things I’m not comfortable that you’ve submitted enough evidence for me to cover this particular device that you want to put in my patients and therefore I’m going to collect more information. And for me to collect more information I need to identify that device, so on the claims form you’re going to tell me what that device is.
So whether we implement it globally or whether we implement it on a case by case basis I think that’s going to happen not long after we have the capability of reading that information on the claims form. I think that’s all good. I think that is helpful, both to patients, with the major issue being safety, but I think there’s some significant benefit issues that we can determine through this process that have been shown in some other countries around some isolated issues.
And so if I’m asked that’s what my bosses are going to hear. And in my readings of various things that I’ve read about the current administration’s health care thoughts and some of the books written by proposed leaders that we may see or that we thought we were going to see ... (Laughter) Yeah, I tried to buy Critical, had a hard time getting it, and now you can see it on e-Bay for a dollar, you know. (Laughter) I think that’s what the administration is going to be interested in. I think that’s not going to be a hard sell.
And so that’s where I think CMS is. And so I think as the big gorilla here I would advise you to be more aggressive. Thank you. (Applause)
[END OF SIDE]
QUESTION AND ANSWER SESSION
MOD: I don’t know if anybody can top that, but we’ll go ahead and open it up. Thank you, panel. Questions, comments on implementation adoption? Anything anybody wants to share? Jeff, I know you’d be up. Yes, Jeff.
MS: Jeff (unint.). I couldn’t miss an opportunity to follow up on that fantastic presentation. But I wanted to ask Steve if CMS would envision electronic health records as the mechanism for getting that UDI information and then off through the claims form through reimbursement?
MS: I think they’re all tied together. I don’t think there’s a separate... Once there’s electronic health records I can’t imagine that hospitals are not going to have a single system that feeds evidence from the data that’s in the electronic health records right into the claims form. I assume those are going to be a similar system.
MS: I’m Mitch Cooper and I want to address the issue of the UPN. Fifteen years ago the Department of Defense initiated the UPN initiative. From what I’m hearing from my provider group here very little implementation has occurred. I’m hoping that we’re not going to experience the same kind of thing with the UDIs we have with the UPN, meaning we don’t modify our software and we don’t implement it. I’ve talked with a lot of manufacturers today and I’m really pleased with the fact we have some great corporate citizens, BD, Johnson & Johnson, Medtronic, the list goes on and on.
These guys have spent millions and millions of dollars labeling their product with a UPN only to find out that no hospitals are using them. There’s some confusion over the standard, but there was no confusion six years ago when I took a sabbatical, everybody was well versed in the fact that AREM (ph.) and all the GPOs, some manufacture associations, the distributor associations had all agreed that the manufacturers would select the bar code standard they chose and use it on their product and then the rest of the industry would just scan it and use it.
Most of the products are labeled today. Most of the products that CMS would be concerned with, all the high cost implantable items have been labeled for many, many years. The data is readily available to you and you could use it in the reimbursement process. With that said, let’s continue on for just a minute. In 1996 the federal government enacted the HIPA legislation and I think they realized that if they did not require the software to be changed to be HIPA compliant that they would be where the hospitals are with UPN today and would continue right along.
Without that mandate there is no motivation for the software houses or for the hospitals to spend the money to get the software changed. If we continue down that path with UDI we’re going to have some challenges. The FDA got the legislation through. In short order 17 days from the time it went through the House, the Senate and to the President’s desk to get this UDI legislation. Seven votes against the legislation out of 435 in the House, the Senate was unanimous, the President signed the bill.
That tells me Congress gets it, we have a serious problem and we need to fix it and they’re moving in the right direction with the UDI. However, we have provided a need for additional software changes. And I heard today, we talked about the materials management software companies are dedicated to getting it changed within two years. In 1996, 97, 98, 99, 2000 we held workshops across the country, we developed the standards, AREM was involved the GPOs were involved, the distributors, the manufacturers, and we outlined the standards very clearly what they needed. The hospitals didn’t implement. The hospitals didn’t push the issue with the software houses.
Now we have a different situation. We’re 15 years down the road we’ve got a great opportunity to clean up our act, get our industry straight, stop killing people inadvertently through the use of recall devices and through infections. All the software was regulating medical devices ... I’m going to step out here a little bit ... we need to regulate the software.
The FDA needs to establish the standard for UDI compliant software and give the software houses a timeline to get compliant with the standards. That timeline should marry up to the timeline we give the manufacturers to label the product. So that at the end of the day, maybe five years, maybe six, the manufacturers have the products labeled, which by the way it’s not going to take them as long because most of them are already way down the road, they’re going to have to have secondary data.
So we need to speed it up, get the software developers moving and get it so that the hospitals can buy the upgraded software, get it installed, train, buy the devices they need to scan the products and get the process underway. Okay? If we don’t have the regulators authority, Jay, we need to know that, we need to let people know we need to get back into Congress. The environment is right. The President has said he wants health care fixed. He wants it reformed. He’s spending several billion dollars, throwing it at us now. And now is the time to get that money. Thank you.
MOD: Fair enough. Thank you. Anyone else? Comments, questions?
MS: Yeah. Matt Hollam (ph.) here, representing OSMA (ph.). Kind of a follow on to what was just said, Jay, maybe you can enlighten us or some of the other folks can as to what is going on now to coordinate this effort?
I mean, if the manufacturers, from our standpoint if we go ahead and do what you ask of us how are we going to be sure this time that the hospitals and the health care facilities do not drop the ball because we can provide them all that information, but if they don’t have electronic patient health records, etc., etc., if they don’t spend the money to get that software and those scanners or whatever they need to use that, to put that thing into a database system what’s going on to make sure that doesn’t happen this time.
MOD: Well, I think that’s why we’re here. I don’t have the answers to how this is going to magically happen, but I think we do need to understand what hospitals need and what it’s going to take to drive adoption. I’m open to suggestions.
MS: The comment I’d make, Jay, is I would say the closest thing to that from my perspective is the work groups, the pilots and the others if you got to those groups you’ll see reasonably good representation across the supply chain. And it would be nice if we had one overall gorilla, so to speak, that could make all of those folks essentially adopt and move. But we don’t have that right now. And so the best we can do is these voluntary work groups that are coming together and try to experiment and try to move it down the road. And so I’d encourage anyone that’s interested to get involved in those work groups.
MOD: Thanks. Dennis?
MS: I’m Dennis Orthman (ph.) from the Strategic Marketplace Initiative, SMI. I just wanted to add, validate that the topic of education came up earlier and I work with the folks in GS1 in a lot of the work groups and we still find a great need for education out there, industry organizations like AREM and SMI have tried to educate folks within the industry, particularly on the provider side. But a great deal more education is needed, particularly at the senor executive level, many of whom believe that these standards are already in place, aren’t they? You’ll find a lot of folks that feel that way.
I also believe that implementation is most successful when the providers help to drive it. 32 SMI members announced within the last week support for the GS1 standards. And we believe that provider driven implementation has great, a higher chance of success than past efforts.
[END OF FILE]