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Who should pay for recalled device replacement?


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Lisa Salberg Find out more about Lisa Salberg
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  • Who should pay for recalled device replacement?

    Recalls, defects jolt health-care costs
    Pressure for reform; lemon law suggested

    By Bruce Japsen
    Tribune staff reporter

    June 19, 2005

    Two years ago, a surgeon cut into Jim Penn's chest, snaked a wire to his heart and implanted a pager-size defibrillator that was supposed to shock his heart if it ever stopped beating properly.

    But in February, Medtronic Inc. recalled the model, saying it had a flaw that could cause some devices to fail. So Penn went through the surgery again, becoming one of 11,000 Medtronic defibrillator patients to do so.

    Beyond the worry and risk of a second surgery for Penn and other patients, the replacements also come with a considerable financial cost to the health-care system.

    Medtronic said it will replace the $20,000-plus device and offer up to $3,500 for other expenses, but it's not going to cover the $8,000 to $14,000 for the second surgery.

    Instead, insurers, employers and people like Penn will pay--to the tune of some $100 million.

    Insurers say the bill could surge this year in the wake of Guidant Corp.'s recall on Friday of more than 40,000 heart defibrillators. The U.S. Food and Drug Administration said Friday that it has documented 45 instances in which the implanted devices failed, and they are linked to two deaths.

    When the system absorbs that kind of expense, it offers a partial explanation for skyrocketing health-care costs in the United States, which are increasing annually by 10 percent or more, far outpacing inflation.

    Costs naturally rise when more people have access to expensive medical technology like defibrillators, but they multiply when flaws and defects occur.

    The Medtronic recall is part of the $400 billion to $500 billion paid in the U.S. each year for care that includes medical errors and flawed devices, according to a study by the Midwest Business Group on Health.

    The 2002 report also cited problems ranging from medical errors and unnecessary treatments to misused drugs and bureaucratic waste, all of which account for up to 30 percent of the $1.7 trillion spent annually on health care.

    Those widespread costs are increasing pressure on companies to take more responsibility for the mistakes. Legislators are threatening to get involved, insurers are becoming more aggressive with lawsuits and some consumers are calling for reform.

    Lemon law for devices

    Lisa Salberg, president of the New Jersey-based Hypertrophic Cardiomyopathy Association, would like to see a lemon law passed for medical devices. Her group works as an advocate for patients like Penn who suffer the condition that causes excessive thickening of the heart muscle.

    "Health-care costs are so high, and we all have a responsibility to manage these costs appropriately and that goes for the doctor, patient and manufacturers," Salberg said. "I think it's a nice gesture by Medtronic, but I am not sure it is the role of health insurance providers and the employer to pay for somebody else's mistake."

    Salberg said her vision of a lemon law would protect employers, consumers and insurance firms from having to pay to remove and replace defective or flawed medical devices.

    Medtronic to cover device costs

    Minneapolis-based Medtronic stands by its reimbursement plan and notes that it already has incurred $18 million in costs related to the recall through April. It also has reserved an additional $17 million because it expects more devices to be replaced in the future.

    "What we try to do is make sure that the device portion of the equation and the device portion of the cost was taken care of," Medtronic spokesman Rob Clark said.

    Medtronic said a defect can cause batteries to deplete rapidly due to a "shorting action" in up to 1.5 percent of the 87,000 Marquis models made.

    Some criticize Medtronic for not covering all the primary costs and for overlooking the secondary implications.

    "There is debate among employers on whether Medtronic went far enough on their reimbursement," said Dr. Dennis Richling, an occupational health specialist and president of the Midwest Business Group on Health. The coalition represents about 70 of the Chicago area's largest employers, including LaSalle Bank and Sears Holdings Corp.

    "This is certainly an ongoing problem with implanted medical devices," Richling said. "The problem is that there will be increased costs back to the individuals for not only the surgery but recovery time and time away from work, and what if the company has to hire a temporary replacement worker?"

    Many patients, including those who will have to pay a portion of the surgery costs and worry about higher insurance premiums, also feel ill-considered.

    "I feel for all of the people out there who are not in a strong financial situation," said Penn, who owns a financial-services business in New Jersey.

    "I believe Medtronic should assume all of the costs involved," he said. "The insurance companies should not really put out the money, and the patient should not be held responsible for any expenses."

    Penn's family health plan, which covers his wife and 12-year-old son, comes with a deductible, so he says he faces at least $1,100 in out-of-pocket costs. That's after he gets a promised $2,500 check from Medtronic designed to pay patients' costs not covered by their health plans. He said the cost for his outpatient procedure, including hospitalization and doctor fees, was about $8,600.

    Some patients may have to stay overnight in a hospital and pay significantly more.

    Penn and his wife worry about the impact on their future health-care premiums, which are about $24,000 a year and rising annually.

    Insurers try to recoup costs

    Their insurer, Horizon Blue Cross and Blue Shield of New Jersey, said it will try to get the money from Medtronic.

    "Horizon will determine the financial impact and seek reimbursement from the manufacturer," Horizon Blue Cross spokesman Thomas Rubino said.

    "Horizon has also been in contact with some of the hospitals in New Jersey and will be working with them to ensure that the manufacturer will cover all patient expenses to have their defibrillator replaced," Rubino said.

    Concern over who will pay for defibrillator replacements started brewing in May after Indianapolis-based Guidant told doctors that its Ventak Prizm 2 DR defibrillator had failed in a small number of cases.

    Included in Friday's recall are Guidant's Ventak Prizm 2 DR model 1861, manufactured on or before April 16, 2002; Contak Renewal Model H135 and Contak 2 Renewal 2 Model H155, both made on or before Aug. 26, 2004; and Ventak Prizm AVT, Vitality AVT, Renewal 3 AVT and Renewal 4 AVT.

    The company on Friday advised patients to see their doctors at three-month intervals to check the devices. If the patient and physician decide a replacement is necessary, Guidant said it would pay for the device, which insurers say costs about $25,000.

    As for surgical costs, Guidant would not comment, but a Chicago doctor said the company has indicated it will pay patients up to $2,500 in unreimbursed costs.

    Design flaw fixed mid-2002

    Earlier this month, Guidant defended its decision to continue selling the original design of its Prizm 2 heart defibrillator, even though more than two dozen of the devices implanted in patients had stopped working because of an electrical problem. The failures prompted Guidant to redesign the device, but the company has said it believed the originals were reliable.

    Guidant said it had fixed the flaw in devices made after mid-2002.

    But patients are still worried about higher costs and the potential for the need of a new defibrillator. Guidant already faces a lawsuit seeking reimbursement for costs, including corrective surgery.

    John Brennan, 74, of Pennsylvania, filed a federal lawsuit June 1 against Guidant, claiming the company is financially liable to all patients implanted with its heart defibrillators because Guidant did not tell them the devices could short-circuit.

    "It is like having a grenade with a pin pulled in his chest," stated the lawsuit, which was filed in U.S. District Court in Indianapolis.


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    Copyright © 2005, Chicago Tribune
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    Dx age 12 current age 46 and counting!
    lost: 5 family members to HCM (SCD, Stroke, CHF)
    Others diagnosed living with HCM (or gene +) include - daughter, niece, nephew, cousin, sister and many many friends!
    Therapy - ICD (implanted 97, 01, 04 and 11, medication
    Currently not obstructed
    Complications - unnecessary pacemaker and stroke (unrelated to each other)

  • #2
    Well my thoughts is the company should pick-up what ever the insurance company doesn't pay and i'm sure the insurance company would want to put it all back on Guidant all I know i shouldn't have to pay for Guidant's deglect

    Diagnosed 2003
    Myectomy 2-23-2004
    Husband: Ken
    Son: John diagnosed 2004
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