Policymakers expressed concern about the lack in price transparency for implantable medical devices (IMD), with confidentiality clauses in purchasing agreements frequently restricting the release of third-party prices. Because this lack of transparency could drive up hospital cost and Medicare spending, GAO examined trends in IMD Medicare spending and utilization, information on IMD pricing for hospitals, and IMD market factors influencing pricing.

GAO released its findings in a new report to Congress, Lack of Price Transparency May Hamper Hospitals’ Ability to Be Prudent Purchasers of Implantable Medical Devices. Following analysis of Medicare hospital claims between fiscal years 2004 through 2009, researchers found hospital IMD procedure expenditures had increased 4.3 percent per year. Of this, nearly all IMD-related expenditures involved cardiac and orthopedic procedures, with orthopedic procedures driving the greatest increase in cost.

While some respondents did not offer the detailed information necessary to accurately compare prices across hospitals, researchers did find notable variations in reported cardiac device prices following analysis of data from 31 hospitals. Researchers also noted that physicians played a role in influencing the price hospitals paid for IMD by expressing preferences for certain manufacturers or models. Price was further influenced by a hospital’s market share and the degree of seller competition.

With less bargaining power and without price transparency, GAO found that some hospitals could be challenged in securing favorable pricing. Higher IMD cost could also pass into the Medicare program.

To read or download the full report, click here  (PDF).