Paul Leininger. Group Product Director, Pricing DePuy Synthes Joint Reconstruction DSUS/MOC/1114/0164
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1 Paul Leininger Group Product Director, Pricing DePuy Synthes Joint Reconstruction 1
2 Johnson & Johnson Family of Companies a Global Presence The World s Largest Healthcare Company 128,000 Employees 250 Operating Companies in 60 Countries Selling Products in 175+ Countries $72 Billion 2016 Revenue We believe our first responsibility is to doctors, nurses and patients We are also responsible to our employees We are also responsible to the communities we serve Our final responsibility is to our stockholders 2
3 Warsaw-Based Platforms ATTUNE Knee System PINNACLE Hip Solutions Improving patient satisfaction via proprietary design elements More than two million PINNACLE Cups implanted Global Unite Platform (Shoulders) Multiple clinical needs addressed with one system 3
4 Medical Device Tax Update Affordable Care Act J&J s supports expanded access: Johnson & Johnson supports health care reform that expands access to affordable health care and improves long-term sustainability of the U.S. health care system while maintaining and building on the best aspects of our system, including incentives for medical innovation. Need for bipartisanship: The partisanship that has characterized the health reform debate during and since the passage of ACA has taken its toll on the health care system. Instability in the Exchange markets and unpredictability in the current health reform debate has the potential to negatively impact access to care for many patients. Like MACRA and 21st Century Cures, we believe bipartisanship is possible and hope Congress can take a step back and consider a bipartisan approach to fixing the system. Medical Device Tax The Affordable Care Act included a 2.3% excise tax on medical devices to help pay for expanded insurance coverage under the law. The medical device industry has successfully garnered bipartisan Congressional support to repeal the tax given its chilling effect on the innovation of new medical technologies. According to the U.S. Department of Commerce, U.S. medtech jobs declined by nearly 29,000 (or 7.2%) while the medical device excise tax was in effect from J&J supports our trade associations (AdvaMed, MDMA & IMDMC) in their opposition to the medical device tax. The medical device tax is currently under a moratorium that expires on December 31,
5 Bundled Payment Update Not new: Bundled payments are not new and have gone through an evolution: BPCI, VBPI, CJR, SHHFT Volume to Value: Indicates movement of US health care system from volume (fee for service) to value (pay for performance, episode based care). CJR Comprehensive Care for Joint Replacement: Applies to DRGs 469 & 470 Effective 4/1/2016 Impacted 67 markets or 31% of DePuy Synthes Sales Based on August CMS rule will now be mandatory in 34 of the 67 markets; voluntary in remainder SHFFT Surgical Hip and Femur Fracture Treatment Applies to DRGs 480, 481 & 482 Effective 12/20/2016 Impacted same 67 MSAs as CJR program Program canceled on 8/15/2017 prior to implementation of performance period 5
6 Bundled Payments (cont d) J&J supports value-based health care centered on collaborations between medtech manufacturers, providers and other key stakeholders such as payers to improve outcomes, enhance patient satisfaction, and reduce costs. Device manufacturers have the specialized product expertise and educational resources that can help providers achieve success in new payment models. For example, we can help drive better clinical outcomes through therapeutic compliance, care coordination, and patient education. J&J is engaging with decision makers at CMS to discuss novel shared performance opportunities such as CJR. Unfortunately, the anti-kickback statute and safe harbor regulations need to be improved in order for us to be full partners in the drive toward improved outcomes and lower costs. Medical device companies should be able to assume risk just as other stakeholders in bundled payment arrangements. The CJR model presents an opportunity for CMMI to use waivers of the anti-kickback statute for manufacturers to enter arrangements with providers that promote enhanced patient outcomes and reduced costs. The regulatory uncertainty created by the lack of clear and comprehensive guidance can be addressed by both CMS and OIG. CMS and OIG have both signaled additional clarification is forthcoming, we are eager for this guidance. 6
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