Rand Corporation Issues Report on U.S. Blood System

06 February 2017 Health Care Law Today Blog
Authors: C. Frederick Geilfuss II

“A robust, sustainable blood system is a crucial component of every health care system.”  That is how Rand Corporation’s recently issued comprehensive report entitled “Toward a Sustainable Blood Supply in the United States” (the “Report”) begins.  Issued as a result of research sponsored by the U.S. Department of Health and Human Services (“HHS”), the Report explores the challenges faced by the U.S. blood system and offers policy alternatives designed to ensure that such system remains sustainable.

The Report describes in detail the component parts and coordinated activities of the multiple stakeholders in the blood system, including the following: (1) voluntary donors of blood and its components; (2) nonprofit blood centers that collect, test, process, store, and distribute blood; (3) suppliers of equipment, goods, and services to blood centers; (4) hospitals and other providers who utilize blood in patient care delivery; (5) government and commercial payers who pay the hospitals and other providers for health care services involving blood; and (5) the government oversight and regulatory agencies (the Food and Drug Administration, the Centers for Disease Control and Prevention, the U.S. Biovigilance Network and the National Institutes of Health).

The Report identifies a number of challenges the blood system is facing.  It points out that there has been a marked decrease in demand for blood in the last 10 years resulting largely from changes in clinical practice and the increased focus by hospitals on cost control and blood management programs.  Provider consolidations have also resulted in stronger bargaining power for providers, which has decreased the prices paid for blood.  At the same time, new pathogens, such as the Zika virus, (which has limited  the ability of some to donate blood in certain areas thereby reducing collections) and technological innovation necessary to test for the presence of pathogens in blood have added costs to the processing and testing of blood.  Having sufficient blood available in times of emergencies or other significant disruptions is also an area of concern.  These various challenges have meant that the financial status of blood centers has reached the point where many lose money on blood operations and all are facing pressure on their margins.

The Report further explores the current payment system for blood.  The blood centers’ activities in collecting, testing, storing and distributing blood are reimbursed indirectly.  It generally is the hospital that is reimbursed for its use of blood on patients as part of the diagnostic related group (“DRG”) or through commercial payments from managed care plans.  Payments are intended to cover the cost the hospital incurs in acquiring and using blood.  The blood centers generally are not paid directly by payors and the negotiations between hospitals and blood centers may or may not reimburse blood centers fairly for the costs incurred by the blood centers.  The Report discusses alternative methods to reimburse blood centers.  Among the alternatives discussed are:

  • a DRG pass-through specifically for blood;
  • direct payment to blood centers (as opposed to hospitals and providers);
  • a supplemental payment for blood technology either made to hospitals or directly to blood centers;
  • federal grants to support the blood supply (for such things as ensuring capacity for emergencies or for developing tests for new pathogens); and
  • a disproportionate blood share model similar to the Medicare or Medicaid DSH program.

Despite the challenges discussed in the Report, the Report concludes that the U.S. blood system currently operates effectively and efficiently.  The pressures facing the blood system, however, create risks for future sustainability.  The Report explores an alternative whereby the U.S. government plays a more active role to ensure sustainability in addressing these pressures. To do so, the Report suggests that the U.S. government could (1) collect data and monitor the system; (2) adjust  how blood use is reimbursed; and/or (3) pay directly for certain technologies or features to help ensure surge capacity or pay for certain pathogen specific tests.

Finally, the Report provides seven recommendations to HHS:

i. Collect data on blood use and financial arrangements.

ii. Develop and disseminate a vision of appropriate levels of surge capacity and emergency response plans.

iii. Pay blood centers for maintaining surge capacity.

iv. Build relationships with brokers and other entities to form a blood “safety net.”

v. Build and implement a value framework for technology.

vi. Pay directly for new technologies where there is no private business case for adoption.

vii. Implement emergency use authorization and contingency planning for key supplies and inputs.

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The Report provides a comprehensive analysis of the U.S. blood system. As the Report states, “a robust sustainable blood system is a crucial component to every healthcare system.”  While the system functions well currently, there are growing pressures on the system.  The Report is valuable in that it proactively identifies the challenges the system faces and provides steps that should be considered to ensure long-term sustainability and avoid a future crisis.

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