A wel­come boost

Pro­posed CMS bud­get could ben­e­fit med­i­cal-de­vice mak­ers

Modern Healthcare - - The Week In Healthcare - Shawn Rhea

The news on fu­ture Medi­care re­im­burse­ments wasn’t all bad for hos­pi­tals last week. While providers were told to ex­pect an ap­prox­i­mate 0.1% de­crease in pay­ments for in­pa­tient ser­vices dur­ing fis­cal 2011, they also learned that CMS could boost re­im­burse­ment for some pro­ce­dures if the use of cer­tain new tech­nolo­gies pushes the cost of those ser­vices sig­nif­i­cantly above Medi­care’s cur­rent DRG pay­ment rates.

And Wall Street an­a­lysts see broader re­im­burse­ment lev­els for med­i­cal de­vices in the pro­posed rule. The some­what pos­i­tive news on de­vices goes against the gen­er­ally neg­a­tive re­cep­tion with which hos­pi­tals and sys­tems gave the pro­posed rule (See story, p. 10).

The CMS won’t is­sue a fi­nal de­ci­sion on the 2011 in­pa­tient prospec­tive pay­ment sys­tem un­til Aug. 1, but un­der the pro­posed rules hos­pi­tals could re­ceive higher re­im­burse­ment for cer­tain pro­ce­dures that in­clude the use of five new de­vices—two of which are holdover tech­nolo­gies that were ap­proved for add-on pay­ment in 2010. Use of the de­vices must re­sult in sub­stan­tial im­prove­ments— such as quicker pa­tient re­cov­er­ies, de­creased mor­tal­i­ties or fewer read­mis­sions—in clin­i­cal out­comes in or­der to qual­ify for add-on pay­ment sta­tus.

Cur­rently, the CMS is con­sid­er­ing add-on pay­ment ap­pli­ca­tions for Mon­teris Med­i­cal’s Au­toLITT catheter-guided laser, which is used to de­stroy glioblas­toma brain tu­mors; In­fraReDX’s Lip­iS­can Coro­nary Imag­ing Sys­tem, which is used dur­ing catheter­i­za­tion to de­ter­mine the com­po­si­tion of coro­nary plaque; and In­fraReDX’s Lip­iS­can Coro­nary Imag­ing Sys­tem with in­travas­cu­lar ul­tra­sound, which is used dur­ing an­giog­ra­phy to vi­su­al­ize stents and coro­nary le­sions. The agency also has pro­posed con­tin­u­ing add-on pay­ment for the Spi­ra­tion IBV Valve Sys­tem, which is used to con­trol air leaks af­ter cer­tain res­pi­ra­tory surg­eries, and the Car­dioW­est Tem­po­rary To­tal Ar­ti­fi­cial Heart, which is used on hos­pi­tal­ized heart fail­ure pa­tients await­ing trans­plant surgery.

The pro­posed pay­ment bumps vary widely based on the cost of the de­vices, but in most cases the add-on pay­ments would be up­wards of $3,000 per pro­ce­dure. Still, Joane Goodroe, se­nior vice pres­i­dent of VHA In­no­va­tions, which fo­cuses on clin­i­cal qual­ity and cost so­lu­tions, said the add-on pay­ments would hardly rep­re­sent a fi­nan­cial wind­fall for hos­pi­tals. She noted that providers who use the var­i­ous tech­nolo­gies will still lose money on the re­lated pro­ce­dures.

“When I see this, I don’t say, ‘oh wow, less pres­sure on the hos­pi­tals,’” said Goodroe of the pro­posed pay­ment in­creases. “I see it as proof that the cost of care is go­ing up.”

Oth­ers echoed Goodroe’s ob­ser­va­tions, but said the pay­ments could be help­ful in pro­mot­ing the use of po­ten­tially life-sav­ing technology that, be­cause of cost, is out of reach for many providers.

“These are tech­nolo­gies that have been shown through stud­ies to have a demon­stra­tive im­prove­ment to pa­tient out­comes, but their use isn’t nec­es­sar­ily wide­spread be­cause their costs aren’t yet in­cluded in the DRG” rates, said Don May, vice pres­i­dent of pol­icy for the Amer­i­can Hos­pi­tal As­so­ci­a­tion. “We think it would make sense to in­crease the num­ber of de­vices that re­ceive” add-on pay- ments, he added.

But Blair Childs, spokesman for the group­pur­chas­ing and qual­ity-im­prove­ment or­ga­ni­za­tion Premier, ar­gues that the CMS is likely to re­main re­luc­tant to ex­pand ap­proval of add-on pay­ments be­yond the two or three prod­ucts that re­ceive such sta­tus each year. “Add-on pay­ment for the right technology makes sense, but the ev­i­dence is spotty on how many of these de­vices are truly break­through,” he said.

Al­though de­vice­mak­ers typ­i­cally sub­mit add-on pay­ment ap­pli­ca­tions to the CMS, they won’t di­rectly ben­e­fit if the pay­ment boosts are ap­proved since hos­pi­tals—not in­sur­ers—buy the de­vices and then bun­dle those costs into their ne­go­ti­a­tions with pay­ers for cov­er­age of cer­tain pro­ce­dures. But many of the de­vices are tar­geted for use among el­derly pa­tients cov­ered by Medi­care, which re­im­burses at a lower rate than pri­vate in­sur­ers. As a re­sult, de­vice­mak­ers of­ten ap­ply for their de­vices to be cov­ered un­der the CMS’ add-on pay­ment pro­vi­sion in hopes of bump­ing up providers’ re­im­burse­ment and, sub­se­quently, in­creas­ing hos­pi­tals’ adop­tion and pur­chase of those de­vices.

A spokes­woman for the Ad­vanced Med­i­cal Technology As­so­ci­a­tion, a de­vice­maker lobby group, said of­fi­cials there are still re­view­ing the pro­posed 2011 in­pa­tient pay­ment rates and were not pre­pared to com­ment on how it might af­fect their mem­ber­ship’s prod­uct pric­ing.

But eq­uity re­searchers at both J.P. Mor­gan and Leerink Swann in­di­cated in notes put out last week that the CMS’ pro­posed re­im­burse­ment rates for many de­vice-ori­ented med­i­cal pro­ce­dures were gen­er­ally bet­ter than an­tic­i­pated. For ex­am­ple, hip and knee im­plant pro­ce­dures are ex­pected to re­ceive a pay rate in­crease of 2.5% while spinal im­plant pro­ce­dures are pro­jected to re­ceive a nearly 5% re­im­burse­ment rate in­crease.

“The pro­posal seems slightly more pos­i­tive than one might have feared dur­ing a pe­riod com­pli­cated by health­care re­form and bud­getary pres­sures,” wrote Leerink Swann an­a­lyst Rick Wise in his re­search re­port. As a re­sult, the fi­nal­ized rule should mit­i­gate the need for hos­pi­tals to place sig­nif­i­cant down­ward pres­sure on de­vice con­tract pric­ing, an­a­lysts said.

De­vices such as the Car­dioW­est To­tal Ar­ti­fi­cial Heart must pro­duce vast im­prove­ments in or­der to be el­i­gi­ble for add-on pay­ments.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.