Action Alert – Urgent Alert on Pacemaker and ICD Reimbursement

Action Alerts — Cardiovascular

Urgent Alert on Pacemaker and ICD Reimbursement

 In service to our members, the AAMA specialty group American College of Cardiovascular Administrators (ACCA) is attuned to recommended changes in federal laws, guidelines and reimbursement as they relate to cardiovascular medicine.  In that light, we would like to alert you to some important recommended changes in HCFA reimbursement related to ICD and pacemaker implantation (DRGs 104, 105, and 116). 

 Information related to the proposed changes is available in the Centers for Medicare and Medicaid Services (CMS) Notice of Proposed Rulemaking (NPRM) in the Medicare Hospital Inpatient Prospective Payment System for FY 2002 published in the May 4, 2001, Federal Register  (66 FR 22692).  CMS is proposing to make DRGs 104, 105 and 116 more clinically coherent by separating valve and ICD procedures into separate new DRGs and removing stent procedures from pacemaker DRG 116.  The consequences of the provisions in the NPRM to reclassify ICD implants from DRGs 104 and 105 to newly-created DRGs 514 and 515 are an approximately 9% reduction in base payment rates for ICD implants.  The NPRM also includes an almost 8% reduction in the pacemaker DRG 116, due to coronary stent implants being removed from DRG 116.  The DRG base payment rates for ICD and pacemaker implants include the cost of the device itself and all associated medical care. The ratio of the device cost to the entire DRG payment is at an unsustainable level for institutions to continue to provide these critical services to patients without being unduly hampered by financial considerations. 

 Impact on Access and Quality of Care for Patients with Cardiac Arrhythmias

 2)     These changes will have a negative impact on an institution’s ability to provide the highest quality of care to Medicare beneficiaries.  There is a strong indication that these changes will adversely influence staffing patterns in the electrophysiology laboratory and will reduce the level of nursing care during and immediately following these procedures.  Most worrisome is the fact that hospitals may be forced to use less costly technologies, especially in lieu of the more advanced ICDs, because of the financial restraints imposed by this proposal.  Ultimately, the consequence of these DRG changes may be an inappropriate limitation of access to these life-saving technologies for many patients, and a decrease in the standard of patient care. 

 Flawed Data

 There are high costs associated with delivering this critical medical technology to patients.  Furthermore, a hospital’s charges over cost for ICDs are systematically less than charges customarily applied to other products and services.  Many hospitals generally only charge approximately 20% above the actual sales price for ICDs on CMS cost reports, which is a considerably lower markup than what is typically applied by hospitals for other services.  As a result, actual costs of ICDs are not captured by the charge data, accounting for the underpayment for these procedures.

 CMS’s methodology assumes that all equipment in similar cost categories is marked up by the same percentage amount.  Most hospitals have lower mark-up rates for high cost items like ICDs.  This methodology results in inappropriately low payments for procedures requiring high cost devices such as ICDs.

The American College of Cardiology, the North American Society for Pacing and Electrophysiology, and many others have recommended that the proposed restructuring of DRG 104, 105, and 116 be withdrawn at this time to study further and assess the potential impact on hospitals that provide these critical services.

 There are significant concerns that these proposed reductions in reimbursement for ICD and pacemaker therapy will lead hospitals to discourage the use of advanced device therapy, especially ICDs, and may even result in a decrease in the level of staffing of electrophysiology laboratories.  The consequences could lead to a decrease in the quality of patient care.

 The formal public comment period for this proposal closed on July 3, 2001.  Comments are being reviewed at present, and the proposal and comments will be ruled on for implementation in October 2001.  While the public comment period has concluded, Congressional leaders from all states still have the opportunity to weigh in on the matter until July 9, 2001.  The ACC and NASPE have encouraged their members and hospitals to contact congressional leaders on the matter and to recommend that the proposal be held for further review and analysis.

 Please be sure this information is passed along to your colleagues who may not be AAMA/ACCA members.