Action Alert – Final Ruling – CMS Inpatient PPS

Action Alerts — Cardiovascular

Final Ruling — CMS Inpatient PPS

As a continued 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.  On August 1, 2002, CMS released its final ruling on the Fiscal Year 2003 Inpatient Prospective Payment System.  In a precedent setting move, CMS has made a provision for increased reimbursement for drug-eluting stents via the creation of two new DRGs that specifically categorize procedures in which the technology, which is presently being reviewed for approval by the FDA, is utilized.

In essence, the creation of DRGs 526 (Percutaneous Cardiovascular Procedure w/ Drug-Eluting Stent w/ AMI) and 527 (Percutaneous Cardiovascular Procedure w/ Drug-Eluting Stent w/o AMI) provides an increase in reimbursement for procedures involving drug-eluting stents of approximately 17 percent.  In real reimbursement dollars, this change will result in approximately $1,800 per case over existing reimbursement for stent-based procedures coding into DRGs 516-517.  Quoting directly from the Federal Register (Vol. 67, No. 148 / Thursday, August 1, 2002)

We are concerned that, if the FDA does approve this technology and the predictions of its rapid, widespread use are accurate, this action will result in a significant strain on hospital financial resources.  In particular, we are concerned that the higher costs of this technology would create undue financial hardships for hospitals due to the high volume of stent cases and the fact that a large proportion of these cases could involve the new technology soon after FDA approval.  Therefore, in this final rule we are creating two new DRGs that parallel existing DRGs 516 and 517, to reflect cases involving the insertion of a drug-eluting coronary artery stent as signified by the presence of code 36.07: DRG 526 (Percutaneous Cardiovascular Procedure with Drug-Eluting Stent with AMI); and DRG 527 (Percutaneous Cardiovascular Procedure with Drug-Eluting Stent without AMI).  We understand the earliest date that a decision from the FDA is anticipated is late 2002.  To further ensure that payments for the new DRGs 526 and 527 will not be made prior to FDA approval, we will activate these DRGs effective for discharges occurring on or after April 1, 2003.  If the FDA approves the use of drug-eluting stents prior to April 1, 2003, cases coded with procedure code 36.07 will be paid using the DRG relative weights for DRG 517.  New DRGs 526 and 527 will be temporary DRGs.  By creating separate new DRGs, we are able to ensure that higher payments will only be made after a positive decision by the FDA.  We expect that when claims data are available that reflect the use of these stents, we will combine drug-eluting stent cases with other cases in DRGs 516 and 517.

While this is a small victory, the emphasis must be on the word SMALL. The CMS decision/recommendation allows for a one-to-one conversion at existing utilization rates.  It is almost certain that utilization of drug-eluting product is not going to be on a one-to-one basis with bare metal stents.  It is highly likely that utilization per case on a national level will accelerate beyond existing averages of 1.6 to 1.7 per case to well in excess of 2.0 per case.  The increase provided by CMS via the new DRGs will account for a one-to-one shift, not the likely increase in utilization per case. 

The fears of hospitals nationwide do not rest solely on the increase in cost per stent, rather on a combination of factors including cost per unit and utilization per case.  As such, we are certainly grateful for the new DRGs, but we are nowhere near being out of the woods on this issue.  Furthermore, the new DRGs will go into effect on April 1, 2003.  It is expected that drug-eluting product will be commercially available well in advance of that time period.  Finally, it should be noted that CMS views these DRGs as temporary until sufficient cost/utilization information can be gathered to appropriately adjust DRGs 516-517, where drug-eluting stents will eventually code out. 

Cardiac Resynchronization Therapy (CRT) received less favorable treatment in CMS’s final version of the 2003 PPS.  Specifically, CRT defibrillators (CRT-D) will code into existing AICD DRGs.DRGs 514 and 515 are slated for modest increases, but the increases will not cover reported prices of CRT-D devices.In essence, CMS rejected the combined recommendations of ACC and NASPE entirely, for both the primary suggestion of coding CRT-D devices into DRG 104-105 and the fallback position of coding these devices automatically into DRG 514.Quoting directly from the

Federal Register (Vol. 67, No. 148 / Thursday, August 1, 2002)


We note that a fundamental assumption underlying the DRGs is that the hospital has the responsibility for deciding what technology and process to employ in treating a particular type of patient.  As hospitals in the aggregate make treatment decisions, these decisions are reflected in the DRG payment weights.  This allows the payment rates to evolve in response to changing practice patterns.  

The decision to treat CRT-D technology similarly to existing defibrillator technology is affected by our opinion that substantial improvement in health outcome benefits of adding the cardioverter-defibrillator component have not been fully established through clinical research.  There are no published articles that have shown an improvement in survival from CRT.  Although we appreciate the information provided by the commenters in this regard, we note there is not a significant body of evidence that CRT-D technology will supplant existing treatments for large numbers of patients.  Because the DRG payment system is an average-based system wherein hospitals are expected to offset the higher costs of some cases with below-average costs in others, we anticipate that hospitals will be able to adequately finance this new technology as it is utilized.  To the extent hospitals move to adopt this technology more widely over time, appropriate adjustments will be reflected in the DRG weights.  

Additionally, CRT pacemakers (CRT-P) will continue to code into DRG 115 when implanted for the treatment of heart failure.  

In another positive move, CMS has finalized the creation of a separate and distinct DRG for the implantation of a Ventricular Assist Device (VAD).  The new DRG – DRG 525 (Heart Assist System Implant) – will provide substantial improvement in reimbursement compared to reimbursement under DRG 104.  VAD procedures had previously coded into DRG 104.  According to CMS’ data, the average charge for LVADs is approximately $36,000 and $85,000 higher than the average charges for all other cases in those two DRGs 104 and 105, but accounts for only 1.3% and .5% of the overall volume, respectively. The change will have little effect on payment for DRGs 104 and 105 by the removal of VAD cases due to their low volume.  

Complete information regarding the 2003 CMS Inpatient Prospective Payment System is available in the Federal Register – Vol. 67, No. 148 / Thursday, August 1, 2002 / Rules and Regulations.  

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