Action Alert – CMS(HCFA) Issues Final Inpatient Prospective Payment System

Action Alerts — Cardiovascular

CMS (HCFA) Issues Final Inpatient Prospective Payment System

 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.  In that light, we would like to update you on some important recommended changes in hospital reimbursement related to defibrillator implantation, pacemaker implantation, and percutaneous cardiovascular interventional procedures (DRGs 104, 105, 112, and 116).

On August 1, 2001, the Centers for Medicare and Medicaid Services (CMS, formerly HCFA) released its final rule on the inpatient prospective payment system (PPS) for fiscal year 2002, provisions of which will be effective October 1, 2001.

The final rule adopts all proposed DRG changes within major diagnostic category five (MDC 5) Diseases and Disorders of the Circulatory System, as reported in the July 5, 2001 ACCA Action Alert sent via electronic mail.  The adoption of these changes was made in spite of significant lobbying efforts on the part of the American College of Cardiology and the North American Society of Pacing and Electrophysiology.  A summary of the final changes to MDC 5 and provisions for new technology payments is provided below.


CMS has created DRG 514 (Cardiac Defibrillator Implant with Cardiac Catheterization) and DRG 515 (Cardiac Defibrillator Implant without Cardiac Catheterization). The removal of defibrillator cases from DRGs 104 (Cardiac Valve & Other Major Cardiothoracic Procedures with Cardiac Catheterization) and 105 (Cardiac Valve & Other Major Cardiothoracic Procedures without Cardiac Catheterization) has the net effect of decreasing reimbursements for these cases and increasing payments for valve procedures.

 Description and values:

            104: Cardiac Valve with Cath (7.8411, $35,658)

105: Cardiac Valve without Cath (5.6796, $25,828)

514: ICD with EPS (6.3663, $28,951)

515: ICD without EPS (4.9905, $22,694)

 Interventional cardiology:

 CMS has created three new DRGs for PTCA and stent procedures, limiting DRG 116 to pacemaker implant procedures and eliminating DRG 112. The new DRGs – DRG 516 (Percutaneous Cardiovascular Procedures with AMI), DRG 517 (Percutaneous Cardiovascular Procedures without AMI, with Coronary Artery Stent Implant), DRG 518 (Percutaneous Cardiovascular Procedures without AMI, without Coronary Artery Stent Implant) – will increase payments for AMI patients and decrease payments for elective interventional procedures.

 Description and values:

116: Other permanent pacer implant (2.2648, $10,299)

516: Percutaneous CV Procedures with AMI (2.7475, $12,494)

517: Percutaneous CV Procedures, with Stent, without AMI (2.1379, $9,722)

518: Percutaneous CV Procedures without Stent, without AMI (1.6989, $7,726)


CMS has placed endovascular brachytherapy procedures in DRG 517, increasing reimbursement by approximately $1,500 from FY 2001 payment rates under DRG 112.

New technology:  

CMS will release a separate final rule addressing its strategy for incorporating costs of new medical services and technologies in the DRG system, as mandated by BIPA.

Impact of the final rule:

CMS officials estimate the final rule will increase payments to hospitals by $1.9 billion relative to FY 2001, resulting in a 2.1 percent increase in average payments per case.  While the overall impact may be positive, there are significant ramifications for the implementation of the new ruling relative to interventional and electrophysiology device services.  As noted in the July 5, 2001 communication, it is likely that hospitals will be forced to reanalyze their positions on the utilization of implantable cardiac rhythm management devices.  This is specifically disturbing when considering newer, more costly technologies targeting atrial arrhythmias and congestive heart failure and the continually growing number of patients that will potentially require this level of therapeutic intervention.