Drug-Eluting Stent Reimbursement: What are the proposed changes this year?

Can you talk about the cyclical nature of CMS’ proposed rulings and why professionals should consider following this cycle on a regular basis? Each year, the Centers for Medicare & Medicaid Services (CMS) issues its proposal for what they’re going to do during the upcoming fiscal year in terms of coverage, coding and payments. For inpatient admissions, CMS typically releases their changes in an April/May timeframe, and a period for comment follows, usually lasting until early July. The final rule, implemented in October of that year, is published August 1st. This is typically how the cycle runs -- the proposed rule in spring and the final rule in mid-summer, with CMS soliciting comments in-between. It really is important that people pay attention to the proposed rule. If they see something that they feel strongly about, the comment period offers an opportunity to contact CMS and share their views. Physicians and professionals interested in commenting on the proposed rule need to write to the Centers for Medicare and Medicaid Services in Baltimore. If there are no changes, the proposed rule will then become the final rule, and will be implemented in October for the following 12 months. What is the current proposal for changes in DES and BMS reimbursement? As you know, CMS created two separate DRGs for drug-eluting stents: DRGs 526 and 527. They have continued to keep those separate from the bare metal stent DRGs, which is actually a very important point. If CMS had collapsed those DRGs all into one, they would have been overpaying for bare metal stents and very substantially underpaying for drug-eluting stents. The fact that CMS chose to continue to keep these DRGs separate was a very important first step. The second critical issue was that CMS looked at the charge data for fiscal year 2003, and as they always do, utilized it as the basis for making adjustments to these DRG payments (along with several hundred other DRG payments) for the next year. Ultimately, the proposed DRG payments don’t change very much year over year. They go up or down 1-2%, depending on which DRG you’re looking at for the drug-eluting stents and bare metal stents. Bare metal stent reimbursement rates increased in this year’s proposed rule. Why do you think that is? Right now we haven’t seen the actual raw data from Medicare; CMS will make it available soon and then we’ll be able to look at it more carefully. There are two components that drive the actual base payment for DRGs. One component is the so-called relative weight, which is the weight of any given DRG versus all of the other DRGs in the pool, which consists of several hundred DRGs. The relative weights of the two bare metal stent DRGs 516 and 517, and for the two drug-eluting stent DRGs, actually all went down slightly. The second component is the multiplier that Medicare applies. For these 4 DRGs, the multiplier actually went up. These two components the relative weight and the multiplier result in the so-called standardized amounts Medicare pays. The net result of multiplying these two components is that the payments for bare metal stents are proposed to go up 1.8% (DRG 516) and 1.2% (DRG 517), as will the payment for the drug-eluting stent in the setting of acute MI (+ 2.9% - DRG 526). Conversely, the payment is proposed to go down slightly for drug-eluting stents without MI (-1.6% - DRG 527). These are relatively small changes year over year, but they are due to this strange interplay between the multiplier and the weight. It is important to note that these percentages may well still change between now and the final rule. We had hoped, clearly, that the payments might go up quite a bit more for the drug-eluting stents than what we’ve seen here. You may also say, well, if bare metal stent prices have gone down, why did the payments not also go down? (or why have the weights not gone down?) This may be because it takes hospitals several months to change the charge master or billed amount. Therefore, what hospitals are actually paying for the devices is not necessarily reflected immediately in the charges that they submit due to this lag time. Hospitals probably also marked up drug-eluting stents less than bare metal stents, resulting in charge compression. There seem to have been an unusually high number of acute MI patients receiving DES. Yes, this is somewhat puzzling. If you look at the preamble to the proposed rule, CMS indicates that there were 42,000 cases in DRG 526 (the one for drug-eluting stents and acute MI). In DRG 527 (the one for drug-eluting stents without AMI), there were 33,000 cases. This translates into 55% of the DES cases involving an AMI, which is a substantial change from years past, where the figure has been more like 25%. Without access to the data, it is difficult to understand this significant change. When Medicare makes the data available, we will dig into it further. It is possible that there were some coding errors, but we cannot say that for sure. Today, it seems like an anomaly. Can you talk about the importance of correct coding? It seems to have implications beyond simply getting proper reimbursement for the individual procedure. Coding is tremendously important, and there are many reasons why this is true. One reason, clearly, is that hospitals need to rely on proper coding to insure appropriate reimbursement for procedures. Improper coding can lead to underpayment, as well as overpayment for procedures. The second thing is that using the right codes is important for tracking what is going on with procedures. For example, Cordis looked at another (non-Medicare) database from a large group of hospitals and reviewed the codes for patients getting drug-eluting stents in association with a single-vessel angioplasty or multi-vessel angioplasty. What we saw is that multi-vessel stenting, which used to be about 14“15% of cases in earlier years, has grown to more than 20% with drug-eluting stents at the end of 2003, and is continuing to rise. By virtue of looking at these codes, we’re able to actually track what is happening with procedures and how procedures are changing. Getting the right data is terribly important if you’re going to make the right decisions on future reimbursement levels. What information and recommendations were the basis of this ruling? The primary basis for these recommendations is CMS’ analysis of its own MedPAR database of Medicare charge data. In addition, we and other companies are obviously in conversation with CMS about appropriate reimbursement for our technologies. AdvaMed, our trade association, also weighs in and makes recommendations to CMS as to what it should do. What Cordis specifically has done, is build a very strong case to CMS that they should create a separate DRG for multi-vessel stenting. We presented CMS with clinical data showing that drug-eluting stents do work, and that long-term, multi-vessel stenting is a durable procedure, as well as a very viable alternative to bypass surgery. We also presented them with cost and charge data from an external database from 120 hospitals. The data show the very significant difference in costs hospitals incur when they place drug-eluting stents in multiple vessels, as opposed to a single vessel. We proposed to CMS that they really should seriously look at creating a DRG for multi-vessel stenting. This DRG would ensure hospitals are not incentivized to send patients to bypass surgery rather than to drug-eluting stent procedures. CMS is very interested in this proposal and will be looking at it very closely over the next year. However, they felt they didn’t have enough data in hand at this stage to make the change this year. We hope they may make that change in October 2005. What are some positive aspects of the current ruling as it stands? I’ve already touched on the importance of maintaining separate DRGs for drug-eluting stents, which was our primary objective. It is also important that, overall, the payments haven’t gone down. We still hope that by the time of the final rule, there might be some further upward adjustments in the payments for drug-eluting stents. A third positive is that CMS is clearly very interested in creating a further DRG for multi-vessel drug-eluting stenting in the future. In the preamble to the current proposed rule, they talk about this extensively and discuss the proposal Cordis made. However, CMS feels that based only on five months of drug-eluting stent data (May through September 2003), they do not have enough data to create a new DRG for multi-vessel stenting at this stage. In general, the CMS system works and pays fairly well for existing procedures, admissions, and technologies. Where there is room for improvement is in appropriate payment for new technologies in a sufficiently rapid timeframe and to create appropriate incentives to drive clinical behavior. The current system is set up to look at things in fairly large categories. Changes in charges or costs of a few hundred dollars one way or another are just not likely to affect the system; it’s not sliced that finely. However, it would probably become somewhat unmanageable if instead of 500-600 DRGs, we had five or six thousand DRGs that CMS had to review and reweight every year. It’s tough enough to do with the number of DRGs they do have. The last thing I would emphasize is that it is important for all parties who are affected by this physicians, staff, cath labs and hospitals to pay close attention to what’s in the proposed rule each year. This is how the democratic process works providing an opportunity for those affected by the proposals to make their comments. There’s a finite time period to do so, ending July 12th this year. Cordis will be getting its comments in to CMS well before that deadline, because during the last two weeks of July, CMS is putting this issue to bed. The final rule will be published in the Federal Register by the first of August and implemented by October 1, 2004.

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