Helping Cath Labs and Hospitals Navigate Reimbursement Process Improvement

As with any new medical technology introduced to the marketplace, there are often many changes, challenges and opportunities realized by the cath lab. It is incumbent upon the hospital industry to learn all of the new dynamics involved with that product from proper utilization of the new product to new coding for reimbursement. In anticipation of the approval and introduction of the Cypher Sirolimus-eluting Stent, Cordis has multi-prong efforts in place to secure incremental reimbursement for this new technology and help prepare hospitals for its arrival. These efforts include seminars focused on coding, reimbursement and contracting. We recently had a chance to speak to Dr. Brian Firth about the steps that were taken to prepare the market prior to FDA approval of the Cypher Stent as well as some new ideas on the horizon. How did the Cypher Sirolimus-eluting Stent launch motivate Cordis to offer reimbursement and coding education? Introducing major new technology such as the Cypher Stent brings with it a lot of challenges, unless payers are appropriately reimbursing facilities. A few years ago, in preparation for the launch, Cordis considered it from multiple standpoints: 1. What could we do to prepare hospitals to make them aware of the Cypher Stent so they could be planning and budgeting for this new technology? Cordis decided to set up a Hospital Awareness program, which worked to inform hospitals about Cypher’s clinical data and economic specifics to help hospital planning and budgeting processes. 2. What could Cordis do to get incremental reimbursement as close to the time of FDA approval as possible? Our efforts eventually culminated in the Centers for Medicare and Medicaid Services (CMS) taking the unprecedented step of paying incrementally for the Cypher stent and agreeing to do so 6“8 months before FDA approval was even granted. Paralleling this effort, Cordis is also working with private payers and Medicaid. As we became further engaged in preparing for the Cypher Stent launch, we realized that there were two specific areas of opportunity. 3. Hospitals can be in very different positions depending on their contractual arrangements with private payers. Some contractual arrangements make it possible for hospitals to adopt new technologies much more readily. For example, some hospitals have carve-outs for the new technology or they get paid on a percentage of charge basis, and that’s very good, not only for this technology, but for all other technologies that come along. Hospitals can incorporate them without taking a huge hit. Cordis has created a program to educate facilities on the different type of contractual arrangements available in the marketplace and strategies for negotiating with payers. We’re running web-based contract management seminars and we have the information on our website (www.cordis.com). Hospitals are thinking, how can we do a better job with our private payers in getting them to pay? Let’s better define our contracts. 4. Finally, we also looked at whether hospitals are coding appropriately and getting the appropriate reimbursement for procedures. If your hospital doesn’t code accurately, it most likely will not be able to collect the proper revenues. We’ve discovered that many hospitals are confused by the different coding systems and frequent changes to coding methodologies. For example, the coding methodology for cardiology and endovascular (peripheral) procedures is very different, and many hospitals are not receiving the amount of money they are due because they are incompletely coding these services. Another area of concern is the reimbursement or revenue process. The seminars uncovered several areas where hospitals could increase their revenue recognition by making process improvements. In 2001, using an outside group of consultants, we organized a couple of reimbursement education seminars for the Cordis Endovascular side. These seminars were so well received that we thought, We really should run a full-day program for hospitals on correct coding and improving the reimbursement process. How did you expand your educational efforts? For 2003, we set up 16 seminars that were held in major cities across the country. We averaged between 120-150 hospital people at every one of these seminars. There is a very substantial appetite for this topic and thus an ongoing demand for education. We were driven by the sense that hospitals needed help to do a better job in the coding and reimbursement process. Our seminars, which are really one-day sessions, are conducted through two expert outside consulting groups. There are three modules: hospital (inpatient and outpatient) coding for cardiology and endovascular services, then a session that focuses on the hospital reimbursement process. During the one-day session, attendees learn the entire reimbursement process, both in the in-patient and outpatient arena. They also learn coding for cardiology procedures in-patient and outpatient procedures, as well as non-vascular procedures, such as pacemakers and electrophysiology. The goal is to teach people the coding process in order to capture appropriate procedure reimbursement. Why are hospitals having trouble? Many hospitals end up not collecting the revenues they should because of errors in coding, or not recognizing all of the codes they should use to describe a particular procedure. As a result, hospitals are not appropriately reimbursed. Hospitals tend to send a broad spectrum of people to these seminars. Some hospitals send a team rather than just one person, as they are trying to upgrade their whole system of revenue recognition. Our audience spectrum includes people in finance, people who are actually in coding, cath lab administrators and health care compliance staff. Some physicians will attend, usually 4-6 per session, and they’re cardiologists, vascular surgeons, etc. How much does it cost to attend? There is no registration fee. Attendees pay for transportation and hotel expenses, but Cordis pays for the handout materials, workbooks and administrative costs. We’ve provided this as a service to our customers, a service we felt they really needed. How are people responding? The kinds of comments that we’ve received are things like: This is just what we need or We can apply it to our local situation. Not only do attendees learn a lot from the didactic sessions, but they also learn from talking with other hospitals and sharing best practices. One person commented, We’re not coding completely. Obviously there’s a need for this kind of education. The net result is that people subscribe heavily to the seminars and fly across the country to attend. This is not the only session in the world where you can learn about coding. I get flyers in the mail from independent groups that are also educating on reimbursement and coding. However, Cordis focused these seminars very specifically on endovascular and cardiovascular procedures rather than trying to cover the whole gamut. On the reimbursement side, there is information that is generally applicable. For example, how do you process bills? If the bill is denied, what do you do next? Are you charging patients for the co-pay? If you’re paid at a lower rate than your contract calls for, what do you do then? While these are core competencies for many hospitals, they are not for all. Often hospitals don’t do anything with claims that are denied. They don’t challenge the payers. They don’t know what to do if things are paid at a lower rate or how to handle co-pays. They may not even pursue it. When hospitals look at their financial situation, it’s also worth looking at whether they are getting paid for what they do. Are they actually collecting the money? In many cases, they aren’t, or perhaps not very well. Some of the very best hospitals will admit to letting these opportunities fall through the cracks. As a result, some hospitals are revamping their entire coding department. For example, hospitals may physically place their coding people where the major activities are taking place. Coding people are being placed in the cath lab or in other places where there’s a big source of revenue. Then coders get it right the first time and don’t get the information second- or third-hand. Cordis is looking at taking reimbursement and coding education to another level, and potentially doing a web-based, modular, CEU-type program. Every year, there are some changes to the coding procedures and reimbursement rates. The hospital inpatient side changes on October 1, and the hospital outpatient side and physician fee schedule change on January 1st. Is this intense focus on education a recent move for Cordis? In 2001, we also ran some of these seminars. Tying them so centrally to a new product is probably new for Cordis. We’ve done some generic seminars before, but the catalyst for really doing coding and reimbursement seminars, and for doing them so broadly, was the Cypher Stent launch. Yet we’re covering more than just how to code correctly for the drug-eluting stent, and trying to make it a much broader, useful experience that is attractive to a lot of people and that they find useful. In terms of other technologies, this obviously stands hospitals in good stead not just for the present, but hopefully for the future as well. If you go back to the launch of the Palmaz-Schatz® Stent, from an educational standpoint, Johnson & Johnson Interventional Systems and Cordis have been invested from the beginning of time. We’ve always been integrated with the hospital environment from a training perspective, but it’s true these new seminars coincide with an important new technological introduction, that of drug-eluting stents. There’s been a lot of learning in terms of what we took away from our experiences with the Palmaz-Schatz stent launch. Can you talk more about what resulted from the 1994 Palmaz-Schatz Stent rollout? The programs that we’ve just talked about came directly from that learning experience. One problem with the Palmaz-Schatz stent launch was that nobody was able to foresee how big it was going to be. The estimates from the most well known consulting firms in the world were that at no point would stents be used in more than 20% of procedures. Well, even before there was reimbursement, which came in 1997, three years after launch, the Palmaz-Schatz stent was being used in about 50% of procedures. The rate at which this technology was used was unforeseen. That had a major impact on hospitals because no incremental reimbursement existed for over three years. If we go back to the Cordis Hospital Awareness program, you’ll find it’s one example of how Cordis is trying to warn hospitals and get them to plan for new technology. Every year, CEOs and hospitals have something new and unexpected for which they’re going to have to budget. It’s a new neonatal unit, or this or the next thing happening. They might not always like it, but they like it much less if they find out during the middle of the year about something that they should have been able to plan around. Helping the planning process is the focus of our Hospital Awareness program, which was actually predicated on the notion that we wouldn’t have any Cypher Stent reimbursement at all. Then we came in with incremental reimbursement at the time of FDA approval, not only from Medicare, but also from a lot of private payers. Again, this was a major difference from the Palmaz-Schatz stent, which had a 3-year delay from FDA approval to incremental reimbursement. Now, is a three-year delay unusual? No, it’s the norm. If you get incremental reimbursement for technology, it typically occurs after FDA approval and it very typically takes 2-4 years from when FDA approval takes place. Medicare generally doesn’t even start thinking about paying for new technology until after the FDA has approved it. Medicare wants to collect data for a year and then make up their minds as to what they should be paying. In terms of reimbursement, what happened with the Cypher Stent was totally unprecedented, and in order for that to happen, Cordis had to start working on it several years ago. In fact, we first met with CMS in September 2000, when we had our earliest data from our first-in-man data for the Cypher Stent. We talked to CMS many, many times and shared clinical data all along the way, as well as all the new data (including economic data) that came out. The big news for payers is that this is basically a break-even or cost-saving technology for them. The reduced need for repeat procedures and the potential for moving some patients from bypass surgery, for which they pay at least twice as much as for stent procedures, means that this technology is very attractive to payers. It’s something that has a huge clinical impact, a 75-80% reduction in events, which is unprecedented in terms of impact, and if they pay more for it, payers still recoup the costs within 6-12 months. However, at the end of the day, the positive impact of Cypher Stent on patients is where I think this story is really important. Restenosis isn’t a rare condition. Coronary artery disease (CAD) is the number one killer of both men and women in the Western world. A lot of patients have CAD, and a lot of patients would like to be treated one time, in the least invasive way possible, and to not come back. Patient responses have been overwhelmingly positive. The big issue is getting the hospital appropriately reimbursed from Medicare and private payers, because this technology is cost-effective to society. It’s not going to increase the cost of health care. We just have to be sure that the payers appropriately reimburse the hospitals. Ultimately, if you take a look at all the elements, there’s a lot of learning that went back to the Palmaz-Schatz stent era, in terms of our planning and execution for the Cypher Stent launch. We’re trying to assist the hospitals in their quest to obtain appropriate reimbursement. The Cypher Stent is an important technology in the here and now, but hospitals have an ongoing issue with new technology. This is not the first or last time hospitals will have to cope with the budgetary impact of new technologies. There will continually be new technology appearing on the market, so there are generic things that hospitals need to learn how to do. We are also working to provide CMS with additional information to justify a further incremental payment for drug-eluting stents. Now we’re trying to provide them with data from hospitals in the U.S. on the charges for bare metal stents and drug-eluting stents. CMS has indicated that they’ll use the best available data to get the rates by August 1 and Cordis is working hard to provide CMS with those data. Cath Lab Digest asked Dr. Firth about the letter recently sent to cardiologists. In response, Cordis provided the following statement: A recent letter sent to interventional cardiologists by Cordis Corp., a Johnson and Johnson subsidiary, served as a reminder to cardiologists to follow approved indications and stent selection when treating patients with its drug-eluting stent, Cypher. The letter was sent following reports of a small number of treated patients that experienced clotting within the first few days after receiving the stent. More than 50,000 patients have been treated in the US since its approval in April 2003, with less than 0.1% experiencing the clotting.

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