CMS Revises Inpatient Reimbursement Proposal
CMS on Tuesday released a "far less dramatic" version of a proposal that would begin to revise Medicare inpatient hospital reimbursements in October, the Boston Globe reports (Heuser, Boston Globe, 8/2).
CMS in April announced the proposal, which includes the closure of loopholes used by specialty hospitals and plans to replace the current charge-based reimbursement system with a cost-based system and to implement a severity-adjusted reimbursement system that would pay hospitals more for the treatment of sicker patients. The proposal would affect reimbursements for several inpatient procedures -- such as those that involve the implantation of cardiac stents, defibrillators and other medical devices (California Healthline, 7/17).
Medical device companies and hospitals criticized the proposal, which they said would result in large reimbursement reductions that would limit medical innovation and reduce the quality of patient care.
CMS Administrator Mark McClellan said that the revised proposal would limit reimbursement reductions and would extend the implementation period from one to three years. According to McClellan, the combination of the cost-based and severity-adjusted systems likely would have no significant net effect on reimbursements for most hospitals.
Under the revised proposal, hospital reimbursements on average would increase by 3.5%, or $3.4 billion, and reimbursements would decrease for only about 2% of all facilities. However, cardiac specialty hospital reimbursements would decrease by more than 5% between 2005 and 2007 (Zhang, Wall Street Journal, 8/2).
Reimbursements for cardiac stent implantation would decrease by 14% over three years, compared with 35% under the original proposal. In addition, reimbursements for cardiac defibrillator implantation would increase by less than 1% over three years, compared with a 21% reduction under the original proposal (Boston Globe, 8/2).
The revised proposal also would begin to implement parts of the severity-adjusted reimbursement system in October, rather than implement the entire system in October 2007. In October, CMS would begin to adjust a limited number of diagnosis-related groups -- categories to which patients are assigned to determine hospital reimbursements -- for severity and would evaluate the adjustments prior to implementation of the entire system.
McClellan said that CMS could have the entire system implemented by October 2007, although the agency could delay adjustments for some DRGs.
HHS Secretary Mike Leavitt said, "Hospital payments should promote the best care for all patients, not the treatments that happen to be most profitable, and we are now on a path to making sure that happens" (Reichard, CQ HealthBeat, 8/1).
Rick Pollack, executive vice president of the American Hospital Association, said, "This is a significant regulation, and we will review the details in the coming days." Pollack added, "While we continue to believe a one-year delay is needed given the rule's complexity, we are committed to working with CMS to ensure any needed changes are addressed in future years" (Freking, AP/San Francisco Chronicle, 8/1).
Stephen Ubl, CEO of the Advanced Medical Technology Association, said, "At first blush ... it appears that the rule addresses many of the concerns that were raised by patient, physician and hospital groups" (CQ HealthBeat, 8/1).
Bruce Nudell, a medical device industry analyst at Sanford C. Bernstein, said the revised proposal is "clearly going to help" companies that manufacture cardiac devices (Boston Globe, 8/2).