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Reimbursement Roadmap

CMS Proposed 2010 Medicare Rule: Impact on Orthopedics

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By: Michael Barbella

Managing Editor

Reimbursement Roadmap



CMS Proposed 2010 MedicareRule: Impact on Orthopedics

Tim Hunter, MCRA LLC



On July 1, the Centers for Medicare and Medicaid Services (CMS) released the 2010 Medi-care Hospital Outpatient Prospective Payment System and Ambulatory Surg-ical Center Prospective Payment System (ASC) proposed rule. This article provides a brief review of key provisions of the draft rule. Readers are encouraged to review the proposed rule and consider whether submission of a public comment is appropriate.

General Impact ofthe Proposed Rule



According to CMS, estimated total hospital outpatient facility payments will be approximately $31.5 billion under the proposed rule, an expected increase of $1.4 billion. Estimated payments to ASCs are expected to be approximately $3.4 billion in 2010.

Impact for Orthopedics—Hospital Outpatient Setting



Orthopedic procedures appear to fare well in the 2010 proposed rule, based on an analysis of 15 Ambulatory Payment Classifications (APC) commonly associated with orthopedic procedures. Anticipated payment rate in-creases among the APCs examined generally range from zero to 10 percent, with only APC 0425 (Level II Arthroplasty or Implantation with Prosthesis) showing a proposed negative update.

Quality Care and Medicare Payments


The proposed rule would expand on previous CMS efforts to link Medicare payments to specific quality measures. In addition to reducing payment by two percentage points for most services to hospitals that fail to meet quality reporting requirements, CMS proposes to implement a validation tool to determine whether hospitals are accurately reporting measures. CMS has indicated that the accuracy of information reported could impact a hospital’s payments in future years. Finally, CMS proposes to establish a method for making hospital quality reporting data available to the public.


New Technology Payments for Implantable Biologics



CMS also announced its intention to expand efforts to treat specific new implantable biologics more like medical device implants for payment purposes. For dates of service on or after Jan. 1, 2009, implantable biologics that receive U.S. Food and Drug Administration clearance or approval as medical devices and are implanted via surgical incision or natural orifice are packaged into the appropriate APC if the product is not eligible for a new technology pass-through payment.

If the product is eligible for pass-through payment, that payment is based upon the product’s Medicare Average Sales Price (ASP) as it is for a drug or biologic.

In the 2010 proposed rule, CMS proposes to change the pass-through payment methodology for these im-plantable biologics from one based on ASP to the methodology it uses to pay for pass-through devices, including provisions related to APC offset amounts.

This proposal impacts the pass-through application pathway for these products and likely will result in hospitals receiving lower payment for a pass-through implantable biologic than otherwise would occur under the current structure.

Impact for Orthopedics—ASC Setting


2010 marks the third year of CMS’ expansion of services eligible for payment in the ASC setting. CMS proposes to expand the list of eligible services to include 28 additional services for 2010.

Orthopedic or musculoskeletal procedures proposed for addition include the following:1

• Decompression of fingers/hand
• Surgery to stop leg growth
• Repair of tibia
• Percutaneous sacral augmenta- tion (sacroplasty)

CMS estimates that the proposed 2010 changes will positively impact musculoskeletal procedures.2 

Estimated total payments for these procedures would increase by 15 percent under the proposed rule, from an estimated $292 million this year to approximately $324 million in 2010.3

By contrast, total payments for all ASC-covered procedures are estimated to increase by 1 percent.

While musculoskeletal procedures as a whole appear to benefit from the 2010 proposed changes, some related procedures are expected to decline.4  
Surgical repair procedures appear to be among the projected winners, including certain procedures for knee arthroscopy, shoulder arthroscopy, rotator cuff repair, and carpal tunnel repair.

Certain spinal injections would experience decreased reimbursement under the rule, including epidural injections.

Full and Partial Device Credit Adjustment


CMS proposes to expand the list of APCs subject to the no cost/full credit and partial credit device adjustment policy to include certain joint repair or replacement procedures of the wrist, elbow and knee.

The full or partial device credit adjustment is triggered for a listed APC when a device used in the procedure is provided without cost (or with a full credit) or with a partial credit of 50 percent or more of the cost of the device.

Public Comment Deadline


CMS will accept comments on the proposed rule until Aug. 31. Direct-ions for comment submission can be found at the beginning of the rule, which was published in the July 20 Federal Register.

CMS expects to publish the final rule on or before Nov. 1, effective for dates of service on or after Jan. 1, 2010.

References:

1. CMS 1414-P, “Proposed Changes to the Hospital Outpatient Prospective Payment System and CY 2010 Payment Rates;” “Proposed Changes to the Ambulatory Surgical Center Prospective Payment System and CY 2010 Payment Rates,” Table 41.

2. CMS 1414-P, Table 53.

3. Comparison to estimated 2009 ASC payments

4. CMS 1414-P, Table 54.


Tim Hunter is the director of reimbursement for MCRA LLC, which provides comprehensive consulting services to the orthopedic industry. Tim has advised medical device, biologic, and drug companies on issues related to coverage, reimbursement, and adoption of novel technologies for more than 10 years. Please send inquiries to Tim at [email protected].

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