Reimbursement Roadmap
Medicare Proposed 2010 Rule: Impact on Orthopedics
Jeffrey D. Zigler
Issued on April 28, the 2010 Inpatient Prospective Payment System (IPPS) rule underscores the need for technology companies to play an active role in Medicare’s rule-making process.
Indirect Impact on Orthopedics
PearlDiver Technologies Inc., a Fort Wayne, Ind.-based life sciences and technology company, conducted an analysis of the proposed rule’s im-pact on orthopedics.
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Based on the changes in payment noted in the rule, certain orthopedic market sectors will be positively im-pacted in fiscal year 2010. (See chart).
Historically Low Payment Update
Inpatient hospitals affected by the proposed rule must adjust to a low payment update from CMS. The 2.1 percent update is reflective of inflation, which by itself is “disappointing” to analysts and indeed is significantly lower than in previous years.5
Moreover, CMS proposes this 2.1 percent update despite the Medicare Pay-ment Advisory Commission’s (Med- PAC) report to Congress in March, which indicated a payment update of 2.7 percent would be appropriate.6
CMS Pays ‘Down’ for Hospitals’ Coding ‘Up’
The 2.1 percent proposed payment update for FY 2010 is already lower than inpatient hospitals had expected. However, the real problem for hospitals’ balance sheets will likely occur once a “documentation and coding” adjustment is phased in over time.
More Reporting Rules Placed on Hospitals
The proposed rule maintains previous years’ emphasis on quality improvement and quality-based purchasing of inpatient hospital services. Under the rule, 3,500 acute care inpatient hospitals would be subject to 43 quality reporting measures in order to be eligible to receive the full 2.1 percent payment update in FY 2010.
Challenging Environment for Orthopedics
Orthopedic manufacturers interested in selling their technologies to inpatient hospitals must demonstrate value following the rule’s proposed changes. This was true even before the rule’s publication, as noted in an Ernst & Young news release.9 Add the pressure that this proposed rule places on inpatient hospitals, and it becomes clear that orthopedic industry stakeholders must work closely with each other and with CMS to ensure patient access to existing and emerging technologies.
CMS will accept comments on the proposed rule until June 30. The final rule will appear in the Aug. 19 Federal Register and will generally be effective for discharges on or after Oct. 1.
References:
1. Source: www. federalregister. gov/ OFRUploadOFRData/2009-10458_PI. pdf (accessed May 7)
2. Source: www.dotmed.com/news/ story/8978 (accessed May 7)
3. Seiber, Eric, “Physician Code Creep and Its Impact on Improper Insurance Billing,” Healthcare Financing Review, Jun 22, 2007
Source:www.allbusiness.com/health-care-social-assistance/4498632-1.html (accessed May 7)
4. Eisner, Walter. “IPPS Updates Smile on Ortho,” Orthopedics This Week, May 4
Source: http://ryortho.com/NEWS-SHORTS/volume5/issue14/05-04-09- BKN-IPPS.html (accessed May 7)
5. Source: www.ohanet.org/finance/ medicare/AHA2010IHPPSAnalysis. pdf (accessed May 7)
6. MedPAC Hospital Inpatient and Outpatient Services Report to Congress, page 68 (March)
Source: www.medpac.gov/documents/Mar09_EntireReport.pdf (accessed May 7)
7. “News: OIG targets MS-DRGs up-coding in 2009 Work Plan,” CDI Strat-egies, Oct 29, 2008
Source: www.hcpro.com/HIM-222458-5707/News-OIG-targets-MSDRGs-upcoding-in-2009-Work-Plan.html (accessed May 8)
8. Reporting Hospital Quality Data for Annual Payment Update on CMS’ Web site
Source: www.cms. hhs. gov/ Hospital-QualityInits/08_HospitalRHQDAPU.asp (accessed May 7)
9. E&Y News Release, “Failing to Demonstrate Value of Innovation is Top Risk Facing Life Sciences Sector, according to Ernst & Young”
Source: www.ey.com/GL/en/News-room/News-releases/Media---News-Release---Failing-to-demonstrate-value-of-innovation-is-top-risk-facing-life-sciences-sector--according-to-Ernst---Young (accessed May 8)