Need-to-know sound bites from Medicare’s 2015 payment rules

Thousands of pages have been released by Medicare over the past three months regarding proposed and final 2015 payments to physicians, hospitals and free-standing Ambulatory Surgery Centers (ASCs).  For the busy medical device executive, I encourage you to skim this summary.  Upon your review, please call to discuss how to incorporate it into your 2015 strategies.  In the coming year, coding, coverage and reimbursement will be key topics for healthcare providers.  Sales reps will be expected to answer basic “financial value” questions much earlier in their sales calls.  Now is the time to consider offering your accounts a Reimbursement HelpLine for accurate information.

Medicare’s FY15 HOSPITAL INPATIENT (IPPS) FINAL RULE was published in the Federal Register on 8/24/14 (http://www.gpo.gov/fdsys/pkg/FR-2014-08-22/pdf/2014-18545.pdf). Revised payment rates for Medicare PART A will become effective on October 1, 2014.  Per CMS, total FY15 operating payments will decrease by 0.6% compared to FY14, or approximately $654 million less than FY14.  This final rule will impact more than 3,400 acute care hospitals. Of general interest to medical device manufacturers – it’s all about QUALITY!  Your sales propositions need to be tied to how to your product offering improves quality (and reduces costs).  Specific quality programs to be aware of:

  • Hospital Readmissions Reduction Program: Readmission penalties will continue for acute myocardial infarction, heart failure, pneumonia, COPD, and hip/knee arthroplasty. CMS proposes to add CABG in FY17.  The readmissions payment adjustment factor for FY2015 can be no more than 3-percent reduction.
  • Hospital-acquired conditions (HACs) reduction program (i.e. the avoidance of complications and adverse events, such as infection).
  • Hospital Value-Based Purchasing (VBP) Program. CMS received numerous comments this summer complaining about the overlap of the HAC and VBP programs. CMS replied – the HAC Reduction program is a program that reduces payment to hospitals for excess HACs to increase patient safety in hospitals; whereas VBP is an incentive program that redistributes a portion of Medicare payments made to hospitals based on their performance on various measures. Regardless, the administrative burden to hospitals to document, collect and report quality data to CMS is time-consuming and expensive.

CMS offered no changes and no new decisions about its 2-midnight benchmark.  Recommendations and comments for an alternative payment methodology for short inpatient hospital stays are currently under consideration.  For additional information on how this 2-midnight benchmark will impact your 2015 sales and marketing strategies, please call for personal consideration.

Specific changes to MS-DRG classifications impacting medical devices includes:

  • Request to move “exclusion of left atrial appendage procedures” from MS-DRGs 250 &  251 to MS-DRGs 237 & 238 was denied.
  • Request to reassign “transcatheter mitral valve repair” using MitraClip from MS-DRGs 250 & 251 to MS-DRGs 216-221 was denied.
  • Request to create new MS-DRGs for transcatheter and endovascular valve therapies was accepted.  Of note, CMS clinical advisors did not support grouping a percutaneous valve repair procedure with transcatheter/endovascular valve replacement procedures.  While CMS denied the request to create a new MS-DRG for percutaneous mitral valve repair (MitraClip) procedures, it did agree to create new MS-DRGs for endovascular/transcatheter cardiac valve replacement procedures (specifically not including the MitraClip).  Effective 10/1/14, new MS-DRG 266 (Endovascular cardiac valve replacement with MCC) and MS-DRG 267 (Endovascular cardiac valve replacement without MCC) will become available.
  • Request for reassignment of endovascular abdominal aorta graft implantation was denied and will remain in MS-DRGs 237 & 238.
  • Request to change shoulder replacement procedures resulted in the deletion of MS-DRG 484 and a revision of MS-DRG 483 to “Major Joint/Limb Reattachment procedure of upper extremities”.
  • Request to change the MS-DRG assignment for two ankle replacement procedures was denied and will remain in MS-DRGs 469 & 470.
  • Request to reassign certain back and neck procedures resulted in the deletion of MS-DRGs 490 & 491 and the creation of new MS-DRGs for disc and non-fusion devices.  For more information about MS-DRGs 518-520, please call for personal assistance.

New Tech Add-On Payment was granted to CardioMEMS Heart Failure Monitoring System; MitraClip; and Responsive Neurostimulation System. New Tech “add-on” payment was denied to Dalbavancin; Aptus Heli-FX AAA; and Aptus Heli-FX TAA.  The Watchman application was withdrawn.

For specific information about Medicare’s 2015 MS-DRGs, such as national average payment rates for inpatient procedures of interest, please call for personal assistance.


Medicare’s proposed rules include hospital outpatient, ASCs and physicians.  CMS proposed hospital outpatient (HOPPS) rule was published in the Federal Register on July 14, 2014.  The final rule is expected in November with final APC payments becoming effective on 1/1/15.

  • Proposed increase of $5.2 billion compared to CY14.
  • It’s all about bundling items and services into a single payment.
  • Comprehensive APCs to prospectively pay for high cost device dependent services in 29 device dependent APCs using a single payment for the hospital stay.
  • Proposing to assign all “Add-On” codes status indicator “N” (unconditionally packaged).
  • Proposed process for New CPTs and Level III was explained and should be reviewed by anyone with a new code, effective 1/1/15.
  • Proposed APC adjustment for new breast biopsy CPTs (core needle versus vacuum assisted).
  • Minimal change to the High/Low cost threshold for packaged skin substitutes.
  • CMS did not identify any procedures that potentially could be removed from the inpatient only list (e.g. no changes proposed to Addendum E).

CMS proposed ASC rule published in the Federal Register on July 14, 2014.

  • Approximately 5,300 Medicare-participating ASCs paid under the ASC payment system.
  • 10 new procedures proposed to be added to the ASC covered list (Table 48). They are all spinal procedures, including anterior & posterior arthrodesis, laminotomy and laminectomy, and transpendicular decompression.

CMS proposed Physician Fee Schedule (PFS) was published in the Federal Register on July 11, 2014.  The final rule will be published in November and become effective on 1/1/15. :

  • Conversion Factor = $35.7977 through March 31, 2015. (Other sources says CF = $35.8228)
  • Primary care specialists proposed payment increase (1%)
  • Hardest hit: Radiation Therapy Centers (-8%), Portable X-ray Supplier (-3%), Radiology (-2%); otherwise, most surgical specialties proposed 0% change.
  • Cut in global periods from surgical procedures: “We are proposing to transform all 10-day and 90-day global codes to 0-day global beginning in CY2017”.
  • 80 codes added to the list of potentially misvalued codes (Table 10).
  • Quality reporting requirements are staggering and burdensome.

For additional information and personal consideration, please call or email any time.  We would be happy to help customize your 2015 strategic reimbursement plan.