In May of this year, CMS granted formal approval for TAVR reimbursement, focusing strong attention on the financial picture of transcatheter aortic valve replacement (TAVR). The ruling mapped TAVR ICD-9 procedure codes 35.05 (transfemoral access) and 35.06 (transapical access) to MS-DRGs 216-221. While the Medicare national average payment is between $25,000 and $55,000 for these cardiac valve MS-DRGs, the payment rates at centers likely to qualify for TAVR are considerably higher; in fact, in FY2011, the payment for hospitals performing 50 or more aortic valve replacements (AVRs) was between $35,000 and $74,000, according to MedPAR data.
UPDATE: Recent CMS reimbursement coverage calls attention to TAVR financial picture
On April 19, the Centers for Medicaid and Medicare Services released their proposed Inpatient Prospective Payment System (IPPS) for fiscal year 2012. In total, overall payments to hospitals will see a 0.5% decrease starting October 1, 2011. Amidst the overall cuts, spine surgery cases will see a notable rate increase, while the orthopedic service line will see cuts, including one of the most common procedures, major joint replacement.
Last year's payment updates also saw increases for spine cases, and this year the trend continues with an overall 0.4% rate increase for all spine DRGs. 360 fusions, in which both a posterior and anterior fusion is performed, would see some of the highest rate increases, rising nearly 3% across MS-DRGs 453-455. The high device cost of these procedures, however, will continue to make it difficult to maintain strong margins despite the higher payments. In all, fusion reimbursement will be relatively flat, with other surgical spine cases seeing a 0.8% positive growth.
The situation is not as positive for orthopedics. While overall payments will remain relatively flat, major joint replacement procedure payments will decrease by 0.7%. Accounting for just over 5% of inpatient hospital stays that Medicare paid for in 2010, the payment cuts alone could save Medicare over $100 million dollars next fiscal year. At the same time, this will make the need to control device costs on the provider side even more pressing.
The final rule won't be released until later this summer, at which point we will do more careful analyses to measure the potential impact on hospital payments.
Last week, the American College of Cardiovascular Administrators (ACCA) held its annual meeting in Chicago, IL. While sessions on physician integration and health reform served to kick off the meeting, several sessions on transcatheter valve devices provided a look into current experience and future potential--both good and bad--for this still investigational field. On the heels of ACC, where clinical results of the hotly anticipated PARTNER trial were released, much of the discussion at ACCA focused on future reimbursement and profitability for these procedures.
Debate Continues Around Reimbursement and Profitability of TAVI