The Pipeline

Following new CMS guidelines, CRT conference sheds light on financial case of TAVR adoption

Di Yu

With the long-awaited release of transcatheter aortic valve replacements (TAVR), it was not surprising that a central topic at this year’s Cardiovascular Research Technology meeting focused on this revolutionary device. Although a significant part of the debate covered patient selection, procedural stroke rates, and referral patterns, perhaps the most critical question impacting future adoption was CMS's reimbursement outlook expected in March 2012.

Recently, CMS proposed new requirements for centers looking to receive reimbursement for any TAVR case, including:

  • Procedure must follow an approved indication and the specific valve system itself must receive approval by the FDA.
  • Patient must be evaluated by at least two cardiac surgeons.
  • Case should be performed at a health care institution with significant surgical and interventional cardiology experience under a heart team model. Hospitals implanting the device must participate in ongoing post-approval studies.
  • Physicians performing the procedure must have sufficient qualifications and experience.
  • Patient should be enrolled in a national TAVR registry for at least five years post-procedure given the importance of outcomes tracking for major stroke, all cause mortality, minor stroke/transient ischemic attack, major adverse events, and acute renal injury.

CMS announced that it will only cover cases under the aforementioned conditions, which excludes payment for patients with concomitant conditions, mixed aortic-valve disease, isolated aortic regurgitation, and untreated clinically significant coronary artery disease requiring revascularization. Off-label use will only be reimbursed under approved clinical trials, such as PARTNER II.

Following the announcement, medical societies, including the American College of Cardiology (ACC), supported the stipulations, stating that “CMS is proposing a national coverage policy, which balances the critical need to provide access to this important, innovative service with the need to ensure that care is provided in qualified facilities by highly skilled heart care teams and the need to collect data on experience with the device and procedure in the real world.”

One critical piece of this coverage criteria includes registration in a national registry, with follow up out to five years. Adding to the high device and operational cost associated with the procedure, hospitals looking to perform TAVR may also need to consider the additional expense of joining the Society of Thoracic Surgeions-American College of Cardiology (STS-ACC) Registry. The initiation fee of $25,000 and follow up fee of $10,000 for each year thereafter will cover the IT infrastructure of the outcomes tracking database. In exchange, hospitals that are members of the registry will receive an annual report benchmarking their program on a regional and national level.

Nevertheless, this added fixed cost only highlights the unfavorable outlook on TAVR profit margins in the context of current CMS payments. At CRT, a presentation on the adequacy of TAVR reimbursement by Dr. David J Cohen revealed that the average cost estimate for the procedure is $42,806, while adding on non-procedural costs of $30,756 and physician fees of $4,978 per procedure elevates the price tag of a single case to $78,540 in total.

For hospitals with TAVR programs, the median cost for the procedure is approximately $62,000. Although this overall procedure cost may be affordable for PARTNER trial participants--who received an average reimbursement of approximately $63,000 per procedure--it will be difficult for average hospitals to break even on TAVR since reimbursement outside of clinical trials only pays roughly $41,000, barely enough to cover the procedure cost. Below are the average reimbursement for PARTNER participants and hospitals outside of the trial:

Reimbursement Payment Overview for PARTNER Hospitals

  Reimbursement with Cardiac Cath   Reimbursement w/o Cardiac Cath 
TAVR non CC   $ 83,874  $ 69,936
 TAVR with CC  $ 56,238  $ 45,521
 TAVR with MCC   $ 44,761   $37,785

Reimbursement Payment Overview for Average Hospital

Reimbursement with Cardiac Cath Reimbursement w/o Cardiac Cath
TAVR non CC $ 54,578 $ 45,608
TAVR with CC $ 36,695 $ 29,621
TAVR with MCC $ 29,132 $ 24,587

Given the current CMS reimbursement picture, hospitals looking to enter the TAVR arena must carefully consider the financial case for performing the procedure against the strategic benefits. Despite slim profit margins, hospitals may be able to leverage the procedure as a marketing tool to attract ancillary volumes to their institutions, as well as optimize patient satisfaction, cut operational costs through decreased length of stay, and expand service line offerings.

With much of the buzz around TAVR driving patient interest in the procedure, pre-emptive valve programmatic investment can play a key role in preventing leakage of volumes to competing institutions. As a potential game-changing therapy in cardiovascular medicine, TAVR is expanding the market for patients who could not previously receive aortic valve surgery. It will be interesting to see how CMS aligns reimbursement strategy to follow the pipeline of TAVR device innovation in the following year.

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