ALS MEMBER UPDATE: August 20, 2001:

[See correction to this update]

NEW MEDICARE REIMBURSEMENT ISSUES

Three issues in Medicare reimbursement have recently come to our attention. First, Representatives from the House Ways and Means Committee requested a delay in the implementation of changes to the reimbursement rates for "pass-through" items. Chair William Thomas, and Representatives Nancy Johnson and "Pete" Stark signed a letter July 23, 2001 requesting the Centers for Medicare and Medicaid Services (CMS, formerly HCFA) to delay by three months any update to "pass-through" reimbursement rates for new drugs, biologics, and devices reimbursed through the Hospital Outpatient Prospective Payment System ("HOPPS"). For example, the catheter used in trans-urethral microwave therapy ("TUMT") is reimbursed when used in an outpatient setting (but not when used in-office) under the "pass-through" system. This "pass-through" system, mandated by the Balanced Budget Refinement Act of 1999 to last at least 2 years, was designed to reimburse new technologies by drawing on a separate pool of federal funds. Delaying changes to the "pass-through" rates effectively extends the system's lifespan, meaning that some drugs, devices and biologics, will be reimbursed at "pass-through" rates. "Pass-through" rates are often higher than standard HOPPS rates. The Representatives' letter also requested that CMS accelerate the process of folding "pass-through" payments into the base rate, change the payment method for "pass-throughs" to better reflect acquisition costs, and phase out outlier payments. Each of these steps could be detrimental to device manufacturers because they would reduce the amount of funds available under the HOPPS to help reimburse the cost of new items.


Second, the Hospital Inpatient Prospective Payment System Final Rule was published in yesterday's Federal Register. The rule mandates that hospitals participating in Medicare's Hospital Inpatient Prospective Payment System receive an average 2.75 percent payment increase in fiscal 2002. The update is effective for patient discharges occurring on or after Oct. 1, and is 0.2 percentage points higher than estimated by CMS in the proposed rule issued in May due to an increase in the "market basket" measure of hospital inflation. Overall, the change means that hospital payments per case would rise 2.1 percent in fiscal 2002, from an average $6,994 in fiscal 2001 to $7,141.


Finally, on August 2, 2001, CMS released proposed regulations altering the Physician Fee Schedule for 2002. This payment system prospectively pays physicians for their professional services in either a "facility" or "non-facility" setting. A "facility" includes an inpatient or outpatient hospital setting, an Ambulatory Surgical Center, or a Skilled Nursing Facility. A "non-facility" is typically a physician's office.


Generally, the "non-facility" payment is greater than the "facility" payment because it reflects the professional services and the overhead costs associated with a physician's office, e.g., supplies, staff, and malpractice expenses. This "non-facility" payment is termed a "global rate" or an all-inclusive rate. Alternatively, in a "facility" setting, the physician is reimbursed for his or her professional services only, while the facility receives its overhead costs in a separate payment unrelated to the physician's professional services (the technical fee).


The proposed rates are not final and are subject to change. Additionally, CMS did not release an adjustment to the 2001 Conversion Factor. Accordingly, the proposed rates are a rough estimation of the final 2002 rates.
As an example, the following table depicts the calculation of the 2002 proposed rates with the 2001 rates for CPT codes 50590 (lithotripsy), and 53850 (TUMT) utilizing the 2001 Conversion Factor ($38.2581):

Please note that non-facility rates have not been included even though they have also changed. We are aware of no requests for reimbursement in-office (and therefore, under the non-facility rate) for lithotripsy because that reimbursement rate is so low. Also, as federal law requires that the Physician Fee Schedule Final Rule must be promulgated by the end of the calendar year, we expect to see an update in November of 2001.

If you have any questions, please contact:
American Lithotripsy Society
305 Second Avenue, Suite 200
Waltham, Massachusetts 02451
Telephone: 781-895-9098


Back to Governmental Affairs


Visit us again to receive up-to-the-minute reports on major issues such as the Health Care Finance Administration's (HCFA) proposed implementation of the Stark II (Physician Ownership) regulations and HCFA's proposed rates for lithotripsy performed in/out patient and ambulatory surgical center settings.

For additional information contact, Wesley E. Harrington, CAE, Executive Director of ALS at:
American Lithotripsy Society, 305 Second Avenue, Suite 200
Waltham, Massachusetts 02451
Telephone: (781) 895-9098
Fax: (781) 895-9088

E-mail: als@lithotripsy.org


American Lithotripsy Society
305 Second Avenue, Suite 200
Waltham, Massachusetts 02451
Telephone: (781) 895-9098
Fax: (781) 895-9088
email:
als@lithotripsy.org


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