US Medical Device Reimbursement Examples from Electrophysiology - - PowerPoint PPT Presentation

US Medical Device Reimbursement

Examples from Electrophysiology Catheter Market

Professor: Mr. Rich Tootchen Phone: (856)256‐5398 Email: tootchen@rowan.edu

Types of Insurers

• Medicare

– Is Health Insurance provided by the US Government which you are eligible for when you become 65 or older. – Premiums paid via paycheck deductions over your life. – “Supplemental Plans” pay for Rx & other costs Medicare doesn’t cover. Purchased from private companies.

• Private Payers

– Insurance companies such as Aetna, Horizon, … – Blue Cross and Blue Shield is a “private payer”

• There are 37 independent health insurance companies.
• Each provider services its own area /state (eg Horizon in NJ)
• Are supposed to be “non‐profits”

Managed Care

• Managed Care

– Mechanism developed to reduce the cost of health care and theoretically improve the quality of care. – Typically have lower premiums & a small co‐pay for a family doctor, specialist, ER visit or hospitalization. – Typically cover all diagnostic testing and procedures.

HMOs & PPOs

• HMOs (Health Maintenance Organizations)

– Patient select a primary care physician (PCP) who provides all of you basic healthcare services. – PCP provides referrals to go to Specialists

• PPOs (Preferred Provider Organizations)

– Plan has contracts with a network of “preferred” providers – Patient have higher payments if they go “Out of Network”

Coding, Coverage & Payment

• Coding

– The Language of Reimbursement – Are #’s to describe procedures & indications – But just because you have a code, does not mean you will get reimbursement $$

• Coverage

– Establishes if a procedure gets reimbursed

• Payment

– Establishes how much $$ is reimbursed

Fee for Service

• In the past, hospitals and physicians were

reimbursed under the Fee for Service System.

• For each procedure/service that was done, the

patient (insurance) was charged a specific reimbursable fee.

– Theoretically the fee was based on the cost for that procedure or test. – A patient would then get charged for many tests done at the hospital … and the health care providers (physicians and hospitals) were thus financially incentivized to order more tests.

Replacing Fee for Service

• To reduce costs, in 1982 Medicare (and then

private insurers) replaced Fee for Service with a system in which a healthcare facilities and providers could only charge for 1 ailment category per event

– 1 category per hospital stay – or 1 category per day for outpatient surgery

DRGs and APCs

• These categories were called

– DRGs (Diagnosis Related Groups) for Hospitals – APC’s (Ambulatory Patient Classifications) for

• utpatient surgery
• The idea is that patients within the same

category are clinically similar and are expected to take up similar amounts of hospital resources.

Codes Driving Payment & Coverage

• CPT, DRG & APC

 drive payments

– Procedure Codes

• ICD‐9‐CM

 drive coverage

– ICD‐9 Diagnosis Codes – ICD‐9 Procedure Codes – ICD‐10’s are going to be enacted in 2015.

Procedure Codes & Diagnosis Codes

(Used to justify payment under DRG’s & APC’s)

• Diagnosis Codes ‐

indicate why the patient was admitted ICD‐9‐CM Diagnosis Code Description 427.0 Paroxysmal supraventricular tachycardia

• Procedure Codes ‐

indicate surgical/diagnostic procedures performed ICD‐9‐CM Procedure Code Description 37.34 Catheter ablation of lesion or tissues of heart

Hospital Inpatient Payment

(DRG System)

• DRG (Diagnostic Related Group)

– DRG represents the major reason (procedure) for which the patient is treated

• Hospital paid single lump payment for the hospital stay based
• n the DRG code

– Each Hospital stay is assigned to 1 DRG – If 2 separate procedures are made (eg an ablation and a pacemaker implant)

• n the same patient, hospital only gets paid for the higher of the 2 DRG’s
• Multipliers

– Each City or Region is given a multiplier (multiple of the DRG payment) based

• n higher or lower cost of living in their location.

– Each hospital (even in the same city) may get paid a different value for the same DRG

• In the case of private payers, the hospitals negotiate their rates

with each of their payers every 1‐2 years

Hospital Outpatient Payment

(APC System)

• APC (Ambulatory Payment Classifications)

– Represents the outpatient procedure for which the patient is treated (no

• vernight stay or less than 24 hour stay with overnight admission)

– In 2014, it was redefined such that patients who stay in a hospital for two midnights is considered a hospital stay (DRG) and patients who stay less than 2 midnight periods are considered outpatient ( APC)

• Hospital gets paid a single lump payment for the procedure

based on the APC code

– Each outpatient procedure is assigned with a CPT Code – A group of similar CPT codes are covered under a single APC Code (single payment value)

Hospital Payment

Inpatient

(70% of Cases) 2003 Medicare DRG Description Reimbursement 518 Percutaneous cardiovascular procedure $8,699 w/o cardiac artery stent, w/o AMI 516 Percutaneous cardiovascular procedure $13,714 with AMI

Outpatient

(30% of Cases) 2003 Medicare APC Description Reimbursement 0086 Ablate Heart Dysrhythmia focus $2,755

* CPT code 93651 (as well as 93650 & 93652) are assigned to APC 0086

Payer Mix

Source: Agency for Healthcare Research & Quality (2000)

Their Real Goal in Life: Lower Cost

Physician Payment

(CPT System)

• Physician reimbursed via CPT code for the procedure

(Both for Inpatient & Outpatient Procedures)

If more than 1 code is submitted, Physician is reimbursed 100% of the primary CPT procedure and 50% for the secondary CPT procedure

• CPT code that describes catheter ablation for AVNRT:

93651 AVNRT, SVT, Flutter, A‐Fib (Intracardiac catheter ablation of arrhythmogenic focus; for treatment

• f supraventricular tachycardia by ablation of fast or slow

atrioventricular pathways, accessory atrioventricular connections or

• ther atrial foci, singly or in combination)

Physician Payment (continued)

• CPT Codes commonly used for Other Ablations:

93650 AV Node Ablation (Intracardiac catheter ablation of atrioventricular node function, atrioventricular conduction for creation of complete heart block, with

• r without temporary pacemaker placement)

93652 VT (Intracardiac catheter ablation of arrhythmogenic focus; for treatment

• f ventricular tachycardia)

Physician Payment

2003 Avg 2003 Mean Payment Charges CPTDescription Medicare Managed Care* 93651 SVT, AVNRT, AFl, AF $868 $3,425 93650 AV Node Ablation $561 $2,250 93652 VT Ablation $944 $3,400

* Payment Rates for Managed Care are not easily found. Charges are more easily found; and one can assume a charge to payment ratio (approximately 50%).