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 outpatient 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 on the DRG code – Each Hospital stay is assigned to 1 DRG – If 2 separate procedures are made (eg an ablation and a pacemaker implant) on 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 on 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 overnight 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 Their Real Goal in Life: Lower Cost Source: Agency for Healthcare Research & Quality (2000)

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 of supraventricular tachycardia by ablation of fast or slow atrioventricular pathways, accessory atrioventricular connections or other 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 or without temporary pacemaker placement) 93652 VT (Intracardiac catheter ablation of arrhythmogenic focus; for treatment of 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%).