2006 Reimbursement Practices: Influence on Medical Device Manufacturers
Medical Device Link published an article this month that details key events which impacted the device industry during 2006. The key developments from Centers for Medicare and Medicaid (CMS) include: guidance on coverage with evidence development (CED), gainsharing demonstrations, proposed physician fee schedule rule, and competitive acquisition for durable medical equipment (DME).
Guidance on CED
CMS issued guidelines in July 2006 that require device makers collect additional data beyond the standard required for claims. This data will be used to generate evidence-based guidelines for coverage recommendations. Two sorts of CED are detailed: data for coverage with appropriateness determination; this requires additional data collection from providers to determine device use in context of national coverage decisions. The second sort of data collection occurs in the context of ongoing clinical trials to verify that device coverage is limited to CMS qualified clinical trials. Collection of evidence based on study participation may drive furture CMS coverage recommendations.
Gainsharing Demonstrations
In September 2006, CMS released solicitations for two pilot projects to assess gainsharing. These programs offer incentives to physicians who reduce costs for Medicare patients while in the hospital. Programs require determination of measures to assess cost savings; hospitals then pay physicians when cost savings are documented. Gainsharing must be tempered because of Medicare rules that prevent reduction or limitation of services for Medicare beneficiaries in exchange for physician payments from hospitals. Pilot programs received approval from HHS. This may represent a changing tide at Medicare, with increased emphasis on appropriate cost savings strategies that still preserve quality patient care.
Proposed Physician Fee Schedule Rule
New regulations from CMS initiated in 2006 limit the ability of physicians to profit from referring patients for diagnostic testing; this particularly addresses payments for technical versus professional fees associated with various testing. Updated regulations also address payment for imaging services, particularly charges for studies of contiguous body parts imaged during the same session.
Durable Medical Equipment (DME) Competitive Billing
The current purchasing on durable medical equipment through Medicare is based on a fee schedule. A new Congressional mandate requires competitive bidding to replace this process in 2007 to re-evaluate payment schedules. For companies that offer prices below the standard payment rate, companies can offer patients rebates. This proposal is the source of ongoing controversy.
Related stories:
- Bill to Update Medicare Payment Schedule
- AdvaMed Backs Request for Moratorium on DRA Imaging Cuts
- CMS Announces Final IRF Payment Rules for FY 2007
- Hospitals, Manufacturers Resist Forthcoming Medicare Payment Changes
- Device Manufacturers Get Support from Congressman Johnson
- Medicare Looks Harder Before Reimbursing Devices
March 28, 2007 Related topics: Legal & legislative, Standards, Trends