FDAnews Device Daily Bulletin

CMS PUBLISHES PRICES FOR 30 PROCEDURES; TREND IS TOWARD COST-BASED COVERAGE, EXPERTS SAY

June 13, 2006
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The Centers for Medicare & Medicaid Services (CMS) recently published prices for 30 diagnosis-related groups (DRGs) and procedures -- a move that will increase pressure on the device industry to lower prices, experts say.

The CMS publication includes the volume and typical ranges of Medicare payments for heart operations and implanting cardiac defibrillators, hip and knee replacements, back and neck operations and other procedures. The agency expects the data to help consumers compare the price and quality of common medical treatments.

This initiative "does raise issues for the device manufacturing community because what you see is that the device cost is a very large proportion of the total payment," said Jeffrey Lerner, president and CEO of ECRI, a medical products testing organization. ECRI publishes PriceGuide, a searchable database of the prices paid for single-use medical products.

The payment breakdown for certain conditions can depend on their relative severity, Lerner said. For example, with a DRG for chest pain, "it's hard to tell how much of the payment percentage is tied to the device." But in the case of a pacemaker implant, "it's pretty straightforward," he said.

For example, the CMS lists its national average payment for DRG number 536 -- "Insertion of Heart Defibrillator With Examination of Heart Through a Catheter" -- as $39,953. "So if the ballpark list price for implantable defibrillators is $25,000 to $30,000, then the device cost is a significant portion of the total," said Lerner.

The list price is "what the manufacturer says the device costs," meaning the retail cost to hospitals, Lerner explained, noting that it is part of his organization's mission to obtain that data. ()a href="http://www.fdanews.com/ddl/33_24/" target=_blank>