May 17, 2006

Two leading device associations say new initiatives proposed by the Centers for Medicare & Medicaid Services (CMS) will not accurately reflect appropriate payment for devices and will compromise innovation.

AdvaMed issued a statement May 8 listing its specific concerns about pending changes in Medicare reimbursement rates for hospital inpatient procedures proposed by the CMS April 12.

The reimbursement cuts proposed are thought to run deep for some of the most lucrative heart products in the device sector, but proposed changes for orthopedic products such as replacement hips and knees are more moderate.

The rule "will in many instances impede access to innovative medical technologies that improve patient lives. Moreover, some critical procedures are cut as much as 20 to 30 percent," said AdvaMed Chairman Edward Ludwig.

While AdvaMed supports a more accurate payment system, "our preliminary analysis indicates that the proposed inpatient rule released by CMS threatens to reduce rather than increase payment accuracy," said Ludwig.

Most small companies depend on predictable payment policies and are not prepared for "wide swings," said Ludwig, who considers the proposed rule "unacceptable in its current form."

Moreover, calculations for diagnosis-related groups (DRGs) in the CMS proposal are based on data that is several years old, said AdvaMed President and CEO Stephen Ubl. As a result, this data fails to reflect the pace of innovation, "such as drug-eluting stents that have only been in widespread use since 2004," he said. ()a href="http://www.fdanews.com/ddl/33_20/" target=_blank>