June 23, 2006

The Centers for Medicare & Medicaid Services (CMS) should delay implementing its proposed changes to the hospital inpatient prospective payment system (IPPS) to allow more time for stakeholders to evaluate their impact on the device industry, say two leading associations. The agency should also consider reexamining its methodology for determining payments under the new rule, a House legislator says.

The changes, which were announced April 12, target reimbursement loopholes used by specialty hospitals and seek to trim the amount spent by the CMS on devices such as pacemakers. When fully implemented, the revised IPPS would improve the accuracy of payment rates for inpatient hospital stays by raising the weights assigned to diagnosis-related groups (DRGs) based on costs rather than charges and by adjusting the DRGs for patient severity, according to the CMS.

Washington, D.C.-based AdvaMed and the Medical Device Manufacturers Association (MDMA) published their recommendations to the CMS June 12. AdvaMed is seeking a one-year delay in the new rule and the MDMA wants implementation rolled back even further, to 2010.

Most device manufacturers are small companies that rely on stable payment rates to bring their products to market, the associations point out.

The rule as it is currently written does not provide "an accurate reflection of the true cost of services," AdvaMed said. It wants the CMS to move to an estimated cost-based weight system in fiscal 2008.