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CMS continues to address costs of recalled and replaced devices

Device Regulation Alert: Safety, Compliance and Reimbursement News, August 13, 2007

Payment for recalled and replaced devices and services represents an increased concern for CMS. The agency proposed adjustments to the 2008 Inpatient Prospective Payment System (IPPS) payment amount relating to recalled and replaced devices but revised the rule after public comment on the issue.

The changes only apply to diagnostic related groups (DRGs) under IPPS for which the implantation of the device determines DRG assignment. CMS changed its proposed requirement to hospitals to report replacement devices for which they get a credit using Condition Code 49 (product replacement due to non-function during lifecycle) or Condition Code 50 (product replacement due to recall).

According to the announced revisions to the IPPS rule, the new CMS policy still applies to specific MS-DRGs in which the device implantation determines the base DRG assignment. However, CMS changed the amount of credit which triggers reduced payment agreeing with comments and raising that percent to a credit of 50% or more of the cost of the device.

Furthermore, CMS will give hospitals the option of submitting a claim without condition code 49 and later adjusting the claim with condition code 49 once the amount of the credit is known or holding the claim until the credit is known.

You can find the IPPS final rule on CMS's Web siteThe final rule is expected to be published in an upcoming issue of the Federal Register.

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