Health Information Management

Special report: Payment cap based on MS-DRG debated during APC Panel meeting

APCs Insider, August 26, 2011

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CMS’ plan to cap payment for cardiac resynchronization therapy (CRT) based on Medicare Severity-Diagnosis Related Group (MS-DRG) 227 payment drew plenty of discussion during the second day of the APC Panel meeting, says Kimberly Anderwood Hoy, JD, director of Medicare and compliance at HCPro, Inc., in Danvers, MA. 

In announcing the 2012 OPPS proposed rule, CMS said it plans to create a new composite APC for CRT defibrillator CRT-D and CTR pacemaker CRT-P procedures. CMS proposes capping payment for these services at the lesser of the newly established APC median cost or the inpatient standardized payment for MS-DRG 227.

The issue was not whether CMS should create a composite, says Hoy. Everyone who spoke seemed to agree that CRT was perfect for an APC composite. Debate focused on CMS’ plan to cap the payment based on MS-DRG 227.

Many commenters noted that CMS’ proposal to cap an outpatient payment based on an inpatient rate is a radical departure from the usual rate-setting process and called it inappropriate, says Hoy.

Jugna Shah, MPH, president of Nimitt Consulting in Washington, DC, commented that CMS has never been willing to look across payment systems in the past even when asked to do so, as with drug payment parity with the physician office setting. Historically, CMS has said that the IPPS, OPPS, and the physician payment system are all very different. However, for the first time, CMS is suggesting crossing payment systems. In the past, CMS has relied on Congress to cross payment systems and has shied away from doing so itself.

Shah asked the APC Panel to consider CMS’ proposal in two ways. First, a philosophical question asks whether the agency should look across payment systems. If CMS decides to do so, it must consider doing it for all services, including drugs and biological, says Shah.

Shah also asked the panel to immediately recommend that CMS also finalize repeated requests to eliminate the drug packaging threshold and provide separate payment for all drugs as it does in the physician office setting if the agency finalizes its proposal for CRT-D. ”If CMS wants to walk through the door of comparing payment systems, then it must do so for other services as well, such as drugs,” says Shah.

Second, Shah cautioned the panel about assuming that CMS’ cost calculations for one care setting are more or less accurate because the inpatient and outpatient rate-setting processes are completely different. “You simply cannot compare apples and eggplants and ask everyone to believe the comparison is valid,” says Shah.

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