TPPs To Include Only Complete Services or Procedures

CMS is developing a plan to pay for new medical technologies in 2002. APC payment rates for other services may be cut to subsidize the transitional pass-through payments (TPPs).
 
By law, Medicare may not spend more than 2.5 percent of the total OPPS budget on TPP. The problem is that CMS expects spending for TPP to exceed that limit considerably. Therefore, TPP for new drugs, radiopharmaceuticals and devices will need to be reduced. CMS projects a 60 to 80 percent cut in TPP next year. That is frightening both to hospitals and to ADVAMED, the medical-device industry association.
 
The lack of sound data [on TPPs] makes it difficult to ensure that payment changes will accurately determine the true costs of services. It is a critical issue for both hospitals and the patients we serve that we get this right, an American Hospital Association statement says.
 
We are afraid this will create a disincentive for hospitals to use the latest technologies in the outpatient setting and will shift procedures to the inpatient setting, says Jeff Ezell, a spokesman for ADVAMED.
 
To cut spending, CMS proposed rule for 2002 OPPS changes includes tighter criteria that would limit TPP to truly new technologies. Only complete services or procedures not instruments, equipment or supplies will be eligible.
 
The feeling is that many of the devices on the list now are not cutting-edge, says Karen S. Fisher, JD, associate vice president with the Association of American Medical Colleges (AAMC) in Washington, D.C., which represents most of the major teaching hospitals in the nation.
 
To save money, ADVAMED suggests Medicare pay only the incremental cost of new technologies the difference between the cost of the original device and the cost of the new one instead of the whole cost of the new one.
 
For example, suppose an APC pays $100, and an existing device like a stent that costs $20 is used. Then a new stent that qualifies for a TPP and costs $100 is introduced. In theory, the TPP for the new stent should be $80 the difference between $100 and $20. In practice, because CMS was not able to identify the cost of the original stent, it would pay the whole $100. ADVAMED says the data CMS has collected will enable it to identify the incremental cost of the new device and pay just that. This method would lead to a $450 million reduction in TPP payments next year. The bottom line is that hospitals will get less money, Fisher says.
 
ADVAMED also wants Medicare to incorporate the cost of new devices into the base APC payment rates to take the pressure off the 2.5 percent limit, Ezell says. This proposal has bipartisan congressional support. Since devices only qualify for [...]

- Published on 2001-10-01