Reimbursement issues: Neuromodulation

1. Reimbursement issues: Neuromodulation December 8, 2012 North American Neuromodulation Society 16th Annual Scientific Meeting Wynn Hotel, Las Vegas Nevada Joshua P. Prager, M.D., M.S.

2. Highlights of the Inpatient Hospital Final Rule • Update for FY 2013 is 2.8% • Market-basket update of 2.6% for hospitals that report quality information • Reduction of -0.7% for multifactor productivity adjustment • Reduction of -0.1 required by the Affordable Care Act • Net adjustment of +1.0% for documentation and coding • With additional neutrality and other contributing factors, payment impact analysis shows aggregate payments increasing by 2.3% in FY 13. • CMS projects that Medicare operating payments will increase about $2.45 billion in FY 2013.

3. Rates do not include the impact of a -2% reduction to Medicare provider payments (2013-2021) from the automatic “sequester” provisions enacted in the Budget Control Act (BCA) of 2011, slated to take effect after January 1, 2013 and applied across the board to all Medicare payments. Barring congressional action to delay or replace this provision, cuts will take effect. • Outlier Threshold FY13 is $21,821. • from $22,385 (FY12) • Charge Compression • CMS finalized its proposal not to use data from the new implantable device cost center to calculate weights in FY2013

4. Hospital Readmissions Reduction Program • This program will begin in FY 2013 with payment reductions to certain hospitals that have excess readmissions for three selected conditions:  heart attack, heart failure and pneumonia.  • Discussion of Add-On Payments for New Services & Technologies • CMS received 6 applications for New Tech Add-On Payment; 2 applicants later withdrew. CMS finalized three new technology add-on payments in the final rule and denied one. • Impact to SCS, TDD and ITB • DRGs that typically come into play for SCS, TDD (Pain & ITB) to see an increase in FY 13 with one exception-(DRG 040).

5. Highlights of the Inpatient Hospital Final Rule SCS & TDD (Pain)

6. Highlights of the Outpatient Hospital Final Rule • 2013 Update • The 2013 payment conversion factor for OPPS is finalized at $71.313, which reflects a 1.8% increase. • CMS projects that Medicare operating payments will increase about $4.6 billion in CY 2013. • Call to Action-Pump refills • CMS elected not to reclassify the CPT 62369-70 to a more appropriate APC that would more accurately reflect the complexity and time associated with a pump refill. These codes will continue to map to APC 0691, however, this APC has a 14.5% increase in reimbursement. • Pharmacy • Separately payable drugs are moving from current ASP +4% to ASP+6%. The added 6% includes combined acquisition and pharmacy overhead.

7. Highlights of the Outpatient Hospital Final Rule, cont’ • $80 per day cost/packaging threshold for CY 2013. Current threshold is $70. Lioresal (J0475 & J0476) and Prialt (J2278) meet the cost threshold and are separately payable in the hospital outpatient site of service. • Charge Compression • As discussed in the proposed rule, CMS finalized the use of the new “implantable devices charged to patient” cost center to set payments under the OPPS. This was established in 2009 to reflect that hospitals typically mark-up higher-cost devices less than they mark-up lower cost devices. This results in approximately 6% of the payment increase for neurostimulator devices and implantable infusion pumps.

8. Highlights of the Outpatient Hospital Final Rule Spinal Cord Stimulation • Reimbursement for neurostimulator insertion to increase 8.1% to $16,395. • Reimbursement for paddle lead insertion to increase 9.3% to $6,792. • Reimbursement for percutaneous lead insertion to decrease slightly by 1.4% to $4,400. • Programming services will see reimbursement reductions

9. Highlights of the Outpatient Hospital Final RuleSpinal Cord Stimulation

10. Highlights of the Outpatient Hospital Final Rule Targeted Drug Delivery • Reimbursement for bolus/single day trials to increase 8.2% to $566. • Reimbursement for continuous infusion/multiple day trials to decrease 5.1% to $857. • Permanent catheter insertion to increase 11.5% to $3,251. • Pump Insertion to increase 4.5% to $14,111. • Pump refills to increase 14.5% to $192.

11. Highlights of the Outpatient Hospital Final RuleTargeted Drug Delivery

12. Highlights of the ASC Final Rule • 2013 Update • ASC payment rates will increase by 0.6 percent—the projected rate of inflation of 1.4 percent minus a 0.8 percent productivity adjustment required by law. • CMS projects that Medicare operating payments will increase about $310 million in CY 2013. • Pharmacy • Separately payable drugs are moving from current ASP +4% to ASP+6%. The added 6% includes combined acquisition and pharmacy overhead.

13. $80 per day cost/packaging threshold for CY 2013. Current threshold is $70. Lioresal (J0475 & J0476) and Prialt (J2278) meet the cost threshold and are separately payable in the hospital outpatient site of service. • Charge Compression • As discussed in the proposed rule, CMS finalized the use of the new “implantable devices charged to patient” cost center to set payments under the OPPS. This was established in 2009 to reflect that hospitals typically mark-up higher-cost devices less than they mark-up lower cost devices. This results in approximately 6% of the payment increase for neurostimulator devices and implantable infusion pumps.

14. Highlights of the ASC Final Rule Spinal Cord Stimulation • Reimbursement for neurostimulator insertion to increase of 8.1% to $15,431. • Reimbursement for paddle lead insertion to increase 11% to $5,861. • Reimbursement for percutaneous lead insertion to decrease slightly by 2.1% to $3,551.

15. Highlights of the ASC Final Rule:Spinal Cord Stimulation • Spinal Cord Stimulation

16. Targeted Drug Delivery • Reimbursement for bolus/single day trials to increase 5% to $317. • Reimbursement for continuous infusion/multiple day trials to decrease 7.7% to $481. • Permanent catheter insertion to increase 8.2% to $1,824. • Pump Insertion to increase 4.2% to $12,969.

17. Highlights of the ASC Final Rule:Targeted Drug Delivery

18. Highlights of the Medicare Physician Final Rule • Sustainable Growth Rate (SGR) • As in past years, CMS again indicates that the fee schedule conversion factor will decline; for 2013 the decrease is set at 26.5%. (The conversion factor is used as the multiplier for the total relative value units (RVUs) to determine the payment for a procedure.) • This decrease is required by the SGR formula, called for in Medicare statute, to calculate payment. • Current expenditures are a component for the formula and since the SGR does not account for more Medicare beneficiaries, longer life spans, new technology, etc. negative updates are the result. • Over the last ten years, CMS, Congress and the President have taken administrative and legislative steps eliminating conversion factor decreases. It is anticipated that additional legislative action will be taken in late 2012 or early 2013

19. Highlights of the Medicare Physician Final Rule • Spinal Cord Stimulation Office Trials • In the 2013 proposed rule, CMS reviewed SCS trialing performed in an office setting, also referred to as a non-facility setting. CMS stated that CPT code 63650 is frequently furnished in the office setting, but because there are no relative value units (RVUs) for the non-facility setting, it is not priced accordingly. • CMS has proposed to establish values for 63650 in an office setting by combining the costs of trial leads as a non-facility direct practice expense (PE) input into the payment, and requested input from the AMA RVU update committee (RUC) and others to value the code appropriately. • CMS states they will pay for trial leads in the office for 2013. It is unknown whether they will pay via 63650 and L8680, as is the current practice. The payment mechanism is not yet established.

20. Pharmacy • Medicare has clarified that drugs used by a physician to refill an implantable pump to be within the “incident to” benefit category and not the DME benefit category. Therefore, the physician must buy and bill for the drug and a non-physician supplier that has shipped the drug to the physician’s office may not bill independently. • Separately payable drugs continue to be reimbursed at ASP +6% The added 6% includes combined acquisition and pharmacy overhead.

21. Spinal Cord Stimulation – National Coverage Determination – Update • Tuesday 11/27/2012: • CMS intent to review SCS National Coverage Determination • AHIP (America's Health Insurance Plans) proposed that CMS review Implantable Pain Stimulators and the associated evidence to ensure that this is used as a last resort for non-malignant pain. (The current NCD mentions “late or last resort”.)

22. CMS Potential NCD’s On November 27, the Centers for Medicare & Medicaid Services (CMS) posted an updated list of 32 potential topics for future national coverage determinations (NCDs). Implantable neurostimulators for chronic pain were listed amongst the many technologies on the list. It is important to note that this technology already has a National Coverage Determination.

23. Epidural and Transforaminal Injections • No NCD, only local coverage decisions in place • Vertebroplasty and Kyphoplasty • No NCD, only local coverage decisions in place • The last time CMS reviewed potential NCD topics was in 2008. Of the 20 topics listed, CMS acted on 7.

27. Questions?? joshuaprager@gmail.com