Medicare will decrease reimbursement by 3%–9% in 2007 for implantation of various neurological devices under a final rule issued in early November.
The cuts are included in the Hospital Outpatient Prospective Payment System rule for 2007. Not much has changed since the Centers for Medicare and Medicaid Services (CMS) first proposed the rule in August, so surprises are few.
Although CMS will increase the overall payments to hospitals—averaging a 3% rise for outpatient services—some procedures are slated for cuts, primarily those involving neurologic devices.
With the 3% increase, Medicare will pay at least $32 billion to hospitals for outpatient procedures in 2007.
The agency has expressed concern that outpatient costs are rising precipitously—an estimated 12% in 2005 and 9% in 2007—mostly because of growth in volume and intensity of services. The increase in costs affects not only Medicare's overall budget but also seniors who, with 25% copayments for outpatient services, will face increasingly larger out-of-pocket burdens, said CMS.
The agency said it will reduce payments for implantation of a neurostimulator by 7% to $11,500 for 2007. CMS has reduced its payments for neurostimulator implantation each of the last 2 years. And, whereas CMS has generally increased payments for implantation of the lead and electrodes that are attached to the stimulators, in 2007, the agency is reducing coverage by 10% from $14,900 to $13,500.
Other procedures will be getting a boost, including implantation of drug infusion reservoirs (60% increase), drug infusion devices (16% increase), and pain management catheters (11% increase).
Finally, hospitals will not have to begin reporting on outpatient quality in 2007. CMS lifted that requirement, which was proposed in the initial rule and would have required reporting on certain measures in order to receive the increase in overall payments. Instead, the agency has postponed that requirement until 2009. In the meantime, CMS will develop outpatient-specific quality measures.
The American Hospital Association applauded the delay. “The AHA is pleased that CMS will develop quality measures specifically for the outpatient setting and has correctly given hospitals ample time to implement a reporting system for hospital outpatient services,” AHA executive vice president Rick Pollack said in a statement.