DJ Medicare Inpatient Rule Softens Reimbursement Impact
08/01/2006
Dow Jones News Services
(Copyright © 2006 Dow Jones & Company, Inc.)
By Jon Kamp
Of DOW JONES NEWSWIRES
The U.S. agency that oversees Medicare released a sweeping rule late Tuesday that will start adjusting the way the government reimburses hospitals for inpatient procedures on Oct. 1, and appears to ramp back on tough proposed changes that had worried the medical-device industry.
The Health & Human Services' Center for Medicare & Medicaid Services did not delay implementation of changes by a year, as the medical-device industry, a slew of lawmakers and other parties had proposed, but did say the change to a cost-based system from a charge-based system would occur over three years. CMS will begin a shift to better account for the severity of a patient's condition at the same time.
The earlier proposal, issued in April, would have significantly cut reimbursement levels for medical devices like implantable defibrillators and drug-coated stents, and has weighed heavily on stocks in that sector this year. It wasn't immediately clear how the final, 1,468-page rule precisely addressed reimbursement issues, but Mark B. McClellan, CMS's administrator, said there was a notably smaller impact in the final rule.
There are no longer any reimbursement codes with "very large reductions in payments," McClellan said, speaking with reporters on a conference call.
Reimbursements are determined by so-called diagnosis-related groups, or DRGs, that set payments depending on a patient's treatment. McClellan said that the DRG payments for defibrillators are "slightly higher" in the new plan, and that there were "much more modest changes in other areas."
Overall, CMS noted that no specific DRG would fall by more than 5.4% in fiscal 2007.
Major defibrillator makers include Medtronic Inc. (MDT), St. Jude Medical Inc. (STJ) and Boston Scientific Corp. (BSX), while major stent makers include Boston Scientific and Johnson & Johnson (JNJ).
Among those companies, shares of St. Jude were recently up 1.3% to $37.83 in after-hours trading, according to Inet. Shares of Boston Scientific were up 3% to $17.78, and shares of Medtronic were up nine cents to $50.56.
-By Jon Kamp; Dow Jones Newswires; 312-750-4129; jon.kamp@dowjones.com
(END) Dow Jones Newswires
08-01-06 1801ET
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