The proposed 2015 Inpatient Prospective Payment System (IPPS) for Medicare services paid to hospitals was released by Centers for Medicare and Medicaid Services (CMS) on April 30, 2014. Comments will be taken by agency until June 30, 2014, with a final rule issued by August 1. With more surgeons becoming employees of hospitals, these proposed payments take on added importance for those surgeons.
Orthopedic related DRGs (Diagnostic Related Groups) are up 2.2% vs 5.5% in 2014.
BMO Capital Markets analyst Joanne Wuensch says with the device industry facing stable pricing pressures, the proposed reimbursement changes for hospitals are mixed for certain orthopedic procedures:
- Lower extremity joint replacement (including hip and knee) w/MCC* decreases 0.3% and w/o MCC decreases 0.5%.
- Upper extremity joint replacement (e.g., shoulders) w/ CC/MCC decreases 7.1%.
- Hip or knee revision procedures w/ MCC decrease 1.0%, w/CC increases 0.2%, and w/o CC/MCC are up 1.2%.
- Spine procedure reimbursement w/MCC increases 4.4%.
*Major Complications
Spine
Overall spine reimbursements were up 2.4%, with artificial discs up 5.3% and vertebroplasty/kyphoplasty up 3.6%. Wells Fargo analyst Larry Biegelsen said companies with the most U.S. exposure to spine are NuVasive, Inc. (89% of total sales), Globus Medical, Inc. (90%), LDR (78%), Orthofix International N.V. (18%) and Medtronic, Inc. (12%).
Hips, Knees and Extremities
Hip and knee replacement DRGs were down 0.6%. Biegelsen said Zimmer Holdings, Inc. has the most exposure as 38% of total sales come from U.S. hip and knee replacements, while Stryker Corporation has 18%, Smith and Nephew 17% and DePuy Synthes 2%. Extremities were up 3.9%. Tornier, Inc. (78% revenues), Wright Medical (72%), Zimmer (4%) and Stryker (3%) are most exposed to extremities.
DRG Changes
CMS is proposing to collapse two upper extremity replacement codes (483 & 484) into the 483 code. CMS is also proposing to create three new DRGs (518, 519, 520) for cervical discs and deleting existing cervical disc DRGs 490 & 491. CMS rejected code reassignments for total ankle replacement.
