The FY 2018 Reimbursement Outlook: The Cath Lab Impact

Healthcare is an ever-changing entity — so it is no wonder hospitals can encounter difficulty in keeping aware of updates, especially throughout this year of continued headlines for the industry! Hospitals must be aware of shifting regulations, increasing scrutiny on quality outcomes, pressure to achieve greater profit margins, and the list goes on.  All of these internal and external influences can directly impact the viability of a hospital, so it is imperative that all organizations be prepared for what is to come well in advance of the effective date of any changes.  

 

The following summary provides a high-level look at the upcoming fiscal year (FY) 2018 changes in terms of financial and quality standards for the cardiovascular service line, and the cath lab in particular. Corazon believes understanding these updates can help hospital and program leaders become aware of new criteria, along with how the changes, either major or minor, will affect clinical, operational, and financial performance.   

 

Under the Centers for Medicare and Medicaid Services (CMS) FY2018 hospital inpatient final rule, the market basket update is 2.7% for acute care hospitals; however, hospitals will only see a net increase of 1.2% in overall operating payment rates due to adjustments. These adjustments include the following:

One adjustment that hospitals have become accustomed to has finally ended: the documentation and coding adjustment. CMS has successfully recovered approximately $11 billion due to past overpayments related to the conversion to MS-DRGs in FY2008.

 

Even though hospitals lost 1.5% in operating payments due to adjustments, facilities should still realize a gain in inpatient reimbursement rates over the last fiscal year. Table 1 highlights a comparison of average weighted payments from FY2017 to FY2018 for the most common inpatient cath lab procedures.  With the exception of PCI without Stent and Peripheral Vascular, ALL cath lab procedures will receive an increase for inpatient payments.

 

 

Although there were no MS-DRG numbering additions/deletions within the cardiovascular service line, there were some changes that will affect coding and reimbursement:

 

 

Since close to half of the cath lab procedures are paid as outpatients, payments for this population must also be critically reviewed. In the outpatient proposed rule released by CMS in July 2017, CMS continues to aggressively shift outpatient payments to a true prospective payment system. 

 

In the last three years, CMS focused on restructuring all high-cost, device-dependent and correlating procedures into Comprehensive Ambulatory Payment Classifications (c-APCs). After several years of revisions, there is no major classification or numbering changes for cardiovascular services in 2018. Table 2 illustrates the payment difference for endovascular procedures, which include Diagnostic Cath, PCI, and Peripheral Interventions. 

 

Even though reimbursement has increased for outpatient coronary and peripheral procedures, the margin is still not as great as in the inpatient setting. On average, an inpatient PCI is reimbursed $6,000 more than an outpatient PCI. And regardless of admission status, the majority of cath lab costs (i.e., stents, other supplies, and pharmaceuticals) for these procedures are similar. When evaluating the financial performance of the cath lab, Corazon recommends reviewing inpatient and outpatient procedures separately. This will help to monitor and manage patients differently in order to appropriately maximize profitability.

 

 

In order to realize maximum reimbursement potential, hospitals must adhere to the three quality standards noted below or else receive a reduction in base payments. For hospitals with poor quality performance, the FY2018 increases in reimbursement for cath-lab based procedures will easily be overshadowed by penalties. Corazon recommends close operational attention to these areas, as any unintended or unexpected payment decrease due to quality missteps can compound quickly, equating to major financial losses for the overall bottom line. Indeed, ensuring that quality standards are in place is the best means for optimizing reimbursement margins, whether for these or other important quality measures.   

 

 

The Hospital Readmissions Reduction Program requires a reduction to a hospital’s base operating DRG payment to account for excess readmissions of selected applicable conditions. Data from 2013-2016 for the six following conditions are used to determine potential penalties: acute myocardial infarction, heart failure, pneumonia, chronic obstructive pulmonary disease, total hip and knee arthroplasty, and coronary artery bypass grafting (CABG). CMS is implementing changes to the payment adjustment factor in accordance with the 21st Century Cures Act. CMS will assess penalties based on a hospital’s performance relative to other hospitals with a similar proportion of patients who are dually eligible for Medicare and full-benefit Medicaid.²

 

 

The estimated base operating DRG payment amount reductions for FY2018 (2% reduction) is the same amount available for value-based incentive payments. Although the measures for FY2018 were finalized in previous rulings, CMS has made final and proposed rulings for the future VBP program that includes the removal of one measure and the addition of two. 

 

 

As part of the Affordable Care Act, a 1% reduction in payment is made to hospitals whose ranking is in the lowest performing quartile. Last year, CMS shifted from a decile-based score to a continuous method called a Winsorized Z-score, which represents a hospital’s distance from the national mean. No new measures were added in the final rule.

 

 

The final rulings go into effect October 1, 2017 for the inpatient payment system and January 1, 2018 for the outpatient payment system. Based on this summary, Corazon recommends all hospitals pay close attention to the financial and quality performance of the cardiovascular service line, and the cath lab in particular. Though many of the FY2018 changes are positive, Corazon strongly believes that all organizations must prepare by allocating appropriate resources, scheduling necessary training, and keeping clinical and financial teams apprised of required policy and/or procedure changes necessary to proactively tackle any issues and ultimately protect the profit margin of the cardiovascular specialty. 

 

 

Kristin Truesdell is a Manager at Corazon, Inc., offering strategic program development for the heart, vascular, neuro, and orthopedic specialties. Corazon provides a full continuum of consulting, software solution, recruitment, and interim management services for hospitals, health systems, and practices of all sizes across the country and in Canada. 

To learn more, visit www.corazoninc.com or call (412) 364-8200. To reach the author, email ktruesdell@corazoninc.com.