Economic Issues for the Cath Lab

Dean Kereiakes: I will be discussing the clinical and economic issues surrounding drug-eluting stents and the evolving role of vascular brachytherapy. The father of coronary angioplasty, Andreas Gruentzig, once said: “if I had an enemy, I would teach him to perform angioplasty”. I think these words reflect the emotional anguish and uncertainty produced by inflating a fluid-filled balloon in a human coronary artery. As many of you know who performed angioplasty in the era prior to coronary stenting, abrupt coronary closure complicated 4–8% of all angioplasty procedures, it was unpredictable and was the cause of considerable morbidity — and even mortality — for patients. This is not surprising when you look at the pathological results of balloon angioplasty. Torn plaque is visible. It is surprising, really, that two-thirds of the time these results will heal open over time. You get a more predictable, reliable, and expedient example with a stainless-steel stent. A tear in the plaque is nicely tacked up by the stent struts. Stents reduced the complication of abrupt coronary closure and also reduced late closure defined as restenosis greater than 50% on angiography at six months. Most of you are familiar with the four randomized trials in which patients with appropriate lesions were randomly allocated to treatment with either a balloon or a stent. Stents provided a 30–50% reduction in restenosis. Restenosis rates remain 20–30%, despite stenting, even with the short, simple target lesions which by definition could be covered by a single 15 mm Palmaz-Schatz stent that were enrolled with these trials. I think the 20–30% restenosis rate was really the “best-case” scenario for stainless-steel stents at that time. Drug-eluting stents, as Bill O’Neill mentioned earlier, appear to represent a major breakthrough. Overall, the number of patients is small, but it appears that the restenosis rate is reduced by 85–100%. TVR rate reduction is 99%–100%. The reduction in major adverse clinical events is 88–100%, and late-loss reduction is between 51–99%. When will these new stents be approved and released? Johnson & Johnson/Cordis Corporation appears to be the first down the chute with the Cypher stent — an excellent product which is expected to be approved in the first quarter of 2003. I think they have superbly executed their clinical plan. We have been fortunate to be involved in the testing of this device. The reality of drug-eluting stents is that they have the potential to change our approach to PCI, particularly multi-vessel PCI, left main intervention, and small-vessel stenting. This technology offers potential for growth in percutaneous intervention. However, in the intact biologic model, restenosis is unlikely to be 0%. I think it may remain in the 5% or less range. The real question is whether we can afford it. Some analysts, using a simple shorthand calculation — which does not include cost offsets and considers only the cost of the stent alone, estimate an increased cost of $800 above the cost of a bare metal stent, is really a “best-case scenario”. Most of you have an average net cost with rebate of $1,100 (nationally). Some of you are in the $900 or less range with larger programs where volume can provide leverage. Assuming 900,000 interventions are performed annually, 85% of which use 1.4 stents — which is a conservative figure — the price/cost differential is $800 versus $3,000, which we are told will be the price for drug-eluting stents. Based on these assumptions, the increase in U.S. hospital costs will be $2.4 billion. It is very important that we understand the many ways our hospitals can lose, particularly in the absence of adequate reimbursement. We place 1.6 stents per patient at the Christ Hospital. Washington Hospital Center’s number is 1.7 stents per patient, and Saint Vincent’s in Indianapolis uses 1.7 stents per patient, and the cost of the stent alone in the absence of reimbursement is prohibitive. Drug-eluting stents will provide a reduction in restenosis rates which is obviously good for patients. However, restenosis is both reimbursable and profitable to the hospital. Analysts at the Thorax Center in Rotterdam were the first to propose and project a 20% decline in surgical volumes over the next two years following the introduction of drug-eluting stents. Coronary bypass surgery is a profit center for the hospital. We have gone to great lengths to determine the impact of this new technology on our hospital. The Christ Hospital is a private community hospital which belongs to a six-hospital consortium, where 2,600 PCIs and 1,200 CABGs are performed annually. The numbers for the system are larger, but for the purpose of this discussion, I will focus only on the Christ Hospital. We have applied both the Cordis and Guidant models for drug-eluting stents. Everyone has a model, none of which are entirely accurate. We have assumed a 10% annual shift in CABG volume to stenting. I will show you the impact of drug-eluting stents at year 1 for the Christ Hospital. We will assume a 10% shift to drug-eluting stents (from surgery) and about a 15% shift in non-stented balloon angioplasty procedures. We have to assume a stent case shift of 100%, at least at our hospital. In the Cordis model, it is 60% in year 1, 70% in year 2, and 80% in year 3. If the technology is available and is proven superior, I want to know which 40% of patients will not be receiving the stent in year 1. How do you police and monitor such a policy? Stent re-admission rates will be reduced by approximately 25% in the first year. We assume that drug-eluting stents will cost $3,000 and we are hoping that additional Medicare reimbursement of $2,800 will come with DRG 516 (I will touch on that in just a moment). This reimbursement is above and beyond what is provided by DRG 517, which is currently the DRG designated for vascular brachytherapy, as well as for balloon plus stent. Hopefully, this additional reimbursement will occur in year 1, not year 2. I think we should avoid the discussion of managed care or private payor reimbursement if it is not available for year one. Our stent utilization is 1.6 stents per procedure. Some centers have higher utilization rates at this point. When you examine the payor demographics of our CABG cases and the interventional (PCI) patient population, we find that less than half of our patients are Medicare patients. Thus, less than half of our reimbursement truly involves Medicare. I want to thank and acknowledge Jeff Morneault, Vice President for the Cardiovascular Service Line at Health Alliance, for working with me to provide these data which take a realistic look at both reimbursement and expenses. In the absence of reimbursement for drug-eluting stents, CABG revenue will decline by $760,000; the shift from balloon to drug-eluting stents increases reimbursement rates. However, the reduction in re-admissions will reduce reimbursement by over $1.2 million, and the net for reimbursement to our hospital is negative $1.9 million. On the expense side, the shift from CABG to drug-eluting stents actually avoids the cost of CABG and reduces our expenses. However, stent costs increased by $5.9 million. Reduction in re-admissions was taken into account here, showing a reduction in expenses of almost $1 million because we don’t have to absorb the cost of processing these patients. The net effect on expense is an increase of $5 million. Thus, the projected loss in year 1 in the absence of reimbursement from either Medicare or private payors is $7 million. In effect, we see a 26% increase in expenses and a 5% reduction in reimbursement. What is being done in anticipation of this? At this point, both Medicare and private payors are being presented with data showing major offsets for the additional cost of drug-eluting stents. There is clearly a decrease in repeat procedures as well as a decrease in coronary bypass surgeries. Budget neutrality models have been given to the Center for Medicare and Medicaid Services. For a hospital budget, a major negative financial impact without incremental reimbursement will clearly delay access to this technology for patients. What has been done — and I understand this is hot off the press as of last week — is that a unique ICD 9 tracking code has been developed. The tracking code was issued in May, and will hopefully be assigned as of October 1st. Ideally, this unique ICD 9 tracking code will be assigned to DRG 516 in August 2002 for the October 2002 hospital in-patient update. Let’s do a brief “DRG 101” review. Some of you may not be aware that DRG 518 is balloon angioplasty; DRG 517 is balloon plus stent, which adds reimbursement of $2,600 — this applies to vascular brachytherapy and balloon plus stent and DRG 516 (which is being sought) adds $2,800 above and beyond DRG 517. DRG 516 is assigned to percutaneous PCI with AMI diagnosis. ICD 9 tracking codes are available now for regular stents. DRG 517 reimbursement figures are geographically weighted around the country. What ICD 9 costs that have been obtained at this point are stents (DRG 517) versus drug-eluting stents (which will move to DRG 516) and will hopefully add $2,800 to reimbursement. What I have created here is a graphic that shows what I call the “DRG 516 model” which looks at the relative cost of the drug-eluting stents versus bare-metal stents and offers three different scenarios. There are incremental costs for bare-metal stents from $800 to $900 to $1,000. Drug-eluting stents across the top are $3,000. The triangle shows the number of stents that can be deployed per patient (on average) that will maintain the current profitability — that is, your current profit margin based on DRG 516. For example, if DRG 516 reimbursement becomes a reality and drug-eluting stent costs $3,000, bare-metal stent costs $1,000, you place William O’Neill: Thank you very much, Dean, for a superb overview of some very interesting clinical and cost data. We talked briefly about the excitement over drug-eluting stents. There are some very intriguing alternatives in terms of potential use of vascular brachytherapy as a kind of back-up for a bare-metal stent. Next, we will turn our attention to Greg Braden, who has also had an enormous amount of experience with vascular brachytherapy. Greg will give us a brief update on his current experience and his views on where this technology will fit into our practice.