The impact of reimbursement changes for intracoronary stents on providers and Medicare.

CONTEXT

New Medicare reimbursement policies will move stents into a different diagnosis-related group (DRG) than conventional balloon angioplasty (percutaneous transluminal coronary angioplasty [PTCA]).

OBJECTIVE

To examine the financial impact on hospitals and Medicare of these planned changes, taking into account costs, reimbursement, and the cost-offset effect of prevented complications.

DESIGN

The economic impact of proposed reimbursement changes was modeled by using a retrospective clinical and economic data set from a single institution.

PATIENTS AND METHODS

A total of 421 consecutive interventional cases from 1996 were examined by using actual cost data. The new, proposed revenues were assigned to these cases. From the hospitals' perspective, the focus was on contribution margin (the difference between revenues and costs), risk adjusted for case-mix severity. From Medicare's perspective, the focus was on expenditures. Various assumptions were adopted for two clinical variables: the effectiveness of stents in preventing the major PTCA-related complications of myocardial infarction and coronary artery bypass graft surgery and the relative proportions of myocardial infarction and coronary artery bypass graft surgery in the mix of complications. Under current Medicare DRG policies, coronary artery bypass graft surgery is highly profitable for hospitals, whereas myocardial infarction as a complication of PTCA has a negative financial impact.

RESULTS

Under the new Medicare reimbursement policies, hospitals experience higher profitability with stents than with conventional PTCA under most assumed levels of clinical effectiveness and mixes of myocardial infarction and coronary artery bypass graft surgery. For Medicare, under most circumstances (including percentages of stent use and levels of clinical effectiveness that represent contemporary practice) stents lead to greater expenditures.

CONCLUSIONS

Medicare reimbursement changes will substantially realign previously misaligned financial and clinical incentives for hospitals. The immediate effect on hospitals will be to enhance profitability, whereas the effect on Medicare will be to increase expenditures.