Medical Device Daily Washington Editor

FDA has published a user fee schedule for device and diagnostic applications and while inflation has not exactly been a prominent feature of the U.S. economy of late, the agency is seeking a boost of user fees of almost 8%. Unfortunately, FDA is not giving industry a break from the user fee schedule agreed to in 2007 no matter what the general rate of inflation.

According to the announcement in the Aug. 3 edition of the Federal Register, the standard fee for a PMA will come to just over $217,000 for fiscal 2010, which commences Oct. 1. This represents a boost of 7.8% over the PMA fee for the current fiscal year of slightly more than $200,000. While small businesses get a break on the PMA fee compared to their larger cousins, a fee of almost $55,000, the registration fee does not vary by company size, $2,008 for all comers.

FDA notes that the law allows the agency to boost the registration fee if the agency anticipates that fewer than 12,250 sites will register, but FDA anticipates that it will exceed that number by the end of fiscal 2009, hence "no establishment fee increase is warranted."

A panel-track supplement to a PMA will prove nearly as dear as a full-blown PMA, coming in at a bit more than $163,000 for the coming fiscal year. This figure is up by roughly $13,000 from approximately $150,000 in FY 2009. This represents a boost of 7.8%, paralleling the increase seen in standard PMA fees.

On the other hand, FDA was even more demanding in its boost from fiscal 2008 to the fiscal year soon to end. The agency boosted fees by about 9.2% in the announcement posted last year, which Medical Device Daily reviewed exactly one year ago (Medical Device Daily, Aug. 4, 2008). The two-year elevation in PMA fees, from $185,000 even for fiscal 2008 to the FY 2010 total of more than $217,000, comes to more than $32,000, or almost 15%

Janet Trunzo, executive VP for technology and regulatory affairs at the Advanced Medical Technology Association (Washington), told Medical Device Daily that the user fee schedule was set more or less in stone through fiscal 2012 as a result of the Food and Drug Administration Amendments Act of 2007 and that the overall rate of increase was pegged at roughly the 8% seen in the current projected boost. FDAAA, she said, "states what these fees will be," and hence there are no surprises for industry.

As for whether the agreed-upon net increase over five years, which is $285 million, is pegged to the operating costs of the Center for Devices and Radiological Health, Trunzo said, "you can't equate the percentage increase from year to year with operating costs." She also said that the first couple of years of user fees produced wildly gyrating fees, and that industry and FDA agreed to the current fee schedule in order to provide "a more predictable fee structure."

As for the application turn-around times that FDA agreed to in exchange for the fee schedules, Trunzo said that industry "is satisfied" that FDA is for the most part keeping its commitments.

CMS proposes three fee schedules

The Centers for Medicare & Medicaid Services announced last week a fee schedule for each of three provider types, long-term care hospitals, skilled nursing facilities (SNFs) and inpatient rehabilitation facilities (IRFs). The rule for inpatient care at acute-care hospitals for fiscal year 2010 calls for an inflation update of 2.1% despite the fact that CMS had proposed earlier in the year "to reduce payments to account for the effect of increases in aggregate payments due to changes in hospital coding practices that do not reflect increases in patient's severity of illness."

Jonathan Blum, director of the CMS Center for Medicare Management, said in the July 31 statement that the final rule's provisions "will ensure that Medicare beneficiaries continue to have access to high quality inpatient care in both short-stay acute care and long-term care hospitals." The statement also notes that CMS's final rule for 2008 included "adjustments to hospital rates in fiscal 2008 through fiscal 2010 to ensure spending neither increased nor decreased, as authorized by statute" because of the expected impact of coding changes.

CMS says that it is unsure of the impact of coding practices on fiscal 2009 spending and the agency therefore "decided not to implement an adjustment for fiscal 2010 until it has a full year of fiscal 2009 data" for acute-care hospitals.

As for long-term care hospitals, the agency announced that it will raise payments by 2.5% and, as is the case with acute-care hospitals, will not undertake adjustments based on changes in how LTCH's code the care they provide. Still, CMS also states that it is "finalizing its proposal to adjust the [real-year] 2010 LTCH rates" downward by half a percentage point to "account for the effect of changes in documentation and coding that occurred in fiscal 2007 under the previous patient classification system."

CMS's July 31 statement for SNFs indicates that CMS will cut about $360 million from total reimbursements, said to constitute 1.1% of total payments compared to fiscal 2008. This final figure is arrived at by starting with a 3.3% reduction for all nursing facilities coupled with a partly offsetting boost to SNFs of 2.2%, leaving SNFs with a net loss.

Operators of IRFs will find they receive a rate increase of 2.5% based on a market-basket calculation, but CMS also announced that it will tighten requirements for admissions to patients, requiring that "the patient is able and willing to actively participate in an intensive rehabilitation program and is expected to make measurable improvement in his or her functional capacity or adaptation to impairments." The clinical teams at IRFs will also have to meet weekly to review each patient's progress as a condition for reimbursement.