A Medical Device Daily

The Centers for Medicare & Medicaid Services reported a proposal for what it said are "new, more accurate" FY09 payment rates for Medicare skilled nursing facilities that more closely reflect differences in patient care needs.

"CMS is committed to providing high quality care to those in skilled nursing facilities and to paying those facilities properly for that care," said Acting Administrator Kerry Weems. "The proposed adjustments to the payment rates for next year reflect that policy."

Medicare pays skilled nursing facilities on a prospective payment system known as the Skilled Nursing Facility Prospective Payment System (SNF PPS). The SNF PPS uses a resource classification known as Resource Utilization Groups (RUGs) to help determine a daily payment rate. The RUGs reflect a patient's severity of illness and the kind of services that a person requires—something known as "case-mix."

In 2006, CMS made refinements to the case-mix indices (CMIs) to better account for the resources used in the care of medically complex patients. The refinement package included two adjustments to the CMIs that were calculated based on forecasted utilization under the refined case-mix system. Skilled nursing facilities have been paid based on these projections since the beginning of 2006.

The expansion of the RUG model was to be budget neutral, but actually resulted in increased Medicare expenditures. CMS found that patients were being classified into one of the newly created RUG groups more than 30% of the time (as compared to 19% as previously estimated by CMS), thus triggering Medicare payments that are far higher than was originally projected.

CMS is now proposing to recalibrate the case-mix weights in order to reestablish budget neutrality on a prospective basis. CMS said it is also proposing to recalibrate the second part of the refinement package that accounted for the use of non-therapy ancillary services. In this manner, payments going forward would reflect the intent of the refinements, and payments to providers would more accurately and better reflect the service needs of Medicare beneficiaries.

CMS said it would also then have in place an accurate and more precise baseline which it could use in anticipation of any additional program enhancements that may be made in future years. These may include enhancements such as payment incentives for quality care and further updates to the case-mix model that would be needed to account for changes in patient needs and industry practice.

The proposed FY09 recalibration of these adjustments to better reflect the resources used by beneficiaries would result in a reduction in payments to nursing homes of $770 million, or about 3.3%. However, CMS said this decrease would be largely offset by this fiscal year's proposed update to Medicare payments to skilled nursing facilities. The update — a proposed increase of 3.1% for 2009 — is based on the change in prices of a "market basket" of goods and services included in covered skilled nursing facility stays. The price of the items in the basket is measured every year and Medicare payments are adjusted accordingly.

CMS said the proposed 3.1% market basket increase for FY09 would yield $710 million in increased payments to skilled nursing facilities. Taken together with the proposed recalibration of the CMI, skilled nursing facilities could expect to see a slight decrease in payments of $60 million or 0.3%, CMS said.

"We are confident that with the payment rates we are proposing today, the nation's skilled nursing facilities would be able to continue to provide high-quality services to those who need critical skilled nursing facility care services," Weems said.

Public comments on the proposal will be accepted until June 30.

GE Healthcare unit emerges from consent decree

The FDA has notified GE Healthcare Surgery (Salt Lake City) that the company has satisfied the criteria in the January 2007 consent decree required to resume operations (Medical Device Daily, Jan. 17, 2007).

The OEC 9900 Elite C-arm, a fluoroscopy device that uses X-rays to reveal real-time imagery of a patient's internal structure, is the first product to receive manufacturing and shipping authorization. More than 300 of these units will be shipped to customers in the first 10 days of operations.

The consent decree of permanent injunction was related to X-ray surgical imaging systems manufactured by the Surgery division.

The consent decree prohibited the manufacturing and distribution of specified X-ray surgical imaging systems at facilities in Salt Lake City, and Lawrence, Massachusetts, until the devices and facilities were shown to be in compliance with FDA's current good manufacturing practice (CGMP) requirements as set forth in the Quality System (QS) regulation for devices.

The decree included the 9900 Elite C-Arm system, 9900 Elite NAV C-Arm system, 9800 C-Arm system, 2800 UroView system, 6800 MiniView system, Insta-Trak 3500 NAV system, and ENTrak 2500 NAV system, as well as their components and accessories. These are radiological image processing and image-intensified fluoroscopic X-ray systems that are used during diagnostic, surgical, and interventional procedures, such as orthopedic, cardiac, critical-care, emergency room procedures, and other imaging applications.

The FDA said inspections at the Salt Lake City facility between July 31 and Aug. 29, 2006, revealed CGMP deficiencies, including failure to establish and maintain adequate procedures for validating the device design and failure to establish and maintain adequate procedures for implementing corrective and preventive actions.

The FDA had previously inspected the Salt Lake City facility between Nov. 15 and Dec. 1, 2004. Following that inspection, it issued a warning letter on March 31, 2005, citing violations of the CGMP requirements. The government brought this enforcement action when FDA's 2006 inspections showed inadequate responses to FDA's requests for corrections in the 2005 Warning Letter.

"Coming out of this, we're a better business," said Pete McCabe, president/CEO of GE Healthcare Surgery. "Our quality system, alongside customer focus and technical innovations, is a foundation of our business. In the last year, we've been able to strengthen it to levels that will ensure we continue to differentiate our products and services as the best in the marketplace. We look forward to again being a leader in this highly competitive field."

GE Healthcare Surgery is a unit of GE Healthcare (Waukesha, Wisconsin).