The U.S. Centers for Medicare and Medicaid Services (CMS) finalized its Medicare inpatient payment rule for fiscal 2021, and Boston Scientific Corp., of Marlborough, Mass., was perhaps a surprise winner with a new technology add-on payment (NTAP) for its Eluvia paclitaxel-coated stent for the lower limbs. The Eluvia had faltered at a previous NTAP application due to the controversy over paclitaxel in devices for the peripheral vasculature, but Boston Scientific said in a Sept. 3 press release that the decision to grant an NTAP payment “is particularly important,” given the scrutiny applied to paclitaxel’s use in these devices.
CMS posted the final inpatient rule along with a Sept. 2 press release stating that spending on acute care inpatient services will rise by about 2.7% to $3.5 billion in the upcoming fiscal year. The agency approved a record 24 NTAP applications, but indicated it will move forward with a relative weighting mechanism for diagnostic-related groups that is opposed by at least one med-tech trade association.
CMS claims data the reason for declining Eluvia NTAP
CMS claimed in the final rule that it had previously declined to offer an NTAP for the Eluvia due to a lack of data backing the company’s claim that the device represented a substantial clinical improvement over existing technology. However, this is not a complete recount of the explanation offered in the FY 2020 inpatient final, in which the agency said the issue of long-term mortality associated with paclitaxel devices was at least a factor, if not the decisive factor, in declining to offer an NTAP.
The final rule depicts Oct. 4, 2018, as the date of first commercial availability of the Eluvia, which presumably is the starting point for the usual three years of eligibility for the NTAP program. Given the 65% cost threshold used for NTAPs, Medicare administrative contractors will provide an add-on payment of roughly $3,600 for the device starting Oct. 1, 2020.
Analysts with Wells Fargo of New York predicted the Eluvia would enjoy three years of NTAPs despite the delayed NTAP coverage, adding that approximately 40% of the related peripheral artery procedures are handled in the inpatient setting. The Wells Fargo team, led by analyst Larry Biegelsen, noted that global sales of the device ran as high as $100 million in 2019, half of which was for sales outside the U.S. The investor note did not include a specific projected sales figure, but said the NTAP payment should aid U.S. sales, “especially as the category continues to recover from the paclitaxel controversy.”
Among the devices that fell out of NTAP coverage is the Aquabeam system for benign prostatic hyperplasia. The Aquabeam, made by Procept Biorobotics, of Redwood Shores, Calif., has used up its eligibility for the program. Medicare administrative contractors are examining the evidence for local coverage determinations, however. The Sentinel cerebral protection system by Boston Scientific subsidiary Claret Medical Inc., of Santa Rosa, Calif, is also out of NTAP calendar time, the same fate that befell the Remede system by Respicardia Inc., of Minnetonka, Minn.
CMS said it had received 17 new applications for NTAP coverage, although two sponsors withdrew their applications before issuance of the draft inpatient rule. Accelerate Diagnostics Inc., of Tucson, Ariz., did not meet the deadline for its Pheno test for antibiotic susceptibility, but the CMS said it could not make allowances for delays incurred by the COVID-19 pandemic.
Biofire Diagnostics LLC, of Salt Lake City, came up short on all three criteria (cost, newness and substantial clinical improvement) for an NTAP for its Filmarray pneumonia panel, while Viz.ai Inc., of San Francisco scored an NTAP for its Contact CT artificial intelligence algorithm for stroke detection. The algorithm’s use will draw an NTAP of $1,040.
Therox Inc., of Irvine, Calif., had withdrawn its application for an NTAP for the fiscal 2019 inpatient fee schedule, although the application for the Downstream system for arterial blood oxygenation failed to pass muster for 2020. Therox came up short again, although the issue was limited to evidence backing the substantial clinical improvement claim.
Relative weight changes hit Impella
The controversial and ongoing recalibration of relative weights for Medicare severity-adjusted diagnostic related groups (MS-DRGs) captures a number of these codes, including MS-DRG 215, which captures heart assist system implants other than valves. This code affects the Impella device by Abiomed of Danvers, Mass., and Mark Leahey, president and CEO of the Medical Device Manufacturers Association (MDMA) had responded to the inpatient draft to argue that any changes in relative weights that impose drastic swings in rates should be avoided.
Leahey noted that the therapies associated with MS-DRG 215 are among those used to treat some patients suffering from COVID-19, adding that any changes in relative weights that fail to account for legitimate changes in the cost of care fly against the principle of payment stability. CMS indicated it was in possession of claims for 66 cases invoking DRG 215 with an average length of stay of 15.3 days at a cost of slightly more than $92,000.
CMS said the relative weight had remained unchanged over the current and past two fiscal years, and opted for a “temporary one-time measure” for the upcoming fiscal year, consisting of an average of the current relative weight (9.4798) of and the otherwise applicable FY 2021 weight. The American Hospital Association had commented that the proposed reweighting would have trimmed payment by more than 26%.
Eric Assaraf, of the Cowen Washington Research Group, said in a Sept. 2 investor note that the cut as seen in the draft rule would have been closer to 24%, adding that the net effect of the final rule is to reduce payment by 10%, or roughly $72,000 for the Impella. Despite CMS’s claim that it has not moved the relative weight for MS-DRG 215 in the past three years, Cowen had noted in an April 2020 bulletin that rates have fluctuated significantly over that time, falling from $96,000 in FY 2017 to $63,000 in 2018. That figure climbed back up to $79,000 in FY 2019, where it held under the current inpatient fee schedule. CMS said it would revisit the question of whether some of these cases should be reassigned to DRGs 216-218 upon receipt of data deemed adequate to support such an analysis.
MDMA’s Leahey also urged the agency to stand down from a proposal to require that all hospitals report median payer-specific negotiated charges in an effort to recalculate MS-DRG weights. This position was seconded by Don May, executive vice president for payment policy at the Advanced Medical Technology Association, who questioned whether this approach would “lead to greater efficiency and care based on value.”
May said the reporting burden on hospitals would be substantial industry-wide and that the draft rule did not spell out how it would determine the reliability of the reported rate date. MDMA’s Leahey pointed out that a hospital’s position in the local market may torque rate negotiations with private payers.
CMS said in the final rule that hospitals will be required to report median payer-specific negotiated charges for Medicare Advantage (MA) plans by MS-DRG starting Jan. 1, 2021, although the agency will not require reporting for charges for other third-party payers. This new methodology for recalculating relative weights will go into force in the FY 2024 rule, however, apparently based entirely on hospitals’ MA contracts.
Additional evidence saved the day for Eluvia NTAP
Jeff Mirviss, Boston Scientific’s executive vice president and president of the peripheral interventions division, told BioWorld that it is not clear yet whether the Eluvia will enjoy 24 months or 36 months of NTAP coverage. Mirviss noted that the Eluvia device was not included in the Katsanos paper in the Journal of the American Heart Association that sparked the controversy. However, a number of re-analyses of those data sets and a number of new streams of data have since emerged that demonstrate a muting of the difference between paclitaxel-coated devices and their untreated cousins.
Mirviss confirmed that the paclitaxel question was the barrier to an NTAP award for the Eluvia in fiscal 2020, and said the award of an NTAP is “a strong signal of the future direction of where this paclitaxel question is going.” The field of paclitaxel-coated devices may have sustained a 50% hit because of the controversy, although Mirviss said it’s difficult to generate the numbers to establish whether the overall market has recovered.
One of the benefits of the controversy is that clinicians are more actively engaged with patients on device/treatment selection, but Mirviss said he does not believe the FDA overreacted. “I think that for the most part, FDA did a very proper and thorough review of this situation. They saw a signal, and they have an obligation … to take that signal seriously, as we did as an industry,” he said. Device makers can help thwart any needless controversies over erratic signals in the postmarket realm with more data collection efforts, something Boston Scientific has invested considerably in, Mirviss said.
Part of the reason the paclitaxel controversy exhibited so much energy and staying power was that the question had not been investigated or tracked as vigorously as might have been appropriate. Mirviss said the Katsanos paper challenged conventional thinking on the subject, and thus this kind of blow-up may have been inevitable. “I think this will be an important lesson for the future” regarding data gathering, he said.