The Shift in Payer Mix and Single-Use Device Reprocessing
The blog post, written by Marcelle Maginnis from the Advisory Board, lays out three reasons why EP procedures should be prioritized: clinical urgency, financial and strategic importance, and procedure feasibility. EP procedures are more urgent than – for example – orthopedic procedures like knee or hip replacement, because they can delay disease progression and sometimes reduce the risk of strokes. Many candidates for these procedures have seen them delayed due to COVID-19 (AFib hospitalization according to Cigna was down 35%), and are in urgent need for treatment. From a feasibility standpoint, it is relatively easy to re-open EP labs, which are staffed with technicians and other employees largely without critical care background. Further, 77% of ablations are done on an outpatient basis, so do not involve an overnight stay.
Many candidates for [EP] procedures have seen them delayed due to COVID-19 (AFib hospitalization according to Cigna was down 35%), and are in urgent need for treatment.
Financially, the case is made that reimbursement and profits from EP procedures are higher than other service lines. This is very important. Many hospitals – in “normal” times – use profits from EP to pay for less profitable service lines, and with the COVID-19 crisis, profits from EP procedures could become even more critical, helping the hospital keep its doors open and continue necessary treatment of critically ill patients. CMS reimbursement for catheter ablation (AFib) went up by almost 9% in 2019 and is now at $20,520. For commercially paid procedures, the picture is even more favorable, with average outpatient reimbursement at $33,417. Median profit from these cases is 47%, which equals $15,700 per procedure(!) Assuming a similar cost structure for CMS reimbursed cases, CMS reimbursed cases would garner a profit of $2,800 per case.
CMS reimbursement for catheter ablation (AFib) went up by almost 9% in 2019 and is now at $20,520.
As a driver of profitability, EP procedures have great strategic significance for the hospital. The Advisory Board blog mentions that outpatient EP services are expected to grow by 18% by 2023. This is driven by both an increasing number of diagnoses and technological progress, not the least by Biosense Webster, that enables more patients to be successfully treated.
Here is what I wanted to add: There is a massive difference in the profitability of Medicare (CMS reimbursed) procedures and commercially reimbursed procedures. Hospitals that are experiencing a shift in their payer mix to more Medicare patients, which could be exacerbated by the massive growth in unemployment, may gain little from the re-opening of EP procedures. Sure, if your hospital is largely used by commercially reimbursed patients and you can make $15K+ from each procedure, the future looks great. However, for Medicare dominant hospitals, $2,800 per procedure is nice, but hardly enough to make the kind of difference a hospital needs it to make.
...for Medicare dominant hospitals, $2,800 per procedure is nice, but hardly enough to make the kind of difference a hospital needs it to make.
Single-use device reprocessing is a great way to be sustainable as a hospital, and in the current (cost and health) environment, savings from single-use device reprocessing could significantly help hospitals that treat a lot of Medicare patients. Unlike most other economic impact initiatives, savings from single-use device reprocessing drop straight to the bottom line: Using a reprocessed catheter at $1,250 instead of a new catheter that costs $2,500 means $1,250 in added profit for the procedure. In AFib procedures, many very expensive devices can be reprocessed, and the total savings potential is over $3,000 per procedure. So in a Medicare reimbursed AFib procedure, the EP lab can more than double their profit by utilizing reprocessed devices.