InFuse® Add-On Payment Extended One Year by CMS - Good News for an Estimated 500 Patients (About 2% of the Infuse® Patient Population)
BY ROBIN R. YOUNG CFA, MAY 24, 2004
The InFuse® add-on payment of $8,900 was extended for one year by the Centers for Medicare and Medicaid Services last week. Medicare, which provides supplemental healthcare cost reimbursement for American elderly patients, directly affects an estimated 15% of the spine fusion patients in the United States. According to CMS's own analysis, because of the relatively narrow patient population approved for InFuse® only about 500 patients are expected to be affected by this decision to pay for InFuse®.
According to data submitted by Medtronic, the typical user of InFuse® uses 2 doses at an average cost of $8,900 each for a total procedure cost of $17,800. (This cost data is for the cage, the collagen sponge and the 1.5mml dose of rhBMP-2.) For a single level fusion, then, the surgeon is placing two cages, two sponges and two doses of BMP-2.
CMS estimates that, with this supplemental approval, Medicare will be making payments for 500 cases (out of a total of, we estimate, over 300,000 spinal fusions in 2004) and paying out $4.4 million. In terms of Medtronic Sofamor Danek revenues, this probably adds about $8-9 million in incremental InFuse® revenues - or approximately 7% increase in prospective 2004 revenues.
InFuse® was approved by the FDA in June 2002. Add-on payment approval wasn't available until October 2003.
Some of the cost data released by CMS was as follows:
- Accourding to CMS, a single level fusion costs between $37,200 and $41,321 (2002 numbers). The threshold to qualify for new technology add-on payment, which was set over a year ago, was between $41,923 and $58,040, depending on whether it was a spine fusion under DRG 497 or DRG 498.
- Medtronic's CMS data, which came from 31 InFuse® cases at 4 hospitals (only one Medicare patient), showed that the average standardized charge for a spine fusion was $47,172. Based on this data, the average standardized charge exceeded the CMS threshold for DRG 498 and therefore qualified for add-on payments.
- In its own analysis 117 DRG 497 cases and 88 DRG 498 cases (which came from the March 2003 MedPAR data), CMS found that the average standardized charge for DRG 497 was $64,931. The average standardized charge for DRG 498 was $58,266. Across both DRGs it was $62,752.
- Some of the CMS spine cage cases entailed multiple level surgery, for which InFuse® is not approved. So, using CPT code data, CMS analysts were able to establish new threshold cost number at $51,121 and with that, InFuse® qualified for add-on payment.
