Dive Brief:

• The Centers for Medicare and Medicaid Services’ Inpatient Prospective Payment System (IPPS) final rule will have limited impact on medtech companies, according to analysts at J.P. Morgan.
• In a note to investors, the analysts said the outlook for the companies they cover is “largely unchanged” after the final rule, which the CMS published Tuesday, but transcatheter aortic valve replacement reimbursement is falling more than expected.
• The CMS used the notice to disclose add-on payments that will continue in the 2024 financial year and to name nine products from companies including Abbott that received approval under the breakthrough devices pathway.

Dive Insight:

IPPS covers Medicare payments to acute care hospitals for inpatient stays. The CMS sets base payment rates prospectively based on the diagnosis, the services or treatment provided, and the severity of illness. As reimbursement of medical devices is covered by IPPS, the annual resetting of the rates has implications for the medtech industry. 

“The outlook for MedTech companies is largely unchanged, with the proposed rule pointing towards a 1.9% increase in Medicare payment rates to hospitals, a modest step below the 4.1% and 2.7% seen in the final rules for FY23 and FY22,” analysts at J.P. Morgan wrote in a note to investors. 

Medical device pricing “has historically not correlated with changes in CMS payment rates,” the analysts wrote, but “it’s worth noting that CMS is proposing to use a blended case volume number using data with and without COVID-19 cases for rate-setting going forward.”

Some technology add-on payments that began in 2023 will continue into 2024 because they are still considered new under the CMS rules, the analysts said. The list includes Cerus’ Intercept blood system for cryoprecipitation, Stratatech’s StrataGraft skin tissue and Carlsmed’s Aprevo intervertebral body fusion device.

Other updates include details of nine products that received approval under the breakthrough devices pathway. As the analysts note, the new technology add-on payment rates for Abbott’s Aveir AR leadless pacemaker and Aveir dual-chamber leadless pacemaker have been set at $10,725 and $15,600, respectively. The rate for Zimmer Biomet’s Canary tibial extension with Canary Health implanted reporting processor is $850.85 for one knee.