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Orthopedic and Dental Industry News Complete Archive »

CMS Proposed Rule for Orthopedics Procedures for FY 2007 BY HUYEN NGUYEN, APRIL 17, 2006

Last week The Centers for Medicare & Medicaid Services (CMS) issued a report on a revised proposed rulemaking of the Inpatient Prospective Payment System (IPPS). The proposed rule highlights changes and updates for Diagnosis Related Groups (DGRs) in orthopedic surgeries: including hip, knee, and spine. Apart from orthopedics, these changes could potentially impact the cardiovascular industry negatively and "could reduce reimbursements for stents by more than 30% and could reduce reimbursements for defibrillators by as much as 20%, according to Morgan Stanley analyst Glenn Reicin." However, the proposed rule issued last week seems to have a smaller impact in orthopedics procedures in some hospitals. These are some key points in the revised proposed rule:

Hip & Knee Replacement

  • In FY 2006 IPPS final rule CMS deleted DRG 209 (Major Joint and Limb Reattachments Procedures of Lower Extremity) and created new DRGs 544 (Major Joint Replacement or Reattachment of Lower Extremity) and 545 (Revision of Hip or Knee Replacement) to resolve payment issues of hospitals.
  • CMS proposed changes to DRG 471 (Bilateral or Multiple Major Joint Procedures of Lower Extremity) which previously utilizes DRGs 544 and 545. To resolve confusions, the proposed change is that DRG 471 should no longer be assigned to DRGs 544 and 545 unless they include bilateral and multiple joints, specifically.
    • Because of changes to DRG 471, CMS proposes several more hip and knee revisions codes assign to DRG 545.
  • CMS will perform extensive data analysis on the new and revised joint procedure codes.


  • In the FY 2006 IPPS final rule, CMS created a new DRG 546 (Spinal Fusions Except Cervical with Curvature of the Spine or Malignancy). Since this new DRG code was implemented, CMS has already received concerns regarding how this coding system was incorrect. However, CMS decided not to address the issue of revisions since it is a fairly new established code (October 1, 2005), CMS does not yet have data to analyze its impact.

Charite™ Spinal Disc Replacement Device

  • Since the approval of the Charite, CMS assigned a new procedural code for the insertion of spinal disc prostheses. Even though there were recommendations for changes to the assigned code, CMS will not reassign this code at this time.
    • CMS also ruled that it will not assign a new technology code for the Charite because it has failed to meet the substantial clinical improvement criterion.

FY 2007 Applications for New Technology Add-on Payments

  • The X STOP from St. Francis Medical Technologies received a procedural code from CMS and went into effect on October 1, 2005. However, CMS did express its concerns regarding clinical improvement.

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