Shifting more responsibility for procedure costs to hospitals is unlikely to pressure prices for orthopedic implants, CEOs said.
Orthopedics firms are shrugging off worries that a new, mandatory Medicare joint replacement model could drive down implant payments.
The Centers for Medicare and Medicaid Services finalized the Comprehensive Care for Joint Replacement Expanded Model, called CJR-X, as part of its hospital inpatient payments rule at the end of July. CJR-X would go into effect in 2028, making hospitals responsible for more spending on joint replacement surgery and associated costs, including the hospital stay and follow-up care provided in the first 90 days of recovery. Hospitals may be eligible for an additional payment from Medicare, or may be required to repay a portion of a patient’s care, depending on quality and spending. Regulators expect the model to save the government $725 million over five years.
Companies that make orthopedic devices fielded questions in recent earnings calls about whether the changes could affect payments for implants. Two of the largest firms, Stryker and Zimmer Biomet, don’t expect much of an impact.
Stryker CEO Kevin Lobo said on a July 30 earnings call — the day before the Medicare rule was finalized — that the payment changes follow a procedure trend that is going to continue “without question.” More joint replacements are shifting to outpatient facilities, such as ambulatory care centers, or ASCs.
“Frankly, for Stryker, that’s a good thing, because we like the ASC as a place where we can win, not just in hips and knees, but across our entire portfolio,” Lobo said.
Zimmer Biomet CEO Ivan Tornos offered similar comments in an earnings call last week.
“For five years now — 20 quarters — I’ve been asked whether I thought that pricing was going to get worse, and it hasn’t,” Tornos said.
Part of the reason that Tornos isn’t worried is because implants make up a relatively small portion of procedure costs, about 14% to 15%, in an ASC setting. Implant prices are comparable across inpatient procedures, hospital outpatient departments and standalone ASCs, the CEO said.
By Elise Reuter | MEDTECHDIVE
Image Credit: Getty Images