StarTribune.com

Who pays for recall surgery?
David Phelps,  Star Tribune July 3, 2005

The recall of a medical device isn't quite as simple as, say, pulling tainted beef or suspect drugs off store shelves. There's the gritty little matter of who pays for taking the device out of the patient and putting a new one in.

Is it the manufacturer or the patient's insurer?

That is at the heart of a debate in Minnesota's health insurance community over the recalls and advisories issued by Medtronic and Guidant in recent months involving various models of their implantable cardioverter defibrillators (ICDs). Because of the explosion of devices in recent years, and the scale of the recalls, Minnesota insurers acknowledge that this is new territory for them.

Guidant, which recalled or issued alerts for about 50,000 devices in the past month, has offered to provide a replacement device for free and reimburse the patient for up to $2,500 in uncovered out-of-pocket expenses. While that is a significant offer, considering the ICDs run $20,000 to $25,000 each, it still leaves someone picking up the tab for doctors' fees and hospital charges, which average $23,000.

So far, who that someone will be is unclear. Not all the devices recalled will end up being replaced, since the risk of the procedure sometimes outweighs the benefit. But whatever the final tally is, insurers say they shouldn't be the ones eating the cost of the procedures.

"We expect the manufacturer to clean up after itself," said Tom Gilde, senior counsel for Blue Cross and Blue Shield of Minnesota. "The patient wouldn't be in that position but for the defect. We'd expect the manufacturer to pick up all of the costs related to the defect."

An ICD is a small device, about the size of a stopwatch, that is planted under a patient's collarbone. The device emits electrical shocks when a heartbeat gets out of rhythm.

Medtronic issued its recall in February after it determined that a small number of batteries that power its ICDs could be faulty. About 87,000 devices were affected. Medtronic made essentially the same replacement offer as Guidant -- a new device free of charge and $2,500 for out-of-pocket expenses not covered by insurance, plus up to $1,000 for reprogramming of the device and any follow-up needs.

Medtronic's position is that the priciest part of the replacement by far is the device itself. Most replacements are done on an outpatient basis and take less than an hour, said Medtronic spokesman Rob Clark.

"Most also don't involve changing any of the leads, which makes it a more straightforward procedure," Clark said. "Our goal, when we framed the offer as we did, was that would be the preponderance of the cost."

Guidant did not respond to requests for comment.

The effect of the Medtronic recall already is being felt at Minnesota hospitals, particularly larger providers with significant heart centers. The Guidant ripple effect is starting to show itself as well.

Abbott Northwestern has replaced 45 ICDs, manufactured by both Medtronic and Guidant, since the February start of the recall. United Hospital in St. Paul has replaced 42 during the same period.

Fairview Southdale and the University of Minnesota Medical Center Fairview have a combined 100 patients with the affected Guidant device. The hospitals have been contacting those patients to inform them of the potential for failure and have received more than 50 unsolicited calls as well, said Ryan Davenport, spokesman for Fairview Health Services.

The Mayo Clinic declined to specify how many replacements it has done but said it has completed more than the national average of 15 percent for the Medtronic recall. North Memorial Hospital has 70 patients affected by the Medtronic recall. After visiting with each of them, doctors determined that 20 patients should receive new ICDs.

The Heart and Vascular Center at Unity and Mercy Hospitals intends to monitor patients with the Guidant ICDs but not replace them "unless the patient is adamant," spokeswoman Gloria O'Connell said. "We think the risk is greater than the benefit."

Major insurers in Minnesota say they will cover the cost of replacing the ICDs regardless of how the reimbursement issue is resolved.

But while they say they shouldn't be billed twice for essentially the same thing, they're unsure whether they will be able to tell from billing records when a replacement procedure takes place as opposed to a first-time implant.

Medical procedures are classified by diagnosis related groups (DRGs), which indicate to insurers what services were performed. DRGs cover types of procedures and are not necessarily precise. Hence, insurers may not be able to tell a replacement procedure from an original implant surgery.

"We are at the mercy of how these things are coded," said Dr. Paul Karazija, medical director of care management for Medica. "We hope docs code these so they show it was a replacement device, or we won't be able to tell what's going on."

HealthPartners said it has a way of ensuring that it will not pay twice for the same procedure. "Our position is that we will pay for replacement when it is medically necessary and appropriate," said Dr. George Isham, medical director for HealthPartners.

"We have a unit focused to make sure that double payments don't occur," Isham said, though he declined to explain how that would be done.

David Phelps is at dphelps@startribune.com.