On April 24, 2003, the Food & Drug Administration ("FDA") approved a new device for use in angioplasty procedures, called a drug-eluting stent. The new drug-eluting stent prevents restentosis, or reclogging of the artery, a common problem with traditional bare-metal stents that often requires repeat angioplasties. The Centers for Medicare & Medicaid Services took the unusual step in the annual 2003 inpatient and outpatient prospective payment system ("PPS") updates of establishing new procedure codes for cases involving drug-eluting stents, in anticipation of FDA approval of the device. The recent FDA approval activates those codes. The Medicare reimbursement amounts under these new codes will be higher than for procedures involving traditional stents, but the incremental increase is not expected to cover the additional cost of the new device, which is three times more expensive than a traditional stent. The Medicare payment amount under the new codes will cover roughly the cost of a single stent, but angioplasty procedures commonly require more than one stent. Therefore, providers likely will be left with a significant Medicare reimbursement shortfall, at least until the next PPS updates.

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