Costs and reimbursement gaps after implementation of third-generation left ventricular assist devices

Abstract

The purpose of this study was to compare and contrast total hospital costs and subsequent reimbursement of implementing a new program using a third-generation left ventricular assist device (LVAD) in Norway. Between July 2005 and March 2008, the total costs of treatment for 9 patients were examined. Costs were calculated for three periods-the pre-implantation LVAD phase, the LVAD implantation phase and the post-implantation LVAD phase-as well as for total hospital care. Patient-specific costs were obtained prospectively from patient records and included personnel resources, medication, blood products, blood chemistry and microbiology, imaging, and procedure costs including operating room costs. Overhead costs were registered retrospectively and allocated to the specific patient by pre-defined allocation keys. Finally, patient-specific costs and overhead costs were aggregated into total patient costs. The average total patient cost in 2007 U.S. dollars was $735,342 and the median was $613,087 (range $342,581 to $1,256,026). The mean length of stay was 77 days (range 40 to 127 days). For the LVAD implantation phase, the mean cost was $457,795 and median cost was $458,611 (range $246,239 to $677,680). The mean length of stay for the LVAD implantation phase was 55 days (range 25 to 125 days). The diagnosis-related group (DRG) reimbursement (2007) was $143,192. There is significant discrepancy between actual hospital costs and the current Norwegian DRG reimbursement for the LVAD procedure. This discrepancy can be partly explained by excessive costs related to the introduction of a new program with new technology. Costly innovations should be considered in price setting of reimbursement for novel technology.