Item 8.01 Other Events.

Centers for Medicare & Medicaid Services (CMS) Final Rule for the Inpatient Prospective Payment System (IPPS)





On September 2, 2020, the Centers for Medicare and Medicaid Services (CMS)
released final Medicare payment levels for inpatient hospital discharges for
fiscal year 2021 (October 1, 2020 through September 30, 2021). The Final Rule
for the Inpatient Prospective Payment System (IPPS) is available on the CMS
website at cms.gov. The Proposed Rule published in May 2020, was described by
the Company in a Form 8-K filed on May 12, 2020. The Final Rule for the IPPS
update includes ICD-10 coding and confirms assignment of percutaneous Impella
implantation to MS-DRG 215 for Other Heart Assist System Implant. The Final Rule
also maintains bi-ventricular Impella (MS-DRG 1), ECpella (MS-DRG 3), and
Impella hospital transfer / support (MS-DRG 268) for the receiving hospital.

Final Rule for FY 2021 Impella Heart Pump Reimbursement





In May 2020, CMS proposed a 24% reduction for MS-DRG 215. In addition, CMS
proposed three options for MS-DRG 215 including (1) maintain FY2020 rate (hold
harmless), (2) an average of the proposed FY2021 rate and FY2020 rate or (3)
adjust and audit reimbursement rate from FY2020 based on hospital charges,
length of stay, patient transfer, patient comorbidities and hospital
efficiencies over the prior year. After reviewing the comments received, CMS set
the relative weight for MS-DRG 215 equal to the average of the proposed FY2021
rate and FY2020 rate, an 11% reduction, instead of the proposed 24% reduction.
In addition, CMS increased rates for MS-DRGs 1, 3, and 268 by 8%, 3%, and 5%,
respectively. The Final Rule will be effective for the 12 months beginning on
October 1, 2020 for all Medicare hospital inpatient discharges.

As highlighted by CMS, the FDA has granted Abiomed EUAs for COVID-19. It should be noted for the duration of the public health emergency (PHE), hospitals treating patients diagnosed with COVID-19 receive an additional 20% in reimbursement.





Hospitals that incorporate best practices often achieve better patient outcomes
at a lower cost of care. For the sickest patients who utilize extensive
resources, hospitals are eligible to receive additional outlier payments, which
may collectively increase reimbursement in future years.

CMS payment levels for common Impella heart pump procedures are described in Table A.





Table A. Summary of common MS-DRGs from the Final Rule for illustration only.



Common Impella Procedures *

                                                                                              Change from
                                                                                                FY 2020
                                                                                               Rate (All
                                                                           FY2021 Rate        Hospitals;
                                                                           (Sample 100        Oct 1, 2021
                                                        FY2021 Rate          Impella          vs. Oct 1,
                                            MS-DRG    (All Hospitals)         Sites)             2020)

Uni-Ventricular Impella percutaneous 215 $ 71,716 $ 84,136

              -11%

insertion

Biventricular Impella or open insertion 1 $ 186,171 $ 217,291

               +8%
with removal
ECpella                                       3      $         122,064     $    142,763               +3%

ICU care and removal of Impella, after 268 $ 44,700 $ 52,895

               +5%

transfer from outlying hospital

* Actual MS-DRGs may vary based on procedure, estimated hospital relative weight.

All Hospitals' include ~3,300 Medicare hospitals, and only ~1,788 have cath labs or operating rooms.

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