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    Regarding VAD Reimbursement by CMS

    Medicare to Increase Payment for DRG 525 by Nearly 25 Percent

    PLEASANTON, Calif., Oct. 1 /PRNewswire-FirstCall/ -- Thoratec Corporation (Nasdaq: THOR), a world leader in products to treat cardiovascular disease, today commented on the notice filed in the Federal Register regarding reimbursement for the use of VADs (Ventricular Assist Devices) by the Centers for Medicare & Medicaid Services (CMS).

    The notice indicates that CMS has made technical adjustments to the final rule, published in August 2003, regarding the relative weight and base level of reimbursement it will provide under a revised DRG (diagnosis-related group) 525 "Heart Assist System Implant." The company believes this change will raise the base payment under DRG 525 from approximately $54,000 to approximately $70,000. Further, the company estimates that in many cases the actual payments to hospitals under this revised DRG will be higher-and in some cases as much as double the base payment-based on geographical location and other factors. As reported in the August 2003 Federal Register, hospitals can also qualify for additional payments under outlier payment policies that could provide an additional $20,000-$30,000, depending on the hospital's actual charges. Importantly, these changes are effective for patients discharged on or after today, October 1, 2003.

    "We still have not been notified regarding the pending National Coverage Decision for Destination Therapy, but our discussions with CMS continue to be very positive and we are hopeful that they will issue their decision in the very near future," said D. Keith Grossman, president and chief executive officer of Thoratec.

    "While we will continue to work with CMS to better align the DRG payment level with the actual costs of VAD use over time, we nevertheless view this most recent change as a very large step in the right direction. Provided that CMS makes a National Coverage Decision that is favorable for patient access to Destination Therapy, we believe our hospitals will now be in a far better position to begin making this truly life saving procedure available to their Medicare patients," he added.
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