Medicare Program: Proposed Changes to the Hospital Outpatient Prospective Payment System and CY 2009 Payment Rates; Proposed Changes to the Ambulatory Surgical Center Payment System and CY 2009 Payment Rates, 41744-42234 [E8-15539]

Agencies

• DEPARTMENT OF HEALTH AND HUMAN SERVICES
• Part II
• Centers for Medicare & Medicaid Services

[Federal Register Volume 73, Number 139 (Friday, July 18, 2008)]
[Proposed Rules]
[Pages 41744-42234]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-15539]



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Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Parts 410 and 419



Medicare Program: Proposed Changes to the Hospital Outpatient 
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes 
to the Ambulatory Surgical Center Payment System and CY 2009 Payment 
Rates; Proposed Rule

Federal Register / Vol. 73, No. 139 / Friday, July 18, 2008 / 
Proposed Rules

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 410 and 419

[CMS-1404-P]
RIN 0938-AP17


Medicare Program: Proposed Changes to the Hospital Outpatient 
Prospective Payment System and CY 2009 Payment Rates; Proposed Changes 
to the Ambulatory Surgical Center Payment System and CY 2009 Payment 
Rates

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise the Medicare hospital 
outpatient prospective payment system to implement applicable statutory 
requirements and changes arising from our continuing experience with 
this system. In this proposed rule, we describe the proposed changes to 
the amounts and factors used to determine the payment rates for 
Medicare hospital outpatient services paid under the prospective 
payment system. These changes would be applicable to services furnished 
on or after January 1, 2009.
    In addition, this proposed rule would update the revised Medicare 
ambulatory surgical center (ASC) payment system to implement applicable 
statutory requirements and changes arising from our continuing 
experience with this system. In this proposed rule, we propose the 
applicable relative payment weights and amounts for services furnished 
in ASCs, specific HCPCS codes to which these proposed changes would 
apply, and other pertinent ratesetting information for the CY 2009 ASC 
payment system. These changes would be applicable to services furnished 
on or after January 1, 2009.

DATES: To be assured consideration, comments on all sections of the 
preamble of this proposed rule must be received at one of the addresses 
provided in the ADDRESSES section no later than 5 p.m. EST on September 
2, 2008.

ADDRESSES: In commenting, please refer to file code CMS-1404-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (no duplicates, 
please):
    1. Electronically. You may submit electronic comments on this 
regulation to https://www.regulations.gov. Follow the instructions for 
``Comment or Submission'' and enter the filecode to find the document 
accepting comments.
    2. By regular mail. You may mail written comments (one original and 
two copies) to the following address ONLY: Centers for Medicare & 
Medicaid Services, Department of Health and Human Services, Attention: 
CMS-1404-P, P.O. Box 8013, Baltimore, MD 21244-1850.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments (one 
original and two copies) to the following address ONLY: Centers for 
Medicare & Medicaid Services, Department of Health and Human Services, 
Attention: CMS-1404-P, Mail Stop C4-26-05, 7500 Security Boulevard, 
Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments (one original and two copies) before the 
close of the comment period to one of the following addresses:
    a. Room 445-G, Hubert H. Humphrey Building, 200 Independence 
Avenue, SW., Washington, DC 20201.
    (Because access to the interior of the HHH Building is not readily 
available to persons without Federal Government identification, 
commenters are encouraged to leave their comments in the CMS drop slots 
located in the main lobby of the building. A stamp-in clock is 
available for persons wishing to retain a proof of filing by stamping 
in and retaining an extra copy of the comments being filed.)
    b. 7500 Security Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
please call the telephone number (410) 786-9994 in advance to schedule 
your arrival with one of our staff members.
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    Submission of comments on paperwork requirements. You may submit 
comments on this document's paperwork requirements by following the 
instructions at the end of the ``Collection of Information 
Requirements'' section in this document.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Alberta Dwivedi, (410) 786-0378--
Hospital outpatient prospective payment issues; Dana Burley, (410) 786-
0378--Ambulatory surgical center issues; Suzanne Asplen, (410) 786-
4558--Partial hospitalization and community mental health center 
issues; Sheila Blackstock, (410) 786-3502--Reporting of quality data 
issues.

SUPPLEMENTARY INFORMATION:
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: https://
www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, MD 21244, on Monday through Friday of each week from 8:30 
a.m. to 4 p.m. EST. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

Electronic Access

    This Federal Register document is also available from the Federal 
Register online database through GPO Access, a service of the U.S. 
Government Printing Office. Free public access is available on a Wide 
Area Information Server (WAIS) through the Internet and via 
asynchronous dial-in. Internet users can access the database by using 
the World Wide Web; the Superintendent of Documents' home page address 
is https://www.gpoaccess.gov/, by using local WAIS client 
software, or by telnet to swais.access.gpo.gov, then login as guest (no 
password required). Dial-in users should use communications software 
and modem to call (202) 512-1661; type swais, then login as guest (no 
password required).

Alphabetical List of Acronyms Appearing in This Proposed Rule

    ACEP American College of Emergency Physicians
    AHA American Hospital Association
    AHIMA American Health Information Management Association
    AMA American Medical Association
    APC Ambulatory payment classification
    AMP Average manufacturer price
    ASC Ambulatory Surgical Center
    ASP Average sales price
    AWP Average wholesale price

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    BBA Balanced Budget Act of 1997, Pub. L. 105-33
    BBRA Medicare, Medicaid, and SCHIP [State Children's Health 
Insurance Program] Balanced Budget Refinement Act of 1999, Pub. L. 
106-113
    BCA Blue Cross Association
    BCBSA Blue Cross and Blue Shield Association
    BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000, Pub. L. 106-554
    CAH Critical access hospital
    CAP Competitive Acquisition Program
    CBSA Core-Based Statistical Area
    CCR Cost-to-charge ratio
    CERT Comprehensive Error Rate Testing
    CMHC Community mental health center
    CMS Centers for Medicare & Medicaid Services
    CoP Condition of participation
    CORF Comprehensive outpatient rehabilitation facility
    CPT [Physicians'] Current Procedural Terminology, Fourth 
Edition, 2007, copyrighted by the American Medical Association
    CRNA Certified registered nurse anesthetist
    CY Calendar year
    DMEPOS Durable medical equipment, prosthetics, orthotics, and 
supplies
    DMERC Durable medical equipment regional carrier
    DRA Deficit Reduction Act of 2005, Pub. L. 109-171
DSH Disproportionate share hospital
EACH Essential Access Community Hospital
E/M Evaluation and management
EPO Erythropoietin
ESRD End-stage renal disease
FACA Federal Advisory Committee Act, Pub. L. 92-463
FAR Federal Acquisition Regulations
FDA Food and Drug Administration
FFS Fee-for-service
FSS Federal Supply Schedule
FTE Full-time equivalent
FY Federal fiscal year
GAO Government Accountability Office
GME Graduate medical education
HCPCS Healthcare Common Procedure Coding System
HCRIS Hospital Cost Report Information System
HHA Home health agency
HIPAA Health Insurance Portability and Accountability Act of 1996, 
Pub. L. 104-191
HOPD Hospital outpatient department
HOP QDRP Hospital Outpatient Quality Data Reporting Program
ICD-9-CM International Classification of Diseases, Ninth Edition, 
Clinical Modification
IDE Investigational device exemption
IME Indirect medical education
I/OCE Integrated Outpatient Code Editor
IOL Intraocular lens
IPPS [Hospital] Inpatient prospective payment system
IVIG Intravenous immune globulin
MAC Medicare Administrative Contractors
MedPAC Medicare Payment Advisory Commission
MDH Medicare-dependent, small rural hospital
MIEA-TRHCA Medicare Improvements and Extension Act under Division B, 
Title I of the Tax Relief Health Care Act of 2006, Pub. L. 109-432
MMA Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003, Pub. L. 108-173
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Pub. L. 
110-173
MPFS Medicare Physician Fee Schedule
MSA Metropolitan Statistical Area
NCCI National Correct Coding Initiative
NCD National Coverage Determination
NTIOL New technology intraocular lens
OMB Office of Management and Budget
OPD [Hospital] Outpatient department
OPPS [Hospital] Outpatient prospective payment system
PHP Partial hospitalization program
PM Program memorandum
PPI Producer Price Index
PPS Prospective payment system
PPV Pneumococcal pneumonia vaccine
PRA Paperwork Reduction Act
QIO Quality Improvement Organization
RFA Regulatory Flexibility Act
RHQDAPU Reporting Hospital Quality Data for Annual Payment Update 
[Program]
RHHI Regional home health intermediary
SBA Small Business Administration
SCH Sole community hospital
SDP Single Drug Pricer
SI Status indicator
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97-
248
TOPS Transitional outpatient payments
USPDI United States Pharmacopoeia Drug Information
WAC Wholesale acquisition cost

    In this document, we address two payment systems under the Medicare 
program: The hospital outpatient prospective payment system (OPPS) and 
the revised ambulatory surgical center (ASC) payment system. The 
provisions relating to the OPPS are included in sections I. through 
XIV., and XVI. through XXI. of this proposed rule and in Addenda A, B, 
C (Addendum C is available on the Internet only; see section XVIII. of 
this proposed rule), D1, D2, E, L, and M to this proposed rule. The 
provisions related to the revised ASC payment system are included in 
sections XV. and XVII. through XXI. of this proposed rule and in 
Addenda AA, BB, DD1, DD2, and EE (Addendum EE is available on the 
Internet only; see section XVIII. of this proposed rule) to this 
proposed rule.

Table of Contents

I. Background for the OPPS
A. Legislative and Regulatory Authority for the Hospital Outpatient 
Prospective Payment System
B. Excluded OPPS Services and Hospitals
C. Prior Rulemaking
D. APC Advisory Panel
1. Authority of the APC Panel
2. Establishment of the APC Panel
3. APC Panel Meetings and Organizational Structure
E. Provisions of the Medicare, Medicaid, and SCHIP Extension Act of 
2007
F. Summary of the Major Contents of This Proposed Rule
1. Proposed Updates Affecting OPPS Payments
2. Proposed OPPS Ambulatory Payment Classification (APC) Group 
Policies
3. Proposed OPPS Payment for Devices
4. Proposed OPPS Payment for Drugs, Biologicals, and 
Radiopharmaceuticals
5. Proposed Estimate of OPPS Transitional Pass-Through Spending for 
Drugs, Biologicals, Radiopharmaceuticals, and Devices
6. Proposed OPPS Payment for Brachytherapy Sources
7. Proposed OPPS Payment for Drug Administration Services
8. Proposed OPPS Payment for Hospital Outpatient Visits
9. Proposed Payment for Partial Hospitalization Services
10. Proposed Procedures That Will Be Paid Only as Inpatient Services
11. OPPS Nonrecurring and Policy Clarifications
12. Proposed OPPS Payment Status and Comment Indicators
13. OPPS Policy and Payment Recommendations
14. Proposed Update of the Revised Ambulatory Surgical Center 
Payment System
15. Proposed Quality Data for Annual Payment Updates
16. Healthcare-Associated Conditions
17. Regulatory Impact Analysis
II. Proposed Updates Affecting OPPS Payments
A. Proposed Recalibration of APC Relative Weights
1. Database Construction
a. Database Source and Methodology
b. Proposed Use of Single and Multiple Procedure Claims
c. Proposed Calculation of CCRs
(1) Development of the CCRs
(2) Charge Compression
2. Proposed Calculation of Median Costs
a. Claims Preparations
b. Splitting Claims and Creation of ``Pseudo'' Single Claims
c. Completion of Claim Records and Median Cost Calculations
d. Proposed Calculation of Single Procedure APC Criteria-Based 
Median Costs
(1) Device-Dependent APCs
(2) Blood and Blood Products
(3) Single Allergy Tests
(4) Echocardiography Services
(5) Nuclear Medicine Services
(6) Hyperbaric Oxygen Therapy
(7) Payment for Ancillary Outpatient Services When Patient Expires 
(-CA Modifier)
e. Proposed Calculation of Composite APC Criteria-Based Median Costs
(1) Extended Assessment and Management Composite APCs (APCs 8002 and 
8003)
(2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC (APC 
8001)
(3) Cardiac Electrophysiologic Evaluation and Ablation Composite APC 
(APC 8000)
(4) Mental Health Services Composite APC (APC 0034)

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(5) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, 
and 8008)
3. Proposed Calculation of OPPS Scaled Payment Weights
4. Proposed Changes to Packaged Services
a. Background
b. Service-Specific Packaging Issues
(1) Package Services Addressed by APC Panel Recommendations
(2) IVIG Preadministration-Related Services
B. Proposed Conversion Factor Update
C. Proposed Wage Index Changes
D. Proposed Statewide Average Default CCRs
E. Proposed OPPS Payments to Certain Rural Hospitals
1. Hold Harmless Transitional Payment Changes Made by Pub. L. 109-
171 (DRA)
2. Proposed Adjustment for Rural SCHs Implemented in CY 2006 Related 
to Pub. L. 108-173 (MMA)
F. Proposed Hospital Outpatient Outlier Payments
1. Background
2. Proposed Outlier Calculation
3. Outlier Reconciliation
    G. Proposed Calculation of an Adjusted Medicare Payment from the 
National Unadjusted Medicare Payment
    H. Proposed Beneficiary Copayments
1. Background
2. Proposed Copayments
3. Calculation of a Proposed Adjusted Copayment Amount for an APC 
Group
III. Proposed OPPS Ambulatory Payment Classification (APC) Group 
Policies
A. Proposed OPPS Treatment of New HCPCS and CPT Codes
1. Proposed Treatment of New HCPCS Codes Included in the April and 
July Quarterly OPPS Updates for CY 2008
2. Proposed Treatment of New Category I and III CPT Codes and Level 
II HCPCS Codes
B. Proposed OPPS Changes--Variations within APCs
1. Background
2. Application of the 2 Times Rule
3. Proposed Exceptions to the 2 Times Rule
C. New Technology APCs
1. Background
2. Proposed Movement of Procedures from New Technology APCs to 
Clinical APCs
D. Proposed OPPS APC-Specific Policies
1. Trauma Response Associated with Hospital Critical Care Services 
(APC 0618)
2. Suprachoroidal Delivery of Pharmacologic Agent (APC 0236)
3. Closed Treatment Fracture of Finger/Toe/Trunk (APC 0043)
4. Individual Psychotherapy (APCs 0322 and 0323)
5. Implant Injection for Vesicoureteral Reflex (APC 0162)
IV. Proposed OPPS Payment for Devices
A. Pass-Through Payments for Devices
1. Expiration of Transitional Pass-Through Payments for Certain 
Devices
a. Background
b. Proposed Policy
2. Proposed Provisions for Reducing Transitional Pass-Through 
Payments to Offset Costs Packaged into APC Groups
a. Background
b. Proposed Policy
B. Proposed Adjustment to OPPS Payments for Partial or Full Credit 
Devices
1. Background
2. Proposed APCs and Devices Subject to the Adjustment Policy
V. Proposed OPPS Payment Changes for Drugs, Biologicals, and 
Radiopharmaceuticals
A. Proposed OPPS Transitional Pass-Through Payment for Additional 
Costs of Drugs, Biologicals, and Radiopharmaceuticals
1. Background
2. Proposed Drugs and Biologicals with Expiring Pass-Through Status 
in CY 2008
3. Proposed Drugs, Biologicals, and Radiopharmaceuticals with New or 
Continuing Pass-Through Status in CY 2009
4. Proposed Reduction of Transitional Pass-Through Payments for 
Diagnostic Radiopharmaceuticals to Offset Costs Packaged into APC 
Groups
B. Proposed OPPS Payment for Drugs, Biologicals, and 
Radiopharmaceuticals without Pass-Through Status
1. Background
2. Proposed Criteria for Packaging Payment for Drugs, Biologicals, 
and Radiopharmaceuticals
a. Drugs, Biologicals, and Therapeutic Radiopharmaceuticals
b. Proposed Payment for Diagnostic Radiopharmaceuticals and Contrast 
Agents
3. Proposed Payment for Drugs and Biologicals without Pass-Through 
Status That Are Not Packaged
a. Payment for Specified Covered Outpatient Drugs (SCODs)
b. Proposed Payment Policy
c. Proposed Payment for Blood Clotting Factors
4. Proposed Payment for Therapeutic Radiopharmaceuticals
a. Background
b. Proposed Payment Policy
5. Proposed Payment for Nonpass-Through Drugs, Biologicals, and 
Radiopharmaceuticals with HCPCS Codes, but without OPPS Hospital 
Claims Data
VI. Proposed Estimate of OPPS Transitional Pass-Through Spending for 
Drugs, Biologicals, Radiopharmaceuticals, and Devices
A. Background
B. Proposed Estimate of Pass-Through Spending
VII. Proposed OPPS Payment for Brachytherapy Sources
A. Background
B. Proposed OPPS Payment Policy
VIII. Proposed OPPS Payment for Drug Administration Services
A. Background
B. Proposed Coding and Payment for Drug Administration Services
IX. Proposed OPPS Payment for Hospital Outpatient Visits
A. Background
B. Proposed Policies for Hospital Outpatient Visits
1. Clinic Visits: New and Established Patient Visits
2. Emergency Department Visits
3. Visit Reporting Guidelines
X. Proposed Payment for Partial Hospitalization Services
A. Background
B. Proposed PHP APC Update
C. Proposed Policy Changes
1. Proposal to Deny Payments for Low Intensity Days
2. Proposal to Strengthen PHP Patient Eligibility Criteria
3. Proposed Partial Hospitalization Coding Update
C. Proposed Separate Threshold for Outlier Payments to CMHCs
XI. Proposed Procedures That Will Be Paid Only as Inpatient 
Procedures
A. Background
B. Proposed Changes to the Inpatient List
XII. OPPS Nonrecurring Technical and Policy Clarifications
A. Physician Supervision of HOPD Services
1. Background
2. Summary
B. Reporting of Pathology Services for Prostrate Saturation Biopsy
XIII. Proposed OPPS Payment Status and Comment Indicators
A. Proposed OPPS Payment Status Indicator Definitions
1. Proposed Payment Status Indicators to Designate Services That Are 
Paid under the OPPS
2. Proposed Payment Status Indicators to Designate Services That Are 
Paid under a Payment System Other Than the OPPS
3. Proposed Payment Status Indicators to Designate Services That Are 
Not Recognized under the OPPS But That May Be Recognized by Other 
Institutional Providers
4. Proposed Payment Status Indicators to Designate Services That Are 
Not Payable by Medicare
B. Proposed Comment Indicator Definitions
XIV. OPPS Policy and Payment Recommendations
A. Medicare Payment Advisory Commission (MedPAC) Recommendations
1. March 2008 Report
2. June 2007 Report
B. APC Panel Recommendations
C. OIG Recommendations
XV. Proposed Update of the Revised Ambulatory Surgical Center 
Payment System
A. Background
1. Legislative Authority for the ASC Payment System
2. Prior Rulemaking
3. Policies Governing Changes to the Lists of HCPCS Codes and 
Payment Rates for ASC Covered Surgical Procedures and Covered 
Ancillary Services
B. Proposed Treatment of New Codes
1. Proposed Treatment of New Category I and III CPT Codes and Level 
II HCPCS Codes
2. Proposed Treatment of New Level II HCPCS Codes Implemented in 
April and July 2008
C. Proposed Update to the Lists of ASC Covered Surgical Procedures 
and Covered Ancillary Services
1. Covered Surgical Procedures
a. Proposed Additions to the List of ASC Covered Surgical Procedures
b. Covered Surgical Procedures Designated as Office Based
(1) Background
(2) Proposed Changes to Covered Surgical Procedures Designated as 
Office-Based for CY 2009
c. Covered Surgical Procedures Designated as Device-Intensive

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(1) Background
(2) Proposed Changes to List of Covered Surgical Procedures 
Designated as Device-Intensive for CY 2009
2. Covered Ancillary Services
D. Proposed ASC Payment for Covered Surgical Procedures and Covered 
Ancillary Services
1. Proposed Payment for Covered Surgical Procedures
a. Background
b. Proposed Update to ASC Covered Surgical Procedure Payment Rates 
for CY 2009
c. Proposed Adjustment to ASC Payments for Partial or Full Device 
Credit
2. Proposed Payment for Covered Ancillary Services
a. Background
b. Proposed Payment for Covered Ancillary Services for CY 2009
E. New Technology Intraocular Lenses
1. Background
2. NTIOL Application Process for Payment Adjustment
3. Classes of NTIOLs Approved and New Request for Payment Adjustment
a. Background
b. Requests to Establish New NTIOL Class for CY 2009 and Deadline 
for Public Comment
4. Proposed Payment Adjustment
5. Proposed ASC Payment for Insertion of IOLs
F. Proposed ASC Payment and Comment Indicators
1. Background
2. Proposed ASC Payment and Comment Indicators
G. Calculation of the ASC Conversion Factor and ASC Payment Rates
1. Background
2. Proposed Policy Regarding Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2009 and Future 
Years
b. Updating the ASC Conversion Factor
3. Display of Proposed ASC Payment Rates
XVI. Reporting Quality Data for Annual Payment Rate Updates
A. Background
1. Reporting Hospital Outpatient Quality Data for Annual Payment 
Update
2. Reporting ASC Quality Data for Annual Payment Update
B. Existing Hospital Outpatient Measures for CY 2009
C. Proposed Quality Measures for CY 2010 and Subsequent Calendar 
Years and Proposed Process to Update Measures
1. Proposed Quality Measures for CY 2010 Payment Determinations
2. Proposed Process for Updating Measures
3. Possible New Quality Measures for CY 2011 and Subsequent Calendar 
Years
D. Proposed Payment Reduction for Hospitals That Fail to Meet the 
HOP QDRP Requirements for the CY 2009 Payment Update
1. Background
2. Proposed Reduction of OPPS Payments for Hospitals That Fail to 
Meet the HOP QDRP CY 2009 Payment Update Requirements
a. Calculation of Reduced National Unadjusted Payment Rates
b. Calculation of Reduced Minimum Unadjusted and National Unadjusted 
Beneficiary Copayments
c. Treatment of Other Payment Adjustments
E. Requirements for HOP Quality Data Reporting for CY 2010 and 
Subsequent Calendar Years
1. Administrative Requirements
2. Data Collection and Submission Requirements
3. HOP QDRP Validation Requirements
a. Proposed Data Validation Requirements for CY 2010
b. Alternative Data Validation Approaches for CY 2011
F. Publication of HOP QDRP Data
G. Proposed HOP QDRP Reconsideration and Appeals Procedures
H. Reporting of ASC Quality Data
XVII. Healthcare-Associated Conditions
A. Background
B. Broadening the Concept of the IPPS Hospital-Acquired Conditions 
Payment Provision to the OPPS
1. Criteria for Possible Candidate OPPS Conditions
2. Collaboration Process
3. Potential OPPS Healthcare-Associated Conditions
4. OPPS Infrastructure and Payment for Encounters Resulting in 
Healthcare-Associated Conditions
XVIII. Files Available to the Public Via the Internet
A. Information in Addenda Related to the Proposed CY 2009 Hospital 
OPPS
B. Information in Addenda Related to the Proposed CY 2009 ASC 
Payment System
XIX. Collection of Information Requirements
A. Legislative Requirement for Solicitation of Comments
B. Associated Information Collections Not Specified in Regulatory 
Text
C. Addresses for Submittal of Comments on ICRs
XX. Response to Comments
XXI. Regulatory Impact Analysis
A. Overall Impact
1. Executive Order 12866
2. Regulatory Flexibility Act (RFA)
3. Small Rural Hospitals
4. Unfunded Mandates
5. Federalism
B. Effects of OPPS Changes in This Proposed Rule
1. Alternatives Considered
2. Limitation of Our Analysis
3. Estimated Effects of This Proposed Rule on Hospitals
4. Estimated Effects of This Proposed Rule on CMHCs
5. Estimated Effects of This Proposed Rule on Beneficiaries
6. Conclusion
7. Accounting Statement
C. Effects of ASC Payment System Changes in This Proposed Rule
1. Alternatives Considered
2. Limitations on Our Analysis
3. Estimated Effects of This Proposed Rule on ASCs
4. Estimated Effects of This Proposed Rule on Beneficiaries
5. Conclusion
6. Accounting Statement
D. Effects of Proposed Requirements for Reporting of Quality Data 
for Annual Hospital Payment Update
E. Executive Order 12866

Regulation Text

Addenda

Addendum A--Proposed OPPS APCs for CY 2009
Addendum AA--Proposed ASC Covered Surgical Procedures for CY 2009 
(Including Surgical Procedures for Which Payment Is Packaged)
Addendum B--Proposed OPPS Payment by HCPCS Code for CY 2009
Addendum BB--Proposed ASC Covered Ancillary Services Integral to 
Covered Surgical Procedures for CY 2009 (Including Ancillary 
Services for Which Payment Is Packaged)
Addendum D1--Proposed OPPS Payment Status Indicators
Addendum DD1--Proposed ASC Payment Indicators
Addendum D2--Proposed OPPS Comment Indicators
Addendum DD2--Proposed ASC Comment Indicators
Addendum E--Proposed HCPCS Codes That Would Be Paid Only as 
Inpatient Procedures for CY 2009
Addendum L--Proposed Out-Migration Adjustment
Addendum M--Proposed HCPCS Codes for Assignment to Composite APCs 
for CY 2009

I. Background for the OPPS

A. Legislative and Regulatory Authority for the Hospital Outpatient 
Prospective Payment System

    When the Medicare statute was originally enacted, Medicare payment 
for hospital outpatient services was based on hospital-specific costs. 
In an effort to ensure that Medicare and its beneficiaries pay 
appropriately for services and to encourage more efficient delivery of 
care, the Congress mandated replacement of the reasonable cost-based 
payment methodology with a prospective payment system (PPS). The 
Balanced Budget Act (BBA) of 1997 (Pub. L. 105-33) added section 
1833(t) to the Social Security Act (the Act) authorizing implementation 
of a PPS for hospital outpatient services.
    The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act 
(BBRA) of 1999 (Pub. L. 106-113) made major changes in the hospital 
outpatient prospective payment system (OPPS). The Medicare, Medicaid, 
and SCHIP Benefits Improvement and Protection Act (BIPA) of 2000 (Pub. 
L. 106-554) made further changes in the OPPS. Section 1833(t) of the 
Act was also amended by the Medicare Prescription Drug, Improvement, 
and Modernization Act (MMA) of 2003 (Pub. L. 108-173). The Deficit 
Reduction Act (DRA) of 2005 (Pub. L. 109-171), enacted on February 8, 
2006, also made additional changes in the OPPS. In addition, the 
Medicare Improvements and Extension Act under Division B of Title I of 
the

[[Page 41420]]

Tax Relief and Health Care Act (MIEA-TRHCA) of 2006 (Pub. L. 109-432), 
enacted on December 20, 2006, made further changes in the OPPS. 
Further, the Medicare, Medicaid, and SCHIP Extension Act (MMSEA) of 
2007 (Pub. L. 110-173), enacted on December 29, 2007, made additional 
changes in the OPPS. A discussion of these changes is included in 
sections I.E., II.C., V., and VII. of this proposed rule.
    The OPPS was first implemented for services furnished on or after 
August 1, 2000. Implementing regulations for the OPPS are located at 42 
CFR part 419.
    Under the OPPS, we pay for hospital outpatient services on a rate-
per-service basis that varies according to the ambulatory payment 
classification (APC) group to which the service is assigned. We use the 
Healthcare Common Procedure Coding System (HCPCS) codes (which include 
certain Current Procedural Terminology (CPT) codes) and descriptors to 
identify and group the services within each APC group. The OPPS 
includes payment for most hospital outpatient services, except those 
identified in section I.B. of this proposed rule. Section 
1833(t)(1)(B)(ii) of the Act provides for Medicare payment under the 
OPPS for hospital outpatient services designated by the Secretary 
(which includes partial hospitalization services furnished by community 
mental health centers (CMHCs)) and hospital outpatient services that 
are furnished to inpatients who have exhausted their Part A benefits, 
or who are otherwise not in a covered Part A stay. Section 611 of Pub. 
L. 108-173 added provisions for Medicare coverage of an initial 
preventive physical examination, subject to the applicable deductible 
and coinsurance, as an outpatient department service, payable under the 
OPPS.
    The OPPS rate is an unadjusted national payment amount that 
includes the Medicare payment and the beneficiary copayment. This rate 
is divided into a labor-related amount and a nonlabor-related amount. 
The labor-related amount is adjusted for area wage differences using 
the hospital inpatient wage index value for the locality in which the 
hospital or CMHC is located.
    All services and items within an APC group are comparable 
clinically and with respect to resource use (section 1833(t)(2)(B) of 
the Act). In accordance with section 1833(t)(2) of the Act, subject to 
certain exceptions, services and items within an APC group cannot be 
considered comparable with respect to the use of resources if the 
highest median (or mean cost, if elected by the Secretary) for an item 
or service in the APC group is more than 2 times greater than the 
lowest median cost for an item or service within the same APC group 
(referred to as the ``2 times rule''). In implementing this provision, 
we generally use the median cost of the item or service assigned to an 
APC group.
    For new technology items and services, special payments under the 
OPPS may be made in one of two ways. Section 1833(t)(6) of the Act 
provides for temporary additional payments, which we refer to as 
``transitional pass-through payments,'' for at least 2 but not more 
than 3 years for certain drugs, biological agents, brachytherapy 
devices used for the treatment of cancer, and categories of other 
medical devices. For new technology services that are not eligible for 
transitional pass-through payments, and for which we lack sufficient 
data to appropriately assign them to a clinical APC group, we have 
established special APC groups based on costs, which we refer to as New 
Technology APCs. These New Technology APCs are designated by cost bands 
which allow us to provide appropriate and consistent payment for 
designated new procedures that are not yet reflected in our claims 
data. Similar to pass-through payments, an assignment to a New 
Technology APC is temporary; that is, we retain a service within a New 
Technology APC until we acquire sufficient data to assign it to a 
clinically appropriate APC group.

B. Excluded OPPS Services and Hospitals

    Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to 
designate the hospital outpatient services that are paid under the 
OPPS. While most hospital outpatient services are payable under the 
OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for 
ambulance, physical and occupational therapy, and speech-language 
pathology services, for which payment is made under a fee schedule. 
Section 614 of Pub. L. 108-173 amended section 1833(t)(1)(B)(iv) of the 
Act to exclude payment for screening and diagnostic mammography 
services from the OPPS. The Secretary exercised the authority granted 
under the statute to also exclude from the OPPS those services that are 
paid under fee schedules or other payment systems. Such excluded 
services include, for example, the professional services of physicians 
and nonphysician practitioners paid under the Medicare Physician Fee 
Schedule (MPFS); laboratory services paid under the clinical diagnostic 
laboratory fee schedule (CLFS); services for beneficiaries with end-
stage renal disease (ESRD) that are paid under the ESRD composite rate; 
and services and procedures that require an inpatient stay that are 
paid under the hospital inpatient prospective payment system (IPPS). We 
set forth the services that are excluded from payment under the OPPS in 
Sec.  419.22 of the regulations.
    Under Sec.  419.20(b) of the regulations, we specify the types of 
hospitals and entities that are excluded from payment under the OPPS. 
These excluded entities include Maryland hospitals, but only for 
services that are paid under a cost containment waiver in accordance 
with section 1814(b)(3) of the Act; critical access hospitals (CAHs); 
hospitals located outside of the 50 States, the District of Columbia, 
and Puerto Rico; and Indian Health Service hospitals.

C. Prior Rulemaking

    On April 7, 2000, we published in the Federal Register a final rule 
with comment period (65 FR 18434) to implement a prospective payment 
system for hospital outpatient services. The hospital OPPS was first 
implemented for services furnished on or after August 1, 2000. Section 
1833(t)(9) of the Act requires the Secretary to review certain 
components of the OPPS, not less often than annually, and to revise the 
groups, relative payment weights, and other adjustments that take into 
account changes in medical practices, changes in technologies, and the 
addition of new services, new cost data, and other relevant information 
and factors.
    Since initially implementing the OPPS, we have published final 
rules in the Federal Register annually to implement statutory 
requirements and changes arising from our continuing experience with 
this system. We published in the Federal Register on November 27, 2007 
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66580). In 
that final rule with comment period, we revised the OPPS to update the 
payment weights and conversion factor for services payable under the CY 
2008 OPPS on the basis of claims data from January 1, 2006, through 
December 31, 2006, and to implement certain provisions of Pub. L. 108-
173 and Pub. L. 109-171. In addition, we responded to public comments 
received on the provisions of the November 26, 2006 final rule with 
comment period (71 FR 67960) pertaining to the APC assignment of HCPCS 
codes identified in Addendum B to that rule with the new interim (NI) 
comment indicator; and public comments received on the August 2,

[[Page 41421]]

2007 OPPS/ASC proposed rule for CY 2008 (72 FR 42628).
    Subsequent to publication of the CY 2008 OPPS/ASC final rule with 
comment period, we published in the Federal Register on February 22, 
2008, a correction notice (73 FR 9860) to correct certain technical 
errors in the CY 2008 OPPS/ASC final rule with comment period.

D. APC Advisory Panel

1. Authority of the APC Panel
    Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of 
the BBRA, and redesignated by section 202(a)(2) of the BBRA, requires 
that we consult with an outside panel of experts to review the clinical 
integrity of the payment groups and their weights under the OPPS. The 
Act further specifies that the panel will act in an advisory capacity. 
The Advisory Panel on Ambulatory Payment Classification (APC) Groups 
(the APC Panel), discussed under section I.D.2. of this proposed rule, 
fulfills these requirements. The APC Panel is not restricted to using 
data compiled by CMS, and it may use data collected or developed by 
organizations outside the Department in conducting its review.
2. Establishment of the APC Panel
    On November 21, 2000, the Secretary signed the initial charter 
establishing the APC Panel. This expert panel, which may be composed of 
up to 15 representatives of providers subject to the OPPS (currently 
employed full-time, not as consultants, in their respective areas of 
expertise), reviews clinical data and advises CMS about the clinical 
integrity of the APC groups and their payment weights. For purposes of 
this APC Panel, consultants or independent contractors are not 
considered to be full-time employees. The APC Panel is technical in 
nature, and is governed by the provisions of the Federal Advisory 
Committee Act (FACA). Since its initial chartering, the Secretary has 
renewed the APC Panel's charter three times: on November 1, 2002; on 
November 1, 2004; and effective November 21, 2006. The current charter 
specifies, among other requirements, that the APC Panel continues to be 
technical in nature; is governed by the provisions of the FACA; may 
convene up to three meetings per year; has a Designated Federal Officer 
(DFO); and is chaired by a Federal official designated by the 
Secretary.
    The current APC Panel membership and other information pertaining 
to the APC Panel, including its charter, Federal Register notices, 
membership, meeting dates, agenda topics, and meeting reports can be 
viewed on the CMS Web site at: https://www.cms.hhs.gov/FACA/05_
AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp#TopOfPage.
3. APC Panel Meetings and Organizational Structure
    The APC Panel first met on February 27, February 28, and March 1, 
2001. Since the initial meeting, the APC Panel has held 13 subsequent 
meetings, with the last meeting taking place on March 5, and March 6, 
2008. Prior to each meeting, we publish a notice in the Federal 
Register to announce the meeting, and when necessary, to solicit 
nominations for APC Panel membership, and to announce new members.
    The APC Panel has established an operational structure that, in 
part, includes the use of three subcommittees to facilitate its 
required APC review process. At its March 2008 meeting, the APC Panel 
recommended that the Observation and Visit Subcommittee's name be 
changed to the ``Visits and Observation Subcommittee.'' We are 
accepting this recommendation and will refer to the subcommittee by its 
new name, as appropriate, throughout this proposed rule. Thus, the 
three current subcommittees are the Data Subcommittee, the Visits and 
Observation Subcommittee, and the Packaging Subcommittee. The Data 
Subcommittee is responsible for studying the data issues confronting 
the APC Panel, and for recommending options for resolving them. The 
Visits and Observation Subcommittee reviews and makes recommendations 
to the APC Panel on all technical issues pertaining to observation 
services and hospital outpatient visits paid under the OPPS (for 
example, APC configurations and APC payment weights). The Packaging 
Subcommittee studies and makes recommendations on issues pertaining to 
services that are not separately payable under the OPPS, but whose 
payments are bundled or packaged into APC payments. Each of these 
subcommittees was established by a majority vote from the full APC 
Panel during a scheduled APC Panel meeting, and their continuation as 
subcommittees was last approved at the March 2008 APC Panel meeting. 
All subcommittee recommendations are discussed and voted upon by the 
full APC Panel.
    Discussions of the recommendations resulting from the APC Panel's 
March 2008 meeting are included in the sections of this proposed rule 
that are specific to each recommendation. For discussions of earlier 
APC Panel meetings and recommendations, we refer readers to previously 
published hospital OPPS final rules or the Web site mentioned earlier 
in this section.

E. Provisions of the Medicare, Medicaid, and SCHIP Extension Act of 
2007

    The Medicare, Medicaid and SCHIP Extension Act (MMSEA) of 2007, 
(Pub. L. 110-173), enacted on December 29, 2007, included the following 
provisions that affect the OPPS and the revised APC payment system:
1. Increase in Physician Payment Update
    Section 101 of the MMSEA provides a 0.5 percent increase in the 
physician payment update from January 1, 2008 through June 30, 2008; 
revises the Physician Assistance and Quality Initiative Fund, and 
extends through 2009 the physician quality reporting system. We refer 
readers to section XV. of this proposed rule for discussion of the 
effect of this provision on services paid under the revised ASC payment 
system.
2. Extended Expiration Date for Cost-Based OPPS Payment for 
Brachytherapy Sources and Therapeutic Radiopharmaceuticals
    Section 106 of the MMSEA amended section 1833(t)(16)(C) of the Act, 
as amended by section 107 of the MIEA-TRCHA to extend for an additional 
6 months, through June 30, 2008, payment for brachytherapy devices at 
hospitals' charges adjusted to costs and to mandate that the same cost-
based payment methodology apply to therapeutic radiopharmaceuticals for 
the same extended payment period. We refer readers to sections V. and 
VII of this proposed rule for discussion of this provision.
3. Alternative Volume Weighting in Computation of Average Sales Price 
(ASP) for Medicare Part B Drugs
    Section 112 of the MMSEA amended section 1847A(b) to provide for 
application of alternative volume weighting in computing the average 
sales price (ASP) for payment of Part B multiple source and single 
source drugs furnished after April 1, 2008, and for a special rule, 
beginning April 1, 2008, for payment of single source drugs or 
biologicals treated as a multiple source drug. This provision is 
discussed in section V. of this proposed rule.

[[Page 41422]]

4. Extended Expiration Date for Certain IPPS Wage Index Geographic 
Reclassifications and Special Exceptions
    Section 117 of the MMSEA extended through September 30, 2008, both 
the reclassifications that were extended by section 106 of MIEA-TRCHA 
as well as certain special exception wage indices referenced in the FY 
2005 IPPS final rule (69 FR 49105 and 49107). This provision also 
amended section 508 of Pub. L. 108-173 to specify conditions specific 
to the reclassification of a group of hospitals in a geographic area 
for discharges occurring during FY 2008. In addition, for hospital 
reclassifications extended by section 106(a) of the MIEA-TRCHA, that 
resulted in a lower wage index for the second half of FY 2007 than 
applicable to such hospitals during the first half of FY 2007, section 
117 of the MMSEA directs the Secretary to apply a higher wage index to 
such hospitals for the entire FY 2007. We refer readers to section 
II.C. of this proposed rule for discussion of this provision.

F. Summary of the Major Contents of This Proposed Rule

    In this proposed rule, we are setting forth proposed changes to the 
Medicare hospital OPPS for CY 2009. These changes would be effective 
for services furnished on or after January 1, 2009. We are also setting 
forth proposed changes to the Medicare revised ASC payment system for 
CY 2009. These changes would be effective for services furnished on or 
after January 1, 2009. The following is a summary of the major changes 
that we are proposing to make:
1. Proposed Updates Affecting OPPS Payments
    In section II. of this proposed rule, we set forth--
     The methodology used to recalibrate the proposed APC 
relative payment weights.
     The proposed changes to packaged services.
     The proposed update to the conversion factor used to 
determine payment rates under the OPPS. In this section we set forth 
changes in the amounts and factors for calculating the full annual 
update increase to the conversion factor.
     The proposed retention of our current policy to use the 
IPPS wage indices to adjust, for geographic wage differences, the 
portion of the OPPS payment rate and the copayment standardized amount 
attributable to labor-related cost.
     The proposed update of statewide average default CCRs.
     The proposed application of hold harmless transitional 
outpatient payments (TOPs) for certain small rural hospitals.
     The proposed payment adjustment for rural SCHs.
     The proposed calculation of the hospital outpatient 
outlier payment.
     The calculation of the proposed national unadjusted 
Medicare OPPS payment.
     The proposed beneficiary copayments for OPPS services.
2. Proposed OPPS Ambulatory Payment Classification (APC) Group Policies
    In section III. of this proposed rule, we discuss the proposed 
additions of new procedure codes to the APCs; our proposal to establish 
a number of new APCs; and our analyses of Medicare claims data and 
certain recommendations of the APC Panel. We also discuss the 
application of the 2 times rule and proposed exceptions to it; proposed 
changes to specific APCs; and the proposed movement of procedures from 
New Technology APCs to clinical APCs.
3. Proposed OPPS Payment for Devices
    In section IV. of this proposed rule, we discuss proposed pass-
through payment for specific categories of devices and the proposed 
adjustment for devices furnished at no cost or with partial or full 
credit.
4. Proposed OPPS Payment Changes for Drugs, Biologicals, and 
Radiopharmaceuticals
    In section V. of this proposed rule, we discuss proposed CY 2009 
OPPS payment for drugs, biologicals, and radiopharmaceuticals, 
including the proposed payment for drugs, biologicals, and 
radiopharmaceuticals with and without pass-through status.
5. Proposed Estimate of OPPS Transitional Pass-Through Spending for 
Drugs, Biologicals, Radiopharmaceuticals, and Devices
    In section VI. of this proposed rule, we discuss the estimate of CY 
2009 OPPS transitional pass-through spending for drugs, biologicals, 
and devices.
6. Proposed OPPS Payment for Brachytherapy Sources
    In section VII. of this proposed rule, we discuss our proposal 
concerning coding and payment for brachytherapy sources.
7. Proposed OPPS Payment for Drug Administration Services
    In section VIII. of this proposed rule, we set forth our proposed 
policy concerning payment and coding for drug administration services.
8. Proposed OPPS Payment for Hospital Outpatient Visits
    In section IX. of this proposed rule, we set forth our proposed 
policies for the payment of clinic and emergency department visits and 
critical care services based on claims paid under the OPPS.
9. Proposed Payment for Partial Hospitalization Services
    In section X. of this proposed rule, we set forth our proposed 
payment for partial hospitalization services, including the proposed 
separate threshold for outlier payments for CMHCs.
10. Proposed Procedures That Will Be Paid Only as Inpatient Procedures
    In section XI. of this proposed rule, we discuss the procedures 
that we are proposing to remove from the inpatient list and assign to 
APCs.
11. OPPS Nonrecurring Technical and Policy Clarifications
    In section XII. of this proposed rule, we set forth our 
nonrecurring technical and policy clarifications.
12. Proposed OPPS Payment Status and Comment Indicators
    In section XIII. of this proposed rule, we discuss our proposed 
changes to the definitions of status indicators assigned to APCs and 
present our proposed comment indicators for the CY 2009 OPPS/ASC final 
rule with comment period.
13. OPPS Policy and Payment Recommendations
    In section XIV. of this proposed rule, we address recommendations 
made by the Medicare Payment Advisory Commission (MedPAC) in its June 
2007 and March 2008 reports to Congress, by the APC Panel regarding the 
OPPS for CY 2009, and by the Office of the Inspector General (OIG) in 
its June 2007 report.
14. Proposed Update of the Revised Ambulatory Surgical Center Payment 
System
    In section XV. of this proposed rule, we discuss the proposed 
update of the revised ASC payment system payment rates for CY 2009.
15. Proposed Reporting of Hospital Outpatient Quality Data for Annual 
Hospital Payment Rate Updates and CY 2009 Payment Reduction
    In section XVI. of this proposed rule, we discuss the proposed 
quality

[[Page 41423]]

measures for reporting hospital outpatient quality data for CY 2010 and 
subsequent calendar years, set forth the requirements for data 
collection and submission for the annual payment update, and propose a 
reduction in the OPPS payment for hospitals that fail to meet the HOP 
QDRP requirements for CY 2009.
16. Healthcare-Associated Conditions
    In section XVII. of this proposed rule, we discuss considerations 
related to potentially extending the principle of Medicare not paying 
more for the preventable healthcare-associated conditions acquired 
during inpatient stays paid under the IPPS to other Medicare payment 
systems for healthcare-associated conditions that occur or result from 
care in other settings.
17. Regulatory Impact Analysis
    In section XXI. of this proposed rule, we set forth an analysis of 
the impact the proposed changes would have on affected entities and 
beneficiaries.

II. Proposed Updates Affecting OPPS Payments

A. Proposed Recalibration of APC Relative Weights

1. Database Construction
a. Database Source and Methodology
    Section 1833(t)(9)(A) of the Act requires that the Secretary review 
and revise the relative payment weights for APCs at least annually. In 
the April 7, 2000 OPPS final rule with comment period (65 FR 18482), we 
explained in detail how we calculated the relative payment weights that 
were implemented on August 1, 2000 for each APC group. As discussed in 
the November 13, 2000 interim final rule (65 FR 67824 through 67827), 
except for some reweighting due to a small number of APC changes, these 
relative payment weights continued to be in effect for CY 2001.
    We are proposing to use the same basic methodology that we 
described in the April 7, 2000 OPPS final rule with comment period to 
recalibrate the APC relative payment weights for services furnished on 
or after January 1, 2009, and before January 1, 2010 (CY 2009). That 
is, we are proposing to recalibrate the relative payment weights for 
each APC based on claims and cost report data for outpatient services. 
We are proposing to use the most recent available data to construct the 
database for calculating APC group weights. For the purpose of 
recalibrating the proposed APC relative payment weights for CY 2009, we 
used approximately 130 million final action claims for hospital 
outpatient department (HOPD) services furnished on or after January 1, 
2007, and before January 1, 2008. (For exact counts of claims used, we 
refer readers to the claims accounting narrative under supporting 
documentation for this proposed rule on the CMS Web site at: https://
www.cms.hhs.gov/HospitalOutpatientPPS/HORD/).
    Of the 130 million final action claims for services provided in 
hospital outpatient settings used to calculate the CY 2009 OPPS payment 
rates for this proposed rule, approximately 100 million claims were of 
the type of bill potentially appropriate for use in setting rates for 
OPPS services (but did not necessarily contain services payable under 
the OPPS). Of the 100 million claims, approximately 45 million were not 
for services paid under the OPPS or were excluded as not appropriate 
for use (for example, erroneous cost-to-charge ratios (CCRs) or no 
HCPCS codes reported on the claim). We were able to use approximately 
52 million whole claims of the approximately 54 million claims that 
remained to set the OPPS APC relative weights that we are proposing for 
the CY 2009 OPPS. From the 52 million whole claims, we created 
approximately 90 million single records, of which approximately 60 
million were ``pseudo'' single claims (created from multiple procedure 
claims using the process we discuss in this section). Approximately 
627,000 claims trimmed out on cost or units in excess of +/-3 standard 
deviations from the geometric mean, yielding approximately 89 million 
single bills used for median setting. Ultimately, we were able to use 
for proposed CY 2009 ratesetting some portion of the data from 96 
percent of the CY 2007 claims containing services payable under the 
OPPS.
    The proposed APC relative weights and payments for CY 2009 in 
Addenda A and B to this proposed rule were calculated using claims from 
CY 2007 that were processed before January 1, 2008, and continue to be 
based on the median hospital costs for services in the APC groups. We 
selected claims for services paid under the OPPS and matched these 
claims to the most recent cost report filed by the individual hospitals 
represented in our claims data. We continue to believe that it is 
appropriate to use the most current full calendar year claims data and 
the most recently submitted cost reports to calculate the median costs 
which we are proposing to convert to relative payment weights for 
purposes of calculating the CY 2009 payment rates.
b. Proposed Use of Single and Multiple Procedure Claims
    For CY 2009, in general, we are proposing to continue to use single 
procedure claims to set the medians on which the APC relative payment 
weights would be based, with some exceptions as discussed below. We 
generally use single procedure claims to set the median costs for APCs 
because we believe that it is important that the OPPS relative weights 
on which payment rates are based be appropriate when one and only one 
procedure is furnished and because we are, so far, unable to ensure 
that packaged costs can be appropriately allocated across multiple 
procedures performed on the same date of service. We agree that, 
optimally, it is desirable to use the data from as many claims as 
possible to recalibrate the APC relative payment weights, including 
those claims for multiple procedures. As we have for several years, we 
continued to use date of service stratification and a list of codes to 
be bypassed to convert multiple procedure claims to ``pseudo'' single 
procedure claims. Through bypassing specified codes that we believe do 
not have significant packaged costs, we are able to use more data from 
multiple procedure claims. In many cases, this enables us to create 
multiple ``pseudo'' single claims from claims that, as submitted, 
contained numerous separately paid procedures reported on the same date 
on one claim. We refer to these newly created single procedure claims 
as ``pseudo'' single claims because they were submitted by providers as 
multiple procedure claims. The history of our use of a bypass list to 
generate ``pseudo'' single claims is well documented, most recently in 
the CY 2008 OPPS/ASC final rule with comment period (72 FR 66590 
through 66597). In addition, for CY 2008, we increased packaging and 
created composite APCs, which also increased the number of bills we 
were able to use for median calculation by enabling us to use claims 
that contained multiple major procedures that previously would not have 
been usable. We refer readers to section II.A.2.e. of this proposed 
rule for discussion of the use of claims to establish median costs for 
composite APCs.
    We are proposing to continue to apply these processes to enable us 
to use as much claims data as possible for ratesetting for the CY 2009 
OPPS. Application of these processes in development of this proposed 
rule data resulted in our being able to use some or all of the data 
from 96 percent of the total claims that are eligible for use in

[[Page 41424]]

the OPPS ratesetting and modeling for this proposed rule. This process 
enabled us to create, for this proposed rule, approximately 60 million 
``pseudo'' single claims, including multiple imaging composite ``single 
session'' bills (we refer readers to section II.A.2.e.(5) of this 
proposed rule for further discussion), and approximately 30 million 
``natural'' single bills. For this proposed rule, ``pseudo'' single 
procedure bills represent 67 percent of all single bills used to 
calculate median costs. This compares favorably to the CY 2008 OPPS/ASC 
final rule with comment period data in which ``pseudo'' single bills 
represented 66 percent of all single bills used to calculate the median 
costs on which the CY 2008 OPPS payment rates were based.
    For CY 2009, we are proposing to bypass 452 HCPCS codes that are 
identified in Table 1 of this proposed rule. We are proposing to 
continue the use of the codes on the CY 2008 OPPS bypass list. Since 
the inception of the bypass list, we have calculated the percent of 
``natural'' single bills that contained packaging for each HCPCS code 
and the amount of packaging in each ``natural'' single bill for each 
code. We have generally retained the codes on the previous year's 
bypass list and used the update year's data (for CY 2009, data 
available for the first CY 2008 APC Panel meeting for services 
furnished on and after January 1, 2007 through and including September 
30, 2007) to determine whether it would be appropriate to add 
additional codes to the previous year's bypass list. The entire list 
(including the codes that remained on the bypass list from prior years) 
is open to public comment. We removed two HCPCS codes from the CY 2008 
bypass list for this CY 2009 proposal because the codes were deleted on 
December 31, 2005, specifically C8951 (Intravenous infusion for 
therapy/diagnosis; each additional hour (List separately in addition to 
C8950)) and C8955 (Chemotherapy administration, intravenous; infusion 
technique, each additional hour (List separately in addition to 
C8954)). We updated HCPCS codes on the CY 2008 bypass list that were 
mapped to new HCPCS codes for CY 2009 ratesetting. We are proposing to 
add to the bypass list all HCPCS codes not on the CY 2008 bypass list 
that, using the APC Panel data, meet the same previously established 
empirical criteria for the bypass list that are summarized below. We 
assume that the representation of packaging in the single claims for 
any given code is comparable to packaging for that code in the multiple 
claims. The proposed criteria for the bypass list are:
     There are 100 or more single claims for the code. This 
number of single claims ensures that observed outcomes are sufficiently 
representative of packaging that might occur in the multiple claims.
     Five percent or fewer of the single claims for the code 
have packaged costs on that single claim for the code. This criterion 
results in limiting the amount of packaging being redistributed to the 
separately payable procedure remaining on the claim after the bypass 
code is removed and ensures that the costs associated with the bypass 
code represent the cost of the bypassed service.
     The median cost of packaging observed in the single claims 
is equal to or less than $50. This limits the amount of error in 
redistributed costs.
     The code is not a code for an unlisted service.
    In addition, we are proposing to add to the bypass list HCPCS codes 
that CMS medical advisors believe have minimal associated packaging 
based on their clinical assessment of the complete CY 2009 OPPS 
proposal. To ensure clinical consistency in our treatment of related 
services, we are also proposing to add the other CPT add-on codes for 
drug administration services to the CY 2009 bypass list, in addition to 
the CPT codes for additional hours of infusion that were previously 
included on the CY 2008 bypass list, because adding them enables us to 
use many correctly coded claims for initial drug administration 
services that would otherwise not be available for ratesetting. The 
result of this proposal is that the packaged costs associated with add-
on drug administration services are packaged into payment for the 
initial administration service, as has been our payment policy for the 
past 2 years for the CPT codes for additional hours of infusion. We are 
also proposing to add HCPCS code G0390 (Trauma response team activation 
associated with hospital critical care service) because we think it is 
appropriate to attribute all of the packaged costs that appear on a 
claim with HCPCS code G0390 and CPT code 99291 (Critical care, 
evaluation and management of the critically ill or critically injured 
patient; first 30-74 minutes) to CPT code 99291. If we did not add 
HCPCS code G0390 to the bypass list, we would have many fewer claims to 
use to set the median costs for APCs 0617 (Critical Care) and 0618 
(Trauma Response with Critical Care). By definition, we could not have 
any properly coded ``natural'' single bills for HCPCS code G0390. 
Including HCPCS code G0390 on the bypass list allows us to create more 
``pseudo'' single bills for CPT code 99291 and HCPCS code G0390, and, 
therefore, to improve the accuracy of the median costs of APCs 0617 and 
0618 to which the two codes are assigned, respectively. The Integrated 
Outpatient Code Editor (I/OCE) logic rejects a line for HCPCS code 
G0390 if CPT code 99291 is not also reported on the claim. Therefore, 
we cannot assess whether HCPCS code G0390 would meet the empirical 
criteria for inclusion on the bypass list because we have no 
``natural'' single claims for HCPCS code G0390.
    As a result of the multiple imaging composite APCs that we are 
proposing to establish for CY 2009 as discussed in section II.A.2.e.(5) 
of this proposed rule, the ``pseudo'' single converter logic for 
bypassed codes that are also members of multiple imaging composite APCs 
would change. When creating the set of ``pseudo'' single claims, claims 
that contain ``overlap bypass codes,'' that is, those HCPCS codes that 
are both on the bypass list and are members of the multiple imaging 
composite APCs, are identified first. These HCPCS codes are then 
processed to create multiple imaging composite ``single'' bills, that 
is, claims containing HCPCS codes from only one imaging family, thus 
suppressing the initial use of these codes as bypass codes. However, 
these ``overlap bypass codes'' are retained on the bypass list because 
single unit occurrences of these codes are identified as single bills 
at the end of the ``pseudo'' single processing logic. The net effect of 
using these HCPCS codes in building multiple imaging composite ``single 
session'' claims rather than for bypass purposes is a slight reduction 
in the number of ``pseudo'' single claims available for the ``overlap 
bypass codes'' and a handful of services that would be frequently 
billed with an ``overlap bypass code.'' This process also creates 
multiple imaging composite ``single session'' bills that can be used 
for calculating composite APC median costs. ``Overlap bypass codes'' 
that would be members of the proposed multiple imaging composite APCs 
are identified by asterisks (*) in Table 1.
    We note that this list contains bypass codes that were appropriate 
to claims for services in CY 2007 and, therefore, includes codes that 
were deleted for CY 2008. Moreover, there are codes on the proposed 
bypass list that are new for CY 2008 and which are appropriate 
additions to the bypass list in preparation for use of the CY 2008 
claims for creation of the CY 2010 OPPS. Table 1 below includes a list 
of the bypass codes that we are proposing

[[Page 41425]]

for CY 2009. We specifically request public comment on this proposed 
list of bypass codes for CY 2009.

 Table 1.--Proposed CY 2009 Bypass Codes for Creating ``Pseudo'' Single
                   Claims for Calculating Median Costs
------------------------------------------------------------------------
                                                       ``Overlap bypass
           HCPCS code              Short descriptor         codes''
---------------------------------------------------