Medicare Program: Changes to the Hospital Outpatient Prospective Payment System and CY 2009 Payment Rates; Changes to the Ambulatory Surgical Center Payment System and CY 2009 Payment Rates; Hospital Conditions of Participation: Requirements for Approval and Re-Approval of Transplant Centers To Perform Organ Transplants-Clarification of Provider and Supplier Termination Policy Medicare and Medicaid Programs: Changes to the Ambulatory Surgical Center Conditions for Coverage, 68502-69380 [E8-26212]
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68502
Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Parts 410, 416, and 419
[CMS–1404–FC; CMS–3887–F; CMS–3835–
F–1]
RIN 0938–AP17; RIN 0938–AL80; RIN 0938–
AH17
Medicare Program: Changes to the
Hospital Outpatient Prospective
Payment System and CY 2009 Payment
Rates; Changes to the Ambulatory
Surgical Center Payment System and
CY 2009 Payment Rates; Hospital
Conditions of Participation:
Requirements for Approval and ReApproval of Transplant Centers To
Perform Organ Transplants—
Clarification of Provider and Supplier
Termination Policy Medicare and
Medicaid Programs: Changes to the
Ambulatory Surgical Center
Conditions for Coverage
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Final rule with comment period;
final rules.
dwashington3 on PRODPC61 with RULES2
AGENCY:
SUMMARY: This final rule with comment
period revises the Medicare hospital
outpatient prospective payment system
to implement applicable statutory
requirements and changes arising from
our continuing experience with this
system, and to implement a number of
changes made by the Medicare
Improvement for Patients and Providers
Act of 2008. In this final rule with
comment period, we describe the
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 are applicable to
services furnished on or after January 1,
2009.
In addition, this final rule with
comment period updates 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
final rule with comment period, we set
forth the applicable relative payment
weights and amounts for services
furnished in ASCs, specific HCPCS
codes to which these changes apply,
and other pertinent ratesetting
information for the CY 2009 ASC
payment system. These changes are
applicable to services furnished on or
after January 1, 2009.
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In this document, we are responding
to public comments on a proposed rule
and finalizing updates to the ASC
Conditions for Coverage to reflect
current ASC practices and new
requirements in the conditions to
promote and protect patient health and
safety.
Further, this final rule also clarifies
policy statements included in responses
to public comments set forth in the
preamble of the March 30, 2007 final
rule regarding the Secretary’s ability to
terminate Medicare providers and
suppliers (that is, transplant centers)
during an appeal of a determination that
affects participation in the Medicare
program.
Effective Dates: The provisions
of this rule are effective January 1, 2009,
except for amendments to 42 CFR 416.2,
416.41 through 416.43, and 416.49
through 416.52 are effective on May 18,
2009. The policy clarification set forth
in section XVIII of the preamble of this
rule is effective December 18, 2008.
Comment Period: We will consider
comments on the payment
classifications assigned to HCPCS codes
identified in Addenda B, AA, and BB to
this final rule with comment period
with the ‘‘NI’’ comment indicator, and
on other areas specified throughout this
rule, received at one of the addresses
provided in the ADDRESSES section, no
later than 5 p.m. EST on December 29,
2008.
Application Deadline—New Class of
New Technology Intraocular Lenses:
Request for review of applications for a
new class of new technology intraocular
lenses must be received by 5 p.m. EST
on March 2, 2009.
ADDRESSES: In commenting, please refer
to file code CMS–1404–FC. 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 file code 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–
FC, 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.
DATES:
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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–FC, 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.
For information on viewing public
comments, see the beginning of the
SUPPLEMENTARY INFORMATION section.
Applications for a new class of new
technology intraocular lenses: Requests
for review of applications for a new
class of new technology intraocular
lenses must be sent by regular mail to:
ASC/NTIOL, Division of Outpatient
Care, Mailstop C4–05–17, Centers for
Medicare & Medicaid Services, 7500
Security Boulevard, Baltimore, MD
21244–1850.
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.
Jacqueline Morgan, (410) 786–4282,
Joan A. Moliki, (410) 786–5526, Steve
Miller, (410) 786–6656, and Jeannie
Miller, (410) 786–3164, Ambulatory
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surgical center Conditions for Coverage
issues.
Marcia Newton, (410) 786–5265, and
Karen Tritz, (410) 786–8021,
Clarification of provider and supplier
termination policy 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
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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 Final Rule With Comment Period
AAAASF American Association for
Accreditation of Ambulatory Surgical
Facilities
AAAHC Accreditation Association for
Ambulatory Health Care
ACEP American College of Emergency
Physicians
AHA American Hospital Association
AHIMA American Health Information
Management Association
AMA American Medical Association
AMP Average manufacturer price
AOA American Osteopathic Association
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APC Ambulatory payment classification
ASC Ambulatory Surgical Center
ASP Average sales price
AWP Average wholesale price
BBA Balanced Budget Act of 1997, Public
Law 105–33
BBRA Medicare, Medicaid, and SCHIP
[State Children’s Health Insurance
Program] Balanced Budget Refinement Act
of 1999, Public Law 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, Public Law 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
CfC Condition for Coverage
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, Public
Law 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,
Public Law 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, Public Law
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
IPPE Initial preventive physical
examination
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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,
Public Law 109–432
MIPPA Medicare Improvements for Patients
and Providers Act of 2008, Public Law
110–275
MMA Medicare Prescription Drug,
Improvement, and Modernization Act of
2003, Public Law 108–173
MMSEA Medicare, Medicaid, and SCHIP
Extension Act of 2007, Public Law 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
OIG [HHS] Office of the Inspector General
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
QAPI Quality Assessment and Performance
Improvement
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, Public Law
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., XVI., XVII., and
XIX. through XXIII. of this final rule
with comment period and in Addenda
A, B, C (Addendum C is available on the
Internet only; we refer readers to section
XIX. of this final rule with comment
period), D1, D2, E, L, and M to this final
rule with comment period. The
provisions related to the revised ASC
payment system are included in
sections XV. and XIX. through XXIII. of
this final rule with comment period and
in Addenda AA, BB, DD1, DD2, and EE
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to this final rule with comment period.
(Addendum EE is available on the
Internet only; we refer readers to section
XIX. of this final rule with comment
period.)
In this document, we also address
changes to the ASC Conditions for
Coverage (CfCs). The provisions relating
to the ASC CfCs are included in sections
XV., XIX., XX.B., and XXIII. of this
document. In addition, in this
document, we clarify policy regarding
the Secretary’s ability to terminate
Medicare providers and suppliers (in
this case, transplant centers) during an
appeal of a determination that affects
participation in the Medicare Program.
This clarification is included in section
XVIII. of this document.
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
1. Increase in Physician Payment Update
2. Extended Expiration Date for Cost-Based
OPPS Payment for Brachytherapy
Sources and Therapeutic
Radiopharmaceuticals
3. Alternative Volume Weighting in
Computation of Average Sales Price
(ASP) for Medicare Part B Drugs
4. Extended Expiration Date for Certain
IPPS Wage Index Geographic
Reclassification and Special Exceptions
F. Provisions of the Medicare
Improvements for Patients and Providers
Act of 2008
1. Improvements to Coverage of Preventive
Services
2. Extended Expiration Date for Certain
IPPS Wage Index Geographic
Reclassifications and Special Exceptions
3. Increase in Physician Payment Update
4. Extension of Expiration Date for CostBased OPPS Payment for Brachytherapy
and Therapeutic Radiopharmaceuticals
5. Extension and Expansion of the
Medicare Hold Harmless Provision
Under the OPPS for Certain Hospitals
G. Summary of the Major Contents of the
CY 2009 OPPS/ASC Proposed Rule
1. Updates Affecting OPPS Payments
2. OPPS Ambulatory Payment
Classification (APC) Group Policies
3. OPPS Payment for Devices
4. OPPS Payment for Drugs, Biologicals,
and Radiopharmaceuticals
5. Estimate of OPPS Transitional PassThrough Spending for Drugs, Biologicals,
Radiopharmaceuticals, and Devices
6. OPPS Payment for Brachytherapy
Sources
7. OPPS Payment for Drug Administration
Services
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8. OPPS Payment for Hospital Outpatient
Visits
9. Payment for Partial Hospitalization
Services
10. Procedures That Will Be Paid Only as
Inpatient Services
11. OPPS Nonrecurring Technical and
Policy Clarifications
12. OPPS Payment Status and Comment
Indicators
13. OPPS Policy and Payment
Recommendations
14. Update of the Revised Ambulatory
Surgical Center (ASC) Payment System
15. Reporting Quality Data for Annual
Payment Rate Updates
16. Healthcare-Associated Conditions
17. Regulatory Impact Analysis
H. Public Comments Received in Response
to the CY 2009 OPPS/ASC Proposed
Rule
I. Public Comments Received in Response
to the November 27, 2007 OPPS/ASC
Final Rule With Comment Period
J. Proposed Rule on ASC Conditions for
Coverage
K. Medicare Hospital Conditions of
Participation: Requirements for Approval
and Re-Approval of Transplant Programs
To Perform Transplants—Clarification of
Provider and Supplier Termination
Policy
II. Updates Affecting OPPS Payments
A. Recalibration of APC Relative Weights
1. Database Construction
a. Database Source and Methodology
b. Use of Single and Multiple Procedure
Claims
c. Calculation of CCRs
(1) Development of the CCRs
(2) Charge Compression
2. Calculation of Median Costs
a. Claims Preparations
b. Splitting Claims and Creation of
‘‘Pseudo’’ Single Claims
(1) Splitting Claims
(2) Creation of ‘‘Pseudo’’ Single Claims
c. Completion of Claim Records and
Median Cost Calculations
d. 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. Calculation of Composite APC CriteriaBased 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)
(5) Multiple Imaging Composite APCs
(APCs 8004, 8005, 8006, 8007, and 8008)
3. Calculation of OPPS Scaled Payment
Weights
4. Changes to Packaged Services
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a. Background
b. Service-Specific Packaging Issues
(1) Package Services Addressed by APC
Panel Recommendations
(2) Intravenous Immune Globulin (IVIG)
Preadministration-Related Services
(3) Other Service-Specific Packaging Issues
B. Conversion Factor Update
C. Wage Index Changes
D. Statewide Average Default CCRs
E. OPPS Payments to Certain Rural and
Other Hospitals
1. Hold Harmless Transitional Payment
Changes Made by Public Law 110–275
(MIPPA)
2. Adjustment for Rural SCHs Implemented
in CY 2006 Related to Public Law 108–
173 (MMA)
F. Hospital Outpatient Outlier Payments
1. Background
2. Outlier Calculation
3. Outlier Reconciliation
G. Calculation of an Adjusted Medicare
Payment from the National Unadjusted
Medicare Payment
H. Beneficiary Copayments
1. Background
2. Copayment Policy
3. Calculation of an Adjusted Copayment
Amount for an APC Group
III. OPPS Ambulatory Payment Classification
(APC) Group Policies
A. OPPS Treatment of New HCPCS and
CPT Codes
1. Treatment of New HCPCS Codes
Included in the April and July Quarterly
OPPS Updates for CY 2008
2. Treatment of New Category I and III CPT
Codes and Level II HCPCS Codes
B. OPPS Changes—Variations Within APCs
1. Background
2. Application of the 2 Times Rule
3. Exceptions to the 2 Times Rule
C. New Technology APCs
1. Background
2. Movement of Procedures from New
Technology APCs to Clinical APCs
D. OPPS APC-Specific Policies
1. Apheresis and Stem Cell Processing
Services
a. Low Density Lipoprotein (LDL)
Apheresis (APC 0112)
b. Bone Marrow and Stem Cell Processing
Services (APC 0393)
2. Genitourinary Procedures
a. Implant Injection for Vesicoureteral
Reflex (APC 0163)
b. Laparoscopic Ablation of Renal Mass
(APC 0132)
c. Percutaneous Renal Cryoablation (APC
0423)
d. Magnetic Resonance Guided Focused
Ultrasound (MRgFus) Ablation of
Uterine Fibroids (APC 0067)
e. Prostatic Thermotherapy (APC 0429)
3. Nervous System Procedures
a. Magnetoencephalography (MEG) (APC
0067)
b. Chemodenervation (APC 0204)
4. Ocular Procedures
a. Suprachoroidal Delivery of
Pharmacologic Agent (APC 0237)
b. Scanning Opthalmic Imaging (APC 0230)
5. Orthopedic Procedures
a. Closed Treatment Fracture of Finger/
Toe/Trunk (APCs 0129, 0138, and 0139)
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b. Arthroscopic and Other Orthopedic
Procedures (APCs 0041 and 0042)
c. Surgical Wrist Procedures (APCs 0053
and 0054)
d. Intercarpal or Carpometacarpal
Arthroplasty (APC 0047)
e. Insertion of Posterior Spinous Process
Distraction Device (APC 0052)
6. Radiation Therapy Services
a. Proton Beam Therapy (APCs 0664 and
0667)
b. Implantation of Interstitial Devices (APC
0310)
c. Stereotactic Radiosurgery (SRS)
Treatment Delivery Services (APCs 0065,
0066, and 0067)
7. Other Procedures and Services
a. Negative Pressure Wound Therapy (APC
0013)
b. Endovenous Ablation (APCs 0091 and
0092)
c. Unlisted Antigen Skin Testing (APC
0341)
d. Home International Normalized Ratio
(INR) Monitoring (APC 0607)
e. Mental Health Services (APCs 0322,
0323, 0324, and 0325)
f. Trauma Response Associated With
Hospital Critical Care Services (APC
0618)
IV. OPPS Payment for Devices
A. Pass-Through Payments for Devices
1. Expiration of Transitional Pass-Through
Payments for Certain Devices
a. Background
b. Final Policy
2. Provisions for Reducing Transitional
Pass-Through Payments To Offset Costs
Packaged Into APC Groups
a. Background
b. Final Policy
B. Adjustment to OPPS Payments for No
Cost/Full Credit and Partial Credit
Devices
1. Background
2. APCs and Devices Subject to the
Adjustment Policy
V. OPPS Payment Changes for Drugs,
Biologicals, and Radiopharmaceuticals
A. OPPS Transitional Pass-Through
Payment for Additional Costs of Drugs,
Biologicals, and Radiopharmaceuticals
1. Background
2. Drugs and Biologicals With Expiring
Pass-Through Status in CY 2008
3. Drugs, Biologicals, and
Radiopharmaceuticals With New or
Continuing Pass-Through Status in CY
2009
4. Reduction of Transitional Pass-Through
Payments for Diagnostic
Radiopharmaceuticals To Offset Costs
Packaged Into APC Groups
B. OPPS Payment for Drugs, Biologicals,
and Radiopharmaceuticals Without PassThrough Status
1. Background
2. Criteria for Packaging Drugs, Biologicals,
and Radiopharmaceuticals
a. Background
b. Drugs, Biologicals, and Therapeutic
Radiopharmaceuticals
c. Payment for Diagnostic
Radiopharmaceuticals and Contrast
Agents
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3. Payment for Drugs and Biologicals
Without Pass-Through Status That Are
Not Packaged
a. Payment for Specified Covered
Outpatient Drugs
b. Payment Policy
c. Payment for Blood Clotting Factors
4. Payment for Therapeutic
Radiopharmaceuticals
a. Background
b. Payment Policy
5. Payment for Nonpass-Through Drugs,
Biologicals, and Radiopharmaceuticals
With HCPCS Codes, but Without OPPS
Hospital Claims Data
VI. Estimate of OPPS Transitional PassThrough Spending for Drugs, Biologicals,
Radiopharmaceuticals, and Devices
A. Background
B. Estimate of Pass-Through Spending
VII. OPPS Payment for Brachytherapy
Sources
A. Background
B. OPPS Payment Policy
VIII. OPPS Payment for Drug Administration
Services
A. Background
B. Coding and Payment for Drug
Administration Services
IX. OPPS Payment for Hospital Outpatient
Visits
A. Background
B. Policies for Hospital Outpatient Visits
1. Clinic Visits: New and Established
Patient Visits
2. Emergency Department Visits
3. Visit Reporting Guidelines
X. Payment for Partial Hospitalization
Services
A. Background
B. PHP APC Update
C. Policy Changes
1. Policy to Deny Payment for Low
Intensity Days
2. Policy to Strengthen PHP Patient
Eligibility
3. Partial Hospitalization Coding Update
D. Separate Threshold for Outlier
Payments to CMHCs
XI. Procedures That Will Be Paid Only as
Inpatient Procedures
A. Background
B. Changes to the Inpatient List
XII. OPPS Nonrecurring Technical and Policy
Changes and Clarifications
A. Physician Supervision of HOPD
Services
B. Reporting of Pathology Services for
Prostrate Saturation Biopsy
C. Changes to the Initial Preventive
Physical Examination (IPPE)
D. Reporting of Wound Care Services
E. Standardized Cognitive Performance
Testing
XIII. OPPS Payment Status and Comment
Indicators
A. OPPS Payment Status Indicator
Definitions
1. Payment Status Indicators To Designate
Services That Are Paid Under the OPPS
2. Payment Status Indicators To Designate
Services That Are Paid Under a Payment
System Other Than the OPPS
3. Payment Status Indicators To Designate
Services That Are Not Recognized Under
the OPPS but That May Be Recognized
by Other Institutional Providers
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4. Payment Status Indicators To Designate
Services That Are Not Payable by
Medicare on Outpatient Claims
B. 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. Ambulatory Surgical Centers: Updates
and Revisions to the Ambulatory
Surgical Center Conditions for Coverage
and Updates to the Revised Ambulatory
Surgical Center Payment System
A. Legislative and Regulatory Authority for
the ASC Conditions for Coverage
B. Updates and Revisions to the ASC
Conditions for Coverage
1. Background
2. Provisions of the Proposed and Final
Regulations
a. Definitions (§ 416.2)
b. Specific Conditions for Coverage
(1) Condition for Coverage: Governing
Body and Management (§ 416.41)
(2) Condition for Coverage: Quality
Assessment and Performance
Improvement (QAPI) (§ 416.43)
(3) Condition for Coverage: Laboratory and
Radiologic Services (§ 416.49)
(4) Condition for Coverage: Patients Rights
(§ 416.50)
(5) Condition for Coverage: Infection
Control (§ 416.51)
(6) Condition for Coverage: Patient
Admission, Assessment and Discharge
(§ 416.52)
c. Comments Outside the Scope of the
Proposed Rule
C. Updates of the Revised ASC Payment
System
1. Legislative Authority for the ASC
Payment System
2. Prior Rulemaking
3. Policies Governing Changes to the Lists
of Codes and Payment Rates for ASC
Covered Surgical Procedures and
Covered Ancillary Services
D. Treatment of New Codes
1. Treatment of New Category I and III CPT
Codes and Level II HCPCS Codes
2. Treatment of New Level II HCPCS Codes
Implemented in April and July 2008
E. Update to the List of ASC Covered
Surgical Procedures and Covered
Ancillary Services
1. Covered Surgical Procedures
a. Additions to the List of ASC Covered
Surgical Procedures
b. Covered Surgical Procedures Designated
as Office-Based
(1) Background
(2) Changes to Covered Surgical Procedures
Designated as Office-Based for CY 2009
c. Covered Surgical Procedures Designated
as Device-Intensive
(1) Background
(2) Changes to List of Covered Surgical
Procedures Designated as DeviceIntensive for CY 2009
d. Surgical Procedures Removed from the
OPPS Inpatient List for CY 2009
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2. Covered Ancillary Services
F. ASC Payment for Covered Surgical
Procedures and Covered Ancillary
Services
1. Payment for Covered Surgical
Procedures
a. Background
b. Update to ASC Covered Surgical
Procedure Payment Rates for CY 2009
c. Adjustment to ASC Payments for No
Cost/Full Credit and Partial Credit
Devices
2. Payment for Covered Ancillary Services
a. Background
b. Payment for Covered Ancillary Services
for CY 2009
G. New Technology Intraocular Lenses
(NTIOLs)
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
4. Payment Adjustment
5. ASC Payment for Insertion of IOLs
6. Announcement of CY 2009 Deadline for
Submitting Requests for CMS Review of
Appropriateness of ASC Payment for
Insertion of an NTIOL Following
Cataract Surgery
H. ASC Payment and Comment Indicators
1. Background
2. ASC Payment and Comment Indicators
I. Calculation of the ASC Conversion
Factor and ASC Payment Rates
1. Background
2. 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 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
3. Reporting Hospital Inpatient Quality
Data for Annual Payment Update
B. Hospital Outpatient Measures for CY
2009
C. Quality Measures for CY 2010 and
Subsequent Calendar Years and the
Process To Update Measures
1. Quality Measures for CY 2010 Payment
Determinations
2. Process for Updating Measures
3. Possible New Quality Measures for CY
2011 and Subsequent Calendar Years
D. Payment Reduction for Hospitals That
Fail To Meet the HOP QDRP
Requirements for the CY 2009 Payment
Update
1. Background
2. 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
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b. Calculation of Reduced Minimum
Unadjusted and National Unadjusted
Beneficiary Copayments
c. Treatment of Other Payment
Adjustments
E. Requirements for HOPD 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. Data Validation Requirements for CY
2010
b. Alternative Data Validation Approaches
for CY 2011
F. Publication of HOP QDRP Data
G. HOP QDRP Reconsideration and
Appeals Procedures
H. Reporting of ASC Quality Data
I. FY 2010 IPPS Quality Measures under
the RHQDAPU Program
XVII. Healthcare-Associated Conditions
A. Background
B. Expanding the Principles 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 HealthcareAssociated Conditions
XVIII. Medicare Hospital Conditions of
Participation: Requirements for Approval
and Re-Approval of Transplant Programs
To Perform Transplants; Clarification of
Provider and Supplier Termination
Policy
XIX. Files Available to the Public Via the
Internet
A. Information in Addenda Related to the
CY 2009 Hospital OPPS
B. Information in Addenda Related to the
CY 2009 ASC Payment System
XX. Collection of Information Requirements
A. Legislative Requirement for Solicitation
of Comments
B. ASC Conditions for Coverage
Collections
1. Condition for Coverage—Governing
Body and Management (§ 416.41)
2. Condition for Coverage—Quality
Assessment and Performance
Improvement (§ 416.43)
3. Condition for Coverage—Patient Rights
(§ 416.50)
4. Condition for Coverage—Patient
Admission, Assessment and Discharge
(§ 416.52)
5. Revisions to the CfCs on Infection
Control in This Final Rule (§ 416.51)
C. Associated Information Collections Not
Specified in Regulatory Text
XXI. Waiver of Proposed Rulemaking
XXII. Response to Comments
XXIII. 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 Final
Rule With Comment Period
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1. Alternatives Considered
a. Alternatives Considered for Payment of
Multiple Imaging Procedures
b. Alternatives Considered for the HOP
QDRP Requirements for the CY 2009
Payment Update
c. Alternatives Considered Regarding OPPS
Cost Estimation for Relative Payment
Weights
2. Limitation of Our Analysis
3. Estimated Effects of This Final Rule
With Comment Period on Hospitals
4. Estimated Effects of This Final Rule
With Comment Period on CMHCs
5. Estimated Effects of This Final Rule
With Comment Period on Beneficiaries
6. Conclusion
7. Accounting Statement
C. Effects of ASC Payment System Changes
in This Final Rule With Comment Period
1. Alternatives Considered
a. Office-Based Procedures
b. Covered Surgical Procedures
2. Limitations of Our Analysis
3. Estimated Effects of This Final Rule
With Comment Period on ASCs
4. Estimated Effects of This Final Rule
With Comment Period on Beneficiaries
5. Conclusion
6. Accounting Statement
D. Effects of Final Requirements for
Reporting of Quality Data for Annual
Hospital Payment Update
E. Effects of ASC Conditions for Coverage
Changes in This Final Rule
1. Effects on ASCs
a. Effects of the Governing Body and
Management Provision
b. Effects of the QAPI Provision
c. Effects of the Laboratory and Radiologic
Services Provision
d. Effects of the Patient Rights Provision
e. Effects of the Infection Control Provision
f. Effects of the Patient Admission,
Assessment and Discharge Provision
2. Alternatives Considered
a. Alternatives to the Governing Body and
Management Provision
b. Alternatives to the QAPI Provision
c. Alternatives to the Patient Rights
Provision
d. Alternatives to the Discharge Provision
3. Conclusion
F. Executive Order 12866
Regulation Text
Addenda
Addendum A—OPPS APCs for CY 2009
Addendum AA—ASC Covered Surgical
Procedures for CY 2009 (Including
Surgical Procedures for Which Payment
Is Packaged)
Addendum B—OPPS Payment by HCPCS
Code for CY 2009
Addendum BB—ASC Covered Ancillary
Services Integral to Covered Surgical
Procedures for CY 2009 (Including
Ancillary Services for Which Payment Is
Packaged)
Addendum D1—OPPS Payment Status
Indicators
Addendum DD1—ASC Payment Indicators
Addendum D2—OPPS Comment Indicators
Addendum DD2—ASC Comment
Indicators
Addendum E—HCPCS Codes That Would
Be Paid Only as Inpatient Procedures for
CY 2009
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Addendum EE—Surgical Procedures
Excluded from Payment in ASCs
Addendum L—Out-Migration Adjustment
Addendum M—HCPCS Codes for
Assignment to Composite APCs for CY
2009
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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 costbased 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. The
Medicare Prescription Drug,
Improvement, and Modernization Act
(MMA) of 2003 (Pub. L. 108–173) also
amended Section 1833(t) of the Act. 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 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. We also note that the Medicare
Improvements for Patients and
Providers Act (MIPPA) of 2008 (Pub. L.
110–275), enacted on July 15, 2008,
made further changes to the OPPS. A
discussion of these changes related to
the MMSEA are included in sections
I.E., II.C., V., and VII. of this final rule
with comment period and those related
to the MIPPA are included in sections
I.F., II.C., II.E.1., V., VII., and XII.C.
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.
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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 final rule with comment period.
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 Public Law 108–173
added provisions for Medicare coverage
for 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 laborrelated 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 passthrough payments,’’ for at least 2 but not
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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 speechlanguage pathology services, for which
payment is made under a fee schedule.
Section 614 of Public Law 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 § 419.22 of the regulations.
Under § 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
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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 Public
Law 108–173 and Public Law 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,
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.
On July 18, 2008, we issued in the
Federal Register (73 FR 41416) a
proposed rule for the CY 2009 OPPS/
ASC payment system to implement
statutory requirements and changes
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arising from our continuing experience
with both systems. Subsequent to
issuance of the CY 2009 OPPS/ASC
proposed rule, we published in the
Federal Register on August 11, 2008 a
correction notice (73 FR 46575) to
replace Table 30 included the CY 2009
OPPS/ASC proposed rule.
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 final rule with comment period,
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 (currently
employed full-time, not as consultants,
in their respective areas of expertise)
subject to the OPPS, reviews clinical
data and advises CMS about the clinical
integrity of the APC groups and their
payment weights. The APC Panel is
technical in nature, and it 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 on 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_
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PaymentClassificationGroups.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 15 subsequent meetings, with
the last meeting taking place on August
27 and 28, 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.’’ As stated
in the CY 2009 OPPS/ASC proposed
rule (73 FR 41421), we are accepting
this recommendation and are referring
to the subcommittee by its new name,
as appropriate, throughout this final
rule with comment period. 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
August 2008 APC Panel meeting. At that
meeting, the Panel recommended that
the work of these three subcommittees
continue, and we are accepting that
recommendation. All subcommittee
recommendations are discussed and
voted upon by the full APC Panel.
Discussions of the recommendations
resulting from the APC Panel’s March
and August 2008 meetings are included
in the sections of this final rule that are
specific to each recommendation. For
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discussions of earlier APC Panel
meetings and recommendations, we
refer readers to previously published
hospital OPPS final rules, the Web site
mentioned earlier in this section, or the
FACA database at https://fido.gov/
facadatabase/public.asp.
During the comment period for the CY
2009 OPPS/ASC proposed rule, we
received several public comments
regarding representation on the APC
Panel.
Comment: Several commenters
requested that CMS include a
designated ASC representative on the
APC Panel. The commenters believed
that, because the ASC payment system
is based on the same APC groups and
relative payment weights as the OPPS,
ASC representation on the APC Panel
would ensure input from
representatives of all the care settings
providing surgical services whose
payment groups and payment weights
are affected by the OPPS.
Response: We acknowledge that the
revised ASC payment system provides
Medicare payment to ASCs for surgical
procedures that is based, in most cases,
on the relative payment weights of the
OPPS. However, CMS is statutorily
required to have an appropriate
selection of representatives of
‘‘providers’’ as members of the APC
Panel.
Specifically, the current APC Panel
charter requires that ‘‘Each Panel
member must be employed full-time by
a hospital, hospital system, or other
Medicare provider subject to payment
under the OPPS,’’ which does not
include ASCs because ASCs are not
providers. We refer readers to section
1833(t)(9)(A) of the Act and § 400.202 of
our regulations for specific requirements
and definitions. The charter must
comply with the statute, which does not
include representatives of suppliers on
the APC Panel. However, we understand
the concerns of commenters regarding
their interest in ASC input on the APC
Panel now that the ASC payment system
is based on the OPPS relative payment
weights.
through June 30, 2008; revised the
Physician Assistance and Quality
Initiative Fund, and extended through
2009 the physician quality reporting
system. We refer readers to section XV.
of this final rule with comment period
for discussion of the effect of this
provision on services paid under the
revised ASC payment system.
F. Provisions of the Medicare
Improvements for Patients and
Providers Act of 2008
The Medicare, Improvements for
Patients and Providers Act (MIPPA) of
2008 (Pub. L. 110–275), enacted on July
15, 2008, includes the following
provisions that affect the OPPS and the
revised ASC payment system:
2. Extended Expiration Date for CostBased OPPS Payment for Brachytherapy
Sources and Therapeutic
Radiopharmaceuticals
1. Improvements to Coverage of
Preventive Services
Section 101(b) of the MIPPA amended
section 1861 of the Act, as amended by
section 114 of the MMSEA, to make
several changes to the Initial Preventive
Physical Examination (IPPE) benefit,
including waiving the deductible and
extending the period of eligibility for an
IPPE from 6 months to 12 months after
the date of the beneficiary’s initial
enrollment in Medicare Part B. Section
101(b) of the MIPPA also removed the
screening electrocardiagram (EKG) as a
mandatory requirement that is part of
the IPPE and required that there be
education, counseling, and referral for
an EKG, as appropriate, for a once-in-alifetime screening EKG performed as a
result of a referral from an IPPE. The
facility service for the screening EKG
(tracing only) is payable under the OPPS
when it is the result of a referral from
an IPPE. The amendments apply to
services furnished on or after January 1,
2009. We refer readers to section XII.C.
of this final rule for discussion of the
HCPCS codes to be used for the IPPE
and screening EKG and the OPPS
payment rates for services under this
provision for CY 2009.
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, includes the following provisions
that affect the OPPS and the revised
ASC payment system:
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). We refer
readers to section II.C. of this final rule
with comment for discussion of this
provision. We also note that section 124
of Public Law 110–275 further extended
this provision through September 30,
2009, as discussed under section I.F.2.
of this final rule with comment period.
1. Increase in Physician Payment
Update
Section 101 of the MMSEA provided
a 0.5 percent increase in the physician
payment update from January 1, 2008
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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.B.4. and VII.
of this final rule with comment period
for discussion of this provision. We also
note that section 142 of Public Law 110–
275 further extended this provision, as
discussed in section I.F.4. of this final
rule with comment period.
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) of the Act to provide
for application of alternative volume
weighting in computing the ASP for
payment of Medicare 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 final rule with
comment period.
4. Extended Expiration Date for Certain
IPPS Wage Index Geographic
Reclassifications and Special Exceptions
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2. Extended Expiration Date for Certain
IPPS Wage Index Geographic
Reclassifications and Special Exceptions
Section 124 of the MIPPA extended
through September 30, 2009 the hospital
wage index reclassifications for
hospitals reclassified under section 508
of the MMA. MIPPA also extended
through the last date of the extension of
the reclassifications under section
106(a) of the MIEA–TRHCA certain
special exception wage indices
referenced in the FY 2005 IPPS final
rule (69 FR 49105 and 49107) and that
were extended by section 117(a)(2) of
the MMSEA. We refer readers to section
II.C. of this final rule with comment
period for discussion of this provision.
3. Increase in Physician Payment
Update
Section 131 of MIPPA increased the
conversion factor by 1.1 percent for CY
2009 and required that CY 2008 and CY
2009 payment updates have no effect on
payment rates for CY 2010 and
subsequent years under the MPFS. We
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refer readers to section XV.F. of this
final rule with comment period for
discussion of the effect of this provision
on payment for covered office-based
surgical procedures and covered
ancillary services paid under the ASC
payment system.
4. Extension of Expiration Date for CostBased OPPS Payment for Brachytherapy
and Therapeutic Radiopharmaceuticals
Section 142 of the MIPPA amended
section 1833(t)(16)(C) of the Act, as
amended by section 106(a) of the
MMSEA, and further extended the
payment period for brachytherapy
devices sources and therapeutic
radiopharmaceuticals based on
hospital’s charges adjusted to cost
through December 31, 2009. We refer
readers to sections V.B.4. and VII. of this
final rule with comment period for
discussions of this provision. We also
refer readers to section XV.F. of this
final rule with comment period for
discussion of the effect of this provision
on covered ancillary services paid under
the ASC payment system.
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5. Extension and Expansion of the
Medicare Hold Harmless Provision
Under the OPPS for Certain Hospitals
Section 147 of the MIPPA amended
section 1833(t)(7)(D)(i) of the Act by
extending the hold harmless payments
(85 percent of the difference between
the prospective payment system amount
under the OPPS and the pre-BBA
amount) for covered OPD services
furnished by rural hospitals with 100
beds or less through December 31, 2009.
It also expanded the same hold harmless
payments to SCHs with 100 beds or
fewer for covered OPD services
furnished on or after January 1, 2009,
and before January 1, 2010. We refer
readers to section II.E. of this final rule
with comment period for discussion of
this provision.
G. Summary of the Major Contents of
the CY 2009 OPPS/ASC Proposed Rule
A proposed rule appeared in the July
18, 2008 Federal Register (73 FR 41416)
that set forth proposed changes to the
Medicare hospital OPPS for CY 2009 to
implement statutory requirements and
changes arising from our continuing
experience with the system and to
implement certain new statutory
provisions. In addition, we proposed
changes to the revised Medicare ASC
payment system for CY 2009, including
updated payment weights and covered
ancillary services based on the proposed
OPPS update. Finally, we set forth
proposed quality measures for the
Hospital Outpatient Quality Data
Reporting Program (HOP QDRP) for
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reporting quality data for annual
payment rate updates for CY 2010 and
subsequent calendar years, the
requirements for data collection and
submission for the annual payment
update, and a proposed reduction in the
OPPS payment for hospitals that fail to
meet the HOP QDRP requirements for
CY 2009, in accordance with the
statutory requirement. The following is
a summary of the major changes
included in the CY 2009 OPPS/ASC
proposed rule:
1. Updates Affecting OPPS Payments
In section II. of the 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. OPPS Ambulatory Payment
Classification (APC) Group Policies
In section III. of the proposed rule, we
discussed 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 discussed the application of the 2
times rule and proposed exceptions to
it; proposed changes to specific APCs;
and proposed movement of procedures
from New Technology APCs to clinical
APCs.
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3. OPPS Payment for Devices
In section IV. of the proposed rule, we
discussed 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. OPPS Payment Changes for Drugs,
Biologicals, and Radiopharmaceuticals
In section V. of the proposed rule, we
discussed 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. Estimate of OPPS Transitional PassThrough Spending for Drugs,
Biologicals, Radiopharmaceuticals, and
Devices
In section VI. of the proposed rule, we
discussed the estimate of CY 2009 OPPS
transitional pass-through spending for
drugs, biologicals, and devices.
6. OPPS Payment for Brachytherapy
Sources
In section VII. of the proposed rule,
we discussed our proposal concerning
coding and payment for brachytherapy
sources.
7. OPPS Payment for Drug
Administration Services
In section VIII. of the proposed rule,
we set forth our proposed policy
concerning payment and coding for
drug administration services.
8. OPPS Payment for Hospital
Outpatient Visits
In section IX. of the 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. Payment for Partial Hospitalization
Services
In section X. of the proposed rule, we
set forth our proposed payment for
partial hospitalization services,
including the proposed separate
threshold for outlier payments for
CMHCs.
10. Procedures That Will Be Paid Only
as Inpatient Procedures
In section XI. of the proposed rule, we
discussed the procedures that we
proposed to remove from the inpatient
list and assign to APCs.
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11. OPPS Nonrecurring Technical and
Policy Clarifications
In section XII. of the proposed rule,
we set forth our nonrecurring technical
issues and policy clarifications.
12. OPPS Payment Status and Comment
Indicators
In section XIII. of the proposed rule,
we discussed our proposed changes to
the definitions of status indicators
assigned to APCs and presented our
proposed comment indicators for the
final rule with comment period.
13. OPPS Policy and Payment
Recommendations
In section XIV. of the proposed rule,
we addressed 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. Update of the Revised Ambulatory
Surgical Center Payment System
In section XV. of the proposed rule,
we discussed the proposed update of
the revised ASC payment system
payment rates for CY 2009.
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15. Reporting of Hospital Outpatient
Quality Data for Annual Hospital
Payment Rate Updates and CY 2009
Payment Reduction
In section XVI. of the proposed rule,
we discussed the proposed quality
measures for reporting hospital
outpatient quality data for the annual
payment update factor for CY 2010 and
subsequent calendar years, set forth the
requirements for data collection and
submission for the annual payment
update, and proposed 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 the proposed rule,
we discussed 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 the proposed rule,
we set forth an analysis of the impact
the proposed changes would have on
affected entities and beneficiaries.
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H. Public Comments Received in
Response to the CY 2009 OPPS/ASC
Proposed Rule
We received approximately 2,390
timely pieces of correspondence
containing multiple comments on the
CY 2009 OPPS/ASC proposed rule. We
note that we received some comments
that were outside the scope of the CY
2009 OPPS/ASC proposed rule,
including public comments on new CY
2009 HCPCS codes that were not
presented in the CY 2009 OPPS/ASC
proposed rule. These comments are not
addressed in this CY 2009 OPPS/ASC
final rule with comment period. New
CY 2009 HCPCS codes are designated
with comment indicator ‘‘NI’’ in
Addenda B, AA, and BB to this final
rule with comment period, to signify
that their CY 2009 interim OPPS and/or
ASC treatment is open to public
comment on this final rule with
comment period. Summaries of the
public comments that are within the
scope of the proposals and our
responses to those comments are set
forth in the various sections of this final
rule with comment period under the
appropriate headings.
68511
We received 30 timely items of
correspondence on this proposed rule.
We present a summary of the provisions
of the proposed rule, a summary of the
public comments received and our
responses, and the final policy
provisions in section XV.B. of the
preamble of this document. (Hereinafter,
we refer to this proposed rule as the
2007 ASC CfCs proposed rule.)
K. Medicare Hospital Conditions of
Participation: Requirements for
Approval and Re-Approval of
Transplant Programs To Perform
Transplants—Clarification of Provider
and Supplier Termination Policy
In section XVIII. of this document, we
are clarifying policy set forth in
responses to public comments on a
March 30, 2007 final rule (72 FR 15198)
regarding the Secretary’s ability to
terminate Medicare providers and
suppliers (in this case, transplant
centers) during an appeal of a
determination that affects participation
in the Medicare program.
II. Updates Affecting OPPS Payments
A. Recalibration of APC Relative
Weights
I. Public Comments Received on the
November 27, 2007 OPPS/ASC Final
Rule With Comment Period
1. Database Construction
We received approximately 507
timely items of correspondence on the
CY 2008 OPPS/ASC final rule with
comment period, some of which
contained multiple comments on the
interim APC assignments and/or status
indicators of HCPCS codes identified
with comment indicator ‘‘NI’’ in
Addendum B to that final rule with
comment period. Summaries of those
public comments on topics open to
comment in the CY 2008 OPPS/ASC
final rule with comment period and our
responses to them are set forth in the
various sections of this final rule with
comment period under the appropriate
headings.
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.
For CY 2009, we proposed 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 proposed
to recalibrate the relative payment
weights for each APC based on claims
and cost report data for outpatient
services. We proposed to use the most
recent available data to construct the
database for calculating APC group
weights. Therefore, for the purpose of
recalibrating the final APC relative
payment weights for CY 2009, we used
approximately 140 million final action
J. Proposed Rule on ASC Conditions for
Coverage
On August 31, 2007, we published in
the Federal Register (72 FR 50470) a
proposed rule to update the ASC
Conditions for Coverage (CfCs) by
revising some of the definitions and
revising the CfCs on governing body and
management and laboratory and
radiologic services to reflect current
ASC practices; and to add several new
CfCs on quality assessment and
performance improvement, patient
rights, and patient admission,
assessment, and discharge to promote
and protect patient health and safety.
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a. Database Source and Methodology
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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 final
rule with comment period on the CMS
Web site at: https://www.cms.hhs.gov/
HospitalOutpatientPPS/HORD/.)
Of the 140 million final action claims
for services provided in hospital
outpatient settings used to calculate the
CY 2009 OPPS payment rates for this
final rule with comment period,
approximately 107 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 107 million claims,
approximately 49 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). From the remaining 58
million claims, we created
approximately 99 million single records,
of which approximately 67 million were
‘‘pseudo’’ single claims (created from 26
million multiple procedure claims using
the process we discuss later in this
section). Approximately 617,000 claims
trimmed out on cost or units in excess
of + /¥3 standard deviations from the
geometric mean, yielding approximately
99 million single bills for median
setting. This number of ‘‘pseudo’’ and
‘‘natural’’ single bills is comparable to
the 97 million single bills that we used
in the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66589). In
prior rules, we have reported the
percentage of claims that we were able
to use to estimate APC median costs.
However, our refinement to the bypass
process to accommodate the multiple
imaging composite methodology
described in section II.A.2.e.(5) of this
final rule with comment period
currently prevents us from providing an
accurate percentage. Because our
refinement increased the number of
‘‘pseudo’’ single bills, we are confident
that we are using a high percentage of
claims to estimate the final CY 2009
APC median costs. We provide greater
detail on this refinement in our claims
accounting narrative for this final rule
with comment period that is posted on
the CMS Web site.
As proposed, the APC relative weights
and payments for CY 2009 in Addenda
A and B to this final rule with comment
period were calculated using claims
from CY 2007 that were processed on or
before June 30, 2008, and continue to be
based on the median hospital costs for
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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
proposed to convert to relative payment
weights for purposes of calculating the
CY 2009 payment rates.
We did not receive any public
comments on our proposal to base the
CY 2009 APC relative weights on the
most currently available cost reports
and on claims for services furnished in
CY 2007. Therefore, for this reason and
the reasons noted above in this section,
we are finalizing our data source for the
recalibration of the CY 2009 APC
relative payment weights as proposed,
without modification, as described in
this section of this final rule with
comment period.
b. Use of Single and Multiple Procedure
Claims
For CY 2009, in general, we proposed
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 (73 FR 41423). We
generally use single procedure claims to
set the median costs for APCs because
we believe that the OPPS relative
weights on which payment rates are
based should 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
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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 the
first 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 final rule with comment period for
discussion of the use of claims to
establish median costs for composite
APCs.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41423), we proposed to
continue to apply these processes to
enable us to use as much claims data as
possible for ratesetting for the CY 2009
OPPS. This process enabled us to create,
for this final rule with comment period,
approximately 67 million ‘‘pseudo’’
single claims, including multiple
imaging composite ‘‘single session’’ bills
(we refer readers to section II.A.2.e.(5) of
this final rule with comment period for
further discussion), and approximately
32 million ‘‘natural’’ single bills. For
this final rule with comment period,
‘‘pseudo’’ single procedure bills
represent 68 percent of all single bills
used to calculate median costs.
In the CY 2009 OPPS/ASC proposed
rule (73FR 41424 through 41429), we
proposed to bypass 452 HCPCS codes
for CY 2009 that were identified in
Table 1 of the proposed rule. We
proposed 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) was open to public comment. We
removed two HCPCS codes from the CY
2008 bypass list for the 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
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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 proposed to add to the bypass list
all HCPCS codes not on the CY 2008
bypass list that, using the APC Panel
data, met the same previously
established empirical criteria for the
bypass list that are summarized below.
We assumed that the representation of
packaging in the single claims for any
given code was comparable to packaging
for that code in the multiple claims. The
proposed criteria for the bypass list
were:
• 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 proposed to continue
to include on 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. Some of these codes
were identified by CMS medical
advisors and some were identified in
prior years by commenters with
specialized knowledge of the services
they requested be added to the bypass
list. To ensure clinical consistency in
our treatment of related services, we
also proposed to add the other CPT addon 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 enabled 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
was that the packaged costs associated
with add-on drug administration
services were packaged into payment for
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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 also proposed to add HCPCS code
G0390 (Trauma response team
activation associated with hospital
critical care service) because we thought
it was 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 had
not added HCPCS code G0390 to the
bypass list, we would have had 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
had any properly coded ‘‘natural’’ single
bills for HCPCS code G0390. Including
HCPCS code G0390 on the bypass list
allowed 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 were 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 could not assess whether
HCPCS code G0390 would meet the
empirical criteria for inclusion on the
bypass list because we had no ‘‘natural’’
single claims for HCPCS code G0390.
As a result of the multiple imaging
composite APCs that we proposed to
establish for CY 2009 as discussed in
section II.A.2.e.(5) of this final rule with
comment period, we noted that 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, were
identified first. These HCPCS codes
were 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’’ were 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. For this final
rule with comment period, we then
reassessed the claims without
suppression of the ‘‘overlap bypass
codes’’ under our longstanding
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68513
‘‘pseudo’’ single process to determine
whether we could convert additional
claims to ‘‘pseudo’’ single claims. (We
refer readers to section II.A.2.c. of this
final rule with comment period for
further discussion of the treatment of
‘‘overlap bypass codes.’’) This process
also created multiple imaging composite
‘‘single session’’ bills that could be used
for calculating composite APC median
costs. ‘‘Overlap bypass codes’’ that
would be members of the proposed
multiple imaging composite APCs were
identified by asterisks (*) in Table 1 of
the CY 2009 OPPS/ASC proposed rule.
Table 1 published in the CY 2009
OPPS/ASC proposed rule included the
proposed list of bypass codes for CY
2009. As noted in that proposed rule (73
FR 41424 through 41429), that list
contained bypass codes that were
appropriate to claims for services in CY
2007 and, therefore, included codes that
were deleted for CY 2008. Moreover,
there were codes on the proposed
bypass list that were new for CY 2008
and which we indicated were
appropriate additions to the bypass list
in preparation for use of the CY 2008
claims for creation of the CY 2010
OPPS. We specifically requested public
comment on the proposed CY 2009
bypass list.
Comment: Several commenters
indicated that review of the CY 2007
claims data on which the CY 2009
proposed OPPS was based revealed that
fewer than 10 percent of the billed lines
for radiation oncology guidance codes
were used in setting the proposed CY
2009 OPPS payment rates. They also
asserted that more than a third of the
billed lines for Image Guided Radiation
Therapy (IGRT) services were being
packaged into the single bills for
services that are totally unrelated to
radiation oncology services, such as
clinic visits. They believed that this
misassignment may have occurred in
part as a result of the inclusion of
radiation oncology services on the
bypass list.
Response: We examined the
combinations of codes that occurred on
claims that contained guidance codes
for radiation oncology services,
specifically CPT codes 76950
(Ultrasonic guidance for placement of
radiation therapy fields); 76965
(Ultrasonic guidance for interstitial
radioelement application); 77014
(Computed tomography guidance for
placement of radiation therapy fields);
77417 (Therapeutic radiology port
film(s)); and 77421 (Stereoscopic X-ray
guidance for localization of target
volume for the delivery of radiation
therapy), in our proposed rule data. We
found that, on some claims, the costs of
E:\FR\FM\18NOR2.SGM
18NOR2
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68514
Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations
image guidance for radiation therapy
services were being packaged into the
costs of other services such as visits, or
were not available to be correctly
packaged. Therefore, those costs were
not being appropriately packaged into
the radiation oncology services to which
they were incidental and supportive.
Our analysis indicated that the
inclusion of radiation oncology codes
that failed to meet the empirical criteria
for inclusion of the codes on the bypass
list was the most likely source of the
problem. We were unable to ensure that
the radiation oncology codes that failed
the empirical criteria could be retained
on the bypass list with confidence that
they would not result in incorrect or
missing packaging for guidance services.
We therefore removed from the
proposed CY 2009 bypass list all codes
in the radiation oncology series of CPT,
specifically ranging from CPT code
77261 (Therapeutic radiology treatment
planning; simple) through and
including CPT code 77799 (Unlisted
procedure, clinical brachytherapy), that
did not meet the empirical criteria for
inclusion on the bypass list based on CY
2009 proposed rule data. We had added
many of these codes to the bypass list
after reviewing and accepting the
recommendations of several
commenters to past OPPS proposed
rules who believed that the codes were
appropriate for inclusion on the bypass
list (71 FR 67970 and 72 FR 66591),
although they failed to meet the
empirical criteria for inclusion on the
bypass list.
Removing these codes from the
bypass list for the CY 2009 OPPS
resulted in a reduction of approximately
1 million ‘‘pseudo’’ single procedure
claims but we believe that it resulted in
more appropriate assignment of
packaged costs. In some cases, the
removal of these codes from the bypass
list increased the median costs of APCs
to which radiation oncology services are
assigned (for example, APC 0412 (IMRT
Treatment Delivery) and APC 0304
(Level I Therapeutic Radiation
Treatment Preparation)) and in other
cases it reduced the ‘‘pseudo’’ single
bills that were available to be used to set
median costs and led to decreases in
medians that were calculated using the
smaller set of single procedure claims
(for example, APC 8001 (LDR Prostate
Brachytherapy Composite)).
On balance, we believe that removing
these codes from the bypass list is the
most appropriate approach for this final
rule with comment period to ensure that
packaged costs are correctly captured in
ratesetting. Although we have removed
all codes in the radiation oncology
series that do not meet the empirical
VerDate Aug<31>2005
15:50 Nov 17, 2008
Jkt 217001
criteria for inclusion on the bypass list
for this CY 2009 final rule with public
comment period, we will continue to
examine the claims data for these codes,
and particularly for the APCs for which
the number of usable claims declined.
We hope to determine if there are
specific codes in the radiation oncology
series that do not meet the empirical
bypass list criteria but which could be
safely added back to the bypass list
without resulting in inappropriate
packaging, in order to enable the use of
more claims data for radiation oncology
services.
Comment: One commenter expressed
support for the ratesetting methodology
using single and ‘‘pseudo’’ single claims
and recommended that CMS continue to
use methodologies that improve the
overall accuracy of the cost estimate
calculations.
Response: We appreciate the
commenter’s support. We will continue
to use our established methodologies
and continue to evaluate additional
refinements and improvements to our
methodologies, with the goal of
achieving appropriate and accurate
estimates of the costs of services in the
HOPD.
Comment: One commenter supported
inclusion of HCPCS code G0340 (Imageguided robotic linear accelerator-based
stereotactic radiosurgery, delivery
including collimator changes and
custom plugging, fractionated treatment,
all lesion, per session, second through
fifth session, maximum) on the bypass
list.
Response: We appreciate the
commenter’s support and have
continued to include HCPCS code
G0340 on the CY 2009 bypass list.
Comment: One commenter requested
clarification regarding the standards by
which codes are added to the bypass
list, believing that CMS’ proposal to
include HCPCS code G0390 on the
bypass list would affect the billing of
the code.
Response: The purpose of the bypass
list is to isolate resource costs associated
with an individual service through
identifying the costs of HCPCS codes
with little or no packaging and using
that cost data to create ‘‘pseudo’’ single
claims. The remaining costs of other
services on the claim are then evaluated
to determine if the claim qualifies as a
single bill that can be used for
ratesetting. The use of empirical criteria
and clinical assessment ensure that
there is minimal and infrequent
packaging associated with services on
the bypass list, making additional
‘‘pseudo’’ single claims for the bypass
services available for ratesetting and
potentially making the claims with the
PO 00000
Frm 00014
Fmt 4701
Sfmt 4700
bypass code’s costs removed
appropriate for ratesetting for other
services on the same claim. In the case
of HCPCS code G0390 and CPT code
99291, as described above, inclusion of
HCPCS code G0390 on the bypass list
allows us to develop more accurate
estimates of the median costs of CPT
code 99291 and HCPCS code G0390
than otherwise would be possible.
However, the bypass list is only used for
data purposes and has no effect on how
hospitals report services on claims. We
fully expect hospitals to continue
reporting HCPCS code G0390 when a
critical care visit qualifies for trauma
activation, in accordance with our
instructions in the Medicare Claims
Processing Manual, Pub. 100–04,
Chapter 4, Section 160.1.
Comment: One commenter
recommended that CPT code 90768
(Intravenous infusion, for therapy,
prophylaxis, or diagnosis (specify
substance or drug): Concurrent infusion
(List separately in addition to code for
primary procedure)) be included on the
bypass list in order to ensure
consistency with the treatment of other
drug administration codes.
Response: We have not added CPT
code 90768 to the bypass list because
our CY 2009 policy unconditionally
packages payment for this service and,
therefore, it is not a candidate for the
bypass list. The purpose of the bypass
list is to develop ‘‘pseudo’’ single claims
so that there are more data available to
determine the median costs of
separately payable services for
ratesetting purposes. Including
packaged codes would be contrary to
the purpose of the bypass list. For
further discussion of packaged payment
in CY 2009 for CPT code 90768, we refer
readers to section VIII.B. of this final
rule with comment period.
Comment: One commenter suggested
that CMS claims data for CY 2007
showed a number of guidance and
radiological supervision and
interpretation ‘‘dependent’’ HCPCS
codes are not on claims with paid
procedures in many cases, due in part
to the interaction with the bypass list,
and therefore, their costs are not used in
ratesetting. They urged CMS to ensure
that the packaging and composite
methodologies are meeting the goals of
capturing accurate multiple claims data.
Response: The empirical criteria
through which most codes are added to
the bypass list are set to limit bypass
codes to those codes which seldom have
packaging, and when packaging exists,
ensure limited packaging associated
with the code. This is to ensure that any
remaining packaging left after removal
of the bypass codes would be minimal
E:\FR\FM\18NOR2.SGM
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Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations
and uncommon. As discussed above in
response to the comment on image
guidance for radiation oncology
services, we have made some changes to
the final CY 2009 bypass list to remove
certain radiation oncology codes from
the bypass list that do not meet the
empirical criteria. Those bypass list
changes ensure that the packaged costs
of image guidance services for radiation
therapy are not lost or misdirected to
payment for other unrelated services.
Furthermore, we have reviewed the
other guidance HCPCS codes that are
unconditionally packaged under the CY
2009 OPPS, and we do not believe that
there are other HCPCS codes included
on the bypass list that fail to meet the
empirical criteria and to which the
packaged costs of these other guidance
services would be appropriately
assigned. Thus, we do not believe that
other changes to the bypass list to
appropriately capture and assign the
costs of other guidance services are
necessary.
With regard to the radiological
supervision and interpretation HCPCS
codes, these codes are conditionally
packaged codes assigned status
indicator ‘‘Q2’’ (‘‘T-packaged’’) to reflect
that their payment would be packaged
when one or more surgical procedures
(status indicator ‘‘T’’) are provided on
the same day, but otherwise they would
be separately paid. The determination of
packaged versus separately payable
status is made for radiological
supervision and interpretation codes
prior to application of the bypass list to
develop ‘‘pseudo’’ single claims. Of
note, there are only 22 ‘‘T’’ status codes
on the bypass list, out of a total of 424
final bypass codes, and many of the ‘‘T’’
status codes on the bypass list are minor
skin treatment procedures. Most of these
‘‘T’’ status procedures currently meet
the empirical criteria for inclusion on
the bypass list, so we do not believe that
radiological supervision and
interpretation services generally appear
on claims with only those ‘‘T’’ status
procedures or would be appropriately
packaged with those procedures.
Therefore, we continue to believe that
the costs of packaged radiological
supervision and interpretation services
are being appropriately captured for
purposes of ratesetting, and those costs
are not being lost or misassigned due to
an interaction with the bypass list.
After consideration of the public
comments received, we are adopting, as
final, the proposed ‘‘pseudo’’ single
claims process and the final CY 2009
bypass list of 424 HCPCS codes, as
displayed in Table 1 below. This list has
been modified from the CY 2009
proposed list, with the removal of
VerDate Aug<31>2005
15:50 Nov 17, 2008
Jkt 217001
certain HCPCS codes as discussed above
in this section.
TABLE 1—FINAL CY 2009 BYPASS
CODES FOR CREATING ‘‘PSEUDO’’
SINGLE CLAIMS FOR CALCULATING
MEDIAN COSTS
HCPCS
code
0144T
11056
11057
11300
11301
11719
11720
11721
11954
17000
17003
29220
31231
31579
51798
53661
54240
56820
57150
67820
69210
69220
70030
70100
70110
70120
70130
70140
70150
70160
70200
70210
70220
70250
70260
70328
70330
70336
PO 00000
Short descriptor
CT heart w/o dye;
qual calc.
Trim skin lesions, 2 to
4.
Trim skin lesions,
over 4.
Shave skin lesion ......
Shave skin lesion ......
Trim nail(s) ................
Debride nail, 1–5 ......
Debride nail, 6 or
more.
Therapy for contour
defects.
Destruct premalg lesion.
Destruct premalg les,
2–14.
Strapping of low back
Nasal endoscopy, dx
Diagnostic laryngoscopy.
Us urine capacity
measure.
Dilation of urethra .....
Penis study ...............
Exam of vulva w/
scope.
Treat vagina infection
Revise eyelashes ......
Remove impacted ear
wax.
Clean out mastoid
cavity.
X-ray eye for foreign
body.
X-ray exam of jaw .....
X-ray exam of jaw .....
X-ray exam of mastoids.
X-ray exam of mastoids.
X-ray exam of facial
bones.
X-ray exam of facial
bones.
X-ray exam of nasal
bones.
X-ray exam of eye
sockets.
X-ray exam of sinuses.
X-ray exam of sinuses.
X-ray exam of skull ...
X-ray exam of skull ...
X-ray exam of jaw
joint.
X-ray exam of jaw
joints.
Magnetic image, jaw
joint.
Frm 00015
Fmt 4701
Sfmt 4700
‘‘Overlap
bypass
codes’’
TABLE 1—FINAL CY 2009 BYPASS
CODES FOR CREATING ‘‘PSEUDO’’
SINGLE CLAIMS FOR CALCULATING
MEDIAN COSTS—Continued
HCPCS
code
70355
..................
70360
70370
..................
70371
..................
70450
70480
..................
..................
..................
..................
..................
70486
70490
70544
..................
..................
..................
..................
..................
..................
68515
70551
71010
71015
71020
71021
71022
71023
..................
71030
71034
..................
..................
..................
71035
71100
71101
..................
..................
..................
71110
71111
71120
..................
71130
..................
..................
..................
..................
71250
72010
72020
72040
..................
72050
..................
72052
..................
72069
..................
72070
..................
72072
..................
72074
..................
72080
..................
..................
..................
72090
..................
72110
*
72114
72100
E:\FR\FM\18NOR2.SGM
Short descriptor
Panoramic x-ray of
jaws.
X-ray exam of neck ..
Throat x-ray & fluoroscopy.
Speech evaluation,
complex.
Ct head/brain w/o dye
Ct orbit/ear/fossa w/o
dye.
Ct maxillofacial w/o
dye.
Ct soft tissue neck w/
o dye.
Mr angiography head
w/o dye.
Mri brain w/o dye ......
Chest x-ray ...............
Chest x-ray ...............
Chest x-ray ...............
Chest x-ray ...............
Chest x-ray ...............
Chest x-ray and fluoroscopy.
Chest x-ray ...............
Chest x-ray and fluoroscopy.
Chest x-ray ...............
X-ray exam of ribs ....
X-ray exam of ribs/
chest.
X-ray exam of ribs ....
X-ray exam of ribs/
chest.
X-ray exam of breastbone.
X-ray exam of breastbone.
Ct thorax w/o dye .....
X-ray exam of spine
X-ray exam of spine
X-ray exam of neck
spine.
X-ray exam of neck
spine.
X-ray exam of neck
spine.
X-ray exam of trunk
spine.
X-ray exam of thoracic spine.
X-ray exam of thoracic spine.
X-ray exam of thoracic spine.
X-ray exam of trunk
spine.
X-ray exam of trunk
spine.
X-ray exam of lower
spine.
X-ray exam of lower
spine.
X-ray exam of lower
spine.
18NOR2
‘‘Overlap
bypass
codes’’
..................
..................
..................
..................
*
*
*
*
*
*
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
*
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
68516
Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations
TABLE 1—FINAL CY 2009 BYPASS
CODES FOR CREATING ‘‘PSEUDO’’
SINGLE CLAIMS FOR CALCULATING
MEDIAN COSTS—Continued
HCPCS
code
72120
72125
72128
72131
72141
72146
72148
72170
72190
72192
72202
72220
73000
73010
73020
73030
73050
73060
73070
73080
73090
73100
73110
73120
73130
73140
73200
73218
73221
73510
73520
73540
73550
73560
dwashington3 on PRODPC61 with RULES2
73562
73564
73565
73590
73600
73610
73620
‘‘Overlap
bypass
codes’’
Short descriptor
X-ray exam of lower
spine.
Ct neck spine w/o
dye.
Ct chest spine w/o
dye.
Ct lumbar spine w/o
dye.
Mri neck spine w/o
dye.
Mri chest spine w/o
dye.
Mri lumbar spine w/o
dye.
X-ray exam of pelvis
X-ray exam of pelvis
Ct pelvis w/o dye ......
X-ray exam sacroiliac
joints.
X-ray exam of
tailbone.
X-ray exam of collar
bone.
X-ray exam of shoulder blade.
X-ray exam of shoulder.
X-ray exam of shoulder.
X-ray exam of shoulders.
X-ray exam of humerus.
X-ray exam of elbow
X-ray exam of elbow
X-ray exam of forearm.
X-ray exam of wrist ...
X-ray exam of wrist ...
X-ray exam of hand ..
X-ray exam of hand ..
X-ray exam of finger(s).
Ct upper extremity w/
o dye.
Mri upper extremity
w/o dye.
Mri joint upr extrem
w/o dye.
X-ray exam of hip .....
X-ray exam of hips ...
X-ray exam of pelvis
& hips.
X-ray exam of thigh ..
X-ray exam of knee,
1 or 2.
X-ray exam of knee,
3.
X-ray exam, knee, 4
or more.
X-ray exam of knees
X-ray exam of lower
leg.
X-ray exam of ankle
X-ray exam of ankle
X-ray exam of foot ....
VerDate Aug<31>2005
15:50 Nov 17, 2008
..................
*
TABLE 1—FINAL CY 2009 BYPASS
CODES FOR CREATING ‘‘PSEUDO’’
SINGLE CLAIMS FOR CALCULATING
MEDIAN COSTS—Continued
HCPCS
code
73630
73650
73660
73700
*
73718
*
73721
*
74000
*
74010
*
..................
..................
*
..................
..................
..................
..................
74020
74022
74150
74210
74220
74230
..................
74246
..................
74247
..................
74249
..................
76100
..................
..................
..................
76510
..................
..................
..................
..................
..................
76512
*
76516
76519
76536
*
76511
76513
76514
76645
76700
*
..................
..................
..................
76705
76770
..................
..................
76775
..................
76776
..................
76801
..................
..................
76805
76811
..................
..................
..................
Jkt 217001
76816
PO 00000
Short descriptor
X-ray exam of foot ....
X-ray exam of heel ...
X-ray exam of toe(s)
Ct lower extremity w/
o dye.
Mri lower extremity w/
o dye.
Mri jnt of lwr extre w/
o dye.
X-ray exam of abdomen.
X-ray exam of abdomen.
X-ray exam of abdomen.
X-ray exam series,
abdomen.
Ct abdomen w/o dye
Contrst x-ray exam of
throat.
Contrast x-ray,
esophagus.
Cine/vid x-ray, throat/
esoph.
Contrst x-ray uppr gi
tract.
Contrst x-ray uppr gi
tract.
Contrst x-ray uppr gi
tract.
X-ray exam of body
section.
Ophth us, b & quant
a.
Ophth us, quant a
only.
Ophth us, b w/nonquant a.
Echo exam of eye,
water bath.
Echo exam of eye,
thickness.
Echo exam of eye .....
Echo exam of eye .....
Us exam of head and
neck.
Us exam, breast(s) ...
Us exam, abdom,
complete.
Echo exam of abdomen.
Us exam abdo back
wall, comp.
Us exam abdo back
wall, lim.
Us exam k transpl w/
doppler.
Ob us <14 wks, single fetus.
Ob us >/= 14 wks,
sngl fetus.
Ob us, detailed, sngl
fetus.
Ob us, follow-up, per
fetus.
Frm 00016
Fmt 4701
Sfmt 4700
‘‘Overlap
bypass
codes’’
..................
..................
..................
*
TABLE 1—FINAL CY 2009 BYPASS
CODES FOR CREATING ‘‘PSEUDO’’
SINGLE CLAIMS FOR CALCULATING
MEDIAN COSTS—Continued
HCPCS
code
76817
76830
76856
*
76857
*
..................
..................
..................
..................
*
..................
..................
..................
76870
76880
76970
76977
76999
77072
77073
77074
77075
77076
..................
77077
..................
77078
77079
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
*
77080
77081
77082
77083
77084
77301
77315
77336
77401
80500
*
80502
*
85097
*
86510
*
86850
86870
..................
..................
86880
86885
..................
86886
..................
86890
E:\FR\FM\18NOR2.SGM
Short descriptor
Transvaginal us, obstetric.
Transvaginal us, nonob.
Us exam, pelvic,
complete.
Us exam, pelvic, limited.
Us exam, scrotum .....
Us exam, extremity ...
Ultrasound exam follow-up.
Us bone density
measure.
Echo examination
procedure.
X-rays for bone age ..
X-rays, bone length
studies.
X-rays, bone survey,
limited.
X-rays, bone survey
complete.
X-rays, bone survey,
infant.
Joint survey, single
view.
Ct bone density, axial
Ct bone density, peripheral.
Dxa bone density,
axial.
Dxa bone density/peripheral.
Dxa bone density,
vert fx.
Radiographic
absorptiometry.
Magnetic image,
bone marrow.
Radiotherapy dose
plan, imrt.
Teletx isodose plan
complex.
Radiation physics
consult.
Radiation treatment
delivery.
Lab pathology consultation.
Lab pathology consultation.
Bone marrow interpretation.
Histoplasmosis skin
test.
RBC antibody screen
RBC antibody identification.
Coombs test, direct ...
Coombs test, indirect,
qual.
Coombs test, indirect,
titer.
Autologous blood
process.
18NOR2
‘‘Overlap
bypass
codes’’
..................
..................
*
*
*
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations
TABLE 1—FINAL CY 2009 BYPASS
CODES FOR CREATING ‘‘PSEUDO’’
SINGLE CLAIMS FOR CALCULATING
MEDIAN COSTS—Continued
HCPCS
code
86900
86901
86903
86904
86905
86906
86930
86970
86977
88104
88106
88107
88108
88112
88160
88161
88162
88172
88173
88182
88184
88185
88300
88302
88304
88305
88307
88311
88312
88313
88321
88323
88325
dwashington3 on PRODPC61 with RULES2
88331
88342
88346
88347
88348
‘‘Overlap
bypass
codes’’
Short descriptor
Blood typing, ABO ....
Blood typing, Rh (D)
Blood typing, antigen
screen.
Blood typing, patient
serum.
Blood typing, RBC
antigens.
Blood typing, Rh phenotype.
Frozen blood prep ....
RBC pretreatment .....
RBC pretreatment,
serum.
Cytopath fl nongyn,
smears.
Cytopath fl nongyn,
filter.
Cytopath fl nongyn,
sm/fltr.
Cytopath, concentrate
tech.
Cytopath, cell enhance tech.
Cytopath smear,
other source.
Cytopath smear,
other source.
Cytopath smear,
other source.
Cytopathology eval of
fna.
Cytopath eval, fna,
report.
Cell marker study ......
Flowcytometry/tc, 1
marker.
Flowcytometry/tc,
add-on.
Surgical path, gross ..
Tissue exam by pathologist.
Tissue exam by pathologist.
Tissue exam by pathologist.
Tissue exam by pathologist.
Decalcify tissue .........
Special stains ............
Special stains ............
Microslide consultation.
Microslide consultation.
Comprehensive review of data.
Path consult intraop,
1 bloc.
Immunohistochemistry.
Immunofluorescent
study.
Immunofluorescent
study.
Electron microscopy
VerDate Aug<31>2005
15:50 Nov 17, 2008
TABLE 1—FINAL CY 2009 BYPASS
CODES FOR CREATING ‘‘PSEUDO’’
SINGLE CLAIMS FOR CALCULATING
MEDIAN COSTS—Continued
HCPCS
code
..................
..................
..................
88358
88360
..................
88361
..................
88365
..................
88368
..................
..................
..................
88399
89049
..................
..................
89230
89240
..................
90472
..................
90474
..................
90761
..................
90766
..................
90767
..................
90770
..................
90771
..................
90775
..................
..................
90801
90802
90804
..................
90805
..................
..................
90806
90807
..................
90808
..................
90809
..................
90810
..................
..................
..................
..................
90811
..................
90816
..................
90818
..................
90826
..................
90845
90846
90812
..................
90847
..................
..................
Jkt 217001
90853
90857
PO 00000
Short descriptor
Analysis, tumor .........
Tumor
immunohistochem/
manual.
Tumor
immunohistochem/
comput.
Insitu hybridization
(fish).
Insitu hybridization,
manual.
Surgical pathology
procedure.
Chct for mal
hyperthermia.
Collect sweat for test
Pathology lab procedure.
Immunization admin,
each add.
Immune admin oral/
nasal addl.
Hydrate iv infusion,
add-on.
Ther/proph/dg iv inf,
add-on.
Tx/proph/dg addl seq
iv inf.
Sc ther infusion, addl
hr.
Sc ther infusion, reset
pump.
Tx/pro/dx inj new
drug add-on.
Psy dx interview ........
Intac psy dx interview
Psytx, office, 20–30
min.
Psytx, off, 20–30 min
w/e&m.
Psytx, off, 45–50 min
Psytx, off, 45–50 min
w/e&m.
Psytx, office, 75–80
min.
Psytx, off, 75–80, w/
e&m.
Intac psytx, off, 20–
30 min.
Intac psytx, 20–30, w/
e&m.
Intac psytx, off, 45–
50 min.
Psytx, hosp, 20–30
min.
Psytx, hosp, 45–50
min.
Intac psytx, hosp, 45–
50 min.
Psychoanalysis .........
Family psytx w/o patient.
Family psytx w/patient.
Group psychotherapy
Intac group psytx ......
Frm 00017
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‘‘Overlap
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TABLE 1—FINAL CY 2009 BYPASS
CODES FOR CREATING ‘‘PSEUDO’’
SINGLE CLAIMS FOR CALCULATING
MEDIAN COSTS—Continued
HCPCS
code
90862
90899
..................
92002
92004
..................
92012
..................
92014
..................
92020
..................
..................
..................
92025
92081
92082
..................
92083
..................
92135
..................
..................
92136
92225
..................
92226
..................
92230
..................
92240
92250
..................
..................
..................
..................
92275
92285
92286
92520
..................
92541
..................
..................
92546
..................
92548
92552
..................
92553
..................
92555
..................
92556
..................
92557
..................
..................
92567
92582
..................
92585
..................
..................
92603
92604
..................
..................
..................
68517
92626
93005
E:\FR\FM\18NOR2.SGM
Short descriptor
Medication management.
Psychiatric service/
therapy.
Eye exam, new patient.
Eye exam, new patient.
Eye exam established
pat.
Eye exam & treatment.
Special eye evaluation.
Corneal topography ..
Visual field examination(s).
Visual field examination(s).
Visual field examination(s).
Ophth dx imaging
post seg.
Ophthalmic biometry
Special eye exam,
initial.
Special eye exam,
subsequent.
Eye exam with
photos.
Icg angiography ........
Eye exam with
photos.
Electroretinography ...
Eye photography .......
Internal eye photography.
Laryngeal function
studies.
Spontaneous nystagmus test.
Sinusoidal rotational
test.
Posturography ...........
Pure tone audiometry, air.
Audiometry, air &
bone.
Speech threshold audiometry.
Speech audiometry,
complete.
Comprehensive hearing test.
Tympanometry ..........
Conditioning play audiometry.
Auditor evoke potent,
compre.
Cochlear implt f/up
exam 7 >.
Reprogram cochlear
implt 7 >.
Eval aud rehab status
Electrocardiogram,
tracing.
18NOR2
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Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations
TABLE 1—FINAL CY 2009 BYPASS
CODES FOR CREATING ‘‘PSEUDO’’
SINGLE CLAIMS FOR CALCULATING
MEDIAN COSTS—Continued
HCPCS
code
93017
93225
93226
93231
93232
93236
93270
93271
93278
93727
93731
93732
93733
93734
93735
93736
93741
93742
93743
93744
93786
93788
dwashington3 on PRODPC61 with RULES2
93797
93798
93875
93880
93882
93886
93888
93922
93923
93924
93925
93926
93930
93931
93965
93970
93971
93975
93976
93978
93979
93990
94015
94690
‘‘Overlap
bypass
codes’’
Short descriptor
Cardiovascular stress
test.
ECG monitor/record,
24 hrs.
ECG monitor/report,
24 hrs.
ECG monitor/record,
24 hrs.
ECG monitor/report,
24 hrs.
ECG monitor/report,
24 hrs.
ECG recording ..........
ECG/monitoring and
analysis.
ECG/signal-averaged
Analyze ilr system .....
Analyze pacemaker
system.
Analyze pacemaker
system.
Telephone analy,
pacemaker.
Analyze pacemaker
system.
Analyze pacemaker
system.
Telephonic analy,
pacemaker.
Analyze ht pace device sngl.
Analyze ht pace device sngl.
Analyze ht pace device dual.
Analyze ht pace device dual.
Ambulatory BP recording.
Ambulatory BP analysis.
Cardiac rehab ...........
Cardiac rehab/monitor.
Extracranial study .....
Extracranial study .....
Extracranial study .....
Intracranial study ......
Intracranial study ......
Extremity study .........
Extremity study .........
Extremity study .........
Lower extremity study
Lower extremity study
Upper extremity study
Upper extremity study
Extremity study .........
Extremity study .........
Extremity study .........
Vascular study ..........
Vascular study ..........
Vascular study ..........
Vascular study ..........
Doppler flow testing ..
Patient recorded
spirometry.
Exhaled air analysis ..
VerDate Aug<31>2005
15:50 Nov 17, 2008
TABLE 1—FINAL CY 2009 BYPASS
CODES FOR CREATING ‘‘PSEUDO’’
SINGLE CLAIMS FOR CALCULATING
MEDIAN COSTS—Continued
HCPCS
code
..................
95115
..................
95117
..................
95165
..................
95250
..................
95805
..................
95806
..................
..................
95807
95808
..................
..................
..................
95812
95813
95816
..................
95819
..................
95822
..................
95869
..................
95872
95900
..................
..................
95921
..................
95925
..................
95926
..................
95930
..................
95950
..................
95953
..................
..................
95970
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
95972
95974
95978
96000
96101
96111
96116
96118
96119
96150
96151
96152
..................
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Short descriptor
Immunotherapy, one
injection.
Immunotherapy injections.
Antigen therapy services.
Glucose monitoring,
cont.
Multiple sleep latency
test.
Sleep study, unattended.
Sleep study, attended
Polysomnography, 1–
3.
EEG, 41–60 minutes
EEG, over 1 hour ......
EEG, awake and
drowsy.
EEG, awake and
asleep.
EEG, coma or sleep
only.
Muscle test, thor
paraspinal.
Muscle test, one fiber
Motor nerve conduction test.
Autonomic nerv function test.
Somatosensory testing.
Somatosensory testing.
Visual evoked potential test.
Ambulatory eeg monitoring.
EEG monitoring/computer.
Analyze neurostim,
no prog.
Analyze neurostim,
complex.
Cranial neurostim,
complex.
Analyze neurostim
brain/1h.
Motion analysis,
video/3d.
Psycho testing by
psych/phys.
Developmental test,
extend.
Neurobehavioral status exam.
Neuropsych tst by
psych/phys.
Neuropsych testing
by tec.
Assess hlth/behave,
init.
Assess hlth/behave,
subseq.
Intervene hlth/behave, indiv.
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‘‘Overlap
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TABLE 1—FINAL CY 2009 BYPASS
CODES FOR CREATING ‘‘PSEUDO’’
SINGLE CLAIMS FOR CALCULATING
MEDIAN COSTS—Continued
HCPCS
code
..................
96153
..................
96402
..................
96411
..................
96415
..................
96417
..................
96423
..................
..................
96900
96910
..................
..................
..................
96912
96913
..................
96920
..................
98925
..................
98926
..................
..................
98927
..................
98940
..................
98941
..................
98942
..................
99204
..................
99212
..................
99213
..................
99214
..................
99241
99242
99243
99244
99245
G0008
..................
..................
..................
G0101
..................
..................
G0127
G0130
..................
G0166
..................
G0175
..................
G0340
..................
G0344
..................
G0365
..................
G0367
E:\FR\FM\18NOR2.SGM
Short descriptor
Intervene hlth/behave, group.
Chemo hormon
antineopl sq/im.
Chemo, iv push, addl
drug.
Chemo, iv infusion,
addl hr.
Chemo iv infus each
addl seq.
Chemo ia infuse each
addl hr.
Ultraviolet light therapy.
Photochemotherapy
with UV–B.
Photochemotherapy
with UV–A.
Photochemotherapy,
UV–A or B.
Laser tx, skin < 250
sq cm.
Osteopathic manipulation.
Osteopathic manipulation.
Osteopathic manipulation.
Chiropractic manipulation.
Chiropractic manipulation.
Chiropractic manipulation.
Office/outpatient visit,
new.
Office/outpatient visit,
est.
Office/outpatient visit,
est.
Office/outpatient visit,
est.
Office consultation ....
Office consultation ....
Office consultation ....
Office consultation ....
Office consultation ....
Admin influenza virus
vac.
CA screen; pelvic/
breast exam.
Trim nail(s) ................
Single energy x-ray
study.
Extrnl counterpulse,
per tx.
OPPS Service, sched
team conf.
Robt lin-radsurg
fractx 2–5.
Initial preventive
exam.
Vessel mapping
hemo access.
EKG tracing for initial
prev.
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Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations
TABLE 1—FINAL CY 2009 BYPASS
CODES FOR CREATING ‘‘PSEUDO’’
SINGLE CLAIMS FOR CALCULATING
MEDIAN COSTS—Continued
HCPCS
code
G0376
G0389
G0390
M0064
Q0091
Short descriptor
Smoke/tobacco counseling >10.
Ultrasound exam
AAA screen.
Trauma Respons w/
hosp criti.
Visit for drug monitoring.
Obtaining screen pap
smear.
‘‘Overlap
bypass
codes’’
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dwashington3 on PRODPC61 with RULES2
c. Calculation of CCRs
(1) Development of the CCRs
We calculated hospital-specific
overall CCRs and hospital-specific
departmental CCRs for each hospital for
which we had CY 2007 claims data. For
CY 2009 OPPS ratesetting, we used the
set of claims processed during CY 2007.
We applied the hospital-specific CCR to
the hospital’s charges at the most
detailed level possible, based on a
revenue code-to-cost center crosswalk
that contains a hierarchy of CCRs used
to estimate costs from charges for each
revenue code. That crosswalk is
available for review and continuous
comment on the CMS Web site at:
https://www.cms.hhs.gov/Hospital
OutpatientPPS/03_crosswalk.
asp#TopOfPage. We calculated CCRs for
the standard and nonstandard cost
centers accepted by the electronic cost
report database. In general, the most
detailed level at which we calculated
CCRs was the hospital-specific
departmental level.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41429), we proposed to
make a change to the revenue code-tocost center crosswalk for the CY 2009
OPPS. Specifically, for revenue code
0904 (Activity Therapy), we proposed to
make cost center 3550 (Psychiatric/
Psychological Services) the primary cost
center and to make cost center 6000
(Clinic services) the secondary cost
center. For CY 2008, for revenue code
0904, the primary cost center is 3580
(Recreational Therapy), cost center 3550
is secondary; and cost center 6000 is
tertiary. We proposed this change to
conform the OPPS methodology for
hospital claims to the crosswalk that is
being used to calculate partial
hospitalization costs for CMHCs.
We would like to affirm that the
longstanding Medicare principles of
cost apportionment at § 413.53 convey
that, under the departmental method of
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15:50 Nov 17, 2008
Jkt 217001
apportionment, the cost of each
ancillary department is to be
apportioned separately rather than being
combined with another department.
However, CMS does not specify a
revenue code-to-cost center crosswalk
that hospitals must adopt to prepare the
cost report, but instead, requires
hospitals to submit their individual
crosswalk to the Medicare contractor
when the cost report is filed. The
proposed CY 2009 OPPS revenue codeto-cost center crosswalk contains several
potential cost center locations for a
revenue code because it is an attempt to
best represent the association of revenue
codes with cost centers across all
hospitals for modeling purposes.
Assignment to cost centers is mutually
exclusive and only defaults to the next
level when the cost center with higher
priority is unavailable. The changes to
the crosswalk for revenue code 0904
mentioned above are used by CMS for
modeling purposes only, and we fully
expect hospitals to comply with the
Medicare reimbursement policies when
reporting their costs and charges in the
cost report.
At the August 2008 APC Panel
meeting, we reviewed with the APC
Panel’s Data Subcommittee the current
revenue code-to-cost center crosswalk,
as well as other data in preparation for
the CY 2009 rulemaking cycle. At this
meeting, the APC Panel recommended
that the Data Subcommittee continue its
work and we are accepting that
recommendation. We will continue to
work with the APC Panels’ Data
Subcommittee to prepare and review
data and analyses relevant to the APC
configurations and OPPS payment
policies for hospital outpatient items
and services.
We received no public comments on
this proposal and, therefore, we are
finalizing our proposal for CY 2009,
without modification, to calculate
hospital-specific overall and
departmental CCRs as described above
in this section.
(2) Charge Compression
Since the implementation of the
OPPS, some commenters have raised
concerns about potential bias in the
OPPS cost-based weights due to ‘‘charge
compression,’’ which is the practice of
applying a lower charge markup to
higher-cost services and a higher charge
markup to lower-cost services. As a
result, the cost-based weights
incorporate aggregation bias,
undervaluing high cost items and
overvaluing low cost items when an
estimate of average markup, embodied
in a single CCR, is applied to items of
widely varying costs in the same cost
PO 00000
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68519
center. Commenters expressed increased
concern about the impact of charge
compression when CMS began setting
the relative weights for payment under
the IPPS based on the costs of inpatient
hospital services, rather than the
charges for the services.
To explore this issue, in August 2006
we awarded a contract to RTI
International (RTI) to study the effects of
charge compression in calculating the
IPPS relative weights, particularly with
regard to the impact on inpatient
diagnosis-related group (DRG)
payments, and to consider methods to
capture better the variation in cost and
charges for individual services when
calculating costs for the IPPS relative
weights across services in the same cost
center. Of specific note was RTI’s
analysis of a regression-based
methodology estimating an average
adjustment for CCR by type of revenue
code from an observed relationship
between provider cost center CCRs and
proportional billing of high and low cost
services in the revenue codes associated
with the cost center in the claims data.
RTI issued a report in March 2007 with
its findings on charge compression. The
report is available on the CMS Web site
at: https://www.cms.hhs.gov/reports/
downloads/Dalton.pdf. Although this
report was focused largely on charge
compression in the context of the IPPS
cost-based relative weights, several of
the findings were relevant to the OPPS.
Therefore, we discussed the findings
and our responses to that interim draft
report in the CY 2008 OPPS/ASC
proposed rule (72 FR 42641 through
42643) and reiterated them in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66599 through
66602).
We did not propose any changes to
address charge compression for CY
2008. RTI noted in its 2007 report that
its research was limited to IPPS DRG
cost-based weights and that it did not
examine potential areas of charge
compression specific to hospital
outpatient services. We were concerned
that the analysis was too limited in
scope because typically hospital cost
report CCRs encompass both inpatient
and outpatient services for each cost
center. Further, because both the IPPS
and OPPS rely on cost-based weights,
we preferred to introduce any
methodological adjustments to both
payment systems at the same time. We
believe that because charge compression
affects the cost estimates for services
paid under both IPPS and OPPS in the
same way, it is appropriate that we
would use the same or, at least, similar
approaches to address the issue. Finally,
we noted that we wished to assess the
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Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations
educational activities being undertaken
by the hospital community to improve
cost reporting accuracy in response to
RTI’s findings, either as an adjunct to or
in lieu of regression-based adjustments
to CCRs.
We have since expanded RTI’s
analysis of charge compression to
incorporate outpatient services. In
August 2007, we again contracted with
RTI. Under this contract, we asked RTI
to evaluate the cost estimation process
for the OPPS relative weights. This
research included a reassessment of the
regression-based CCR models using
hospital outpatient and inpatient charge
data, as well as a detailed review of the
OPPS revenue code-to-cost center
crosswalk and the OPPS’ hospitalspecific CCR methodology. In evaluating
cost-based estimation, in general, the
results of RTI’s analyses impact both the
OPPS APC relative weights and the IPPS
MS–DRG (Medicare-Severity) relative
weights. With the release of the IPPS FY
2009 proposed rule in April 2008, CMS
posted an interim report discussing
RTI’s research findings for the IPPS MS–
DRG relative weights to be available
during the public comment period on
the FY 2009 IPPS proposed rule. This
report can be found on RTI’s Web site
at: https://www.rti.org/reports/cms/
HHSM-500-2005-0029I/PDF/
Refining_Cost_to_Charge_Ratios
_200804.pdf. The IPPS-specific
chapters, which were separately
displayed in the April 2008 interim
report, as well as the more recent OPPS
chapters, are included in the July 2008
RTI final report entitled, ‘‘Refining Cost
to Charge Ratios for Calculating APC
and DRG Relative Payment Weights,’’
which became available at the time of
the publication of the CY 2009 OPPS/
ASC proposed rule. The RTI final report
can be found on RTI’s Web site at:
https://www.rti.org/reports/cms/HHSM500-2005-0029I/PDF/Refining_Cost_to_
Charge_Ratios_200807_Final.pdf.
RTI’s final report distinguished
between two types of research findings
and recommendations, those pertaining
to the accounting or cost report data
itself and those related to statistical
regression analysis. Because the OPPS
uses a hospital-specific CCR
methodology, employs detailed cost
report data, and estimates costs at the
claim level, CMS asked RTI to closely
evaluate the accounting component of
the cost-based weight methodology,
specifically the revenue code-to-cost
center crosswalk. In reviewing the cost
report data for nonstandard cost centers
used in the crosswalk, RTI discovered
some problems concerning the
classification of nonstandard cost
centers and reclassified nonstandard
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cost centers by reading providers’ cost
center labels. Standard cost centers are
preprinted in the CMS-approved cost
report software and constitute the
minimum set of cost centers that must
be reported on the Medicare hospital
cost report if a hospital includes that
cost center in its own internal accounts.
Nonstandard cost centers are additional
common cost centers available to
hospitals for reporting when preparing
their Medicare hospital cost report. To
the extent hospitals provide services
captured by nonstandard cost centers,
they should report the relevant
nonstandard cost centers as well, if the
service is captured in a separate account
and qualifies as a cost center in
accordance with the Provider
Reimbursement Manual (PRM)–I,
Section 2302.8. RTI also evaluated the
revenue code-to-cost center crosswalk
after examining hospitals’ cost report
and revenue code billing patterns in
order to reduce aggregation bias
inherent in defaulting to the overall
ancillary CCR and generally to improve
the empirical accuracy of the crosswalk.
With regard to the statistical
adjustments, RTI confirmed the findings
of its March 2007 report that regression
models are a valid approach for
diagnosing potential aggregation bias
within selected services for the IPPS
and found that regression models are
equally valid for setting payments under
the OPPS. RTI also suggested that
regression-based CCRs could provide a
short-term correction for charge
compression until accounting data
could be refined to support more
accurate CCR estimates under both the
IPPS and the OPPS. RTI again found
aggregation bias in devices, drugs, and
radiology and, using combined
outpatient and inpatient claims,
expanded the number of recommended
regression-adjusted CCRs.
In almost all cases, RTI observed that
potential distortions in the APC relative
weights were proportionally much
greater than for MS–DRGs for both
accounting-based and statistical
adjustments because APC groups are
small and generally price a single
service. However, just as the overall
impacts on MS–DRGs were more
moderate because MS–DRGs
experienced offsetting effects of changes
in cost estimation, a given hospital
outpatient visit might include more than
one service, leading to offsetting effects
in cost estimation for services provided
in the outpatient episode as a whole. In
general, APC relative weights are more
volatile than MS–DRG relative weights
from year to year yet OPPS provider
impacts are typically quite modest and,
in light of this experience, we expect
PO 00000
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that overall provider impacts could be
much more moderate than those
suggested by individual APC impacts
from the RTI analysis.
Notwithstanding likely offsetting
effects at the provider level, RTI
asserted that, while some averaging is
appropriate for a prospective payment
system, extreme distortions in APC
payments for individual services bias
perceptions of service profitability and
may lead hospitals to inappropriately
set their charge structure. RTI noted that
this may not be true for ‘‘core’’ hospital
services, such as oncology, but these
distortions may have a greater impact in
evolving areas with greater potential for
provider-induced demand, such as
specialized imaging services. RTI also
noted that cost-based weights are only
one component of a final prospective
payment rate. There are other rate
adjustments (wage index, indirect
medical education (IME), and
disproportionate share hospital (DSH))
to payment derived from the revised
cost-based weights and the cumulative
effect of these components may not
improve the ability of final payment to
reflect resource cost. With regard to
APCs and MS–DRGs that contain
substantial device costs, RTI cautioned
that other prospective payment system
adjustments (wage index, IME, and
DSH) largely offset the effects of charge
compression among hospitals that
receive these adjustments. Although RTI
endorsed short-term regression-based
adjustments, RTI also concluded that
more refined and accurate accounting
data are the preferred long-term solution
to mitigate charge compression and
related bias in hospital cost-based
weights.
As a result of this research, RTI made
11 recommendations, 2 of which are
specific to IPPS MS–DRGs and were not
discussed in the CY 2009 OPPS/ASC
proposed rule, nor are they discussed in
this final rule with comment. The first
set of non-IPPS-specific
recommendations concentrates on shortterm accounting changes to current cost
report data; the second set addresses
short-term regression-based and other
statistical adjustments. RTI concluded
its recommendations with longer-term
accounting changes to the cost report.
(RTI report, ‘‘Refining Cost to Charge
Ratios for Calculating APC and MS–
DRG Relative Payment Weights,’’ July
2008.) Given the magnitude and scope
of impacts on APC relative weights that
would result from adopting both
accounting and statistical changes, as
specifically observed in Chapter 6 of
RTI’s July 2008 final report and
Attachments 4a, 4b, and 5 (RTI report,
‘‘Refining Cost to Charge Ratios for
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Calculating APC and MS–DRG Relative
Payment Weights,’’ July 2008), we did
not propose to adopt any short-term
adjustments to OPPS payment rate
calculations for CY 2009 (73 FR 41430
through 41431). Furthermore, the
numerous and substantial changes that
RTI recommended have significantly
complex interactions with one another
and we believe that we should proceed
cautiously. In a budget neutral payment
system, increases in payment for some
services must be countered by
reductions to payment for other
services.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41431), we did not propose
to adopt, but specifically requested
general public comments on, several of
RTI’s recommended accounting-based
changes pertaining to the cost report as
discussed below because we plan to
consider the public comments in our
current revision of the Medicare
hospital cost report and for CY 2010
OPPS ratesetting. We believe that
improved and more precise cost
reporting is the best way to improve the
accuracy of all cost-based payment
weights, including relative weights for
the IPPS MS–DRGs. Because both the
IPPS and the OPPS rely on cost-based
weights derived, in part, from data on
the Medicare hospital cost report form,
we indicated in the CY 2009 OPPS/ASC
proposed rule (73 FR 41431) that the
requested public comments on
recommended changes to the cost report
should address any impact on both the
inpatient and outpatient payment
systems.
We noted in the FY 2009 IPPS final
rule (73 FR 48467 through 48468), that
we are updating the cost report form to
eliminate outdated requirements in
conjunction with the Paperwork
Reduction Act (PRA), and that we plan
to propose actual changes to the cost
reporting form, the attending cost
reporting software, and the cost report
instructions in Chapter 36 of the PRM–
II. We indicated that we now believe the
revised cost report may not be available
until cost reporting periods starting after
the Spring of 2009. Because there is
generally a 3-year lag between the
availability of cost report data for IPPS
and OPPS ratesetting purposes in a
given calendar year, we may be able to
use data from the revised cost report
form for CY 2012 or CY 2013 OPPS
relative weights.
In the FY 2009 IPPS final rule, we
finalized our proposal for both OPPS
and IPPS to add one cost center to the
cost report so that, in general, the costs
and charges for relatively inexpensive
medical supplies would be reported
separately from the costs and charges for
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more expensive implantable devices
(such as pacemakers and other
implantable devices). Specifically we
will create one cost center for ‘‘Medical
Supplies Charged to Patients’’ and one
cost center for ‘‘Implantable Devices
Charged to Patients.’’ This change
ultimately will split the current CCR for
Medical Supplies and Equipment into
one CCR for medical supplies and
another CCR for implantable devices. In
response to support from a majority of
commenters on the FY 2009 IPPS
proposed rule, we finalized a definition
of the Implantable Devices Charged to
Patients cost center as capturing the
costs and charges billed with the
following UB–04 revenue codes: 0275
(Pacemaker), 0276 (Intraocular lens),
0278 (Other implants), and 0624 (FDA
investigational devices). Identifying
most implantable devices based on the
existing revenue code definitions is the
most straightforward and easiest means
of capturing device costs, although some
charge compression will remain in the
resulting device and supply CCRs.
Hospitals are already familiar with
National Uniform Billing Committee
(NUBC) billing instructions, and we
believe this definition will minimize the
disruption to hospitals’ accounting and
billing systems. For a complete
discussion of the proposal, public
comments, and our responses, we refer
readers to section II.E.4. of the FY 2009
IPPS final rule (73 FR 48458 through
45467).
RTI’s first set of recommendations for
accounting changes addressed improved
use of existing cost report and claims
data. RTI recommended: (1)
Immediately using text searches of
providers’ line descriptions to identify
provider-specific cost centers and
ultimately to more appropriately
classify nonstandard cost centers in
current hospital cost report data; (2)
changing cost report preparation
software to impose fixed descriptions on
nonstandard cost centers; (3) slightly
revising CMS’ cost center aggregation
table to eliminate duplicative or
misplaced nonstandard cost centers and
to add nonstandard cost centers for
common services without one; and (4)
adopting RTI’s recommended changes to
the revenue code-to-cost center
crosswalk.
Given the magnitude and scope of
impacts resulting from RTI’s
recommended revisions, we did not
propose to adopt any of the short-term
accounting changes, including text
searches of providers’ line descriptions
to more appropriately classify
nonstandard cost centers and changes to
the revenue code-to-cost center
crosswalk. As indicated in the CY 2009
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OPPS/ASC proposed rule (73 FR 41431),
we stated that we would modify the cost
report preparation software. This
revision will print a brief fixed
description next to each nonstandard
cost center number, while continuing to
allow the hospital to enter a description,
and will be incorporated in the 2009
Medicare hospital cost report
preparation software.
With regard to revisions to the cost
center aggregation table, we specifically
invited public comment on whether
several identified cost centers are
duplicative (RTI report, ‘‘Refining Cost
to Charge Ratios for Calculating APC
and MS–DRG Relative Payment
Weights,’’ July 2008). We also
specifically requested public comment
on creation of new nonstandard cost
centers for services that are well
represented in line descriptions
reported with ‘‘other ancillary services’’
and other outpatient nonstandard cost
centers, but for which no specific
nonstandard cost center currently exists
and for which UB–04 revenue codes do
exist, including cardiac rehabilitation,
hyperbaric oxygen therapy, and patient
education (RTI report, ‘‘Refining Cost to
Charge Ratios for Calculating APC and
MS–DRG Relative Payment Weights,’’
July 2008) (73 FR 41431).
Comment: Many commenters
expressed support for refining the
Healthcare Cost Report Information
System (HCRIS) database that CMS uses
for ratesetting by using text string
searches to reassign cost center lines
based on the description entered by the
hospital, in order to mitigate hospital
error in assigning a nonstandard HCRIS
cost center code. Commenters viewed
this change as a way to improve the
accuracy of the CCRs derived from the
cost report for cost estimation, without
imposing additional burden on
hospitals. Many commenters also
supported CMS’ modification to add
fixed descriptions to nonstandard cost
center lines in the cost reporting
software, with the caveat that hospitals
continue to be allowed to enter their
own nonstandard cost center
descriptions. The commenters believed
that this change would improve the
quality and consistency of hospital
reporting. One commenter indicated
that CMS should clarify instructions
about the specific cost centers that
should be reported on nonstandard
lines. Another commenter noted that a
cost center for patient education could
be difficult to report because patient
education can take place across multiple
departments and reclassifying costs
could be challenging. Many commenters
supported RTI’s recommendation to
modify the cost aggregation table to
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eliminate duplicative or misplaced
nonstandard cost centers but
emphasized that hospitals should not be
required to report the revised cost
centers. A number of commenters
supported the addition of nonstandard
cost centers that also have a UB–04
revenue code, including Cardiac
Rehabilitation, Patient Education,
Hyperbaric Oxygen Therapy, and
Lithotripsy.
Response: With regard to modifying
the cost reporting preparation software
to impose fixed descriptions for
nonstandard cost centers, we stated in
the CY 2009 OPPS/ASC proposed rule
(73 FR 41431) that we would make this
change in the cost reporting preparation
software accompanying the revised
Medicare hospital cost report form.
Should release of the revised form be
delayed, we will make this change for
the next release of the cost report
preparation software. Hospitals will
continue to be able to enter their own
description of the nonstandard cost
center. This modification will act as a
quality check for hospitals to review
their choice of nonstandard cost center
code and encourage hospitals to more
accurately report their nonstandard cost
centers without significantly increasing
provider burden.
We appreciate the commenters’
argument that text string searches could
refine submitted cost report data
without imposing hospital burden.
However, we will not implement RTI’s
recommended text string search
algorithm for CY 2009 because it would
introduce significant changes in APC
median costs in concentrated areas with
significant Medicare charges and
utilization and because it would
represent a major shift in the current
way we use cost report data. Our
preference in the median cost
development process has been to accept
the information submitted by hospitals
as it is received, only trimming
egregiously erroneous data through
conservative statistical methods in order
to maintain the integrity of the original
data set. Modifying the data from its
submitted form based on assumptions
about the data typically would be
contrary to our principle of using the
data as submitted by hospitals. Further,
implementing an algorithm that
reassigns nonstandard cost center lines
based on their HCRIS descriptions
would entail assumptions about what
that hospital’s written description
means and what the data represent. For
example, RTI reassigned cost center
lines with combined descriptions, such
as ‘‘Radiation and Oncology,’’ to the
cost center with the highest dollar
volume, in this case Radiation Therapy.
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However, we are not confident that the
assumptions underlying these
reassignments are correct. We will
continue to examine the quality of the
data submitted by hospitals and may
consider implementing the text string
searches in the future.
While many commenters expressed
general support for RTI’s
recommendation to eliminate
duplicative nonstandard cost centers
with low volume from the cost
aggregation table, we continue to
consider whether we should retain these
cost centers. We note that RTI’s analysis
only included an examination of the
nonstandard cost centers from more
recent cost reports. Observing data from
older cost reports may have led RTI to
conclude that the same nonstandard
cost centers would nonetheless be
necessary. For continuity with historical
cost report data, at this time we do not
plan to eliminate any duplicative
nonstandard cost centers from the cost
center aggregation table.
As part of its recommendation for
modifications to the cost aggregation
table, RTI suggested adding new
nonstandard cost centers for hospital
departments that were well represented
in the cost report data and had an
associated UB–04 revenue code but
lacked their own nonstandard cost
center, specifically Cardiac
Rehabilitation, Patient Education,
Hyperbaric Oxygen Therapy, and
Lithotripsy. Many commenters were
supportive of these changes, believing
that these cost centers would result in
more accurate cost estimates for the
services in question, but they were
concerned about additional burden
associated with reporting new cost
centers. One commenter indicated that
reporting patient education could be
difficult.
We do not expect additional burden
for reporting these new nonstandard
cost centers to be significant because
hospitals that provide these services and
maintain a separate account for each of
these services in their internal
accounting records to capture the costs
and charges are currently required, in
accordance with § 413.53(a)(1), to report
these cost centers in the cost report,
even if CMS does not identify a
nonstandard cost center code for the
department(s). Specifically, under those
regulations defining the departmental
method of cost apportionment, the
hospital must separately apportion the
costs of each ancillary department. CMS
defines a cost center in PRM–I, Section
2302.8, as an organizational unit,
generally a department or its subunit,
having a common functional purpose
for which direct and indirect costs are
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accumulated, allocated, and
apportioned. Hospitals that do not
maintain distinct departments or
accounts in their internal accounting
systems for Cardiac Rehabilitation,
Hyperbaric Oxygen Therapy, or
Lithotripsy would not be required to
report these nonstandard cost centers.
We plan to include nonstandard cost
center codes for Cardiac Rehabilitation,
Hyperbaric Oxygen Therapy, and
Lithotripsy on the revised Medicare
hospital cost report form that we
provide to the public for comment
through the PRA process, because we
believe these changes will facilitate
more accurate cost reporting for these
services.
With regard to ‘‘patient education,’’
we agree with the commenter that
‘‘education’’ may not be sufficiently
definitive to serve as a useful cost
center. We will review RTI’s findings on
the presence of patient education in the
HCRIS data to see if we should narrow
the scope of this label to improve its
usefulness as a nonstandard cost center.
Based on this review, we may include
a nonstandard cost center like Patient
Education on the revised Medicare
hospital cost report form that we
provide for public comment through the
PRA process.
In summary, CMS continues to
examine ways in which it can improve
the cost reporting process. We have
already implemented the minor change
in the cost reporting software by
imposing fixed descriptions on
nonstandard cost centers. We also plan
to add the new nonstandard cost centers
for Cardiac Rehabilitation, Hyperbaric
Oxygen Therapy, and Lithotripsy, as
well as potentially a nonstandard cost
center like Patient Education, to the
nonstandard list when we revise the
Medicare hospital cost report form. We
will consider the appropriateness of the
text string searches for future
ratesetting.
Comment: One commenter requested
that CMS issue a detailed written
explanation of CMS’s processes for
collecting, reviewing, and aggregating
data, and reviewing and adjusting cost
data to arrive at median cost amounts,
specifically in the context of hyperbaric
oxygen therapy services.
Response: This final rule with
comment period contains a
comprehensive discussion of the
process through which we use cost
report and claims data to arrive at
median costs in sections II.A.1. and
II.A.2. The claims accounting narrative
mentioned earlier, available on the CMS
Web site, offers a detailed breakdown of
the processing logic CMS uses to refine
the claims data set, as well as exact
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counts of claims involved in each stage
of that process.
CMS also requested comment in the
CY 2009 OPPS/ASC proposed rule (73
FR 41431) on RTI’s recommended
changes to the OPPS revenue code-tocost center crosswalk. We indicated that
we may propose to adopt crosswalk
changes for CY 2010 based on RTI’s
analyses and related public comments
received on this issue. Although
available on the CMS Web site for
continuous public comment, we have
received relatively few public comments
over the last several years on the OPPS
revenue code-to-cost center crosswalk,
which has undergone only minimal
change since the inception of the OPPS.
RTI’s revised crosswalk in Attachment
2b of its final report reflected all
accounting changes, including
reclassification of nonstandard cost
centers from text searches, removal of
duplicative cost centers, and addition of
new nonstandard cost centers for
common services (RTI report, ‘‘Refining
Cost to Charge Ratios for Calculating
APC and MS–DRG Relative Payment
Weights,’’ July 2008). Throughout the
July 2008 final report, RTI used a
subscripting nomenclature developed
from CMS’s aggregation table to identify
cost centers. To disentangle the
combined impact of these changes and
clearly communicate RTI’s
recommended changes in current HCRIS
cost center numbers, we made available
on the CMS Web site a revised (RTIrecommended) crosswalk using current
standard and nonstandard cost centers
codes in the same format as the
crosswalk proposed for the CY 2009
OPPS. This revised (RTI-recommended)
crosswalk may be found on the CMS
Web site under supporting
documentation for this final rule with
comment period at: https://
www.cms.hhs.gov/
HospitalOutpatientPPS/HORD/
list.asp#TopOfPage. We did not include
RTI’s recommended new nonstandard
cost centers in this revised crosswalk as
they are not yet active.
We specifically requested public
comment on the numerous changes
included in this crosswalk (73 FR
41431). We were interested in public
opinion about the addition of ‘‘default’’
CCRs for clinic, cardiology, and therapy
services before defaulting to the overall
ancillary CCR, as is our current policy.
The overall ancillary CCR, which is the
traditional default CCR, is chargeweighted and heavily influenced by the
relationship between costs and charges
for surgical and imaging services. RTI
also introduced cost center 4300
(Radioisotope) as a primary cost
converter for the nuclear medicine
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revenue codes (034X). Further, RTI
added secondary and tertiary crosswalk
maps for services that frequently appear
together, such as CCRs for Computed
Tomography (CT) Scan as a secondary
cost converter for the Magnetic
Resonance Imaging (MRI) revenue codes
(061X) (RTI report, ‘‘Refining Cost to
Charge Ratios for Calculating APC and
MS–DRG Relative Payment Weights,’’
July 2008).
Comment: Some commenters
supported full adoption of the RTIrecommended revenue code-to-cost
center crosswalk, which included
expanded and revised crosswalks.
Others believed that they could not
comment on the proposal, including the
addition of default CCRs for cardiology,
therapy, and clinic services, until CMS
provides additional information
comparing the cost-based weights under
the current and RTI-recommended
crosswalks that would illustrate the
impact of these changes. Other
commenters wondered whether the
crosswalk would be applied under both
the IPPS for estimating DRG relative
weights and the OPPS for estimating
APC relative weights.
One commenter requested that CMS
update the revenue code-to-cost center
crosswalk to reflect the cost report
change finalized in the FY 2009 IPPS
final rule to create a new implantable
device cost center. Some commenters
expressed support for using cost center
4300 (Radioisotope) as a primary cost
converter for the nuclear medicine
revenue code series 0340 to 0349, which
includes revenue codes for nuclear
medicine and radiopharmaceuticals.
One commenter believed that cost
center 2500 (Adults and Pediatrics
(General Routine Care)) offered the
appropriate CCR for estimating costs
from charges on revenue code 0762
(Observation Room), instead of cost
center 6200 (Observation Beds). Another
commenter recommended removing
cost center 3540 (Prosthetic Devices) as
the primary CCR for revenue code 0275
(Pacemaker) and only keeping cost
center 5500 (Medical Supplies Charged
to Patients) in the crosswalk. The same
commenter pointed out that hospitals
frequently bill certain imaging services
under revenue code 0361 (Operating
Room Services: Minor Surgery) because
of billing requirements by Medicare
Administrative Contractors (MACs) and
non-Medicare payers. This practice
ensures that a radiology CCR would not
be used to estimate costs for these
radiology services under the OPPS cost
methodology.
Response: The RTI-recommended
revenue code-to-cost center crosswalk
included significant changes from the
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68523
current OPPS crosswalk that would
impact the APC relative payment
weights considerably. While several of
RTI’s recommendations to improve
CMS’ processes for estimating costs
from charges would apply to both the
IPPS and the OPPS, the revenue codeto-cost center crosswalk is specific to
the OPPS. We agree with the
commenters that observing the actual
median costs associated with the
revised crosswalk would help to inform
public comment. We note that the
majority of the changes detailed under
the (RTI_1) column in Attachment 4a of
RTI’s final report are attributable to the
revised crosswalk (RTI report, ‘‘Refining
Cost to Charge Ratios for Calculating
APC and MS–DRG Relative Payment
Weights,’’ July 2008). Like many
commenters, we also believe that RTI’s
recommended changes are
improvements. For example, we expect
that default CCRs for clinic services,
cardiology, and therapy that are specific
to those types of services would be
appropriate for more accurately
estimating cost when the hospital has
not reported a clinic, cardiology, or
therapy cost center. However, we
understand that commenters may not
have been able to fully absorb the
changes discussed in RTI’s report and
would benefit from a streamlined
comparison of median costs that isolates
changes attributable to the revenue
code-to-cost center crosswalk.
We did not receive many detailed
comments about specific revenue code
and cost center relationships in the
crosswalk, and we will therefore not
adopt significant changes to the
crosswalk until we provide such a
comparison. Informed analysis and
public comment regarding the RTIrecommended changes to the revenue
code-to-cost center crosswalk would
help to ensure that any final changes
would be appropriate and likely to
result in more accurate data. We will
update the revenue code-to-cost center
crosswalk when the new device cost
centers and new nonstandard cost
centers are included in the Medicare
hospital cost report form and
corresponding HCRIS database.
We appreciate the small number of
commenters who provided thoughtful
input on specific adjustments to the
revenue code-to-cost center crosswalk.
We will consider these and any further
public comments regarding RTI’s
recommended revisions to the revenue
code-to-cost center crosswalk as we
consider crosswalk revisions for future
OPPS updates. We are not adopting
RTI’s revised revenue code-to-cost
center crosswalk for the CY 2009 OPPS.
Furthermore, we intend to explore
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differences between revenue code
billing requirements set by contractors
and NUBC revenue code definitions.
RTI’s second set of recommendations
concentrated on short-term statistical
regression-based adjustments to address
aggregation bias. RTI recommended: (1)
Adopting regression-adjusted OPPS
CCRs for Devices, Other Supplies Sold,
Additional Detail Coded Drugs, and
Intravenous (IV) Solutions and Other
Drugs Sold; and (2) adopting a set of
CCRs that blend corrected cost report
and regression-adjusted CCRs for CT
scanning, MRI, therapeutic radiology,
nuclear medicine, and other diagnostic
radiology services for hospitals that did
not report these standard and
nonstandard cost centers. We agree that
improved data for cost estimation in
these areas is a desirable goal. However,
we historically have received mixed
support for regression-adjusted CCRS
through both the IPPS and OPPS
regulatory process. For this reason, we
have chosen to concentrate our efforts
on concrete steps to improve the quality
of cost report accounting data that
ultimately would be used to calculate
both hospital inpatient and outpatient
prospective payment system relative
weights. We specifically did not
propose to adopt regression-adjusted
CCRs for the CY 2009 OPPS. In the FY
2009 IPPS final rule (73 FR 48457), we
emphasized our fundamental goal of
improving cost report accounting data
through revisions to the cost report and
our support of education initiatives,
rather than introducing short-term
statistical adjustments.
Comment: Many commenters
expressed general support for all of
RTI’s recommended regression-adjusted
CCRs to improve the overall accuracy of
the OPPS relative weights. One
commenter specifically noted that CMS
should not delay applying regressionbased adjustments to CCRs for APC
payment calculations because the
agency chose not to implement
regression-adjusted CCRs for FY 2009
IPPS payments. Some commenters
supported the CMS’ decision not to
implement the short-term statistical
adjustments recommended by RTI. A
number of commenters believed that
actual hospital data should be used for
ratesetting to ensure accuracy in
payment rates. Other commenters did
not support the adoption of regressionadjusted CCRs until CMS could provide
enough information to show the
payment impact and redistribution of
costs. A few commenters noted that
CMS should actually propose specific
refinements and discuss the
methodology behind such a proposal.
Many commenters requested that CMS
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proceed with caution with regard to
making any changes that could
significantly affect the payment system.
Numerous commenters expressed
support for the use of regressionadjusted CCRs for devices in order to
improve short-term accuracy in the
OPPS relative payment weights by
addressing charge compression arising
from use of a single CCR for supplies
and devices. These commenters viewed
regression-adjusted CCRs as a suitable
temporary adjustment for charge
compression until CCRs for the new
Implantable Devices Charged to Patients
cost center, finalized in the FY 2009
IPPS final rule (73 FR 48458 through
48469), become available in CY 2012 or
CY 2013. Many commenters saw
regression-adjusted CCRs for devices as
a necessary solution that would be
immediately available and appropriate,
especially because they believed that
other options, such as provider
education, could not address the issue
of highly variable markup rates
compressed by a single CCR during cost
estimation. Those commenters offered
varied suggestions for implementing
regression-adjusted CCRs for devices,
including phasing in adoption of
regression-adjusted device CCRs over
several years, using the regressionadjusted CCRs to check the validity of
early cost report data for the new cost
center, and using the device regressionadjusted CCR to soften CCR changes due
to new implantable devices cost report
data.
Several commenters supported the
use of regression-adjusted CCRs for
drugs, but most commenters focused
their comments about charge
compression in drug payment on CMS’
proposal to create two new cost centers
for drugs with high and low pharmacy
overhead costs, respectively, which is
discussed in more detail in section
V.B.3. of this final rule with comment
period. Many commenters specifically
opposed the concept of regressionadjusted CCRs for radiology services,
noting that RTI’s results for the CT
Scanning and MRI cost centers were
inaccurate due to error in capital cost
allocation for specialized imaging
services which resulted in
inappropriately low relative weights.
Response: As noted above in the
preceding three paragraphs, we once
again received numerous mixed
comments on the use of regressionadjusted CCRs, comparable to the type
of comments received on the FY 2009
IPPS proposed rule. While we
appreciate commenters’ continued
thoughtful comments on this issue, we
did not propose to adopt regressionadjusted CCRs for the CY 2009 OPPS, as
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we have received mixed support for this
approach in the past. As such, we are
not implementing regression-adjusted
CCRs for CY 2009. We continue to
emphasize our preference for long-term
cost reporting changes and broad
education initiatives to address the
accuracy of the data, rather than shortterm statistical adjustments. With regard
to devices, CMS finalized a proposal in
the FY 2009 IPPS final rule to
disaggregate the medical supplies CCR
into one cost center for medical supplies
and one for implantable devices (73 FR
48458 through 48467). This change to
the cost report will influence both the
IPPS and OPPS relative weights. We
believe that, ultimately, improved and
more precise cost reporting is the best
way to minimize charge compression
and improve the accuracy of the cost
weights. With regard to radiology, we
agree with the commenters that the
hospital community could benefit from
education on Medicare hospital cost
report requirements for allocation of
fixed capital and moveable equipment
indirect costs to improve the accuracy of
cost reporting for specialized imaging
services.
RTI’s third and final set of
recommendations focused on long-term
accounting revisions to the cost report
and educational efforts to improve the
overall accuracy of accounting data. RTI
recommended: (1) Clarifying cost report
instructions and requiring hospitals to
use all standard lines in the cost report
if their facility offers the described
services; (2) creating new standard lines
in the cost report for CT Scanning, MRI,
Cardiac Catheterization, Devices, and
Drugs Requiring Additional Coding; and
(3) educating hospitals through
industry-led educational initiatives
directed at methods for capital cost
finding, specifically encouraging
providers to use direct assignment of
equipment depreciation and lease costs
wherever possible, or at least to allocate
moveable equipment depreciation based
on dollar value of assigned depreciation
costs.
As noted above in this section, we
will assess further steps we can take to
educate hospitals about the principle of
departmental apportionment of costs at
§ 413.53, which states that hospitals
should apportion separately the costs
and charges of each ancillary
department for which charges are
customarily made separately, rather
than combining those costs and charges
with another ancillary department.
Standard cost centers are preprinted in
the CMS-approved cost report software
and constitute the minimum set of cost
centers that must be reported on the
Medicare hospital cost report as
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required in Section 2302.8 of the PRM–
I if the hospital creates a separate
account for the service in its accounting
system. RTI noted that many hospitals
combine costs and charges for standard
costs centers, especially therapeutic
radiology and nuclear medicine
services, under the diagnostic radiology
cost center (RTI report, ‘‘Refining Cost
to Charge Ratios for Calculating APC
and MS–DRG Relative Payment
Weights,’’ July 2008). In the CY 2009
OPPS/ASC proposed rule (73 FR 41431
through 41432), we specifically asked
for public comment on the reasons for
this aggregation and other relatively
common deviations from cost reporting
instructions, such as a failure to report
the standard cost center 4700 (Blood
Storing, Processing & Transportation)
when the hospital bills Medicare for
blood products that have storage and
processing costs and charges.
With regard to creating new standard
lines in the cost report, in addition to
our proposal to add a standard cost
center for Implantable Devices Charged
to Patients in the FY 2009 IPPS
proposed rule, we proposed to add two
standard cost centers, one for Drugs
with High Overhead Cost Charged to
Patients and one for Drugs with Low
Overhead Cost Charge to Patients, in the
CY 2009 OPPS/ASC proposed rule. We
discuss our decision not to finalize this
proposal to create two new cost centers
for drugs in our discussion of payment
for the acquisition and pharmacy
overhead costs associated with
separately payable drugs and biologicals
in section V.B.3. of this final rule with
comment period.
As we indicated in the CY 2009
OPPS/ASC proposed rule (73 FR 41432),
we believe that standard cost centers for
CT Scanning, MRI, and Cardiac
Catheterization also may be appropriate
as we revise the Medicare hospital cost
report form. CMS already has
established nonstandard cost centers for
these services and many hospitals
currently report costs and charges for
these cost centers. RTI identified almost
1,000 cost center lines for CT scanning,
MRI, and cardiac catheterization each in
the one year of HCRIS data used for
RTI’s study. Many more hospitals than
this bill distinct charges for these
services, and we are confident that
many hospitals maintain a separate
account for these services in their
accounting system. While we currently
use available nonstandard cost center
CCRs for cost estimation under the
OPPS, creating standard lines for
common advanced imaging services,
such as CT Scanning and MRI, and a
common cardiac diagnostic service,
Cardiac Catheterization, would
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encourage more providers to report cost
and charge information separately for
these services. Although we did not
propose to create these cost centers, in
the CY 2009 OPPS/ASC proposed rule
(73 FR 41432), we specifically invited
public comment on the appropriateness
of creating standard cost centers for CT
Scanning, MRI, and Cardiac
Catheterization to consider in our
revision of the Medicare hospital cost
report form. We recognize that
improved allocation of moveable
equipment costs based on dollar value,
the recommended allocation statistic,
would be important to ensure improved
accuracy in ratesetting if we were to
make these cost centers standard.
The accuracy of capital cost allocation
under Medicare allocation methods
remains an issue when discussing the
accuracy of CCRs for radiology and
other capital-intensive services. We are
supportive of industry-led educational
initiatives to improve the quality of
reporting capital costs in the cost report
within the context of the Medicare
policies in PRM–I, Section 2307, and
PRM–II, Chapter 36, and, as we
explained in the FY 2008 IPPS final rule
with comment period (72 FR 47196), we
are willing to work with the hospital
industry to further such initiatives.
We received numerous comments
about potential revisions to the cost
report and recommendations to improve
the cost report form and cost report
process. A summary of the comments
and our responses follow.
Comment: Many commenters urged
CMS to use caution when making
incremental changes to the cost report,
but also suggested that a more
comprehensive effort be made to
improve the cost reporting process.
Several commenters noted that changes
to the cost report to improve the
accuracy of prospective payment system
weights impose hospital burden without
adding additional revenue to the system
and may counteract their purpose by
requesting a level of precision that
hospitals cannot provide. Some
commenters requested that CMS make
cost report changes consistent across the
inpatient and outpatient payment
systems. One commenter requested that
CMS coordinate cost report
requirements with those required by
State Medicaid programs. Other
commenters suggested that CMS
undertake educational efforts providing
greater detail on how to comply with
regulations and manual instructions,
how to file a cost report, how to
evaluate a completed cost report for
accuracy, and the consequences of
noncompliance. Many commenters
noted that hospitals do not know what
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CMS wants them to do when
completing the cost report and urged
CMS to provide explicit cost report
guidance on direct expense assignment,
capital expense assignment, allocation
of overhead, and matching gross
revenue, in order to reduce hospital
reporting burden and to ensure that
hospitals have both the direction and
knowledge to comply. One commenter
suggested that even if hospitals
recognized problems in their internal
cost reporting process, they would
continue their erroneous reporting
practice in order to achieve base year
consistency. A number of commenters
also requested that CMS instruct
Medicare contractors to audit cost
reports more closely.
Several commenters specifically
addressed the new Implantable Devices
Charged to Patients cost center finalized
in the FY 2009 IPPS final rule. These
commenters requested that CMS
carefully choose an appropriate
overhead allocation statistic to ensure
that overhead allocation would not
undermine the potential accuracy in
CCR data behind CMS’ proposal to
create a new cost center. They requested
that CMS undertake an educational
campaign to describe appropriate
practices for distinguishing between
devices and supplies. Some commenters
also requested that CMS develop
mechanisms to validate the accuracy of
data from the new cost center.
In response to CMS’ inquiry regarding
the failure of hospitals to report costs
and charges for cost center 4700 (Blood
Storing, Processing, and Transfusion),
several commenters indicated that even
though hospitals are required to bill
costs and charges under revenue code
0391 (Administration, Processing and
Storage for Blood and Blood
Components; Administration (eg,
Transfusion)) and capture those costs in
cost center 4700 in the cost report, as
indicated in the FY 2009 IPPS final rule
(73 FR 48466), hospitals do not report
costs and charges for cost center 4700
because there are no specific cost report
instructions. The commenters suggested
that CMS define a formula-driven
expense reclassification method.
Response: We appreciate the
thoughtful public input on clarifying
cost report instructions and the cost
reporting process. We recognize that
there are areas of concern with the cost
report, and we are taking steps to
address some of them. These include
finalizing a new cost center for
implantable devices, adding fixed
descriptions to HCRIS cost center codes
in the cost report preparation software,
and engaging in provider educational
efforts to help educate providers
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regarding the proper accounting of costs
in the cost report. While these efforts are
being made to help address charge
compression and improve the accuracy
of cost report data, more fundamentally,
they will improve the cost reporting
process itself.
We are currently in the process of
making revisions to the Medicare cost
report form, and we will consider the
commenters’ many concerns and
recommendations summarized above in
our revisions. Changes to the Medicare
hospital cost report will be incorporated
into both the IPPS and OPPS relative
weights. Under the effort to update the
cost report and eliminate outdated
requirements in conjunction with the
PRA, changes to the cost report form
and cost report instructions will be
made available to the public for
comment. The commenters will have an
opportunity to suggest more
comprehensive reforms and to request
more detailed instructions, and
similarly will be able to make
suggestions for ensuring that these
reforms are made in a manner that is not
disruptive to hospitals’ billing and
accounting systems and are within the
guidelines of Medicare principles of
reimbursement and generally accepted
accounting principles (GAAP). We
welcome further comment on changes to
the revised Medicare hospital cost
report through the PRA process.
Many State Medicaid programs use
the Medicare cost report to determine
Medicaid payments, including Medicaid
Disproportionate Share Hospital (DSH)
payments. Therefore, it is important for
hospitals to complete the Medicare cost
report in accordance with the Medicare
reimbursement and cost reporting
policies. With regard to reporting costs
and charges for cost center 4700, we
note that CMS provides instructions in
PRM–II, Section 3610, Line 47 for this
cost center.
While we always are open to
incorporating refinements in our cost
report instructions as requested by
numerous commenters, we note that
CMS cannot provide as much specificity
in instructions as some commenters
have requested, as discussed below.
While CMS is responsible for issuing
cost reporting instructions that are clear,
hospitals are required to complete the
cost report in a manner that is
appropriate for their internal accounting
system structure (42 CFR 413.20) and
that is within the framework of
Medicare reimbursement principles and
cost report instructions. With regard to
the overhead allocation basis for the
new implantable devices cost center,
CMS will recommend an allocation
basis as it does with all overhead
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allocation. However, hospitals may use
a different statistic if approved by the
hospital’s Medicare contractor, in
accordance with PRM–I, Section 2313.
Comment: Many commenters did not
support requiring hospitals to report all
standard cost centers that describe
services the hospitals provide.
Response: In accordance with the
principle of departmental
apportionment of costs at § 413.53,
hospitals are required to report
separately the costs and charges for each
ancillary department for which charges
are customarily billed. Section 2302.8 of
the PRM–I defines a cost center as an
organizational unit, generally a
department or its subunit, having a
common functional purpose for which
direct and indirect costs are
accumulated, allocated and
apportioned. Language in the PRM–II,
Chapter 36, incorporated these policies
when establishing the standard ancillary
cost centers in the cost report.
Therefore, the standard cost centers
constitute the most minimum set of
common cost centers hospitals are
required to report, assuming they
maintain a separate account for those
services in the internal accounting
systems.
We recognize that not all cost centers,
whether standard or nonstandard, apply
to all providers. For example, where a
provider furnishes all radiological
services in a single department and their
records are maintained in that manner,
the provider would currently enter a
single entry identifying all radiological
services on the Radiology-Diagnostic
line of Worksheet A and make no
entries on the Radiology-Therapeutic
line and Radioisotopes line of the cost
report. However, currently, if these
radiological services were furnished in
three separate departments (cost
centers), then the corresponding
department data should also be
accumulated as such in the provider’s
accounting system and recorded
similarly in the cost report.
Comment: While some commenters
expressed agreement in theory with
establishing standard cost centers for CT
Scanning, MRI, and Cardiac
Catheterization, many expressed
significant concern with their actual
implementation. The commenters
believed that allocating costs for these
services to specific cost centers could
prove difficult, especially for cardiac
catheterization, and would in most
cases be an estimate. Some commenters
warned that smaller hospitals might not
have accounting systems that allow
matching costs to revenue in
departments for these diagnostic
services. One commenter suggested that
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hospitals frequently are slow to adopt
new cost centers and that CMS should
consider requiring all providers to use
the new cost centers. Some commenters
wanted to ensure that these services met
CMS’ definition for reporting as a
separate and distinct cost center. A
number of commenters requested that
CMS delay implementation of these
changes to the cost report to allow
industry-led initiatives to improve cost
reporting, especially capital cost
finding, to take effect. Other
commenters believed that the agency
should fully understand hospital costs
for CT and MRI before adding the
standard cost centers. One commenter
suggested that failure to establish cost
centers for CT Scanning and MRI would
amount to a violation of the
Administrative Procedures Act (APA)
because the final regulation must have
some rational connection with the facts.
Response: RTI recommended these
standard cost centers in order to
separately capture cost and charge data
for high volume services contributing to
aggregation bias in the OPPS relative
weights. Although we did not propose
to adopt these cost centers as standard
cost centers, we believe that doing so
would help provide more accurate cost
estimates for CT scans, MRI, and
Cardiac Catheterization, coupled with
improved hospital allocation of
moveable equipment costs based on
dollar value or direct assignment, if the
criteria in PRM–I, Section 2307 are met.
All of these departments already are
nonstandard cost centers, and, therefore,
we believe that they meet CMS’
definition of separate and distinct cost
centers, if a hospital maintains separate
departments for these services and
establishes separate accounts for them
in its internal accounting system.
We will review these comments again,
should we consider proposing
additional standard cost centers in the
cost report in future years.
We do not understand the comments
concerning the APA. We did not
propose to adopt these three cost
centers; we only requested comment on
RTI’s recommendation. Further, RTI and
commenters acknowledge that hospitals
do not appear to be appropriately
allocating capital costs to these
specialized imaging cost centers,
potentially using ‘‘square feet’’ as the
allocation basis rather than the
recommended allocation basis of ‘‘dollar
value.’’ Finally, commenters will have
an opportunity to provide further input
on revisions to the Medicare hospital
cost report form through a notice and
comment process as we pursue changes
to the cost report through the PRA
process.
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Comment: Many commenters asked
CMS to consider whether separate cost
centers for a variety of services should
be created, such as Type B emergency
departments, in order to develop more
accurate CCRs, particularly in the
context of potentially significant
changes to the cost report form. Other
commenters recommended that CMS
limit cost report changes to cost center
lines that have significant accuracy
problems in their current CCRs, so as
not to place undue burden on hospitals.
Response: The commenters will have
an opportunity to provide further input
on revisions to the Medicare hospital
cost report form through the PRA notice
and comment process anticipated later
this year. We note that RTI could not
consider Type B emergency department
visits specifically in its analysis because
Type B visits do not have a unique UB–
04 revenue code. Still, most commenters
believed that the issue of medical
devices and supplies represented the
most significant area of charge
compression and further changes to the
cost report and associated hospital
reporting burden would not be
warranted by potential improvements in
payment accuracy. We understand the
hospital’s increased administrative
burden that may result from changes to
the cost report because we have been
told that changes to the cost report
involve significant accounting and
billing modifications. However, we note
that most of the cost centers discussed
in this section are for departments or
accounts that cost report data indicate
are already established within many
hospitals’ internal accounting systems.
As to the potential new billing
requirements, we do not believe most
cost report changes would require
significant billing modifications if the
hospital uses the most detailed UB–04
revenue codes available. In summary,
we will keep these comments in mind
as we consider other revisions to the
Medicare hospital cost report.
Comment: Some commenters were
very concerned with the results of RTI’s
analysis, which observed very low CCRs
for CT scanning and MRI. They
attributed this finding to a common
hospital practice of allocating fixed
capital and moveable equipment costs
using a per square footage allocation
statistic, rather than one that more
appropriately associates the high capital
and equipment costs with the CT and
MRI cost centers. Some commenters
believed that RTI’s conclusions were
unjustified because RTI assumed that
the full cost of these specialized imaging
services was fully captured by the CT
and MRI nonstandard cost centers.
Many commenters requested more
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guidance regarding how to properly
allocate moveable equipment capital
costs, including the practice of direct
assignment of equipment depreciation
and lease costs, and generally supported
an educational initiative about capital
cost finding. Most commenters
supported allocating overhead based on
direct assignment or dollar value of
depreciation and lease costs.
Response: We agree that cost
allocation of the capital costs (for
example, depreciation or rental) of
expensive moveable equipment using
‘‘square feet’’ as the allocation basis may
lead to inaccuracies in cost estimates, as
the allocation basis bears no direct
relationship to the cost being allocated.
Because the CMS-recommended
allocation basis for moveable equipment
capital costs is ‘‘dollar value,’’ we
suggest that hospitals use that basis
rather than ‘‘square feet’’ to allocate the
moveable equipment capital costs. (We
refer readers to Section 3617 of PRM–II
and column header on Worksheet B–1.)
We note that ‘‘dollar value’’ in the
context of PRM–II, Section 3617 means
the ‘‘cost of the equipment’’ rather than
‘‘depreciation expense and lease costs’’
as the commenters mentioned. We fully
support industry-led hospital
educational initiatives related to capital
cost finding, including direct
assignment. As to the cost finding, the
policies in PRM–I, Section 2313 permit
a hospital to request that its Medicare
contractor approve a different allocation
basis than the CMS-recommended basis
if the use of the basis results in more
appropriate and more accurate
allocations. Hospitals may also directly
assign the capital-related cost if such
assignment meets all the criteria of
PRM–I, Section 2307. However, we
specify in PRM–I, Section 2307.A that,
‘‘Direct assignment of cost is the process
of assigning directly allocable costs of a
general service cost center (we refer
readers to Section 2302.9 of PRM–I) to
all cost centers receiving service from
that cost center based upon actual
auditable usage’’ and that, ‘‘The direct
assignment of costs must be made as
part of the provider’s accounting system
with costs recorded in the ongoing
normal accounting process.’’ Therefore,
these policies prohibit a hospital from
directly assigning moveable equipment
capital or building and fixture costs to,
for example, only a CT Scanning, MRI,
or Radiology-Diagnostic cost center(s),
and allocating those moveable
equipment capital or building and
fixture costs applicable to all the other
cost centers through the stepdown
process. We note that these policies for
allocating moveable equipment and
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building and fixture costs not only
impact the accuracy of the OPPS cost
estimates, but also impact the
calculation of reimbursement for
hospitals paid under cost
reimbursement (such as cancer hospitals
or CAHs).
2. Calculation of Median Costs
In this section of this final rule with
comment period, we discuss the use of
claims to calculate the final OPPS
payment rates for CY 2009. The hospital
OPPS page on the CMS Web site on
which this final rule with comment
period is posted provides an accounting
of claims used in the development of
the final rates at: https://
www.cms.hhs.gov/
HospitalOutpatientPPS. The accounting
of claims used in the development of
this final rule with comment period is
included on the Web site under
supplemental materials for the CY 2009
final rule with comment period. That
accounting provides additional detail
regarding the number of claims derived
at each stage of the process. In addition,
below we discuss the files of claims that
comprise the data sets that are available
for purchase under a CMS data user
contract. Our CMS Web site, https://
www.cms.hhs.gov/
HospitalOutpatientPPS, includes
information about purchasing the
following two OPPS data files: ‘‘OPPS
Limited Data Set’’ and ‘‘OPPS
Identifiable Data Set.’’ These files are
available for the claims that were used
to calculate the final payment rates for
the CY 2009 OPPS.
As proposed, we used the following
methodology to establish the relative
weights used in calculating the
proposed OPPS payment rates for CY
2009 shown in Addenda A and B to this
final rule with comment period.
a. Claims Preparation
We used the CY 2007 hospital
outpatient claims processed on and
before June 30, 2008, to set the final
relative weights for CY 2009. To begin
the calculation of the relative weights
for CY 2009, we pulled all claims for
outpatient services furnished in CY
2007 from the national claims history
file. This is not the population of claims
paid under the OPPS, but all outpatient
claims (including, for example, CAH
claims and hospital claims for clinical
laboratory services for persons who are
neither inpatients nor outpatients of the
hospital).
We then excluded claims with
condition codes 04, 20, 21, and 77.
These are claims that providers
submitted to Medicare knowing that no
payment would be made. For example,
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providers submit claims with a
condition code 21 to elicit an official
denial notice from Medicare and
document that a service is not covered.
We then excluded claims for services
furnished in Maryland, Guam, the U.S.
Virgin Islands, American Samoa, and
the Northern Mariana Islands because
hospitals in those geographic areas are
not paid under the OPPS.
We divided the remaining claims into
the three groups shown below. Groups
2 and 3 comprise the 107 million claims
that contain hospital bill types paid
under the OPPS.
1. Claims that were not bill types 12X,
13X (hospital bill types), or 76X (CMHC
bill types). Other bill types are not paid
under the OPPS and, therefore, these
claims were not used to set OPPS
payment. In prior years, we also used
claims of bill type 14X to set payment
rates under the OPPS. However, bill
type 14X ceased to be used to report any
services for which payment is made
under the OPPS effective April 1, 2006.
Therefore, we did not use these claims
in development of the final CY 2009
OPPS rates.
2. Claims that were bill types 12X or
13X (hospital bill types). These claims
are hospital outpatient claims.
3. Claims that were bill type 76X
(CMHC). (These claims are later
combined with any claims in item 2
above with a condition code 41 to set
the per diem partial hospitalization rate
determined through a separate process.)
For the CCR calculation process, we
used the same general approach as we
used in developing the final APC rates
for CY 2007 using the revised CCR
calculation which excluded the costs of
paramedical education programs and
weighted the outpatient charges by the
volume of outpatient services furnished
by the hospital. We refer readers to the
CY 2007 OPPS/ASC final rule with
comment period for more information
(71 FR 67983 through 67985). We first
limited the population of cost reports to
only those for hospitals that filed
outpatient claims in CY 2007 before
determining whether the CCRs for such
hospitals were valid.
We then calculated the CCRs for each
cost center and the overall CCR for each
hospital for which we had claims data.
We did this using hospital-specific data
from the HCRIS. We used the most
recent available cost report data, in most
cases, cost reports beginning in CY
2006. As proposed, for this final rule
with comment period, we used the most
recently submitted cost reports to
calculate the CCRs to be used to
calculate median costs for the proposed
CY 2009 OPPS rates. If the most recent
available cost report was submitted but
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not settled, we looked at the last settled
cost report to determine the ratio of
submitted to settled cost using the
overall CCR, and we then adjusted the
most recent available submitted but not
settled cost report using that ratio. We
calculated both an overall CCR and cost
center-specific CCRs for each hospital.
We used the overall CCR calculation
discussed in section II.A.1.c. of this
final rule with comment period for all
purposes that require use of an overall
CCR.
We then flagged CAH claims, which
are not paid under the OPPS, and claims
from hospitals with invalid CCRs. The
latter included claims from hospitals
without a CCR; those from hospitals
paid an all-inclusive rate; those from
hospitals with obviously erroneous
CCRs (greater than 90 or less than
.0001); and those from hospitals with
overall CCRs that were identified as
outliers (3 standard deviations from the
geometric mean after removing error
CCRs). In addition, we trimmed the
CCRs at the cost center (that is,
departmental) level by removing the
CCRs for each cost center as outliers if
they exceeded +/¥3 standard
deviations from the geometric mean. We
used a four-tiered hierarchy of cost
center CCRs, the revenue code-to-cost
center crosswalk, to match a cost center
to every possible revenue code
appearing in the outpatient claims that
is relevant to OPPS services, with the
top tier being the most common cost
center and the last tier being the default
CCR. If a hospital’s cost center CCR was
deleted by trimming, we set the CCR for
that cost center to ‘‘missing’’ so that
another cost center CCR in the revenue
center hierarchy could apply. If no other
cost center CCR could apply to the
revenue code on the claim, we used the
hospital’s overall CCR for the revenue
code in question. For example, if a visit
was reported under the clinic revenue
code, but the hospital did not have a
clinic cost center, we mapped the
hospital-specific overall CCR to the
clinic revenue code. The revenue codeto-cost center crosswalk is available for
inspection and comment on the CMS
Web site: https://www.cms.hhs.gov/
HospitalOutpatientPPS. Revenue codes
not used to set medians or to model
impacts are identified with an ‘‘N’’ in
the revenue code-to-cost center
crosswalk. We note that as discussed in
section II.A.1.c.(1) of this final rule with
comment period, we removed cost
center 3580 (Recreational Therapy) from
the hierarchy of CCRs for revenue code
0904 (Activity Therapy).
We then converted the charges to
costs on each claim by applying the CCR
that we believed was best suited to the
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revenue code indicated on the line with
the charge. Table 2 of the CY 2009
OPPS/ASC proposed rule contained a
list of the revenue codes we proposed to
package. Revenue codes not included in
Table 2 were those not allowed under
the OPPS because their services could
not be paid under the OPPS (for
example, inpatient room and board
charges), and thus charges with those
revenue codes were not packaged
during development of the OPPS
median costs. One exception to this
general methodology for converting
charges to costs on each claim is the
calculation of median blood costs, as
discussed in section II.A.2.d.(2) of this
final rule with comment period.
Thus, we applied CCRs as described
above to claims with bill type 12X or
13X, excluding all claims from CAHs
and hospitals in Maryland, Guam, the
U.S. Virgin Islands, American Samoa,
and the Northern Mariana Islands and
claims from all hospitals for which
CCRs were flagged as invalid.
We identified claims with condition
code 41 as partial hospitalization
services of hospitals and moved them to
another file. These claims were
combined with the 76X claims
identified previously to calculate the
partial hospitalization per diem rate.
We then excluded claims without a
HCPCS code. We moved to another file
claims that contained nothing but
influenza and pneumococcal
pneumonia (PPV) vaccines. Influenza
and PPV vaccines are paid at reasonable
cost and, therefore, these claims are not
used to set OPPS rates. We note that the
separate file containing partial
hospitalization claims is included in the
files that are available for purchase as
discussed above.
We next copied line-item costs for
drugs, blood, and brachytherapy sources
(the lines stay on the claim, but are
copied onto another file) to a separate
file. No claims were deleted when we
copied these lines onto another file.
These line-items are used to calculate a
per unit mean and median cost and a
per day mean and median cost for
drugs, radiopharmaceutical agents,
blood and blood products, and
brachytherapy sources, as well as other
information used to set payment rates,
such as a unit-to-day ratio for drugs.
We did not receive any public
comments on our CY 2009 proposal to
prepare the claims to be split into usable
groups and, therefore, we are finalizing
our proposal without modification.
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b. Splitting Claims and Creation of
‘‘Pseudo’’ Single Claims
(1) Splitting Claims
We then split the remaining claims
into five groups: single majors, multiple
majors, single minors, multiple minors,
and other claims. (Specific definitions
of these groups follow below.) In the CY
2009 OPPS/ASC proposed rule (73 FR
41434), we proposed to continue our
current policy of defining major
procedures as any procedure having a
status indicator of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or
‘‘X;’’ defining minor procedures as any
code having a status indicator of ‘‘F,’’
‘‘G,’’ ‘‘H,’’ ‘‘K,’’ ‘‘L,’’ ‘‘R,’’ ‘‘U,’’ or ‘‘N,’’
and classifying ‘‘other’’ procedures as
any code having a status indicator other
than one that we have classified as
major or minor. For CY 2009, we
proposed that status indicator ‘‘R’’
would be assigned to blood and blood
products; status indicator ‘‘U’’ would be
assigned to brachytherapy sources;
status indicator ‘‘Q1’’ would be assigned
to all ‘‘STVX-packaged codes;’’ status
indicator ‘‘Q2’’ would be assigned to all
‘‘T-packaged codes;’’ and status
indicator ‘‘Q3’’ would be assigned to all
codes that may be paid through a
composite APC based on compositespecific criteria or paid separately
through single code APCs when the
criteria are not met. The codes with
proposed status indicators ‘‘Q1,’’ ‘‘Q2,’’
and ‘‘Q3’’ were previously assigned
status indicator ‘‘Q’’ for the CY 2008
OPPS. As we discuss in section XIII.A.1.
of this final rule with comment period,
we proposed to assign these new status
indicators to facilitate identification of
the different categories of codes. We
proposed to treat these codes in the
same manner for data purposes for CY
2009 as we treated them for CY 2008.
Specifically, we proposed to continue to
evaluate whether the criteria for
separate payment of codes with status
indicator ‘‘Q1’’ or ‘‘Q2’’ are met in
determining whether they are treated as
major or minor codes. Codes with status
indicator ‘‘Q1’’ or ‘‘Q2’’ are carried
through the data either with status
indicator ‘‘N’’ as packaged or, if they
meet the criteria for separate payment,
they are given the status indicator of the
APC to which they are assigned and are
considered as ‘‘pseudo’’ single major
codes. Codes assigned status indicator
‘‘Q3’’ are paid under individual APCs
unless they occur in the combinations
that qualify for payment as composite
APCs and, therefore, they carry the
status indicator of the individual APC to
which they are assigned through the
data process and are treated as major
codes during both the split and
‘‘pseudo’’ single creation process. The
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calculation of the median costs for
composite APCs from multiple major
claims is discussed in section II.A.2.e. of
this final rule with comment period.
Specifically, we divided the
remaining claims into the following five
groups:
1. Single Major Claims: Claims with a
single separately payable procedure
(that is, status indicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’
or ‘‘X,’’ which includes codes with
status indicator ‘‘Q3’’); claims with one
unit of a status indicator ‘‘Q1’’ code
(‘‘STVX-packaged’’) where there was no
code with status indicator ‘‘S,’’ ‘‘T,’’
‘‘V,’’ or ‘‘X’’ on the same claim on the
same date; or claims with one unit of a
status indicator ‘‘Q2’’ code (‘‘Tpackaged’’) where there was no code
with a status indicator ‘‘T’’ on the same
claim on the same date.
2. Multiple Major Claims: Claims with
more than one separately payable
procedure (that is, status indicator ‘‘S,’’
‘‘T,’’ ‘‘V,’’ or ‘‘X,’’ which includes codes
with status indicator ‘‘Q3’’), or multiple
units of one payable procedure. These
claims include those codes with a status
indicator ‘‘Q2’’ code (‘‘T-packaged’’)
where there was no procedure with a
status indicator ‘‘T’’ on the same claim
on the same date of service but where
there was another separately paid
procedure on the same claim with the
same date of service (that is, another
code with status indicator ‘‘S,’’ ‘‘V,’’ or
‘‘X’’). We also include in this set claims
that contained one unit of one code
when the bilateral modifier was
appended to the code and the code was
conditionally or independently
bilateral. In these cases, the claims
represented more than one unit of the
service described by the code,
notwithstanding that only one unit was
billed.
3. Single Minor Claims: Claims with a
single HCPCS code that was assigned
status indicator ‘‘F,’’ ‘‘G,’’ ‘‘H,’’ ‘‘K,’’
‘‘L,’’ ‘‘R,’’ ‘‘U,’’ or ‘‘N’’ and not status
indicator ‘‘Q1’’ (‘‘STVX-packaged’’) or
status indicator ‘‘Q2’’ (‘‘T-packaged’’)
code.
4. Multiple Minor Claims: Claims with
multiple HCPCS codes that are assigned
status indicator ‘‘F,’’ ‘‘G,’’ ‘‘H,’’ ‘‘K,’’
‘‘L,’’ ‘‘R,’’ ‘‘U,’’ or ‘‘N;’’ claims that
contain more than one code with status
indicator ‘‘Q1’’ (‘‘STVX-packaged’’) or
more than one unit of a code with status
indicator ‘‘Q1’’ but no codes with status
indicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X’’ on the
same date of service; or claims that
contain more than one code with status
indicator ‘‘Q2’’ (‘‘T-packaged’’), or ‘‘Q2’’
and ‘‘Q1,’’ or more than one unit of a
code with status indicator ‘‘Q2’’ but no
code with status indicator ‘‘T’’ on the
same date of service.
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68529
5. Non-OPPS Claims: Claims that
contain no services payable under the
OPPS (that is, all status indicators other
than those listed for major or minor
status). These claims were excluded
from the files used for the OPPS. NonOPPS claims have codes paid under
other fee schedules, for example,
durable medical equipment or clinical
laboratory tests, and do not contain
either a code for a separately paid OPPS
service or a code for a packaged service.
Non-OPPS claims include claims for
therapy services paid sometimes under
the OPPS but billed, in these non-OPPS
cases, with revenue codes indicating
that the therapy services would be paid
under the Medicare Physician Fee
Schedule (MPFS).
The claims listed in numbers 1, 2, 3,
and 4 above are included in the data
files that can be purchased as described
above. Claims that contain codes to
which we have assigned status
indicators ‘‘Q1’’ (‘‘STVX-packaged’’)
and ‘‘Q2’’ (‘‘T-packaged’’) appear in the
data for the single major file, the
multiple major file, and the multiple
minor file used in this final rule with
comment period. Claims that contain
codes to which we have assigned status
indicator ‘‘Q3’’ (composite APC
members) appear in both the data of the
single and multiple major files used in
this final rule with comment period,
depending on the specific composite
calculation.
Comment: One commenter asked that
CMS make the preliminary packaging
and composite data available to the
public for review as soon as possible. In
addition, several commenters requested
that CMS make packaging data available
to the public, including utilization rates
and median costs for packaged services,
and general payment calculations, to
allow more transparency in the OPPS
ratesetting process.
Response: We make available a
considerable amount of data for public
analysis each year and, while we are not
developing and providing to the public
the extensively detailed information
that commenters requested, we provide
the public use files of claims and a
detailed narrative description of our
data process that the public can use to
perform any desired analyses. In
addition, we believe that the
commenters must examine the data
themselves to develop the specific
arguments to support their requests for
changes to payments under the OPPS. In
fact, several commenters submitted
detailed analyses of how often certain
packaged services were provided with
specific independent services, and the
amount by which packaged costs
contribute to the payment rate for the
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independent service. We understand
that the OPPS is a complex payment
system and that it is impossible to easily
determine the quantitative amount of
packaged costs present in the median
cost for every independent service.
However, based on the complex and
detailed comments that we received,
commenters are clearly able to perform
meaningful analyses based on the public
claims data available at this time.
After consideration of the public
comments received on our proposed
process of organizing claims by type, we
are finalizing our CY 2009 proposal,
without modification.
(2) Creation of ‘‘Pseudo’’ Single Claims
As proposed, to develop ‘‘pseudo’’
single claims for this final rule with
comment period, we examined both the
multiple major claims and the multiple
minor claims. We first examined the
multiple major claims for dates of
service to determine if we could break
them into ‘‘pseudo’’ single procedure
claims using the dates of service for all
lines on the claim. If we could create
claims with single major procedures by
using dates of service, we created a
single procedure claim record for each
separately paid procedure on a different
date of service (that is, a ‘‘pseudo’’
single).
We also used the bypass codes listed
earlier in Table 1 and discussed in
section II.A.1.b. of this final rule with
comment period to remove separately
payable procedures that we determined
contained limited or no packaged costs
or that were otherwise suitable for
inclusion on the bypass list from a
multiple procedure bill. When one of
the two separately payable procedures
on a multiple procedure claim was on
the bypass list, we split the claim into
two ‘‘pseudo’’ single procedure claim
records. The single procedure claim
record that contained the bypass code
did not retain packaged services. The
single procedure claim record that
contained the other separately payable
procedure (but no bypass code) retained
the packaged revenue code charges and
the packaged HCPCS code charges. We
also removed lines that contained
multiple units of codes on the bypass
list and treated them as ‘‘pseudo’’ single
claims by dividing the cost for the
multiple units by the number of units
on the line. Where one unit of a single,
separately paid procedure code
remained on the claim after removal of
the multiple units of the bypass code,
we created a ‘‘pseudo’’ single claim
from that residual claim record, which
retained the costs of packaged revenue
codes and packaged HCPCS codes. This
enabled us to use claims that would
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otherwise be multiple procedure claims
and could not be used.
Where only one unit of one of an
‘‘overlap bypass code’’ appeared on a
claim with only one unit of another
separately paid code, for the CY 2009
OPPS/ASC proposed rule we used the
line-item cost of the ‘‘overlap bypass
code’’ to create a ‘‘pseudo’’ single
procedure claim for the ‘‘overlap bypass
code’’ but did not use the remaining
costs on the claim for the other
separately paid procedure.
Comment: Several commenters urged
CMS to use as much claims data as
possible to set the CY 2009 OPPS
median costs.
Response: We agree that it is
preferable to use as much claims data as
possible to maximize the extent to
which the median costs for any given
service or APC accurately reflect the
relative costs of the services. Although
as discussed in section II.A.1.b. of this
final rule with comment period, the
removal of radiation oncology codes
that did not pass the empirical criteria
from the bypass list for this final rule
with comment period resulted in a
smaller number of ‘‘pseudo’’ single
claims, we were able to revise our
treatment of the ‘‘overlap bypass codes’’
to enable us to use the claims data that
remained on the claim after removal of
the line-item cost for the bypass code
when only one unit of one separately
paid code remained on the claim. We
refer readers to section II.A.1.b. of this
final rule with comment period for
further discussion of this change.
For this final rule with comment
period, we created ‘‘pseudo’’ single
claims from the remaining information
on these claims. We assessed the claim
to determine if, after removal of all lines
for bypass codes, including the ‘‘overlap
bypass codes,’’ a single unit of a single
separately paid code remained on the
claim. If so, we attributed the packaged
costs on the claim to the single unit of
the single remaining separately paid
code other than the bypass code to
create a ‘‘pseudo’’ single claim. This
allowed us to use more claims data for
ratesetting purposes for this final rule
with comment period.
We also examined the multiple minor
claims to determine whether we could
create ‘‘pseudo’’ single procedure
claims. Specifically, where the claim
contained multiple codes with status
indicator ‘‘Q1’’ (‘‘STVX-packaged’’) on
the same date of service or contained
multiple units of a single code with
status indicator ‘‘Q1,’’ we selected the
status indicator ‘‘Q1’’ HCPCS code that
had the highest CY 2008 relative weight,
moved the units to one on that HCPCS
code, and packaged all costs for other
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codes with status indicator ‘‘Q1,’’ as
well as all other packaged HCPCS code
and packaged revenue code costs, into
a total single cost for the claim to create
a ‘‘pseudo’’ single claim for the selected
code. We changed the status indicator
for selected codes from the data status
indicator of ‘‘N’’ to the status indicator
of the APC to which the selected
procedure was assigned for further data
processing and considered this claim as
a major procedure claim. We used this
claim in the calculation of the APC
median cost for the status indicator
‘‘Q1’’ HCPCS code.
Similarly, where a multiple minor
claim contained multiple codes with
status indicator ‘‘Q2’’ (‘‘T-packaged’’) or
multiple units of a single code with
status indicator ‘‘Q2,’’ we selected the
status indicator ‘‘Q2’’ HCPCS code that
had the highest CY 2008 relative weight,
moved the units to one on that HCPCS
code, and packaged all costs for other
codes with status indicator ‘‘Q2,’’ as
well as all other packaged HCPCS code
and packaged revenue code costs into a
total single cost for the claim to create
a ‘‘pseudo’’ single claim for the selected
code. We changed the status indicator
for the selected code from a data status
indicator of ‘‘N’’ to the status indicator
of the APC to which the selected code
was assigned, and we considered this
claim as a major procedure claim.
Lastly, where a multiple minor claim
contained multiple codes with status
indicator ‘‘Q2’’ (‘‘T-packaged’’) and
status indicator ‘‘Q1’’ (‘‘STVXpackaged’’), we selected the status
indicator ‘‘Q2’’ HCPCS code (‘‘Tpackaged’’) that had the highest relative
weight for CY 2008, moved the units to
one on that HCPCS code, and packaged
all costs for other codes with status
indicator ‘‘Q2,’’ costs of all codes with
status indicator ‘‘Q1’’ (‘‘STVXpackaged’’), and other packaged HCPCS
code and packaged revenue code costs
into a total single cost for the claim to
create a ‘‘pseudo’’ single claim for the
selected (‘‘T-packaged’’) code. We favor
status indicator ‘‘Q2’’ over ‘‘Q1’’ HCPCS
codes because ‘‘Q2’’ HCPCS codes have
higher CY 2008 relative weights. If a
status indicator ‘‘Q1’’ HCPCS code had
a higher CY 2008 relative weight, it
would become the primary code for the
simulated single bill process. We
changed the status indicator for the
selected status indicator ‘‘Q2’’ (‘‘Tpackaged’’) code from a data status
indicator of ‘‘N’’ to the status indicator
of the APC to which the selected code
was assigned and we considered this
claim as a major procedure claim.
After we assessed the conditional
packaging of HCPCS codes with
proposed status indicators ‘‘Q1’’ and
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‘‘Q2,’’ we then assessed the claims to
determine if the criteria for the multiple
imaging composite APCs, discussed in
section II.A.2.e.(5) of this final rule with
comment period, were met. Where the
criteria for the imaging composite APCs
were met, we created a ‘‘single session’’
claim for the applicable imaging
composite service and determined
whether we could use the claim in
ratesetting. For HCPCS codes that are
both conditionally packaged and are
members of a multiple imaging
composite APC, we first assessed
whether the code would be packaged
and if so, the code ceased to be available
for further assessment as part of the
composite APC. Because the packaged
code would not be a separately payable
procedure, we considered it to be
unavailable for use in setting the
composite APC median cost.
We excluded those claims that we
were not able to convert to single claims
even after applying all of the techniques
for creation of ‘‘pseudo’’ singles to
multiple majors and to multiple minors.
As has been our practice in recent years,
we also excluded claims that contained
codes that were viewed as
independently or conditionally bilateral
and that contained the bilateral modifier
(Modifier 50 (Bilateral procedure))
because the line-item cost for the code
represented the cost of two units of the
procedure, notwithstanding that the
code appeared with a unit of one.
Comment: One commenter suggested
that the handling of status indicator
‘‘Q1’’ (‘‘STVX-packaged’’) and ‘‘Q2’’
(‘‘T-packaged’’) conditionally packaged
codes at the beginning of the ratesetting
process rather than in later stages
packaged more lines than were
necessary or appropriate. The
commenter suggested that applying the
packaging determination of the
conditionally packaged code in later
stages would allow lines that would
otherwise be packaged to be used for
ratesetting.
Response: The purposes of the various
methods through which we develop
‘‘pseudo’’ single claims is to isolate the
resource cost of a service in situations
where that otherwise might not be
possible. In the case of the status
indicator ‘‘Q1’’ and ‘‘Q2’’ conditionally
packaged codes, we only used lines that
would actually be paid separately under
the final CY 2009 payment policies in
estimating median costs in order to
accurately estimate the costs of these
services when they would be separately
payable. The commenter’s suggested
methodology would result in our
incorporation of lines that would be
packaged when processed through the I/
OCE, which we believe to be
inappropriate in the ‘‘pseudo’’ single
claim development process that we use
to estimate the costs of services that
would be separately payable.
After consideration of the public
comment received, we are finalizing our
CY 2009 proposal, without
modification, for the process by which
we develop ‘‘pseudo’’ single claims, for
this final rule with comment period.
c. Completion of Claim Records and
Median Cost Calculations
We then packaged the costs of
packaged HCPCS codes (codes with
status indicator ‘‘N’’ listed in
Addendum B to this final rule with
comment period, the costs of those lines
for codes with status indicator ‘‘Q1’’ or
‘‘Q2’’ when they are not separately
paid), and the costs of packaged revenue
codes into the cost of the single major
procedure remaining on the claim.
As noted in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66606), for the CY 2008 OPPS, we
adopted an APC Panel recommendation
that requires CMS to review the final list
of packaged revenue codes for
consistency with OPPS policy and
ensure that future versions of the I/OCE
edit accordingly. We compared the
packaged revenue codes in the I/OCE to
the final list of packaged revenue codes
for the CY 2008 OPPS (72 FR 66608
through 66609) and that we used for
packaging costs in median calculation.
As a result of that analysis, we used the
packaged revenue codes for CY 2009
that are displayed in Table 2 below. We
received no public comments on the
revenue codes that we proposed to
package for CY 2009 and, therefore, we
are finalizing the list of packaged
revenue codes as proposed, without
modification, as shown in Table 2
below.
In this final rule with comment
period, we replaced the NUBC standard
abbreviations for the revenue codes
listed in Table 2 of the CY 2009 OPPS/
ASC proposed rule with the most
current NUBC description of the
revenue code categories and
subcategories to better articulate the
meanings of the revenue codes.
However, while the labeling for the
packaged revenue codes changed, the
list of revenue codes shown in Table 2
has not changed from the revenue codes
that we proposed to package for CY
2009 as displayed in Table 2 of the CY
2009 OPPS/ASC proposed rule (73 FR
41436 through 41437) and which we are
finalizing for the CY 2009 OPPS. In the
course of making the changes in labeling
for the revenue codes in Table 2, we
noticed some changes to revenue
categories and subcategories that we
believe warrant further review for future
OPPS updates. Although we are
finalizing the list of packaged revenue
codes in Table 2 for CY 2009, we intend
to assess the NUBC revenue codes to
determine whether any changes to the
list of packaged revenue codes should
be proposed for the CY 2010 OPPS. We
welcome public input and discussion
during the comment period of this final
rule with comment period on the
packaged revenue codes listed in Table
2, for purposes of assisting us in this
assessment of revenue codes. When
submitting comments, commenters
should remember that the OPPS pays
not only for services furnished to
hospital outpatients but also pays for a
limited set of services furnished to
inpatients who do not have Part A
coverage of hospital services furnished
on the date on which the service is
furnished. Payment under the OPPS for
these services, which are reported on
12X bill types, may lead to the
appropriate packaging of some costs
reported on inpatient revenue codes for
purposes of the OPPS ratesetting.
TABLE 2—CY 2009 PACKAGED REVENUE CODES
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Revenue
code
0250
0251
0252
0254
0255
0257
0258
0259
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Description
Pharmacy;
Pharmacy;
Pharmacy;
Pharmacy;
Pharmacy;
Pharmacy;
Pharmacy;
Pharmacy;
General Classification.
Generic Drugs.
Non-Generic Drugs.
Drugs Incident to Other Diagnostic Services.
Drugs Incident to Radiology.
Non-Prescription.
IV Solutions.
Other Pharmacy.
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TABLE 2—CY 2009 PACKAGED REVENUE CODES—Continued
Revenue
code
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0260
0262
0263
0264
0269
0270
0271
0272
0273
0275
0276
0278
0279
0280
0289
0343
0344
0370
0371
0372
0379
0390
0399
0560
0569
0621
0622
0624
0630
0631
0632
0633
0681
0682
0683
0684
0689
0700
0709
0710
0719
0720
0721
0732
0762
0801
0802
0803
0804
0809
0810
0819
0821
0824
0825
0829
0942
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Description
IV Therapy; General Classification.
IV Therapy; IV Therapy/Pharmacy Svcs.
IV Therapy; IV Therapy/Drug/Supply Delivery.
IV Therapy; IV Therapy/Supplies.
IV Therapy; Other IV Therapy.
Medical/Surgical Supplies and Devices; General Classification.
Medical/Surgical Supplies and Devices; Non-sterile Supply.
Medical/Surgical Supplies and Devices; Sterile Supply.
Medical/Surgical Supplies and Devices; Take Home Supplies.
Medical/Surgical Supplies and Devices; Pacemaker.
Medical/Surgical Supplies and Devices; Intraocular Lens.
Medical/Surgical Supplies and Devices; Other Implants.
Medical/Surgical Supplies and Devices; Other Supplies/Devices.
Oncology; General Classification.
Oncology; Other Oncology.
Nuclear Medicine; Diagnostic Radiopharmaceuticals.
Nuclear Medicine; Therapeutic Radiopharmaceuticals.
Anesthesia; General Classification.
Anesthesia; Anesthesia Incident to Radiology.
Anesthesia; Anesthesia Incident to Other DX Services.
Anesthesia; Other Anesthesia.
Administration, Processing and Storage for Blood and Blood Components; General Classification.
Administration, Processing and Storage for Blood and Blood Components; Other Blood Handling.
Home Health (HH)—Medical Social Services; General Classification.
Home Health (HH)—Medical Social Services; Other Med. Social Service.
Medical Surgical Supplies—Extension of 027X; Supplies Incident to Radiology.
Medical Surgical Supplies—Extension of 027X; Supplies Incident to Other DX Services.
Medical Surgical Supplies—Extension of 027X; FDA Investigational Devices.
Pharmacy—Extension of 025X; Reserved.
Pharmacy—Extension of 025X; Single Source Drug.
Pharmacy—Extension of 025X; Multiple Source Drug.
Pharmacy—Extension of 025X; Restrictive Prescription.
Trauma Response; Level I Trauma.
Trauma Response; Level II Trauma.
Trauma Response; Level III Trauma.
Trauma Response; Level IV Trauma.
Trauma Response; Other.
Cast Room; General Classification.
Cast Room; Reserved.
Recovery Room; General Classification.
Recovery Room; Reserved.
Labor Room/Delivery; General Classification.
Labor Room/Delivery; Labor.
EKG/ECG (Electrocardiogram); Telemetry.
Specialty Room—Treatment/Observation Room; Observation Room.
Inpatient Renal Dialysis; Inpatient Hemodialysis.
Inpatient Renal Dialysis; Inpatient Peritoneal Dialysis (Non-CAPD).
Inpatient Renal Dialysis; Inpatient Continuous Ambulatory Peritoneal Dialysis (CAPD).
Inpatient Renal Dialysis; Inpatient Continuous Cycling Peritoneal Dialysis (CCPD).
Inpatient Renal Dialysis; Other Inpatient Dialysis.
Acquisition of Body Components; General Classification.
Inpatient Renal Dialysis; Other Donor.
Hemodialysis-Outpatient or Home; Hemodialysis Composite or Other Rate.
Hemodialysis-Outpatient or Home; Maintenance—100%.
Hemodialysis-Outpatient or Home; Support Services.
Hemodialysis-Outpatient or Home; Other OP Hemodialysis.
Other Therapeutic Services (also see 095X, an extension of 094x); Education/Training.
In addition, we excluded (1) claims
that had zero costs after summing all
costs on the claim and (2) claims
containing packaging flag number 3.
Effective for services furnished on or
after July 1, 2004, the I/OCE assigned
packaging flag number 3 to claims on
which hospitals submitted token
charges for a service with status
indicator ‘‘S’’ or ‘‘T’’ (a major separately
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paid service under the OPPS) for which
the fiscal intermediary or MAC was
required to allocate the sum of charges
for services with a status indicator
equaling ‘‘S’’ or ‘‘T’’ based on the weight
of the APC to which each code was
assigned. We do not believe that these
charges, which were token charges as
submitted by the hospital, are valid
reflections of hospital resources.
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Therefore, we deleted these claims. We
also deleted claims for which the
charges equaled the revenue center
payment (that is, the Medicare payment)
on the assumption that where the charge
equaled the payment, to apply a CCR to
the charge would not yield a valid
estimate of relative provider cost.
For the remaining claims, we then
standardized 60 percent of the costs of
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the claim (which we have previously
determined to be the labor-related
portion) for geographic differences in
labor input costs. We made this
adjustment by determining the wage
index that applied to the hospital that
furnished the service and dividing the
cost for the separately paid HCPCS code
furnished by the hospital by that wage
index. As has been our policy since the
inception of the OPPS, we proposed to
use the pre-reclassified wage indices for
standardization because we believe that
they better reflect the true costs of items
and services in the area in which the
hospital is located than the postreclassification wage indices and,
therefore, would result in the most
accurate unadjusted median costs.
We also excluded claims that were
outside 3 standard deviations from the
geometric mean of units for each HCPCS
code on the bypass list (because, as
discussed above, we used claims that
contain multiple units of the bypass
codes).
After removing claims for hospitals
with error CCRs, claims without HCPCS
codes, claims for immunizations not
covered under the OPPS, and claims for
services not paid under the OPPS,
approximately 58 million claims were
left for this final rule with comment
period. Using these 58 million claims,
we created approximately 99 million
single and ‘‘pseudo’’ single claims, of
which we used 99 million single bills
(after trimming out approximately
617,000 claims as discussed above in
this section) in the final CY 2009
median development and ratesetting.
We used the remaining claims to
calculate the final CY 2009 median costs
for each separately payable HCPCS code
and each APC. The comparison of
HCPCS code-specific and APC medians
determines the applicability of the 2
times rule. Section 1833(t)(2) of the Act
provides that, subject to certain
exceptions, the items and services
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
group is more than 2 times greater than
the lowest median cost for an item or
service within the same group (the 2
times rule). Finally, we reviewed the
median costs and public comments
received on the CY 2009 OPPS/ASC
proposed rule and reassigned HCPCS
codes to different APCs where we
believed that it was appropriate. Section
III. of this final rule with comment
period includes a discussion of certain
HCPCS code assignment changes that
resulted from examination of the
median costs, review of the public
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comments, and for other reasons. The
APC medians were recalculated after we
reassigned the affected HCPCS codes.
Both the HCPCS code-specific medians
and the APC medians were weighted to
account for the inclusion of multiple
units of the bypass codes in the creation
of ‘‘pseudo’’ single bills.
Comment: Several commenters
objected to the volatility of the OPPS
rates from year to year. These
commenters asserted that the absence of
stability in the OPPS rates creates
budgeting, planning, and operating
problems for hospitals, and that as more
care is provided on an outpatient, rather
than inpatient basis, the need for stable
payment rates from one year to the next
becomes more important to hospitals.
Some commenters suggested that we
limit reductions in APC payments to a
set amount. One commenter suggested
that we reexamine the billing system.
Response: There are a number of
factors pertinent to the OPPS that may
cause median costs to change from one
year to the next. Some of these are a
reflection of hospital behavior, and
some of them are a reflection of
fundamental characteristics of the OPPS
as defined in statute. For example, the
OPPS payment rates are based on
hospital cost report and claims data.
However, hospital costs and charges
change each year and this results in
both changes to the CCRs taken from the
most currently available cost reports
and also differences in the charges on
the claims that are the basis of the
calculation of the median costs on
which OPPS rates are based. Similarly,
hospitals adjust their mix of services
from year to year by offering new
services and ceasing to furnish services
or changing the proportion of the
various services they furnish, which has
an impact on the CCRs that we derive
from their cost reports. CMS cannot
stabilize these hospital-driven
fundamental inputs to the calculation of
OPPS payment rates.
Moreover, there are other essential
elements of the OPPS which contribute
to the changes in relative weights each
year. These include, but are not limited
to, reassignments of HCPCS codes to
APCs to rectify 2 times violations as
required by the law, to address the costs
of new services, to address differences
in hospitals’ costs that may result from
changes in medical practice, and to
respond to public comments. Our efforts
to improve payment accuracy may also
contribute to payment volatility in the
short run, as may be the case when we
are eventually able to use more specific
CCRs to estimate the costs of
implantable devices, based on the final
policy that we adopted to disaggregate
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the single cost center for medical
supplies into two more specific cost
centers, as described in the FY 2009
IPPS final rule (73 FR 48458 through
48467). Moreover, for some services, we
cannot avoid using small numbers of
claims, either because the volume of
services is naturally low or because the
claims data do not facilitate the
calculation of a median cost for a single
service. Where there are small numbers
of claims that are used in median
calculation, there is more volatility in
the median cost from one year to the
next. Lastly, changes to OPPS payment
policy (for example, changes to
packaging) also contribute to some
extent to the fluctuations in the OPPS
payment rates for the same services
from year to year.
We cannot avoid the naturally
occurring volatility in the cost report
and claims data that hospitals submit
and on which the payment rates are
based. Moreover (with limited
exceptions), we are required by law to
reassign HCPCS codes to APCs where it
is necessary to avoid 2 times violations.
However, we have made other changes
to resolve some of the other potential
reasons for instability from year to year.
Specifically, we continue to seek ways
to use more claims data so that we have
fewer APCs for which there are small
numbers of single bills used to set the
APC median costs. Moreover, we have
tried to eliminate APCs with very small
numbers of single bills where we could
do so. We recognize that changes to
payment policies, such as the packaging
of payment for ancillary and supportive
services and the implementation of
composite APCs, may contribute to
volatility in payment rates in the short
term, but we believe that larger payment
packages and bundles should help to
stabilize payments in future years by
enabling us to use more claims data and
by establishing payments for larger
groups of services.
Comment: Some commenters asked
that CMS provide an adjustment for
medical education costs under the OPPS
because many of the costs of teaching
services are now incurred in the HOPD
as services previously furnished only in
the inpatient setting are now being
furnished in the HOPD. These
commenters stated that CMS indicated
that it would study the costs and
payment differential among different
classes of providers in the April 7, 2000
OPPS final rule but has not done so.
They recommended that CMS study
whether the hospital outpatient costs of
teaching hospitals are higher than the
costs of other hospitals for purposes of
determining whether there should be a
teaching hospital adjustment. The
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commenters explained that their
internal analysis of 2006 Medicare cost
reports showed that the average
outpatient margins were ¥27.3 for
major teaching hospitals, ¥13.0 for
other teaching hospitals, and ¥15.2 for
nonteaching hospitals. They believed
that these findings demonstrated that
the hospital outpatient costs of major
teaching hospitals are significantly
greater than the costs of other hospitals.
The commenters requested that CMS
conduct its own analysis and that if that
analysis showed a difference due to the
unique missions of teaching hospitals,
CMS should add a teaching adjustment
to the OPPS.
Response: Unlike payment under the
IPPS, the law does not provide for
payment for indirect medical education
costs to be made under the OPPS.
Section 1833(t)(2)(E) of the Act, as
added by section 4523 of the BBA, states
that the Secretary shall establish, in a
budget neutral manner ‘‘* * * other
adjustments as determined to be
necessary to ensure equitable payments,
such as adjustments for certain classes
of hospitals.’’ We have not found such
an adjustment to be necessary to ensure
equitable payments to teaching
hospitals and, therefore, have not
developed such an adjustment. We do
not believe an indirect medical
education add-on payment is
appropriate in a budget neutral payment
system where such changes would
result in reduced payments to all other
hospitals. Furthermore, in this final rule
with comment period, we have
developed payment weights that we
believe provide appropriate and
adequate payment for the complex
medical services, such as visits
requiring prolonged observation, new
technology services, and devicedependent procedures, which we
understand are disproportionately
furnished by teaching hospitals. We
note that teaching hospitals benefit from
the CY 2009 recalibration of the APCs
in this final rule with comment period.
The final CY 2009 impacts by class of
hospital are displayed in Table 51 in
section XXIII.B. of this final rule with
comment period.
After consideration of the public
comments received, we are finalizing
our proposed CY 2009 methodology for
calculating the median costs upon
which the CY 2009 OPPS payment rates
are based.
In some cases, APC median costs are
calculated using variations of the
process outlined above. Section II.A.2.d.
of this final rule with comment period
that follows addresses the calculation of
single APC criteria-based median costs.
Section II.A.2.e. of this final rule with
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comment period discusses the
calculation of composite APC criteriabased median costs. Section X.B. of this
final rule with comment period
addresses the methodology for
calculating the median cost for partial
hospitalization services.
d. Calculation of Single Procedure APC
Criteria-Based Median Costs
(1) Device-Dependent APCs
Device-dependent APCs are
populated by CPT codes that usually,
but not always, require that a device be
implanted or used to perform the
procedure. For a full history of how we
have calculated payment rates for
device-dependent APCs in previous
years and a detailed discussion of how
we developed the standard devicedependent APC ratesetting
methodology, we refer readers to the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66739 through
66742). Overviews of the procedure-todevice edits and device-to-procedure
edits used in ratesetting for devicedependent APCs are available in the CY
2005 OPPS final rule with comment
period (69 FR 65761 through 65763) and
the CY 2007 OPPS/ASC final rule with
comment period (71 FR 68070 through
68071).
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41437), we proposed for CY
2009 to continue using our standard
methodology for calculating median
costs for device-dependent APCs, which
utilizes claims data that generally
represent the full cost of the required
device. Specifically, we proposed to
calculate the medians for devicedependent APCs for CY 2009 using only
the subset of single procedure claims
from CY 2007 claims data that pass the
procedure-to-device and device-toprocedure edits; do not contain token
charges (less than $1.01) for devices;
and do not contain the ‘‘FB’’ modifier
signifying that the device was furnished
without cost to the provider, supplier,
or practitioner, or where a full credit
was received. We believe that this
methodology gave us the most
appropriate proposed rule median costs
for device-dependent APCs in which the
hospital incurs the full cost of the
device.
While the median costs for the
majority of device-dependent APCs
showed increases from CY 2008 based
on the CY 2009 proposed rule claims
data, the median costs for three APCs
involving electrode/lead implantation
decreased significantly compared to the
CY 2008 final rule with comment period
median costs. Specifically, APC 0106
(Insertion/Replacement of Pacemaker
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Leads and/or Electrodes), APC 0225
(Implantation of Neurostimulator
Electrodes, Cranial Nerve), and APC
0418 (Insertion of Left Ventricular
Pacing Electrode) demonstrated median
decreases of 26 percent, 52 percent, and
47 percent, respectively. As indicated in
the CY 2009 OPPS/ASC proposed rule
(73 FR 41437), we believe these
decreases reflect hospitals’ correction of
inaccurate and incomplete billing
practices for these services due to the
implementation of device-to-procedure
edits beginning in CY 2007. As
discussed in the CY 2007 OPPS/ASC
final rule with comment period (71 FR
68070 through 68071), in the course of
examining claims data for calculation of
the CY 2007 OPPS payment rates, we
identified circumstances in which
hospitals billed a device code but failed
to bill any procedure code with which
the device could be used correctly. For
APCs 0106, 0225, and 0418 in
particular, we found that hospitals
frequently billed a procedure code for
lead/electrode implantation with device
HCPCS codes for a lead/electrode and
the more expensive pulse generator but
failed to report a procedure code for
generator implantation. These errors in
billing led to the costs of the pulse
generator being packaged incorrectly
into the procedure codes for lead/
electrode implantation. Hospitals that
coded and billed in this manner
received no payment for the procedure
to implant the pulse generator, but these
erroneous claims caused the OPPS
payment rate for the lead/electrode
implantation APCs to be inappropriately
high. To address this problem, we
implemented edits to correct the coding
for CY 2007, and the proposed decreases
to the median costs of APCs 0106, 0225,
and 0418 for CY 2009 were consistent
with what we expected, based on what
we understood to be the nature of the
services and the costs of correctly coded
devices. In the CY 2009 OPPS/ASC
proposed rule (73 FR 41438), we also
noted an anticipated decrease in our
frequency of single procedure claims for
the services assigned to APCs 0106,
0225, and 0418, most likely because the
device-to-procedure edits led hospitals
to include the pulse generator
implantation HCPCS codes on the same
claims, resulting in fewer single
procedure claims for the lead/electrode
implantation procedures.
At the August 2008 meeting of the
APC Panel, one presenter stated that the
proposed decrease in payment for CY
2009 for APC 0225, which includes a
procedure to implant a neurostimulator
electrode for vagus nerve stimulation
(VNS), would make VNS too costly for
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providers and beneficiaries relative to
its OPPS payment. The presenter
requested that CMS reassign CPT code
64553 (Percutaneous implantation of
neurostimulator electrodes, cranial
nerve) to APC 0040 (Percutaneous
Implantation of Neurostimulator
Electrodes, Excluding Cranial Nerve),
leaving CPT code 64573 (Incision for
implantation of neurostimulator
electrodes, cranial nerve) as the only
code in APC 0225 (CPT code 64573
describes the lead implantation for
VNS). The presenter argued that the
procedure described by CPT code 64553
is more similar clinically and in terms
of resource utilization to the procedures
assigned to APC 0040 than to the other
procedure assigned to APC 0225. The
presenter also requested that, after
reassigning CPT code 64553 to APC
0040, CMS calculate the payment rate
for APC 0225 using only claims for
patients with epilepsy. According to the
presenter, in May 2007, CMS issued a
National Coverage Determination (NCD)
denying Medicare coverage of VNS for
the treatment of depression, while
maintaining coverage for certain
epilepsy indications. The presenter
stated that it was possible the Medicare
noncoverage of VNS for depression may
have confused hospital providers,
leading to incorrect hospital coding and
submission of epilepsy claims. In
response to this two-part request, the
APC Panel recommended that CMS
reassign CPT code 64553 to APC 0040,
and that CMS recalculate the median
cost of APC 0225 based solely on claims
for CPT code 64573. The APC Panel did
not make a recommendation related to
the requester’s second request, to
include only claims with epilepsy
indications in ratesetting for APC 0225.
We discuss our response to these two
APC Panel recommendations below
under the comments and responses
section of this section of this final rule
with comment period.
We also indicated in the CY 2009
OPPS/ASC proposed rule (73 FR 41438),
that APC 0625 (Level IV Vascular
Access Procedures) as configured for CY
2008 and calculated based on CY 2007
claims data also demonstrated a
significant decrease in median cost
(approximately 59 percent) relative to
CY 2008 (based on CY 2006 claims
data). We believe this decrease is
attributable to the implementation of
procedure-to-device edits on January 1,
2007, for the only CPT code assigned to
this APC, specifically CPT code 36566
(Insertion of tunneled centrally inserted
central venous access device, requiring
two catheters via two separate venous
access sites; with subcutaneous port(s)).
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Because the procedure described by
CPT code 36566 involves the insertion
of a dialysis access system, our edits
require that the HCPCS code for that
device be present on the claim any time
a hospital bills CPT code 36566. Prior to
January 1, 2007, we believe that
hospitals often reported CPT code 36566
without also reporting the device
HCPCS code for the dialysis access
system, or incorrectly billed CPT code
36566 for procedures that do not require
the use of the device. Therefore, with
the implementation of procedure-todevice edits, the volume of total CY
2007 claims for CPT code 36566
decreased as hospitals corrected their
claims to report this service only under
the appropriate circumstances, while
the correctly coded claims reporting the
required device (and available for CY
2009 ratesetting) increased significantly
from CY 2006 to CY 2007. We believe
that the CY 2009 proposed rule median
cost of approximately $2,092 calculated
for CPT code 36566 from those claims
was accurate and appropriately reflected
correct hospital reporting of the
procedure and the associated device.
Furthermore, because of the decrease in
the median cost for CPT code 36566, we
proposed to reassign the code to APC
0623 (Level III Vascular Access
Procedures), which had a proposed
median cost of approximately $1,939.
We also proposed to delete APC 0625
because no other procedures would map
to this APC if CPT code 36566 was
reassigned.
In addition, we noted a decrease of
approximately 19 percent for APC 0681
(Knee Arthroplasty) relative to CY 2008,
which we believe is attributable to a low
volume of services being performed by
a small number of providers (73 FR
41438) and to a single provider
furnishing the majority of the services.
As we have stated in the past, some
fluctuation in relative costs from year to
year is to be expected in a prospective
payment system, particularly for low
volume device-dependent APCs such as
APC 0681, for which the proposed
median cost increased approximately 37
percent from CY 2007 to CY 2008.
Comment: Many commenters
supported the CMS proposal to set the
median costs for device-dependent
APCs using the standard devicedependent APC ratesetting methodology
in CY 2009, and expressed appreciation
of CMS’ efforts to use only those claims
that reflect the full costs of devices in
ratesetting for device-dependent APCs.
One commenter remarked that the
methodology of using only those claims
that include the appropriate device
HCPCS codes to calculate payment rates
for procedures that require a device to
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68535
be implanted or used results in payment
rates that more appropriately reflect the
costs associated with device-dependent
APCs. The commenter supported the
proposed payment increases for APC
0385 (Level I Prosthetic Urological
Procedures) and APC 0386 (Level II
Prosthetic Urological Procedures) in
particular. Some commenters supported
the mandatory reporting of all HCPCS
device C-codes, and urged CMS to
continue educating hospitals on the
importance of accurate coding for
devices, supplies, and other
technologies. Those commenters
recommended that CMS focus on
educating providers on the accurate use
of supply codes, particularly HCPCS
code A4306 (Disposable drug delivery
system, flow rate of less than 50 ml per
hour), which the commenters believed
was reported inappropriately by many
hospitals.
Several commenters also requested
that CMS exclude claims from
ratesetting in CY 2010 and beyond that
contain the ‘‘FC’’ modifier, indicating
the procedure was performed using a
device for which the hospital received
partial credit. According to the
commenters, exclusion of these claims
is necessary to ensure that only claims
that contain the full costs of devices are
included in ratesetting.
Response: We appreciate the
commenters’ support of the standard
device-dependent APC ratesetting
methodology. We agree that accurate
reporting of device, supply, and
technology charges will help to ensure
that these items are appropriately
accounted for in future years’ OPPS
payment rates. We encourage
stakeholders to carefully review HCPCS
code descriptors, as well as any
guidance CMS may have provided for
specific HCPCS codes. In addition, we
have provided further instructions on
the billing of medical and surgical
supplies in the October 2008 OPPS
update (Transmittal 1599, Change
Request 6196, dated September 19,
2008). For HCPCS codes that are paid
under the OPPS, providers may also
submit inquiries to the AHA Central
Office on HCPCS, which serves as a
clearinghouse on the proper use of Level
I HCPCS codes for hospital providers
and certain Level II HCPCS codes for
hospitals, physicians, and other health
professionals. Inquiries must be
submitted using the approved form,
which may be downloaded from the
AHA Web site (https://
www.ahacentraloffice.org) and either
faxed to 312–422–4583 or mailed
directly to the AHA Central Office:
Central Office on HCPCS, American
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Hospital Association, One North
Franklin, Chicago, IL 60606.
The ‘‘FC’’ modifier became effective
January 1, 2008, and will be present for
the first time on claims used in OPPS
ratesetting for CY 2010. Any
refinements to our standard devicedependent APC ratesetting methodology
for years beyond CY 2009 would be
addressed in future rulemaking.
Comment: Several commenters
remarked that the CY 2009 OPPS/ASC
proposed rule included several
reductions to the payments for devicedependent APCs that they believe may
threaten medical technology innovation
and patient access. The commenters
made the general recommendation that
CMS study further the claims for any
APC for which the calculated payment
reduction would be greater than 10
percent and take action to correct issues
that may reduce these payments
artificially. The commenters further
recommended that CMS limit the
reduction in payment that any devicedependent APC may experience in 1
year to 10 percent. Other commenters
expressed concerns specifically about
the proposed payment reductions for
APCs 0106 and 0418, arguing that the
proposed payment rates would not
cover outpatient hospital costs
associated with providing the
procedures assigned to these APCs, and
that CMS should take steps to stabilize
payment for these APCs to protect
beneficiary access.
Several commenters also requested
that CMS reassign CPT code 64553 from
APC 0225 to APC 0040 as a means to
address what they perceived to be
inadequate payment for the only other
procedure assigned to APC 0225, which
is described by CPT code 64573,
consistent with the recommendation
made by the APC Panel at its August
2008 meeting. These commenters
argued that the procedure described by
CPT code 64553 is more similar
clinically and/or in terms of resource
utilization to procedures that are
assigned to APC 0040, because these
procedures have median costs that more
closely approximate the median cost of
CPT code 64553 and involve the
percutaneous implantation of
neurostimulator electrodes through an
introducer needle. They asserted that
CPT code 64573, in contrast, describes
electrode placement by using a scalpel
to incise skin. In addition to requesting
the reassignment of CPT code 64553 to
APC 0040, some commenters asked
CMS to calculate the median cost for
CPT code 64573 using only single
procedure claims with an epilepsy
diagnosis code that is consistent with
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CMS’ NCD for VNS, effective May 4,
2007.
Response: We do not agree that it is
necessary to implement a payment
reduction limit of 10 percent or take
other steps to stabilize payment for
device-dependent APCs in CY 2009. We
reviewed the data for all devicedependent APCs with significant
changes in median costs from CY 2008
to CY 2009, as is our usual practice, to
ensure there are no data errors that
would inappropriately or artificially
impact the median costs. We found no
reason to believe that the claims used to
calculate the median costs for all
device-dependent APCs, including
those with median costs that declined
for CY 2009 relative to CY 2008, did not
appropriately reflect hospitals’ relative
costs for providing those services as
reported to us in the claims and cost
report data. Because we believe the
device-dependent APC median costs
appropriately reflect hospital costs,
implementing a payment reduction
limit would artificially and inaccurately
inflate payment rates. As described
previously in this section and in the CY
2009 OPPS/ASC proposed rule (73 FR
41437 through 41438), the decreases in
median costs for three APCs involving
electrode/lead implantation, APCs 0106,
0225, and 0418, are expected and
appropriate based on what we
understand to be the nature of the
services included in these APCs and the
costs of correctly coded devices. We
believe that the median costs calculated
for these APCs were inappropriately
high in years prior to CY 2009 due to
widespread errors in how hospitals
billed for the implantation of leads/
electrodes and the pulse generators
connected to the leads/electrodes. Prior
to CY 2007, hospitals frequently billed
a procedure code for lead/electrode
implantation with device HCPCS codes
for a lead/electrode and the more costly
pulse generator, but failed to report a
procedure code for the implantation of
the pulse generator. As a result,
hospitals received only one APC
payment for implanting both the
electrode/lead and the pulse generator
when they should have received
separate APC payments for both the
electrode/lead implantation and the
pulse generator implantation. These
hospital billing errors also resulted in
the inappropriate attribution of the
pulse generator costs to the median
costs for the APCs for the less expensive
electrode/lead implantation procedures.
The implementation of device-toprocedure edits in CY 2007 corrected
these incorrect and incomplete billing
practices by requiring hospitals to
include a procedure code for pulse
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generator implantation when they report
a device HCPCS code for a pulse
generator or to remove the device
HCPCS code for the pulse generator
from the claim if it was not furnished.
As described above in this section, prior
to CY 2007, some hospitals billed a
procedure code for lead/electrode
implantation with device HCPCS codes
for both a lead/electrode and the more
costly pulse generator, but did not bill
a procedure code for implantation of the
pulse generator. This practice resulted
in an erroneous single procedure claim
that was used for ratesetting in years
prior to CY 2009. However, beginning in
CY 2007, hospitals reported such
services with a procedure code for lead/
electrode implantation, a device HCPCS
code for the lead/electrode, a procedure
code for pulse generator implantation,
and a device HCPCS code for the pulse
generator (resulting in a multiple
procedure claim that would not be used
for ratesetting). Thus, for the first time
in CY 2009, we no longer have single
procedure claims available for
ratesetting that would result in the
inappropriate attribution of pulse
generator costs to lead/electrode
implantation APCs. Where the edits
result in hospitals billing both the CPT
code for the insertion of the leads and
the CPT code for the implantation of the
device, hospitals are being correctly
paid considerably more than they were
being paid when they were billing
incorrectly. Therefore, we believe that
the device-to-procedure edits result both
in more accurate claims payment and
more appropriate relative weights for
these services.
We agree with the commenters and
the APC Panel that the procedure
described by CPT code 64553 is more
similar clinically and in terms of
resource utilization to procedures that
are assigned to APC 0040 than to the
other procedure assigned to APC 0225.
Therefore, for CY 2009, we are accepting
the APC Panel’s recommendation and
reassigning the procedure described by
CPT code 64553 to APC 0040, and
changing the title of APC 0040 to
‘‘Percutaneous Implantation of
Neurostimulator Electrode.’’ As a result
of our decision to reassign CPT code
64553 from APC 0225 to APC 0040, CPT
code 64573 is the only CPT code
assigned to APC 0225. Consistent with
the APC Panel’s second
recommendation, we are recalculating
the median cost of APC 0225 based
solely on claims for CPT code 64573.
We do not agree with the commenters
that we should calculate the median
cost for CPT code 64573 using only
single procedure claims with an
epilepsy diagnosis code based on CMS’
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NCD for VNS therapy, effective May 4,
2007. OPPS payment rates typically
apply regardless of the medical
condition for which a device is used;
thus, APC median costs are developed
based on claims for all patient
diagnoses. Furthermore, we note that
the NCD for VNS made effective on May
4, 2007, establishes noncoverage of VNS
specifically for indications of
depression. We examined the diagnosis
codes present on the single procedure
claims for CPT code 64573 that we
would use in ratesetting, and found that,
while diagnosis codes for epilepsy most
commonly appeared on the claims, most
nonepilepsy diagnoses present on the
claims were for conditions other than
depression. As such, the
recommendation by some commenters
to utilize only those claims with an
epilepsy diagnosis for ratesetting would
result predominantly in the exclusion of
claims with diagnoses other than
depression, to which the VNS national
noncoverage decision does not apply.
Therefore, we find no basis to deviate
from our standard device-dependent
APC ratesetting methodology, which
does not take into consideration patient
diagnoses, and we will not exclude
claims for VNS therapy with diagnoses
other than epilepsy from ratesetting.
Comment: One commenter stated that,
while the standard device-dependent
APC ratesetting methodology of using
single procedure claims for calculating
median costs is appropriate for many
device-dependent APCs, this approach
distorts and undervalues payment for
those services where multiple devicedependent procedures are conducted
within the same session. The
commenter pointed out, as an example,
that the lead/electrode implantation
procedures assigned to APC 0225 are
frequently performed with pulse
generator implantation procedures
assigned to APC 0039 (Level I
Implantation of Neurostimulator). The
commenter also noted that, according to
an analysis of CY 2007 claims data
available for the CY 2009 OPPS/ASC
proposed rule, claims for devicedependent APCs more commonly
include multiple procedures than
claims for other types of APCs. The
commenter encouraged CMS to develop
a methodology to ensure that packaged
costs can be allocated across multiple
procedures performed on the same date
of service. Until such a methodology
can be implemented, the commenter
asked that CMS institute a payment
reduction limit of no more than 10
percent annually for device-dependent
APCs such as APC 0225 with a large
proportion of multiple procedure
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claims. Other commenters shared
similar concerns about the use of single
procedure claims in ratesetting for
device-dependent APCs and suggested
that CMS implement a composite
payment methodology for certain
procedures assigned to devicedependent APCs for which relatively
few correctly coded single procedure
claims are available for ratesetting,
specifically those procedures involving
the implantation of a cardiac
resynchronization therapy defibrillator
(CRT–D) or cardiac resynchronization
therapy pacemaker (CRT–P).
Response: We do not agree that it is
necessary, as one commenter suggested,
to establish a payment reduction limit
for APC 0225, or any other devicedependent APC, until we have
developed a methodology for devicedependent ratesetting that can
incorporate data from multiple
procedure claims. For all OPPS services,
we continue our efforts to use the data
from as many multiple procedure claims
as possible, through approaches such as
use of the bypass list and date splitting
of claims as described further in section
II.A. of this final rule with comment
period, and through methodologies such
as increased packaging and composite
APCs. We believe that the standard
device-dependent APC ratesetting
methodology currently provides the
most appropriate median costs for
device-dependent APCs in which the
hospital incurs the full cost of the
device. As we discuss above in this
section, we believe that decreases in the
median costs for APC 0225 and other
device-dependent APCs involving lead/
electrode implantation are appropriate
and attributable to the correction of
inaccurate and incomplete hospital
billing practices. However, we recognize
the importance of maximizing our
utilization of claims data, especially of
claims that reflect common clinical
scenarios, and that the number of single
procedure claims available for
ratesetting for many device-dependent
APCs comprise a very low proportion of
total bills for procedures that map to
those APCs. We will continue to
examine ways to utilize more claims
data to set payment rates under the
OPPS, including payment rates for
device-dependent APCs, and appreciate
the commenters’ thoughtful suggestions.
We refer readers to section II.A.2.e. of
this final rule with comment period for
a detailed summary of the public
comments related to the establishment
of a composite payment methodology
for procedures involving CRT–D and
CRT–P devices and our responses.
Comment: Several commenters
requested that CMS alter the standard
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device-dependent APC ratesetting
methodology in order to utilize data
from multiple procedure claims for APC
0222 (Level II Implantation of
Neurostimulator). They noted that, for
CY 2008, CMS reconfigured the APC
assignments for implantable
neurostimulators to accommodate the
inclusion of procedures involving both
nonrechargeable and rechargeable
neurostimulators (the pass-through
status for which expired in CY 2007)
and improve resource homogeneity
among the neurostimulator APCs. The
commenters further noted that the
revised configuration provides payment
for procedures involving mostly
nonrechargeable neurostimulator
technology (that is, cranial, sacral,
gastric, or other peripheral
neurostimulators) through two APCs—
APC 0039 (Level I Implantation of
Neurostimulator) and APC 0315 (Level
III Implantation of Neurostimulator)—
while establishing a single APC, APC
0222, for spinal neurostimulator
implantation, which commonly utilizes
either rechargeable or nonrechargeable
technologies. The commenters
summarized CMS’ assessment in the CY
2008 OPPS/ASC final rule with
comment period that, to the extent
rechargeable spinal neurostimulators
become the dominant device implanted
in procedures described by the only
CPT code assigned to APC 0222, CPT
code 63685 (Insertion or replacement of
spinal neurostimulator pulse generator
or receiver, direct or inductive
coupling), the median cost for APC 0222
may increase to reflect contemporary
utilization patterns.
The commenters raised concerns that
analyses of the CY 2007 claims data
demonstrate that the evolution to
rechargeable spinal neurostimulators,
while occurring in clinical practice and
seen in the total billed claims, is not
well represented in single procedure
claims used for ratesetting for APC
0222. As a result, the commenters
stated, the use of single procedure
claims in the calculation of the median
costs for APC 0222 systematically
underestimates the use and cost of
rechargeable neurostimulators.
According to the data provided by the
commenters, rechargeable
neurostimulators are present on only 40
to 43 percent of single procedure claims,
as opposed to 57 to 60 percent of all
claims (both single and multiple
procedure) for APC 0222. If CMS were
to replace the device cost estimated for
single procedure claims with the device
cost estimated for total claims, the
commenters stated, the median cost for
APC 0222 would increase by 7 percent.
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One commenter also contended that the
median line-item device cost for
neurostimulator generators was 17
percent lower in ‘‘pure single claims’’
when compared to all claims assigned to
APC 0222. Another commenter noted
that neurostimulator implantation
procedures are reported with two
separately payable CPT codes and
consequently almost always appear on
multiple procedure claims. The
commenter argued that the single
procedure claims used in ratesetting are
either replacement procedures or
incorrectly coded claims and do not
reflect clinical practice in terms of
either procedural frequency or cost.
Several commenters recommended
that CMS calculate the payment rate for
APC 0222 using the median device cost
for rechargeable and nonrechargeable
neurostimulators from all claims and
the median procedure cost for CPT code
63685 from single procedure claims,
arguing that larger claim samples lead to
more accurate payment rates. The
commenters stated that this would be an
extension of CMS’ process of using
‘‘pseudo’’ single procedure claims to
calculate median costs, and would be
consistent with CMS’ focus on
converting multiple procedure claims to
‘‘pseudo’’ single procedure claims in
order to maximize the use of claims data
in calculating median costs for OPPS
ratesetting. According to the
commenters, this approach would result
in a 7 percent increase in the median
cost for APC 0222 compared to the
median cost calculated for the CY 2009
OPPS/ASC proposed rule.
Another commenter expressed the
same concern that rechargeable
neurostimulator costs were
underrepresented in the claims data
used to establish the median cost for
APC 0222 and urged CMS to split APC
0222 into separate APCs based on
whether a rechargeable or
nonrechargeable spinal neurostimulator
generator is utilized. Alternatively, the
commenter asked CMS to consider a
ratesetting methodology that, similar to
the method offered by other
commenters, would incorporate data
from single and multiple procedure
claims and result in a 9-percent increase
in the median cost for APC 0222.
Response: We do not believe it is
necessary or appropriate to alter our
ratesetting methodology for devicedependent APC 0222. We believe that
the revised neurostimulator APC
configuration adopted in CY 2008, and
our standard device-dependent APC
ratesetting methodology, allow us to
calculate appropriate OPPS payment
rates for procedures involving spinal
neurostimulators. The foundation of a
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system of relative weights is the
relativity of the costs of all services to
one another, as derived from a
standardized system that uses
standardized inputs and a consistent
methodology. Adoption of a ratesetting
methodology for APC 0222 that is
different from our standard devicedependent APC ratesetting would
undermine this relativity. A policy to
provide different payments for the same
procedures according to the types of
devices implanted also would not be
consistent with our overall strategy
under the OPPS to encourage hospitals
to use resources more efficiently by
increasing the size of the payment
bundles, as we described in the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66715 through 66716).
According to information provided by
certain manufacturers of rechargeable
neurostimulators in response to the CY
2008 OPPS/ASC final rule with
comment period, rechargeable
neurostimulators are clinically
indicated in only a subset of patients for
whom spinal neurostimulation is a
treatment option. These manufacturers
estimated that approximately 35 percent
of these patients are candidates for
rechargeable spinal neurostimulators,
although this proportion may be higher
(72 FR 66715). We note that, according
to the data analysis submitted by the
commenters, rechargeable
neurostimulators were used in 40 to 43
percent of spinal neurostimulator
implantation procedures included on
single procedure claims for APC 0222 in
CY 2007, and in 57 to 60 percent of
spinal neurostimulator implantation
procedures included on all claims (both
single and multiple procedure) for APC
0222 in CY 2007. Therefore, the rate of
implantation of rechargeable
neurostimulators in Medicare
beneficiaries in CY 2007 in the hospital
outpatient setting appears to have met
or exceeded the expectations of certain
manufacturers that were expressed in
their comments to the CY 2008 OPPS/
ASC final rule with comment period.
Based on these reported analyses,
rechargeable neurostimulator
technology appears to have been widely
adopted into medical practice, and we
expect that our CY 2009 OPPS payment
rates will provide continued access to
this technology for those patients for
whom rechargeable neurostimulators
are clinically indicated.
Comment: Several commenters stated
that the proposed national unadjusted
CY 2009 OPPS payment rate for
cochlear implantation is significantly
less than the average cost for the
hospital to acquire the cochlear device
and the associated costs to provide the
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implantation procedure and may
impede patient access to this
technology. The cochlear device
implantation procedure is described by
CPT code 69930 (Cochlear device
implantation, with or without
mastoidectomy), the only CPT code
assigned to APC 0259 (Level VII ENT
Procedures). The commenters remarked
that, although the proposed CY 2009
OPPS payment rate is higher than the
CY 2008 OPPS payment rate, it is also
less than the OPPS national unadjusted
CY 2007 OPPS payment rate, and occurs
at a time when device costs and related
hospital costs continue to rise. Some
commenters stated that the true cost of
the cochlear implant procedure,
including the device and related
surgical costs, is between $35,000 and
$40,000, depending on the specific
devices and services required for a given
patient, while other commenters
indicated that the cost to hospitals is
approximately $32,000. Several
commenters recommended that CMS
adjust the median cost upon which the
OPPS payment rate for APC 0259 is
based by substituting a weighted
average selling price of $24,500 for the
median device cost from the CY 2007
OPPS claims of $18,420, where this
selling price was calculated based on
hospital invoice data supplied
separately by the two leading cochlear
implant manufacturers. The
commenters indicated that this
methodology would result in a median
cost for APC 0259 of $30,037. Other
commenters referenced a 2006 analysis,
which found the average cost of
cochlear implant procedures to be
approximately $33,364, and asked that
CMS reconsider establishing payment
based on this figure.
The commenters also expressed
concern about the proposed assignment
and payment rate of procedures
involving auditory osseointegrated
devices, the pass-through status for
which will expire on December 31,
2008. The commenters noted that CMS
proposed in the CY 2009 OPPS/ASC
proposed rule to package payment for
these devices, described by HCPCS code
L8690 (Auditory osseointegrated device,
includes all internal and external
components), into payment for their
associated implantation procedures,
described by CPT codes 69714
(Implantation, osseointegrated implant,
temporal bone, with percutaneous
attachment to external speech
processor/cochlear stimulator; without
mastoidectomy); 69715 (Implantation,
osseointegrated implant, temporal bone,
with percutaneous attachment to
external speech processor/cochlear
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stimulator; with mastoidectomy); 69717
(Replacement (including removal of
existing device), osseointegrated
implant, temporal bone, with
percutaneous attachment to external
speech processor/cochlear stimulator;
without mastoidectomy); and 69718
(Replacement (including removal of
existing device), osseointegrated
implant, temporal bone, with
percutaneous attachment to external
speech processor/cochlear stimulator;
with mastoidectomy). Citing the CMS
proposal to assign these implantation
procedures to APC 0425 (Level II
Arthroplasty or Implantation with
Prosthesis) for CY 2009, the commenters
stated that the proposed payment rate
for APC 0425 would be insufficient to
guarantee continued patient access to
auditory osseointegrated devices and
argued that the appropriate payment for
procedures involving these devices
should at least approximate the sum of
the CY 2008 OPPS payment rate for APC
0256 (Level VI ENT Procedures), the
APC to which the auditory
osseointegrated device implantation
procedures were assigned in CY 2007,
and the average sales price for auditory
osseointegrated devices, which they
report totals $8,826 ($2,539 for APC
0256 plus $6,287 for device costs). The
commenters also remarked that auditory
osseointegrated device implantation
procedures are clinically dissimilar to
the other procedures assigned to APC
0425 and recommended that CMS
establish a new APC for procedures
involving osseointegrated devices.
According to the commenters, APC 0425
is an inappropriate APC assignment for
osseointegrated device implantation
procedures because it is comprised of
less device-intensive orthopedic
procedures for the restoration of joint
functioning. The commenters also stated
that a training and audit process for the
billing offices of hospitals performing
osseointegrated device implantation
procedures revealed widespread billing
and coding errors, and indicated that
these billing errors may contribute to a
median cost calculation for
osseointegrated device implantation
procedures that is too low.
Response: We disagree with the
commenters that it would be
appropriate to use external pricing
information in place of the costs derived
from the claims and Medicare cost
report data for APC 0259 or APC 0425
because we believe that to do so would
distort the relativity that is so
fundamental to the integrity of the
OPPS. We have not systematically used
external data to validate the median
costs derived from claims data because
external data lack relativity to the
estimated costs derived from the claims
and cost report data and generally are
not appropriate for determining relative
weights that result in payment rates. As
described earlier in this section and in
previous final rules such as the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66742), the foundation of
a system of relative weights is the
relativity of the costs of all services to
one another, as derived from a
standardized system that uses
standardized inputs and a consistent
methodology.
We also do not agree that auditory
osseointegrated device implantation
procedures are so clinically dissimilar
to the other procedures assigned to APC
0425 that their assignment to that APC
is not warranted. All procedures
assigned to APC 0425 involve the
implantation of a prosthestic device into
bone. In regard to the commenters’
concerns that billing and coding errors
may have contributed to an inaccurate
median cost calculation for APC 0425,
we note that, because APC 0425 is a
device-dependent APC, we calculated
the median cost for osseointegrated
device implantation procedures using
only correctly coded claims that
included the HCPCS device code for the
osseointegrated device, L8690, along
with an appropriate procedure code.
Effective January 1, 2009, we also will
implement procedure-to-device edits
that require all hospitals paid under the
OPPS to report HCPCS code L8690
whenever they report an osseointegrated
device implantation procedure
described by CPT codes 69714, 69715,
69717, and 69718. We also will
implement the appropriate device-toprocedure edits to ensure that when
HCPCS code L8690 is reported, an
appropriate implantation procedure
code is also included on the claim.
Comment: One commenter accepted
CMS’ consistent reliance on claims data
to establish the CY 2009 OPPS/ASC
proposed rule median cost for CPT code
36566 of $2,092, but disagreed with the
proposed reassignment of CPT code
36566 to APC 0623 and urged CMS to
maintain APC 0625. While the median
cost for CPT code 36566 is very similar
to the median costs of other procedures
assigned to APC 0623, the commenter
stated that the amounts will likely
diverge in the future.
Response: We do not believe it would
be appropriate to maintain an APC that
is not necessary to classify services into
groups that are similar clinically and in
terms of resource utilization based on
purported anticipated future costs. We
continue to believe that CPT code 36566
is most appropriately assigned to APC
0623 for CY 2009, as we proposed,
based on consideration of the
procedure’s clinical and resource
characteristics. We reassess the
composition of APCs, including
reviewing the median costs of
individual HCPCS codes, annually
when we have new claims and Medicare
cost report data and propose those
changes through our annual rulemaking
cycle that we believe are necessary to
maintain the clinical and resource
homogeneity of APCs based on that
updated data. To the extent that the
median cost of CPT code 36566 changes
significantly in the future, we may
propose future changes to the CPT
code’s assignment if we determine that
a different APC would be more
appropriate.
After consideration of the public
comments received, we are finalizing
our proposed CY 2009 payment policies
for device-dependent APCs, with
modification to reassign CPT code
64553 from APC 0225 to APC 0040. The
CY 2009 OPPS payment rates for devicedependent APCs are based on their
median costs calculated from CY 2007
claims and the most recent cost report
data, using only claims that pass the
device edits, do not contain token
charges for devices, and do not have a
modifier signifying that the device was
furnished without cost or with full
credit. We continue to believe that the
median costs calculated from the single
bills that meet these three criteria
represent the most valid estimated
relative costs of these services to
hospitals when they incur the full cost
of the devices required to perform the
procedures. The CY 2009 devicedependent APCs are listed in Table 3
below.
TABLE 3—CY 2009 DEVICE-DEPENDENT APCS
Final CY 2009
APC
Final CY 2009
status indicator
0039 ....................
0040 ....................
S .......................
S .......................
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CY 2009 APC title
Level I Implantation of Neurostimulator.
Percutaneous Implantation of Neurostimulator Electrodes.
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TABLE 3—CY 2009 DEVICE-DEPENDENT APCS—Continued
Final CY 2009
APC
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0061
0082
0083
0084
0085
0086
0089
0090
0104
0106
0107
0108
0115
0202
0222
0225
0227
0229
0259
0293
0315
0384
0385
0386
0418
0425
0427
0622
0623
0648
0652
0653
0654
0655
0656
0674
0680
0681
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....................
....................
....................
....................
....................
....................
Final CY 2009
status indicator
S
T
T
S
T
T
T
T
T
T
T
T
T
T
S
S
T
T
T
T
S
T
S
S
T
T
T
T
T
T
T
T
T
T
T
T
S
T
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.......................
.......................
CY 2009 APC title
Laminectomy, Laparoscopy, or Incision for Implantation of Neurostimulator Electrodes.
Coronary or Non Coronary Atherectomy.
Coronary or Non Coronary Angioplasty and Percutaneous Valvuloplasty.
Level I Electrophysiologic Procedures.
Level II Electrophysiologic Procedures.
Level III Electrophysiologic Procedures.
Insertion/Replacement of Permanent Pacemaker and Electrodes.
Insertion/Replacement of Pacemaker Pulse Generator.
Transcatheter Placement of Intracoronary Stents.
Insertion/Replacement of Pacemaker Leads and/or Electrodes.
Insertion of Cardioverter-Defibrillator.
Insertion/Replacement/Repair of Cardioverter-Defibrillator Leads.
Cannula/Access Device Procedures.
Level VII Female Reproductive Procedures.
Level II Implantation of Neurostimulator.
Implantation of Neurostimulator Electrodes, Cranial Nerve.
Implantation of Drug Infusion Device.
Transcatheter Placement of Intravascular Shunts.
Level VII ENT Procedures.
Level V Anterior Segment Eye Procedures.
Level III Implantation of Neurostimulator.
GI Procedures with Stents.
Level I Prosthetic Urological Procedures.
Level II Prosthetic Urological Procedures.
Insertion of Left Ventricular Pacing Elect.
Level II Arthroplasty or Implantation with Prosthesis.
Level II Tube or Catheter Changes or Repositioning.
Level II Vascular Access Procedures.
Level III Vascular Access Procedures.
Level IV Breast Surgery.
Insertion of Intraperitoneal and Pleural Catheters.
Vascular Reconstruction/Fistula Repair with Device.
Insertion/Replacement of a permanent dual chamber pacemaker.
Insertion/Replacement/Conversion of a permanent dual chamber pacemaker.
Transcatheter Placement of Intracoronary Drug-Eluting Stents.
Prostate Cryoablation.
Insertion of Patient Activated Event Recorders.
Knee Arthroplasty.
(2) Blood and Blood Products
Since the implementation of the OPPS
in August 2000, separate payments have
been made for blood and blood products
through APCs rather than packaging
them into payments for the procedures
with which they are administered.
Hospital payments for the costs of blood
and blood products, as well as the costs
of collecting, processing, and storing
blood and blood products, are made
through the OPPS payments for specific
blood product APCs.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41439), we proposed to
continue to establish payment rates for
blood and blood products for CY 2009
using our blood-specific CCR
methodology, which utilizes actual or
simulated CCRs from the most recently
available hospital cost reports to convert
hospital charges for blood and blood
products to costs. This methodology has
been our standard ratesetting
methodology for blood and blood
products since CY 2005. It was
developed in response to data analysis
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indicating that there was a significant
difference in CCRs for those hospitals
with and without blood-specific cost
centers, and past comments indicating
that the former OPPS policy of
defaulting to the overall hospital CCR
for hospitals not reporting a bloodspecific cost center often resulted in an
underestimation of the true hospital
costs for blood and blood products.
Specifically, in order to address the
difference in CCRs and to better reflect
hospitals’ costs, we proposed to
continue to simulate blood CCRs for
each hospital that does not report a
blood cost center by calculating the ratio
of the blood-specific CCRs to hospitals’
overall CCRs for those hospitals that do
report costs and charges for blood cost
centers. We would then apply this mean
ratio to the overall CCRs of hospitals not
reporting costs and charges for blood
cost centers on their cost reports in
order to simulate blood-specific CCRs
for those hospitals. We calculated the
median costs upon which the proposed
CY 2009 payment rates for blood and
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blood products were based using the
actual blood-specific CCR for hospitals
that reported costs and charges for a
blood cost center and a hospital-specific
simulated blood-specific CCR for
hospitals that did not report costs and
charges for a blood cost center. For more
detailed discussion of the blood-specific
CCR methodology, we refer readers to
the CY 2005 OPPS proposed rule (69 FR
50524 through 50525). For a full history
of OPPS payment for blood and blood
products, we refer readers to the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66807 through
66810).
As we indicated in the CY 2009
OPPS/ASC proposed rule (73 FR 41439),
we believe that the blood-specific CCR
methodology better responds to the
absence of a blood-specific CCR for a
hospital than alternative methodologies,
such as defaulting to the overall hospital
CCR or applying an average bloodspecific CCR across hospitals. Because
this methodology takes into account the
unique charging and cost accounting
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structure of each provider, we believe
that it yields more accurate estimated
costs for these products. We believe that
continuing with this methodology in CY
2009 will result in median costs for
blood and blood products that
appropriately reflect the relative
estimated costs of these products for
hospitals without blood cost centers,
and, therefore, for these products in
general.
As discussed in section XIII.A.1. of
this final rule with comment period, we
also proposed to create status indicator
‘‘R’’ (Blood and Blood Products) to
denote blood and blood products for
publication and payment purposes in
CY 2009. We believe that it is necessary
to create a status indicator that is
specific to blood and blood products to
facilitate development of blood product
median costs under the blood-specific
CCR methodology and to facilitate
implementation of the reduced
payments that will be made to hospitals
that fail to report the hospital outpatient
quality data, as discussed in section
XVI.D.2. of this final rule with comment
period.
Comment: One commenter remarked
that the proposed blood-specific CCR
methodology accurately reflects the
relative estimated costs of blood and
blood products for hospitals without
blood cost centers and for these
products in general. The commenter
encouraged CMS to continue the
historical practice of providing separate
payments for blood and blood products
through APCs, rather than packaging
their payment into payments for the
procedures with which they are
administered. Another commenter
stated that the proposed payment rates
for many blood and blood products are
less than the actual acquisition costs,
particularly for high volume blood
products. The commenter noted that the
proposed payment rate for the most
commonly transfused blood product,
leukocyte-reduced red blood cells
described by HCPCS code P9016 (Red
blood cells, leukocytes reduced, each
unit), is less than hospitals’ average
acquisition cost for the product (not
including overhead, storage, handling,
and wastage) according to a nationwide
survey of 2006 blood costs. The survey
was conducted by the American
Association of Blood Banks under a
contract with HHS and includes data
from approximately 1,700 hospitals. The
commenter noted that since 2006, the
year for which cost data were collected,
the costs of acquiring blood products
have continued to increase due to new
safety advances and increasingly
expensive donor recruitment and
retention efforts. The commenter
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recommended that CMS continue to
increase payments for blood products,
particularly leukocyte-reduced red
blood cells, to bridge the perceived gap
between Medicare payments and the
actual costs incurred by hospitals.
Response: We continue to believe that
using blood-specific CCRs applied to
hospital claims data results in payments
that appropriately reflect hospitals’
relative costs of providing blood and
blood products as reported to us by
hospitals. We do not believe it is
necessary or appropriate to incorporate
external survey data into our ratesetting
process for blood and blood products
because, in a relative weight system, it
is the relativity of the costs to one
another, rather than absolute cost, that
is most important for setting payment
rates. External data lack relativity to the
estimated costs derived from the claims
and cost report data and generally are
not appropriate for determining relative
weights that result in payment rates. We
note that median costs per unit
(calculated using the blood-specific CCR
methodology) for this final rule with
comment period increase from CY 2008
for 16 of the top 20 highest volume
blood products.
Comment: One commenter asked that
CMS reconsider the proposed payment
rate of approximately $30 for HCPCS
code P9011 (Blood, split unit),
indicating that this payment rate was
much lower than the CY 2008 payment
rate of approximately $149 and would
fail to cover the costs of split units of
blood. The commenter also was
concerned that the proposed payment
decrease would result in insufficient
Medicaid payment for transfusions
involving split blood products.
Response: We do not agree that it
would be appropriate to deviate from
our standard methodology of using
blood-specific CCRs to calculate the
median cost upon which payment is
based for HCPCS code P9011, despite
the significant decrease in median cost
from the CY 2006 claims data used for
ratesetting in CY 2008 relative to the CY
2007 claims data used for ratesetting in
CY 2009. We believe that some variation
in relative costs from year to year is to
be expected in a prospective payment
system, particularly for low volume
items such as HCPCS code P9011. We
also note that, because HCPCS code
P9011 is defined only as a split unit of
blood and no particular designation is
made within the code’s descriptor as to
the type or volume of blood product that
makes up the split unit reported, the
median cost for this HCPCS code also
may vary based upon the types and
volumes of split products hospitals
report using HCPCS code P9011.
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68541
Public comments on Medicaid
payment for blood and blood products
are not within the scope of this CY 2009
OPPS/ASC final rule with comment
period, as it is only within our purview
to establish payment rates for HOPDs
that receive payment under the OPPS
for services furnished to Medicare
beneficiaries.
We also note that it is our common
practice to review significant changes in
median costs from year to year and from
the proposed rule to the final rule for a
given calendar year. Although a handful
of HCPCS codes experienced decreases
in median cost for CY 2009 from the
proposed rule to this final rule with
comment period, most notably HCPCS
codes P9011 and P9043 (Infusion,
plasma protein fraction (human), 5%,
50ml), we determined that the decreases
in median cost were due to
contributions of additional claims and
revised cost report data. For all APCs
whose payment rates are based upon
relative payment weights, we note that
the quality and accuracy of reported
units and charges significantly influence
the final median costs that are the basis
for our payment rates, especially for low
volume items and services. Beyond our
standard OPPS trimming methodology
(described in section II.A.2. of this final
rule with comment period) that we
apply to those claims that have passed
various types of claims processing edits,
it is not our policy to judge the accuracy
of hospital coding and charging for
purposes of ratesetting.
After consideration of the public
comments received, we are finalizing,
without modification, our CY 2009
proposal to calculate the median costs
upon which the CY 2009 payment rates
for blood and blood products are based
using the blood-specific CCR
methodology that we have utilized since
CY 2005. We continue to believe this
methodology is the best mechanism to
deal with the absence of a blood-specific
CCR for hospitals that do not use the
blood cost center. We believe that
continuing with this methodology,
which takes into account the unique
charging and cost accounting structure
of each provider, results in median costs
for blood and blood products that
appropriately reflect the relative
estimated costs of these products. As
discussed in section XIII.A.1. of this
final rule with comment period, we also
are finalizing our proposal to create
status indicator ‘‘R’’ to denote blood and
blood products in Addendum B to this
final rule with comment period for
publication and payment purposes.
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(3) Single Allergy Tests
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41439 through 41440), we
proposed to continue with our
methodology of differentiating single
allergy tests (‘‘per test’’) from multiple
allergy tests (‘‘per visit’’) by assigning
these services to two different APCs to
provide accurate payments for these
tests in CY 2009. Multiple allergy tests
are currently assigned to APC 0370
(Allergy Tests), with a median cost
calculated based on the standard OPPS
methodology. We provided billing
guidance in CY 2006 in Transmittal 804
(issued on January 3, 2006) specifically
clarifying that hospitals should report
charges for the CPT codes that describe
single allergy tests to reflect charges
‘‘per test’’ rather than ‘‘per visit’’ and
should bill the appropriate number of
units of these CPT codes to describe all
of the tests provided. However, as noted
in the CY 2009 OPPS/ASC proposed
rule (73 FR 41439), our CY 2007 claims
data available for that rule for APC 0381
did not reflect improved and more
consistent hospital billing practices of
‘‘per test’’ for single allergy tests. The
median cost of APC 0381, calculated for
the proposed rule according to the
standard single claims OPPS
methodology, was approximately $51,
significantly higher than the CY 2008
median cost of APC 0381 of
approximately $17 calculated according
to the ‘‘per unit’’ methodology, and
greater than we would expect for these
procedures that are to be reported ‘‘per
test’’ with the appropriate number of
units. Some claims for single allergy
tests still appear to provide charges that
represent a ‘‘per visit’’ charge, rather
than a ‘‘per test’’ charge. Therefore,
consistent with our payment policy for
CYs 2006, 2007, and 2008, we
calculated a proposed ‘‘per unit’’
median cost for APC 0381 of $25, based
upon 520 claims containing multiple
units or multiple occurrences of a single
CPT code. For a full discussion of this
methodology, we refer readers to the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66737).
We did not receive any public
comments on our CY 2009 proposal for
payment of single allergy tests.
Therefore, we are finalizing our CY 2009
proposal, without modification, to
calculate a ‘‘per unit’’ median cost for
APC 0381 as described above in this
section. The final CY 2009 median cost
of APC 0381 is approximately $23.
(4) Echocardiography Services
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41440), we proposed to
continue the packaging of payment for
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all contrast agents into the payment for
the associated imaging procedure for CY
2009, as we did in CY 2008. For
echocardiography services, we proposed
to estimate median costs using the same
methodology that we used to set
medians for these services for CY 2008.
In CY 2008, we finalized a policy to
package payment for all contrast agents
into the payment for the associated
imaging procedure, regardless of
whether the contrast agent met the
OPPS drug packaging threshold. Section
1833(t)(2)(G) of the Act requires us to
create additional APC groups of services
for procedures that use contrast agents
that classify them separately from those
procedures that do not utilize contrast
agents. To reconcile this statutory
provision with our final policy of
packaging all contrast agents, for CY
2008, we calculated HCPCS codespecific median costs for all separately
payable echocardiography procedures
that may be performed with contrast
agents by isolating single and ‘‘pseudo’’
single claims with the following CPT
codes where a contrast agent was also
billed on the claim: 93303
(Transthoracic echocardiography for
congenital cardiac anomalies;
complete); 93304 (Transthoracic
echocardiography for congenital cardiac
anomalies; follow-up or limited study);
93307 (Echocardiography, transthoracic,
real-time with image documentation
(2D) with or without M-mode recording;
complete); 93308 (Echocardiography,
transthoracic, real-time with image
documentation (2D) with or without Mmode recording; follow-up or limited
study); 93312 ( Echocardiography,
transesophageal, real time with image
documentation (2D) (with or without Mmode recording); including probe
placement, image acquisition,
interpretation and report); 93315
(Transesophageal echocardiography for
congenital cardiac anomalies; including
probe placement, image acquisition,
interpretation and report); 93318
(Echocardiography, transesophageal
(TEE) for monitoring purposes,
including probe placement, real time 2dimensional image acquisition and
interpretation leading to ongoing
(continuous) assessment of
(dynamically changing) cardiac
pumping function and to therapeutic
measures on an immediate time basis);
and 93350 (Echocardiography,
transthoracic, real-time with image
documentation (2D), with or without Mmode recording, during rest and
cardiovascular stress test using
treadmill, bicycle exercise and/or
pharmacologically induced stress, with
interpretation and report). As noted in
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the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66644), our
analysis indicated that all
echocardiography procedures that may
be performed with contrast agents are
reasonably similar both clinically and in
terms of resource use, as evidenced by
similar HCPCS code-specific median
costs.
As provided for under the statute, for
CY 2008, we created APC 0128
(Echocardiogram With Contrast) to
provide payment for echocardiography
procedures that are performed with a
contrast agent. In addition, as discussed
in the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66644
through 66646), in order for hospitals to
identify separately and receive
appropriate payment for
echocardiography procedures performed
with contrast beginning in CY 2008, we
created eight new HCPCS codes (C8921
through C8928) that corresponded to the
related CPT echocardiography codes
and assigned them to the newly created
APC 0128. We instructed hospitals
performing echocardiography
procedures without contrast to continue
to report the CPT codes and to report
the new HCPCS C-codes when
performing echocardiography
procedures with contrast or without
contrast followed by with contrast.
As noted in the CY 2009 OPPS/ASC
proposed rule (73 FR 41440), claims
data from CY 2008 are not yet available
for ratesetting, so we do not yet have
claims data specific to HCPCS codes
C8921 through C8928 in order to
determine the CY 2009 payment rate for
APC 0128. Therefore, for CY 2009, we
proposed to again use the methodology
that we used to set the CY 2008
payment rate for APC 0128 (72 FR
66645). That is, we isolated single and
‘‘pseudo’’ single claims in our database
that included those CPT codes in the
range of 93303 through 93350 as
described above in this section that
correspond to the contrast studies
described by HCPCS codes C8921
through C8928. For claims where one of
these echocardiography procedures was
billed with a contrast agent, we
packaged the cost of the contrast agent
into the cost of the echocardiography
procedure and then calculated a median
cost for APC 0128 using this subset of
claims. As in CY 2008, the HCPCS codespecific median costs for
echocardiography procedures performed
with contrast are all similar, and we
continue to believe these services share
sufficient similarity to be assigned to the
same APC.
For CY 2009, we also recalculated the
median cost for APCs 0269 (Level II
Echocardiogram Without Contrast
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Except Transesophageal); 0270
(Transesophageal Echocardiogram
Without Contrast); and 0697 (Level I
Echocardiogram Without Contrast
Except Transesophageal), as we did in
CY 2008 (72 FR 66645). We used claims
for CPT codes 93303 through 93350
after removing claims from the
ratesetting process that included
contrast agents because these claims
were used to set the median cost for
APC 0128.
Comment: One commenter noted that
a new CPT code will be available in CY
2009 that combines spectral and color
Doppler with transthoracic
echocardiography. The commenter
stated that hospitals using this code in
CY 2009 will be able to assign costs to
this new code, but expressed concern as
to how CMS plans to provide payment
for the years before claims data are
available.
Response: Typically, our process for
providing payment for CPT codes that
are newly recognized under the OPPS
for payment in the upcoming calendar
year is to provide interim APC
assignments in the final rule with
comment period for that upcoming year.
The APC assignment of these codes is
then open to comment on that final rule.
We note that there are circumstances
regarding the new CPT code referenced
by the commenter, CPT 93306
(Echocardiography, transthoracic, realtime with image documentation (2D),
includes M-mode recording, when
performed, complete, with spectral
Doppler echocardiography, and with
color flow Doppler echocardiography),
that contributed to our CY 2009 interim
APC assignment for that code. There
were also several factors that
contributed to our decision regarding
the final APC assignment for CPT code
93307 for CY 2009.
First, as discussed above in this
section, in CY 2008, we implemented
HCPCS C-codes for hospitals to identify
echocardiography procedures provided
with contrast, or without contrast
followed by with contrast. As these data
are not yet available for ratesetting for
CY 2009, we used the same process for
CY 2009 as we did for CY 2008 to
separately identify echocardiography
services provided with contrast and
those provided without contrast.
Second, the American Medical
Association (AMA) revised several CPT
codes in the 93000 series to more
specifically describe particular services
provided during echocardiography
procedures. The CY 2009 descriptor for
CPT code 93306 essentially includes the
services described in CY 2008 by CPT
codes 93307 (Echocardiography,
transthoracic, real-time with image
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documentation (2D) with or without Mmode recording; complete); 93320
(Doppler echocardiography, pulsed
wave and/or continuous wave with
spectral display; complete) and 93325
(Doppler echocardiography color flow
velocity mapping). Therefore, in CY
2008, the service described in CY 2009
by new CPT code 93306 is reported with
three CPT codes, specifically CPT codes
93307, 93320, and 93325, and the
hospital receives separate payment for
CPT code 93307 through APC 0269, into
which payment for the other two
services is packaged. The revised CY
2009 descriptor of CPT code 93307
(Echocardiography, transthoracic, realtime with image documentation (2D),
includes M-mode recording, when
performed, complete, without spectral
or color Doppler echocardiography)
explicitly excludes services described
by CPT codes 93320 and 93325.
To determine the hospital costs of
CPT codes 93306 and 93307 under CY
2009 definitions for purposes of CY
2009 ratesetting, we redefined our CY
2007 single and ‘‘pseudo’’ single claims.
We began by redefining the single
claims for CPT code 93307 billed with
packaged CPT codes 93320 and 93325
as single claims for CPT code 93306. We
identified almost 600,000 CY 2007
single and ‘‘pseudo’’ single claims for
CPT code 93306. We then limited the
single claims for CPT code 93307 to
reflect the newly revised descriptor for
CY 2009, that is, those claims where
CPT code 93307 was not billed with
either packaged CPT code 93320 or CPT
code 93325. We identified roughly
13,000 single and ‘‘pseudo’’ single
claims for revised CPT code 93307.
Having created claims that reflected
CY 2009 definitions, we then followed
our proposed CY 2009 methodology for
calculating HCPCS code-specific
median costs for these
echocardiography procedures with and
without contrast by dividing the new set
of single and ‘‘pseudo’’ single claims for
CPT codes 93306 and 93307 into those
billed without and with contrast agents.
We first calculated a HCPCS codespecific median cost for new CPT code
93306 when it was billed without
contrast. We had over 500,000 claims
that fit this criterion, and the median
cost for this service was approximately
$425. We then calculated a HCPCS
code-specific median cost for CPT code
93307 under the newly revised
descriptor for CY 2009 without contrast.
We had approximately 13,000 claims
that fit this criterion. The median cost
for this service was approximately $256.
In addition, as discussed above in this
section, in CY 2008, we began providing
separate payment for echocardiography
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68543
services that are performed with
contrast through APC 0128. In
accordance with this policy and the
revised and new CPT codes, we
calculated a HCPCS code-specific
median cost for new CPT code 93306
using the set of redefined single claims
billed with contrast. Over 9,000 claims
met this criterion, and the median cost
for CPT code 93306 with contrast was
approximately $569. Consistent with
our CY 2008 policy of providing HCPCS
C-codes for billing the ‘‘with contrast’’
form of the echocardiography CPT code,
we identified this set of claims to
represent new HCPCS code C8929
(Transthoracic echocardiography with
contrast, or without contrast followed
by with contrast, real-time with image
documentation (2D), includes M-mode
recording, when performed, complete,
with spectral Doppler
echocardiography, and with color flow
Doppler echocardiography).
Finally, we calculated a HCPCS codespecific median cost for CPT code 93307
using single claims for CPT code 93307
under the newly revised descriptor for
CY 2009 when billed with contrast. We
had 168 claims that fit this criterion,
and the median cost for this service was
approximately $376. We identified this
set of claims to represent revised HCPCS
code C8923 (Transthoracic
echocardiography with contrast, or
without contrast followed by with
contrast, real-time with image
documentation (2D), includes M-mode
recording, when performed, complete,
without spectral or color Doppler
echocardiography). Based on their
HCPCS code-specific median costs, we
have assigned new CPT code 93306
(with a median cost of approximately
$425 based on the methodology
described above in this section) without
contrast to APC 0269 for CY 2009 on an
interim basis. In addition, we have
reassigned CPT code 93307 without
contrast, using the updated CPT
descriptor and the criteria described
above in this section to develop a
median cost of approximately $256, to
APC 0697 for CY 2009. We have
assigned new HCPCS code C8929 on an
interim basis and revised HCPCS code
C8923 on a final basis to APC 0128. All
codes with interim assignments are
designated with comment indicator
‘‘NI’’ in Addendum B to this final rule
with comment period, and their OPPS
treatment is open to comment in this
final rule with comment period.
Comment: One commenter disagreed
with the proposed payment for fetal
echocardiography services in general,
while several other commenters
suggested that the proposed assignment
of CPT code 76825 (Echocardiography,
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fetal, cardiovascular system, real time
with image documentation (2D), with or
without M-mode recording) to APC
0266 (Level II Diagnostic and Screening
Ultrasound) and CPT code 76826
(Echocardiography, fetal, cardiovascular
system, real time with image
documentation (2D), with or without Mmode recording; follow-up or repeat
study) to APC 0265 (Level I Diagnostic
and Screening Ultrasound) did not
provide an accurate representation of
the resources required by these two CPT
codes. These commenters noted that the
resources required to perform these
procedures differ substantially from the
other services included in APCs 0265
and 0266 and that resource use exceeds
that for comparable studies on adults. In
addition, the commenters suggested that
CMS reassign CPT code 76825 to APC
0269 and CPT code 76826 to APC 0697.
Response: We agree with the
commenters that the services described
by CPT codes 76825 and 76826 are most
appropriately grouped with the services
assigned to APCs 0269 and 0697,
respectively. The resource use and
clinical characteristics of these fetal
echocardiography services resemble
those of nonfetal echocardiography
services also assigned to APCs 0269 and
0697 for CY 2009. Therefore, we are
reassigning CPT code 76825 to APC
0269, and CPT code 76826 to APC 0697
for CY 2009. In reference to the general
comment regarding fetal
echocardiography services, we note that
CPT codes 76827 (Doppler
echocardiography, fetal, pulsed wave
and/or continuous wave with spectral
display; complete) and 76828 (Doppler
echocardiography, fetal, pulsed wave
and/or continuous wave with spectral
display; follow-up or repeat study) are
also included in this general service
type. We have reviewed the proposed
APC assignments of these two CPT
codes, and we have concluded that the
clinical characteristics of these services
and their HCPCS code-specific median
costs from hospital claims data
(approximately $92 and $77,
respectively) are similar to those of
other services also assigned to APC
0265, which has a final CY 2009 APC
median cost of approximately $61.
Therefore, in the absence of specific
recommendations to move these codes
to another APC or other detailed
information from commenters in
support of their reassignment, we
believe that CPT codes 76827 and 76828
are most appropriately assigned to APC
0265 for CY 2009, as we proposed.
Comment: One commenter agreed
with our procedure regarding
identifying those echocardiography
procedures with and without contrast
until the specific HCPCS C-code data
are available for ratesetting purposes.
However, the commenter expressed
concern that because of low utilization
of contrast for echocardiography
procedures, the median cost for APC
0128 may not accurately reflect all of
the resources required to provide
contrast echocardiography services. The
commenter suggested that CMS review
those echocardiography procedures that
are performed with contrast and
consider creating more than one APC
that includes echocardiography services
performed with contrast.
Response: We have reviewed the
HCPCS code-specific median costs for
echocardiography services performed
with contrast in our CY 2007 claims
data, and we continue to believe that the
median cost of APC 0128 accurately
reflects the hospital costs of performing
echocardiography procedures with
contrast. We see no need, based on
clinical characteristics or median costs
as reflected in the hospital claims data,
to develop another APC for certain
echocardiography procedures with
contrast. Only two services assigned to
APC 0128 for CY 2009 are significant
procedures, specifically with contrast
studies described by CPT code 93306
(based on the subset of claims that met
our criteria described above in this
section) and CPT code 93350, with
median costs of approximately $569 and
$537, respectively. Other
echocardiography services are rarely
provided with contrast to Medicare
beneficiaries. Furthermore, we believe
that the final OPPS coding and payment
methodology for echocardiography
services allows us to both adhere to the
statutory requirement to create
additional groups of services for
procedures that use contrast agents and
to continue packaged payment for
contrast agents.
After consideration of the public
comments received, we are finalizing
our CY 2009 payment proposals for
echocardiography services, with
modification to reassign CPT code
93307 to APC 0697 and to assign new
CPT code 93306 to APC 0269 based on
their revised and new CY 2009 CPT
code descriptors, respectively. In
addition, we are reassigning CPT code
76825 and CPT code 76826 for fetal
echocardiography services to APC 0269
and APC 0697, respectively. The final
echocardiography APCs and their CY
2009 median costs are listed in Table 4
below.
TABLE 4—CY 2009 ECHOCARDIOGRAPHY APCS
Final CY
2009 APC
0128
0269
0270
0697
............
............
............
............
Echocardiogram with Contrast ...................................................................................................................................
Level II Echocardiogram Without Contrast Except Transesophageal .......................................................................
Transesophageal Echocardiogram Without Contrast ................................................................................................
Level I Echocardiogram Without Contrast Except Transesophageal ........................................................................
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(5) Nuclear Medicine Services
In CY 2008, we began packaging
payment for diagnostic
radiopharmaceuticals into the payment
for the associated nuclear medicine
procedure. (For a discussion regarding
the distinction between diagnostic and
therapeutic radiopharmaceuticals, we
refer readers to the CY 2008 OPPS/ASC
final rule at 72 FR 66636.) Prior to the
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approximate
APC median
cost
CY 2009 APC title
15:50 Nov 17, 2008
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implementation of this policy,
diagnostic radiopharmaceuticals were
subject to the standard OPPS drug
packaging methodology whereby
payments are packaged when the
estimated mean per day product costs
fall at or below the annual packaging
threshold for drugs, biologicals, and
radiopharmaceuticals.
Packaging costs into a single aggregate
payment for a service, encounter, or
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$553
422
539
249
episode-of-care is a fundamental
principle that distinguishes a
prospective payment system from a fee
schedule. In general, packaging the costs
of supportive items and services into the
payment for the independent procedure
or service with which they are
associated encourages hospital
efficiencies and also enables hospitals to
manage their resources with maximum
flexibility. All nuclear medicine
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procedures require the use of at least
one radiopharmaceutical or other
radiolabeled product, and there are only
a small number of radiopharmaceuticals
that may be appropriately billed with
each diagnostic nuclear medicine
procedure. For the OPPS, we
distinguish diagnostic
radiopharmaceuticals from therapeutic
radiopharmaceuticals for payment
purposes, and this distinction is
recognized in the Level II HCPCS codes
for diagnostic radiopharmaceuticals that
include the term ‘‘diagnostic’’ along
with a radiopharmaceutical in their
HCPCS code descriptors. As we stated
in the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66635), we
believe that our policy to package
payment for diagnostic
radiopharmaceuticals (other than those
already packaged when their per day
costs are below the packaging threshold
for OPPS drugs, biologicals, and
radiopharmaceuticals) is consistent with
OPPS packaging principles, provides
greater administrative simplicity for
hospitals, and encourages hospitals to
use the most clinically appropriate and
cost efficient diagnostic
radiopharmaceutical for each study. For
more background on this policy, we
refer readers to discussions in the CY
2008 OPPS/ASC proposed rule (72 FR
42667 through 42672) and the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66635 through 66641).
For CY 2008 ratesetting, we used only
claims for nuclear medicine procedures
that contained a diagnostic
radiopharmaceutical in calculating the
median costs for APCs including
nuclear medicine procedures (72 FR
66639). This is similar to the established
methodology used for device-dependent
APCs before claims reflecting the
procedure-to-device edits were included
in our claims data. For CY 2008, we also
implemented claims processing edits
(called procedure-to-radiolabeled
product edits) requiring the presence of
a radiopharmaceutical (or other
radiolabeled product) HCPCS code
when a separately payable nuclear
medicine procedure is present on a
claim. Similar to our practice regarding
the procedure-to-device edits that have
been in place for some time, we
continually review comments and
requests for changes related to these
edits and, based on our review, may
update the edit list during our quarterly
update process if necessary. The
radiopharmaceutical (and other
radiolabeled product) and procedure
HCPCS codes that are included in these
edits can be viewed on the CMS Web
site at: https://www.cms.hhs.gov/
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HospitalOutpatientPPS/
01_overview.asp.
The CY 2008 OPPS claims that are
subject to the procedure-to-radiolabeled
product edits will not be available for
setting payment rates until CY 2010
and, therefore, are not yet available to
set payment rates for CY 2009.
Therefore, in the CY 2009 OPPS/ASC
proposed rule (73 FR 41440), we
proposed to continue our established
CY 2008 methodology for setting the
payment rates for APCs that include
nuclear medicine procedures for CY
2009. We used an updated list of
radiolabeled products, including but not
limited to diagnostic
radiopharmaceuticals, from the
procedure-to-radiolabeled product edit
file to identify single and ‘‘pseudo’’
single claims for nuclear medicine
procedures that also included at least
one eligible radiolabeled product. Using
this subset of claims, we followed our
standard OPPS ratesetting methodology,
discussed in section II.A. of this final
rule with comment period, to calculate
median costs for nuclear medicine
procedures and their associated APCs.
We identified those APCs containing
nuclear medicine procedures that would
be subject to this methodology under
our CY 2009 proposal in Table 4 of the
CY 2009 OPPS/ASC proposed rule, and
shown below in Table 5. As in CY 2008,
when we set APC median costs based on
single and ‘‘pseudo’’ single claims that
also included at least one radiolabeled
product on our edit file, we observed an
equivalent or higher median cost than
that calculated from all single and
‘‘pseudo’’ single bills. We believe that
this methodology appropriately ensures
that the costs of diagnostic
radiopharmaceuticals are included in
the ratesetting process for these APCs.
During its March 2008 meeting, the
APC Panel recommended that CMS
continue to package payment for
diagnostic radiopharmaceuticals for CY
2009. In addition, the APC Panel
recommended that CMS present data at
the first CY 2009 APC Panel meeting on
usage and frequency, geographic
distribution, and size and type of
hospitals performing nuclear medicine
studies using radioisotopes in order to
ensure that access to diagnostic
radiopharmaceuticals is preserved for
Medicare beneficiaries. We discuss,
below, our response to these APC Panel
recommendations along with our
response to public comments.
Comment: A number of the
commenters opposed CMS’ proposed
policy to package payment for all
diagnostic radiopharmaceuticals into
their associated nuclear medicine
procedure. They noted that the majority
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of diagnostic radiopharmaceuticals are
not interchangeable, and for that reason,
the CMS policy of packaging all
diagnostic radiopharmaceuticals into
their associated nuclear medicine
procedure does not foster hospital
efficiencies. Some of these commenters
expressed concern that packaging
diagnostic radiopharmaceuticals into
the payment for associated nuclear
medicine procedures results in
overpayment of many procedures,
especially those using existing lowercost radiopharmaceuticals, while the
bundled payment would be insufficient
for newer, and likely more expensive,
radiopharmaceuticals.
In addition, the commenters
requested that if CMS continues to
package payment for diagnostic
radiopharmaceuticals into payment for
their associated nuclear medicine
procedures, CMS should revise the
nuclear medicine APCs to provide
differential payments for nuclear
medicine procedures when used with
different radiopharmaceuticals. Several
commenters identified the series of
tumor/infection imaging APCs,
including APCs 0406 (Level I Tumor/
Infection Imaging), 0408 (Level III
Tumor/Infection Imaging), and 0414
(Level II Tumor/Infection Imaging), for
CMS’ attention to ensure appropriate
payment for low volume, high cost
radiopharmaceuticals. One commenter
specifically suggested a composite APC
for specific combinations of a tumor
imaging scan and certain diagnostic
radiopharmaceuticals. Several
commenters noted that there is wide
variation in the costs of diagnostic
radiopharmaceuticals, and that
composite APCs for specific
combinations of procedures and
diagnostic radiopharmaceuticals would
be necessary to ensure adequate
payment to hospitals using expensive
diagnostic radiopharmaceuticals. Other
commenters suggested that the
significant clinical and resource
diversity of radiopharmaceuticals
packaged into nuclear imaging
procedures amounted to a violation of
the 2 times rule. The commenters
explained that just as diagnostic
radiopharmaceuticals are not
interchangeable, certain
radiopharmaceuticals are indicated for
particular types of diseases, such as
cancer, and are not clinically similar to
other radiopharmaceuticals used for
other purposes, such as tumor imaging.
Response: We understand that the
selection of a diagnostic
radiopharmaceutical for a particular
nuclear medicine procedure is a
complex decision based on many
factors, including patient-specific
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factors, and that not every diagnostic
radiopharmaceutical is fully
interchangeable with others. However,
as stated in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66617), we believe that nonspecific
packaging (as opposed to selected code
packaging) based on combinations of
items and services observed on hospital
claims is fully appropriate because of
the myriad combinations of items and
services that can be appropriately
provided together. Under the OPPS, we
package payment for ancillary,
supportive, and interrelated items and
services into payment for the
independent services they accompany.
As we discuss in section II.A.4. of this
final rule with comment period,
packaging promotes hospital efficiencies
through numerous means, not only just
through the choice of which
radiopharmaceutical to use for a specific
nuclear medicine scan. While all
diagnostic radiopharmaceuticals may
not be interchangeable, we believe that
packaging the costs of diagnostic
radiopharmaceuticals, however
differential those costs may be, into the
payment for nuclear medicine services
that use these products is appropriate,
whether there is one product or
multiple products that could be used to
furnish the particular service provided
to an individual patient. The OPPS has
a history of packaging items that are not
necessarily interchangeable. It is our
longstanding practice to package
payment for nonpass-through
implantable medical devices into
payment for the procedure in which
they are used, notwithstanding that
there may be different devices or
combinations of devices that could be
used to furnish a service. (For a more
complete discussion of the history of
packaging items, we refer readers to the
CY 2008 OPPS/ASC final rule with
comment period at 72 FR 66639.)
Therefore, in combination with our
understanding that a diagnostic
radiopharmaceutical is never provided
without an accompanying nuclear
medicine scan, we believe that it is
appropriate to package the payment for
all diagnostic radiopharmaceuticals into
the payment for the associated nuclear
medicine procedure.
With regard to suggested composites
or other revisions designed to isolate
specific nuclear medicine scans with a
subset of diagnostic
radiopharmaceuticals, we do not believe
that the inability to substitute one
diagnostic radiopharmaceutical for
another is a compelling reason for
creating composite APCs, as explained
below. We developed composite APCs
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to provide a single payment for two or
more services that are typically
performed together during a single
clinical encounter and that result in the
provision of a complete service.
Composite APCs differ from packaging.
Composite APCs provide a single
payment for specific combinations of
independent services that would
otherwise be separately payable if they
were not provided together, while
packaging entails associating the cost of
ancillary, supportive, and interrelated
services and supplies with a distinct
service or composite service. Composite
APCs are intended to expand the OPPS
payment bundles to encourage hospital
efficiencies. Providing a single payment
for a specific combination of a
diagnostic radiopharmaceutical with a
particular nuclear medicine procedure
would not constitute a composite APC
and would provide no incentives for
hospital efficiency. From the
perspective of value-based purchasing,
we see no benefit to paying for many
individual diagnostic
radiopharmaceutical and nuclear
medicine procedure combinations over
paying separately for both the item and
service, beyond an appearance of
bundling. Such an approach would add
complexity to ratesetting and would
create challenges and cost instability
because payments would be based on
data from small numbers of claims for
certain HCPCS code pairs. As noted
above, there are many items and
services that we package under the
OPPS that are similarly not
interchangeable with other related items
and services.
We understand that by packaging
payment for a range of products such as
diagnostic radiopharmaceuticals,
payment for the associated nuclear
medicine procedure may be more or less
than the hospital’s cost for these
services in a given case. As stated in the
CY 2008 OPPS/ASC final rule with
comment period (72 FR 66639), we note
that the most fundamental characteristic
of a prospective payment system is that
payment is to be set at an average for the
service, which, by definition, means
that some services are paid more or less
than average. As explained above in this
section, in order to more accurately
account for these packaged services, for
CY 2009 ratesetting, we used only
correctly coded claims for nuclear
medicine procedures that contained a
radiolabeled product in calculating the
CY 2009 median costs for APCs
including nuclear medicine procedures.
We discussed in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66640) the issue of variability in
radiopharmaceutical costs or other
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packaged costs creating potential 2
times violations. We note that 2 times
violations are specific to the total cost
of the primary service, nuclear medicine
scans in this case, including packaged
costs. We have performed our standard
review of the APCs using updated CY
2007 claims data for this final rule with
comment period and, as a result, have
not identified any 2 times violations in
the APCs containing nuclear medicine
procedures, when calculated as
described above. (For more information
on the 2 times rule, we refer readers to
sections III.B.2. and 3. of this final rule
with comment period.)
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to set the payment rates
for APCs containing nuclear medicine
procedures based on those claims that
also contain a radiolabeled product to
ensure that the costs of diagnostic
radiopharmaceuticals are appropriately
packaged into the costs of nuclear
medicine procedures. The CY 2009
APCs to which nuclear medicine
procedures are assigned and for which
we required radiolabeled products on
the nuclear medicine procedure claims
used for ratesetting are displayed in
Table 5 below.
Comment: Several commenters cited
concerns regarding the proposed APC
assignments and proposed payment
rates for a number of the nuclear
medicine procedures. These
commenters noted that the APC
assignments of certain nuclear medicine
procedures led to clinically diverse
procedures being grouped together for
payment purposes. Furthermore, they
added that, in some cases, nuclear
medicine procedures with very different
resource requirements, such as positron
emission tomography (PET) and PET/
computed tomography (CT) scans, were
grouped together.
Specifically, one commenter
requested that (1) CPT code 78645
(Cerebrospinal fluid flow, imaging (not
including introduction of material);
shunt evaluation) be reassigned from
APC 0403 (Level I Nervous System
Imaging) to APC 0402 (Level II Nervous
System Imaging); (2) CPT code 78608
(Brain imaging, positron emission
tomography (PET); metabolic
evaluation) be reassigned from APC
0308 (Non-Myocardial Positron
Emission Tomography (PET) Imaging) to
a more appropriate APC; and (3) CPT
codes 78000 (Thyroid uptake; single
determination) and 78001 (Thyroid
uptake; multiple determinations) be
reassigned from APC 0389 (Level I Nonimaging Nuclear Medicine) to APC 0392
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(Level II Non-imaging Nuclear
Medicine).
Response: We have performed our
annual review of all the procedures and
APC groupings for this final rule with
comment period based on updated CY
2007 claims data. The HCPCS codespecific median cost of CPT code 78645
is approximately $208 based on 425
single claims, which is reasonably close
to the median cost of APC 0403 of
approximately $182, where we
proposed to assign the service. The
commenter recommended assignment of
CPT code 78645 to APC 0402, in the
same nervous system imaging series,
with an APC median cost of
approximately $536. Based on this
review of costs, we continue to believe
CPT code 78645 is most appropriately
assigned to APC 0403 as we proposed,
as the HCPCS code-specific median cost
of CPT code 78645 is more comparable
to the level of hospital resources that are
reflected in the median cost of APC
0403 than the level of resources
reflected in the median cost of APC
0402.
There is a single APC for
nonmyocardial PET scans, APC 0308,
with a median cost of approximately
$1,014. The median costs of all CPT
codes assigned to that APC, including
CPT codes for PET scans and PET/CT
scans and CPT code 78608 for a
metabolic evaluation of the brain using
PET, range from approximately $891 to
$1,164, demonstrating very significant
resource similarity. Therefore, we do
not agree with commenters that the
proposed configuration of APC 0308
should be modified because all of these
nonmyocardial services that use PET
technology demonstrate very similar
costs and share clinical similarity as
well.
With regard to the thyroid scans
described by CPT codes 78000 and
78001, these procedures have HCPCS
code-specific median costs of
approximately $109 and $117,
respectively, very close to the median
cost of APC 0389 of approximately
$115, where we proposed to assign
them. There is only one other service,
with one single claim, assigned to APC
0389, other than an unlisted code whose
data do not contribute to ratesetting for
the APC. Therefore, these two CPT
codes determine the median cost of APC
0389. In contrast, the median cost of
APC 0392, their recommended
placement according to the commenter,
is approximately $161, substantially
greater than the median costs of the two
thyroid studies. Therefore, we do not
believe any changes to the proposed
APC assignments of CPT codes 78000 or
78001 are justified.
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Comment: Several commenters
disagreed with the proposed payment
rate for myocardial PET scan services
because they believed that the payment
rate is based on inadequate hospital data
consisting of fewer than 2,800 claims.
They stated that the CY 2009 proposed
payment rate of approximately $1,143
for myocardial PET scan services
decreased 18 percent compared to the
CY 2008 payment rate of approximately
$1,400 for these services. The
commenters believed that the proposed
payment rate for APC 0307 (Myocardial
Positron Emission Tomography (PET)
Imaging) is substantially less than the
cost of providing the services involved,
including the use of a relatively costly
diagnostic radiopharmaceutical. They
urged CMS to accept external data in
light of the limited hospital claims data
in order to set the payment rate for
myocardial PET scans. If external data
are not used for CY 2009 ratesetting, the
commenters alternatively recommended
that CMS freeze the payment rate for
myocardial PET scans at the CY 2008
payment rate of approximately $1,400
for CY 2009 to ensure greater stability in
payment. Some commenters asserted
that the payment rates for myocardial
PET studies have shown significant
volatility over the past 4 years, and
requested that CMS refrain from
implementing the proposed payment
reduction and work towards stabilizing
the payment rate. One commenter
suggested placing all three myocardial
PET scan CPT codes, that is 78459,
78491, and 78492, in New Technology
APC 1516 (New Technology—Level XVI
($1400—$1500)), with a proposed CY
2009 payment rate of $1,450, for at least
2 years, to stabilize the payment for
these services. Another commenter
urged CMS to carefully review the
claims data in setting the final payment
rate for APC 0307.
Response: Analysis of the CY 2007
hospital outpatient claims data revealed
that the HCPCS code-specific median
costs for all three myocardial PET scan
procedures that we proposed to retain in
APC 0307 are about the same.
Specifically, the HCPCS code-specific
median costs of the three myocardial
PET scan procedures are as follows: (1)
For CPT code 78459, the median cost is
approximately $924 based on 118 single
claims; (2) For CPT code 78491, the
median cost is approximately $1,410
based on 28 single claims; and (3) For
CPT code 78492, the median cost is
approximately $1,142 based on 1,809
single claims. In setting the CY 2009
payment rates for the myocardial PET
scan services, according to our standard
ratesetting methodology for clinical
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APCs to which nuclear medicine
procedures are assigned, we used only
those claims with a radiolabeled
product reported, to ensure correctly
coded claims. We packaged the cost of
the diagnostic radiopharmaceuticals
used in the studies into payment for the
scans, as discussed in detail in section
V.B.2.c. of this final rule with comment
period. We believe that all of the
myocardial PET scan procedures are
appropriately assigned to APC 0307
based on consideration of their clinical
characteristics and resource costs.
While we utilized external data in the
early years of the OPPS for ratesetting
for a few services, we now rely on the
cost data from claims as the system has
matured and we have gained additional
experience in ratesetting for HOPD
services. The foundation of a system of
relative weights like the OPPS is the
relativity of the costs of all services to
one another, as derived from a
standardized system that uses
standardized inputs and a consistent
methodology. Adoption of a ratesetting
methodology for APC 0307 that is
different from ratesetting for other APCs
containing nuclear medicine procedures
would undermine this relativity. We
believe that we have sufficient claims
data for the myocardial PET scan
services upon which to base the CY
2009 final payment rates. In fact, the
total number of claims for these services
has increased steadily over the past
several years. There were 2,576 claims
for CY 2004; 2,874 claims for CY 2005;
3,094 claims for CY 2006; and 3,537
claims for CY 2007, the most recent year
of claims available for CY 2009
ratesetting. The historical variability in
OPPS payment for myocardial PET scan
services does not appear to have
affected the access of Medicare
beneficiaries to these services. Given
that these services have been assigned to
APC 0307 since CY 2007, with payment
based on the most current hospital
claims and Medicare cost report data,
we believe we are providing a stable and
consistent payment methodology that
appropriately reflects the hospital
resources required for myocardial PET
scans. Therefore, we see no reason to
‘‘freeze’’ the payment for myocardial
PET scans at the CY 2008 rate when we
have updated hospital claims
information available for ratesetting.
Further, we do not agree with the
recommendation to assign myocardial
PET scan services to New Technology
APC 1516, because these services are
established OPPS services of moderate
volume, with historical claims data
available for a number of past years, and
they do not fit the general criteria for
services considered to be new
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technology services under the OPPS. We
continue to believe that assignment of
CPT codes 78459, 78491, and 78492 to
APC 0307 ensures appropriate payment
for the services. Assignment to New
Technology APC 1516, which has a CY
2009 payment rate of $1,450, would
result in overpayment for myocardial
PET scan services according to our most
recent hospital cost data.
Comment: One commenter expressed
concern with the proposed assignment
of the multiple myocardial PET scan
procedure, specifically CPT code 78492,
to the same APC as the single
myocardial PET scan procedure,
specifically CPT code 78491, and
believed this approach would
significantly underpay providers for
multiple scanning procedures. The
commenter stated that multiple scans
require greater hospital resources, as
well as increased scan times, than single
scans, and argued that the proposal
would result in underpayment to the
facilities providing multiple scan
services. The commenter further
asserted that the proposed significant
reduction in payment from CY 2008 to
CY 2009 would impact patient access to
these services. The commenter urged
CMS to reevaluate the claims data for
APC 0307 to distinguish between the
resources necessary to provide single
versus multiple imaging studies before
finalizing the proposed CY 2009
payment rate for myocardial PET scan
services.
Response: Based on our CY 2007
claims data used for this final rule with
comment period, the HCPCS codespecific median costs for all three
myocardial PET scan services that we
proposed to assign to APC 0307 are
similar. Approximately 93 percent of
the CY 2007 claims for myocardial PET
scans are for CPT code 78492 for
multiple scans, while only
approximately 1 percent are for CPT
code 78491, the single scan CPT code
referenced by the commenter. The
median cost for CPT code 78492 of
approximately $1,142 is actually less
than the median cost of CPT code 78491
of approximately $1,410, a
counterintuitive finding that is likely
the result of very few claims for CPT
code 78491 from a small number of
hospitals. Nevertheless, the assignment
of single myocardial PET scan
procedures to the same APC as multiple
scan procedures has very little effect on
the payment rate for APC 0307, which
is largely driven by the majority of
claims for multiple scan procedures. As
we explained previously in the CY 2007
OPPS/ASC final rule with comment
period (71 FR 68040 through 68041) and
the CY 2008 OPPS/ASC final rule with
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comment period (72 FR 66718), based
on the CY 2007 claims data used for this
final rule with comment period, we
believe that the assignment of CPT
codes 78459, 78491, and 78492 to a
single clinical APC for CY 2009 is
appropriate because the CY 2007 claims
data used for CY 2009 ratesetting do not
support a payment differential between
single and multiple myocardial PET
scan services.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to continue to assign CPT
codes 78459, 78491, and 78492 for
myocardial PET scan services to APC
0307, with a final APC median cost of
approximately $1,131 for CY 2009.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposals, without
modification, for the configurations of
APCs containing nuclear medicine
procedures. The final APC assignments
of all CPT codes for nuclear medicine
procedures are displayed in Addendum
B to this final rule with comment
period.
Comment: With regard to the
procedure-to-radiolabeled product
claims processing edits, some
commenters suggested that CMS create
a modifier or a HCPCS code for
hospitals to use when the hospital
performs the nuclear medicine scan but
does not supply the radiolabeled
product. The commenters noted that
this would be an appropriate situation
for a reduction to payment for the
nuclear medicine procedure in order to
offset the packaged diagnostic
radiopharmaceutical costs not incurred
by the hospital when the hospital does
not provide the radiopharmaceutical.
Response: It continues to be our
expectation that, in accordance with the
hospital bundling requirements,
hospitals will provide both the
diagnostic radiopharmaceutical and the
nuclear medicine procedure because
administration of the diagnostic
radiopharmaceutical is an essential part
of the nuclear medicine study. As we
stated in the April 7, 2000 OPPS final
rule (65 FR 18440), ‘‘All diagnostic tests
that are furnished by a hospital, directly
or under arrangements, to a registered
hospital outpatient during an encounter
at a hospital are subject to the bundling
requirements.’’ We further explained
that the hospital is not responsible for
billing the diagnostic test if a hospital
patient leaves the hospital and goes
elsewhere to obtain the diagnostic test.
However, when reporting a nuclear
medicine procedure provided in the
HOPD, the administration of the
radiopharmaceutical is not separately
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reported because the administration is
considered to be integral to the
performance of the nuclear medicine
procedure. Therefore, we would expect
that the radiopharmaceutical and the
accompanying nuclear medicine
procedure that make up the complete
service ‘‘furnished to hospital patients,
must be provided directly or under
arrangements by the hospital and only
the hospital may bill the program,’’ as
we also stated in the August 2, 2000
OPPS final rule (65 FR 18440).
We have provided a specific
accommodation for one rare
circumstance where the HOPD does not
furnish a diagnostic
radiopharmaceutical (or other
radiolabeled product) prior to
performing a nuclear medicine
procedure. In the particular case where
a Medicare beneficiary receives a
radiolabeled product as a hospital
inpatient and then requires a nuclear
medicine procedure as a hospital
outpatient but does not require
administration of a diagnostic
radiopharmaceutical, as of October
2008, we have instructed hospitals to
report HCPCS code C9898 (Radiolabeled
product provided during a hospital
inpatient stay) with a token charge of
less than $1.01 so that the claims for the
nuclear medicine procedure may
process to payment. In this situation,
which we have been told is rare, the
patient would not receive a radiolabeled
product in the HOPD. We believe the
hospital should receive payment for the
nuclear medicine procedure provided in
the HOPD and the hospital bundling
rules would not present a problem
because the radiolabeled product
furnished to an inpatient was not
provided for purposes of the nuclear
medicine study. HCPCS code C9898 is
recognized as a radiolabeled product
code for purposes of the procedure-toradiolabeled product edits incorporated
in the I/OCE. However, we do not
believe that the development of a
modifier, additional HCPCS codes, or an
offset methodology for other
circumstances, such as the patient
receiving a radiopharmaceutical in the
physician’s office when the nuclear
medicine procedure is provided in the
HOPD, would be appropriate because of
the hospital bundling requirements.
Moreover, in those situations where an
exception is made, such as when a
beneficiary is administered a
therapeutic radiopharmaceutical as part
of a hospital inpatient stay and then
returns to the HOPD for a nuclear
medicine scan without needing a
diagnostic radiopharmaceutical to be
administered for the study, we do use
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these claims for ratesetting purposes.
We believe that just as these situations
are representative of the use of a nuclear
medicine scan, it is also appropriate to
include them for ratesetting purposes.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to provide payment for
nuclear medicine procedures on OPPS
claims that pass the procedure-toradiolabeled product edits incorporated
in the I/OCE, without additional
provisions for bypassing those edits or
offsetting the packaged diagnostic
radiopharmaceutical costs included in
the procedure payment if the
radiopharmaceutical is administered
outside the HOPD.
In summary, because we are
continuing to package payment for
diagnostic radiopharmaceuticals in CY
2009 as discussed further in section
V.B.2.c. of this final rule with comment
period, we are finalizing our CY 2009
proposal, without modification, to set
the nuclear medicine procedure
payment rates based on those correctly
coded claims that pass the claims
processing edits that ensure that a
radiolabeled product is included on the
nuclear medicine procedure claim. We
also are finalizing the proposed APC
configurations for those APCs to which
68549
nuclear medicine procedures are
assigned. In doing so, we are accepting
the APC Panel’s March 2008
recommendation to continue to package
payment for diagnostic
radiopharmaceuticals for CY 2009. In
addition, we are accepting another APC
Panel recommendation from March
2008 to present data at the first CY 2009
APC Panel meeting on usage and
frequency, geographic distribution, and
size and type of hospitals performing
nuclear medicine studies using
radioisotopes in order to ensure that
access to diagnostic
radiopharmaceuticals is preserved for
Medicare beneficiaries.
TABLE 5—APCS WHERE NUCLEAR MEDICINE PROCEDURES ARE ASSIGNED WITH MEDIAN COSTS CALCULATED FROM
CLAIMS WITH AN ASSOCIATED RADIOLABELED PRODUCT
Final CY 2009 APC
0307
0308
0377
0378
0389
0390
0391
0392
0393
0394
0395
0396
0397
0398
0400
0401
0402
0403
0404
0406
0408
0414
CY 2009 APC Title
....................................................................
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(6) Hyperbaric Oxygen Therapy
Since the implementation of the OPPS
in August 2000, the OPPS has
recognized HCPCS code C1300
(Hyperbaric oxygen under pressure, full
body chamber, per 30 minute interval)
for hyperbaric oxygen therapy (HBOT)
provided in the hospital outpatient
setting. In the CY 2005 OPPS final rule
with comment period (69 FR 65758
through 65759), we finalized a ‘‘per
unit’’ median cost calculation for APC
0659 (Hyperbaric Oxygen) using only
claims with multiple units or multiple
occurrences of HCPCS code C1300
because delivery of a typical HBOT
service requires more than 30 minutes.
We observed that claims with only a
single occurrence of the code were
anomalies, either because they reflected
terminated sessions or because they
were incorrectly coded with a single
unit. In the same rule, we also
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Myocardial Positron Emission Tomography (PET) imaging.
Non-Myocardial Positron Emission Tomography (PET) imaging.
Level II Cardiac Imaging.
Level II Pulmonary Imaging.
Level I Non-Imaging Nuclear Medicine.
Level I Endocrine Imaging.
Level II Endocrine Imaging.
Level II Non-imaging Nuclear Medicine.
Hematologic Processing & Studies.
Hepatobiliary Imaging.
GI Tract Imaging.
Bone Imaging.
Vascular Imaging.
Level I Cardiac Imaging.
Hematopoietic Imaging.
Level I Pulmonary Imaging.
Level II Nervous System Imaging.
Level I Nervous System Imaging.
Renal and Genitourinary Studies.
Level I Tumor/Infection Imaging.
Level III Tumor/Infection Imaging.
Level II Tumor/Infection Imaging.
established that HBOT would not
generally be furnished with additional
services that might be packaged under
the standard OPPS APC median cost
methodology. This enabled us to use
claims with multiple units or multiple
occurrences. Finally, we also used each
hospital’s overall CCR to estimate costs
for HCPCS code C1300 from billed
charges rather than the CCR for the
respiratory therapy or other
departmental cost centers. The
comments on the CY 2005 OPPS
proposed rule effectively demonstrated
that hospitals report the costs and
charges for HBOT in a wide variety of
cost centers. Since CY 2005, we have
used this methodology to estimate the
median cost for HBOT. The median
costs of HBOT using this methodology
have been relatively stable for the last 4
years. In the CY 2009 OPPS/ASC
proposed rule (73 FR 41442), we
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proposed to continue using the same
methodology to estimate a ‘‘per unit’’
median cost for HCPCS code C1300 for
CY 2009 of approximately $103, using
71,866 claims with multiple units or
multiple occurrences.
Comment: One commenter suggested
that the payment rate per unit for HBOT
was too low relative to the commenter’s
incurred costs for the hyperbaric oxygen
and equipment. The commenter further
encouraged CMS to instruct providers to
be sure their charges are appropriate
and offer providers specific billing
guidance and instruction by providing
examples of charging by the ‘‘unit’’ for
multiple 30 minute sessions. The
commenter noted that per unit billing
can be confusing.
Response: In response to the comment
on the adequacy of the proposed
payment rate, the proposed
methodology represents our best
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approach to estimating a valid median
cost upon which to base a payment rate
for HBOT services for CY 2009, in the
context of the per 30 minute time period
specified in the HCPCS code descriptor
for HCPCS code C1300. All OPPS
payment rates are based on the middle
or median estimated cost of providing a
service or group of services. For any
given service or group of services, we
expect that some hospitals will incur
costs higher than the payment rate and
some less.
We agree with the commenter on the
importance of having accurate claims
data as part of our median cost
calculation and that unit billing can be
challenging. For all services, we do
expect hospitals participating in the
OPPS to be familiar with CPT and
HCPCS code descriptors and to bill
accordingly. We provide general
direction on billing units for HCPCS
codes under the OPPS in the Medicare
Claims Processing Manual, Pub. 100–04,
Chapter 4, Section 20.4. We note that
HCPCS code C1300 has been in use for
some time. Our analysis of claims for
HCPCS code C1300 for the CY 2005
OPPS proposed rule indicated that
many hospitals understand unit billing
for HCPCS code C1300. We observed
that most hospitals billed 3 or 4 units
for an HBOT session, and these multiple
unit claims are the claims we used for
rateseting for CY 2009.
After consideration of the public
comment received, we are finalizing our
CY 2009 proposal, without
modification, to continue to use our
established ratesetting methodology for
calculating the median cost of APC 0659
for payment of HBOT, with a final CY
2009 APC median cost of approximately
$101.
(7) Payment for Ancillary Outpatient
Services When Patient Expires (–CA
Modifier)
In the November 1, 2002 final rule
with comment period (67 FR 66798), we
discussed the creation of the new
HCPCS–CA modifier to address
situations where a procedure on the
OPPS inpatient list must be performed
to resuscitate or stabilize a patient
(whose status is that of an outpatient)
with an emergent, life-threatening
condition, and the patient dies before
being admitted as an inpatient. In
Transmittal A–02–129, issued on
January 3, 2003, we instructed hospitals
on the use of this modifier. For a
complete description of the history of
the policy and development of the
payment methodology for these
services, we refer readers to the CY 2007
OPPS/ASC final rule with comment
period (71 FR 68157 through 68158).
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41442), we proposed to
continue to use for CY 2009 our
established ratesetting methodology for
calculating the median cost of APC 0375
(Ancillary Outpatient Services When
Patient Expires), and we proposed to
continue to make one payment under
APC 0375 for the services that meet the
specific conditions for using modifier
–CA. We proposed to calculate the
relative payment weight for APC 0375
by using all claims reporting a status
indicator ‘‘C’’ procedure appended with
the –CA modifier, using estimated costs
from claims data for line-items with a
HCPCS code assigned status indicator
‘‘G,’’ ‘‘H,’’ ‘‘K,’’ ‘‘N,’’ ‘‘Q1,’’ ‘‘Q2,’’ ‘‘Q3,’’
‘‘R,’’ ‘‘S,’’ ‘‘T,’’ ‘‘U,’’ ‘‘V,’’ and ‘‘X’’ and
charges for packaged revenue codes
without a HCPCS code. We continue to
believe that this methodology results in
the most appropriate aggregate median
cost for the ancillary services provided
in these unusual clinical situations.
As discussed in the CY 2009 OPPS/
ASC proposed rule (73 FR 41442), we
believe that hospitals are reporting the
–CA modifier according to the policy
initially established in CY 2003. We
noted that the claims frequency for APC
0375 has been relatively stable over the
past few years. Although the proposed
median cost for APC 0375 was slightly
lower for CY 2009 than the final median
cost for CY 2008, generally it has
increased significantly in recent years.
Variation in the median cost for APC
0375 is expected because of the small
number of claims and because the
specific cases are grouped by the
presence of the –CA modifier appended
to an inpatient procedure and not
according to the standard APC criteria
of clinical and resource homogeneity.
Cost variation for APC 0375 from year
to year is anticipated and acceptable as
long as hospitals continue judicious
reporting of the –CA modifier. Table 5
of the CY 2009 OPPS/ASC proposed
rule showed the number of claims and
the median cost for APC 0375 from CY
2006 to CY 2008. For CY 2009, the final
median cost for APC 0375 of
approximately $5,545 is slightly higher
than the CY 2008 and proposed CY 2009
median costs.
We did not receive any public
comments regarding this proposal.
Therefore, we are finalizing our CY 2009
proposal, without modification, to
continue to use our established
ratesetting methodology for calculating
the median cost of APC 0375, which has
a final CY 2009 APC median cost of
approximately $5,545.
Table 6 below shows the number of
claims and the final median cost for
APC 0375 from CY 2006 to CY 2009.
TABLE 6—CLAIMS FOR ANCILLARY OUTPATIENT SERVICES WHEN PATIENT EXPIRES (–CA MODIFIER) FOR CYS 2006
THROUGH 2009
Number of claims
Prospective payment year
CY
CY
CY
CY
2006
2007
2008
2009
370
260
183
168
$2,717
3,549
4,945
5,545
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
e. Calculation of Composite APC
Criteria-Based Median Costs
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Final approximate
APC median cost
As discussed in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66613), we believe it is important
that the OPPS enhance incentives for
hospitals to provide only necessary,
high quality care and to provide that
care as efficiently as possible. For CY
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2008, we developed composite APCs to
provide a single payment for groups of
services that are typically performed
together during a single clinical
encounter and that result in the
provision of a complete service.
Bundling payment for multiple
independent services into a single OPPS
payment in this way enables hospitals
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to manage their resources with
maximum flexibility by monitoring and
adjusting the volume and efficiency of
services themselves. An additional
advantage to the composite APC model
is that we can use data from correctly
coded multiple procedure claims to
calculate payment rates for the specified
combinations of services, rather than
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relying upon single procedure claims
which typically are low in volume and/
or incorrectly coded. We refer readers to
section II.A.4. of the CY 2008 OPPS/
ASC final rule with comment period for
a full discussion of the development of
the composite APC methodology (72 FR
66611 through 66614 and 66650 through
66652).
We continue to consider the
development and implementation of
larger payment bundles, such as
composite APCs, a long-term policy
objective for the OPPS and continue to
explore other areas where this payment
model may be utilized. In developing
the CY 2009 OPPS/ASC proposed rule,
we followed the same methodology for
identifying possible composite APCs as
we did for CY 2008. Specifically, we
examined the multiple procedure claims
that we could not convert to single
procedure claims to identify common
combinations of services for which we
have relatively few single procedure
claims. We then performed a clinical
assessment of the combinations that we
identified to determine whether our
findings were consistent with our
understanding of the services furnished.
In addition, consistent with our stated
intention to involve the APC Panel in
our future exploration of how we can
develop encounter-based and episodebased payment groups (72 FR 66614),
we also specifically explored a possible
composite APC for radioimmunotherapy
in response to a recommendation of the
APC Panel from its September 2007
meeting.
After performing claims analysis and
clinical assessments as described
earlier, and taking into consideration
the recommendation of the APC Panel
from its March 2008 meeting that we
continue pursuing a
radioimmunotherapy composite APC,
we did not propose a composite APC
payment for radioimmunotherapy for
CY 2009, as discussed further in section
V.B.4. of this final rule with comment
period. However, in the CY 2009 OPPS/
ASC proposed rule (73 FR 41450), we
proposed to expand the composite APC
model to one new clinical area for CY
2009, multiple imaging services, as
described in detail in section II.A.2.e.(5)
of this final rule with comment period.
We also proposed to continue for CY
2009 our established composite APC
policies for extended assessment and
management, low dose rate (LDR)
prostate brachytherapy, cardiac
electrophysiologic evaluation and
ablation, and mental health services, as
discussed in sections II.A.2.e.(1),
II.A.2.e.(2), II.A.2.e.(3), and II.A.2.e.(4),
respectively, of this final rule with
comment period (73 FR 41443).
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Comment: Many commenters
supported the development and
implementation of composite APCs as a
mechanism to encourage efficient and
effective care and to use multiple
procedure claims that otherwise would
not be available for ratesetting because
they include multiple separately
payable procedures furnished on the
same date of service. The commenters
remarked that the number of single bills
available for ratesetting for certain
procedures (particularly those requiring
coding combinations to represent a
complete service) remain a very small
percentage of total billed claims, and
recommended that CMS develop
composite APCs in several clinical areas
in order to improve OPPS payment
accuracy and include more correctly
coded, multiple procedure claims in
ratesetting. For example, several
commenters urged CMS to create
composite APCs for procedures
involving cardiac resynchronization
therapy defibrillator (CRT–D) or cardiac
resynchronization therapy pacemaker
(CRT–P) devices. The commenters
argued that the procedures involved in
the implantation of CRT–D and CRT–P
devices are major, separately payable
services that, if correctly coded, are
always represented by the submission of
at least two CPT codes. A number of
commenters recommended the
development of ‘‘composite’’ APCs to
address their concerns regarding the
proposed packaging of certain items and
services, specifically suggesting the
creation of ‘‘composite’’ APC payments
for various combinations of individual
services and specific packaged items or
services, such as bronchoscopy
procedures with endobronchial
ultrasound or nuclear medicine
procedures combined with specific
diagnostic radiopharmaceuticals.
In contrast to the commenters
requesting that CMS create additional
composite APCs, several commenters
remarked generally that CMS should
proceed cautiously as it expands service
bundling, and should not implement
additional composite methodologies
until adequate data are available to
evaluate the effectiveness and impact on
beneficiary access to care of the
composite policies implemented in CY
2008. Some commenters urged CMS to
reevaluate the concept of composite
APCs to ensure they are truly meeting
the objective of encouraging more cost
efficient care, are not unfairly
penalizing hospitals because of the
acuity of the patients they treat, and are
not making the system unnecessarily
complex.
Response: We agree with commenters
that the composite APC model is an
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68551
important and effective mechanism for
promoting efficiency and paying more
appropriately for packages of services.
The composite payment methodology
also enables us to use more claims data
and generates payment rates that more
accurately reflect the reality of how
hospitals furnish services. Therefore, we
will carefully explore the commenters’
suggestions for additional composite
APCs when we assess what payment
policy changes might be appropriate in
the future. We also will consider
bringing these and other composite
ideas to the APC Panel for further
discussion.
We believe we are proceeding at an
appropriate pace in the development of
composite APCs. We did not receive any
comments on the CY 2009 OPPS/ASC
proposed rule indicating there were
access problems resulting from the
implementation of composite APCs in
CY 2008. Furthermore, we believe that
the composite payment methodology
improves the accuracy of OPPS
payment, and we would not expect
access problems or other difficulties to
arise from a methodology that utilizes
more complete and valid claims in
ratesetting than our standard APC
ratesetting methodology. We also do not
agree that the composite methodology
makes the OPPS payment system
unnecessarily complex, because it
utilizes data from multiple procedure
claims as reported by hospitals and does
not require hospitals to change their
coding and billing practices in any way.
As discussed in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66650), our initial work on
developing composite APCs arose, in
part, from our attempts to develop an
approach to utilize common multiple
procedure claims that were not
otherwise available for ratesetting
because they included multiple
separately payable procedures furnished
on the same date of service. Composite
APCs were designed to expand the
payment bundles of the OPPS by
providing a single payment for the
totality of care provided in a hospital
outpatient encounter that would be
reported with two or more HCPCS codes
for otherwise separately payable
component services. Similarly, in CY
2008 the expanded unconditional
packaging of items and services also
allowed us to use more claims data from
what would otherwise be multiple
procedure claims and to expand the
OPPS payment bundles. We do not
consider some of the recommendations
by commenters to provide unique
payments for specific combinations of
separately payable services with certain
packaged items and services to be
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‘‘composite’’ APCs that move toward a
single payment for that totality of a
service because, in such cases, we are
already providing only a single payment
for the totality of the service, including
the packaged items and services. Such
an approach would lead to smaller
OPPS payment bundles, would not
utilize additional multiple procedure
claims, and would reduce the incentives
for hospital efficiency created by
packaging payment.
After consideration of the public
comments received, for CY 2009 we are
finalizing our proposal, without
modification, to continue our
established composite APC policies for
extended assessment and management,
LDR prostate brachytherapy, cardiac
electrophysiologic evaluation and
ablation, and mental health services, as
discussed in sections II.A.2.e.(1),
II.A.2.e.(2), II.A.2.e.(3), and II.A.2.e.(4),
respectively, of this final rule with
comment period. We also are
implementing a new composite
payment methodology for multiple
imaging services provided on the same
date of service, as discussed further in
section II.A.2.e.(5) of this final rule with
comment period.
(1) Extended Assessment and
Management Composite APCs (APCs
8002 and 8003)
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41443), we proposed to
continue to include composite APC
8002 (Level I Extended Assessment and
Management Composite) and composite
APC 8003 (Level II Extended
Assessment and Management
Composite) in the OPPS for CY 2009. In
addition, we proposed to include
HCPCS code G0384 (Level 5 hospital
emergency department visit provided in
a type B emergency department) in the
criteria that determine eligibility for
payment for composite APC 8003 (73 FR
41443) for CY 2009. For CY 2008, we
created these two new composite APCs
to provide payment to hospitals in
certain circumstances when extended
assessment and management of a patient
occur (an extended visit). In most
circumstances, observation services are
supportive and ancillary to the other
services provided to a patient. In the
circumstances when observation care is
provided in conjunction with a high
level visit or direct admission and is an
integral part of a patient’s extended
encounter of care, payment is made for
the entire care encounter through one of
two composite APCs as appropriate.
As defined for the CY 2008 OPPS,
composite APC 8002 describes an
encounter for care provided to a patient
that includes a high level (Level 5)
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clinic visit or direct admission to
observation in conjunction with
observation services of substantial
duration (72 FR 66648 through 66649).
Composite APC 8003 describes an
encounter for care provided to a patient
that includes a high level (Level 4 or 5)
emergency department visit or critical
care services in conjunction with
observation services of substantial
duration. HCPCS code G0378
(Observation services, per hour) is
assigned status indicator ‘‘N,’’ signifying
that its payment is always packaged. As
noted in the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66648
through 66649), the I/OCE evaluates
every claim received to determine if
payment through a composite APC is
appropriate. If payment through a
composite APC is inappropriate, the I/
OCE, in conjunction with the PRICER,
determines the appropriate status
indicator, APC, and payment for every
code on a claim. The specific criteria
that must be met for the two extended
assessment and management composite
APCs to be paid are provided below in
the description of the claims that were
selected for the calculation of the
proposed CY 2009 median costs for
these composite APCs. The general
composite APC logic and observation
care reporting criteria have also been
included in updates to the Claims
Processing and Benefit Policy Manuals
through Change Request 5916
(Transmittals 82 and 1145), dated
February 8, 2008, and we did not
propose to change these criteria for the
CY 2009 OPPS (73 FR 41443).
When we created composite APCs
8002 and 8003 for CY 2008, we retained
as general reporting requirements for all
observation services those criteria
related to physician order and
evaluation; documentation; and
observation beginning and ending time
as listed in section XI. of the CY 2008
final rule with comment period (72 FR
66812). In the CY 2009 OPPS/ASC
proposed rule (73 FR 41443), we did not
propose to change these reporting
requirements for the CY 2009 OPPS.
These are more general requirements
that encourage hospitals to provide
medically reasonable and necessary care
and help to ensure the proper reporting
of observation services on correctly
coded hospital claims that reflect the
full charges associated with all hospital
resources utilized to provide the
reported services.
As noted in detail in sections IX.C.
and XI. of the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66802
through 66805 and 66814), we saw a
normal and stable distribution of clinic
and emergency department visit levels.
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We do not expect to see an increase in
the proportion of visit claims for high
level visits as a result of the new
composite APCs adopted for CY 2008
and proposed for CY 2009. Similarly,
we expect that hospitals will not
purposely change their visit guidelines
or otherwise upcode clinic and
emergency department visits reported
with observation care solely for the
purpose of composite payment. As
stated in the CY 2008 OPPS/ASC final
rule with comment period (72 FR
66648), we expect to carefully monitor
any changes in billing practices on a
service-specific and hospital-specific
level to determine whether there is
reason to request that Quality
Improvement Organizations (QIOs)
review the quality of care furnished, or
to request that Benefit Integrity
contractors or other contractors review
the claims against the medical record.
However, we will not have claims
available for analysis that reflect the
new CY 2008 payment policy for the
extended assessment and management
composite APCs until the CY 2010
annual OPPS rulemaking cycle.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41444), we proposed to
continue the extended assessment and
management composite APC payment
methodology for APCs 8002 and 8003
for CY 2009. As stated earlier, we also
proposed to continue the general
reporting requirements for observation
services reported with HCPCS code
G0378. We continue to believe that the
composite APCs 8002 and 8003 and the
related policies provide the most
appropriate means of paying for these
services. We proposed to calculate the
median costs for APCs 8002 and 8003
using all single and ‘‘pseudo’’ single
procedure claims for CY 2007 that meet
the criteria for payment of each
composite APC.
Specifically, to calculate the proposed
median costs for composite APCs 8002
and 8003, we selected single and
‘‘pseudo’’ single claims that met each of
the following criteria:
1. Did not contain a HCPCS code to
which we have assigned status indicator
‘‘T’’ that is reported with a date of
service 1 day earlier than the date of
service associated with HCPCS code
G0378. (By selecting these claims from
single and ‘‘pseudo’’ single claims, we
had already assured that they would not
contain a code for a service with status
indicator ‘‘T’’ on the same date of
service.);
2. Contained 8 or more units of
HCPCS code G0378; and
3. Contained one of the following
codes:
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• In the case of composite APC 8002,
HCPCS code G0379 (Direct admission of
patient for hospital observation care) on
the same date of service as G0378; or
CPT code 99205 (Office or other
outpatient visit for the evaluation and
management of a new patient (Level 5));
or CPT code 99215 (Office or other
outpatient visit for the evaluation and
management of an established patient
(Level 5)) provided on the same date of
service or one day before the date of
service for HCPCS code G0378.
• In the case of composite APC 8003,
CPT code 99284 (Emergency department
visit for the evaluation and management
of a patient (Level 4)); CPT code 99285
(Emergency department visit for the
evaluation and management of a patient
(Level 5)); CPT code 99291 (Critical
care, evaluation and management of the
critically ill or critically injured patient;
first 30–74 minutes); or HCPCS code
G0384 provided on the same date of
service or one day before the date of
service for HCPCS code G0378. (As
discussed in detail below, we proposed
to add HCPCS code G0384 to the
eligibility criteria for composite APC
8003 for CY 2009.)
We applied the standard packaging
and trimming rules to the claims before
calculating the proposed CY 2009
median costs. The proposed CY 2009
median cost resulting from this process
for composite APC 8002 was
approximately $364, which was
calculated from 14,968 single and
‘‘pseudo’’ single bills that met the
required criteria. The proposed CY 2009
median cost for composite APC 8003
was approximately $670, which was
calculated from 83,491 single and
‘‘pseudo’’ single bills that met the
required criteria. This is the same
methodology we used to calculate the
medians for composite APCs 8002 and
8003 for the CY 2008 OPPS (72 FR
66649).
As discussed in more detail in section
IX.B. of this final rule with comment
period, in the CY 2009 OPPS/ASC
proposed rule (73 FR 41444), we
proposed to reassign HCPCS code
G0384 from APC 0608 (Level 5 Hospital
Clinic Visits) to APC 0616 (Level 5
Emergency Visits) for CY 2009.
Consistent with this change for CY
2009, in the CY 2009 OPPS/ASC
proposed rule (73 FR 41444), we also
proposed to add HCPCS code G0384 to
the eligibility criteria for payment of
composite APC 8003. Because these
visits are rare, we would not expect that
adding HCPCS code G0384 to the
eligibility criteria for payment for
extended assessment and management
composite APC 8003 would
significantly increase the relative
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frequency of the Type B emergency
department Level 5 visits reported using
HCPCS code G0384.
As discussed further in sections III.D
and IX. of this final rule with comment
period and consistent with our CY 2008
final policy, when calculating the
median costs for the clinic, Type A
emergency department visit, Type B
emergency department visit, and critical
care APCs (0604 through 0617 and 0626
through 0629), we would utilize our
methodology that excludes those claims
for visits that are eligible for payment
through the two extended assessment
and management composite APCs, that
is APC 8002 or APC 8003. We believe
that this approach would result in the
most accurate cost estimates for APCs
0604 through 0617 and 0626 through
0629 for CY 2009.
Also as discussed in section XIII.A.1.
of this final rule with comment period,
for CY 2009, in the CY 2009 OPPS/ASC
proposed rule (73 FR 41520 through
41521), we proposed to replace current
status indicator ‘‘Q’’ with three new
separate status indicators: ‘‘Q1,’’ ‘‘Q2,’’
and ‘‘Q3’’ for CY 2009. In the CY 2009
OPPS, ASC proposed rule (73 FR 41520
through 41521), we indicated our belief
that this proposed change would make
our policy more transparent to hospitals
and would facilitate the use of status
indicator-driven logic in our ratesetting
calculations, and in hospital billing and
accounting systems. Under this
proposal, status indicator ‘‘Q3’’ would
be assigned to all codes that may be
paid through a composite APC based on
composite-specific criteria or separately
through single code APCs when the
criteria are not met. Therefore, we
proposed that each of the direct
admission, clinic, and emergency
department visit codes that may be paid
through composite APCs 8002 and 8003
be assigned status indicator ‘‘Q3’’ for CY
2009. We proposed that HCPCS code
G0378 would continue to be always
packaged by assigning the HCPCS code
status indicator ‘‘N,’’ its current status
indicator under the CY 2008 OPPS.
At its March 2008 meeting, the APC
Panel recommended that CMS provide
additional data related to the frequency
and median cost for the extended
assessment and management composite
APCs and length-of-stay frequency
distribution data for observation
services, with additional detail at the
24–48 hour and greater than 48 hour
levels. At the APC Panel’s August 2008
meeting, we provided the additional
data as requested. After reviewing the
data presented, the APC Panel requested
that additional data on observation
services with longer lengths of stay,
analyzed by hospital characteristics, be
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68553
presented at the next meeting of the
APC Panel, that is, the APC Panel’s first
CY 2009 meeting. In addition, the APC
Panel requested that an analysis of CY
2008 claims data for clinic visits,
emergency department visits (Type A
and Type B), and extended assessment
and management composite APCs be
presented at the first CY 2009 meeting
of the APC Panel.
At its August 2008 meeting, the APC
Panel also recommended that CMS
adopt the CY 2009 proposals related to
the extended assessment and
management composite APCs,
especially in reference to the inclusion
of the Level 5 Type B emergency
department visit HCPCS code in APC
8003 (Level II Extended Assessment and
Management Composite). Finally, the
APC Panel recommended continuation
of the Visits and Observation
Subcommittee’s work. We are accepting
each of the APC Panel’s
recommendations and will provide
additional data and analyses as
requested at the first CY 2009 meeting
of the APC Panel.
Comment: Several commenters
expressed continued support for
payment of composite APC 8003, which
includes a high level emergency
department visit or critical care billed
with observation services. In addition,
several commenters supported CMS’
proposal to include the Level 5 Type B
ED visits, reported with HCPCS code
G0384, to the eligibility criteria for
payment of composite APC 8003 (Level
II Extended Assessment and
Management Composite). Another
commenter asserted that the extended
assessment and management APC
criteria are arbitrary because they do not
include lower level emergency
department and clinic visits. The latter
commenter believed that observation
care is medically necessary in
association with low level visits in some
cases and that the observation care is
often identical to the observation
provided to individuals in association
with high level visits. Therefore, the
commenter concluded that the proposed
composite payment criteria were
arbitrary because no payment is made
for the medically necessary observation
care provided in association with a low
level visit.
Response: We appreciate the
commenter’s support for continued
payment of the extended assessment
and management composite APCs and
for the addition of HCPCS code G0384
to the eligibility criteria for payment of
composite APC 8003.
In response to the commenter who
stated that the composite APC payment
criteria are arbitrary, payment for all
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observation care is packaged under the
OPPS but, as we explained in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66648), we
believe that observation care only rises
to the level of a major component
service that could be paid through a
composite APC when it is provided for
8 hours or more in association with a
high level clinic or emergency
department visit. Therefore, we do not
believe it would be appropriate to
provide payment for observation care in
association with a low level clinic or
emergency department visit through a
composite APC because we do not
believe that two major component
services are provided in such cases.
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66649), we
estimated that roughly 90 percent of the
instances of separately payable
observation care reported in CY 2006
would be eligible for payment through
composite APCs 8002 and 8003, using
the CY 2008 final criteria. We continue
to believe that most instances of
observation that were separately payable
in CY 2006 would have been eligible for
payment under composite APCs 8002
and 8003 under the CY 2009 OPPS. In
addition, some of the packaged
observation care that was provided in
CY 2006 would now be eligible for
payment through composite APCs 8002
and 8003 because we eliminated the
diagnosis requirement for CY 2008.
However, for observation care provided
under circumstances that do meet the
criteria for composite APC payment,
including observation in association
with low level clinic or emergency
department visits, we continue to
believe that the observation is ancillary
and supportive to those other services
provided to the patient on the same day.
Therefore, in such cases, hospitals
would receive payment for the
observation care as it is packaged into
payment for the other separately
payable services, such as the low level
clinic or emergency department visit.
After consideration of the public
comments received and the
recommendations of the APC Panel, we
are finalizing our CY 2009 proposals,
without modification, for payment of
composite APCs 8002 and 8003. The CY
2008 criteria and payment methodology
finalized for composites APCs 8002 and
8003 will continue, consistent with the
APC Panel’s August 2008
recommendation in support of our CY
2009 proposals for payment of extended
assessment and management composite
APCs. As discussed in section IX.B. of
this final rule with comment period, we
are also finalizing our proposal to
reassign HCPCS code G0384 from APC
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0608 (Level 5 Hospital Clinic Visits) to
APC 0616 (Level 5 Emergency Visits).
Moreover, we are finalizing our CY 2009
proposal, without modification, to
include HCPCS code G0384 in the
criteria that determine eligibility for
payment of composite APC 8003,
consistent with the APC Panel’s August
2008 recommendation that we should
adopt this proposal. The final CY 2009
median cost for composite APC 8002 is
approximately $367, which was
calculated from 17,501 single and
‘‘pseudo’’ single bills that met the
required criteria. The final CY 2009
median cost for composite APC 8003 is
approximately $660, which was
calculated from 150,088 single and
‘‘pseudo’’ single bills that met the
required criteria.
Finally, as discussed in section
XIII.A.1, of this final rule with comment
period, we are finalizing our CY 2009
proposal to replace current status
indicator ‘‘Q’’ with three new separate
status indicators: ‘‘Q1,’’ ‘‘Q2,’’ and
‘‘Q3.’’ Therefore, each of the direct
admission, clinic, and emergency
department visit codes that may be paid
through composite APCs 8002 and 8003
are assigned status indicator ‘‘Q3’’
(Codes that May be Paid Through a
Composite APC) for CY 2009 in
Addendum B to this final rule with
comment period.
As we indicated in the CY 2008 OPPS
ASC final rule with comment period,
(72 FR 66802 through 66805 and 66814),
we saw a normal and stable distribution
of clinic and emergency department
visits. We continue not to expect to see
an increase in the proportion of visit
claims for high level visits as a result of
the new composite APCs adopted for CY
2008 and proposed for CY 2009.
Similarly, we expect that hospitals will
not purposely change their visit
guidelines or otherwise upcode clinic
and emergency department visits
reported with observation care solely for
the purpose of composite payment. We
would also remind readers that
reasonable and necessary observation
care is a supportive and ancillary
service for which payment is always
packaged. When the criteria for payment
of either composite APC 8002 or 8003
are met, then the costs associated with
observation care reported with HCPCS
code G0378 are attributed to the total
costs of that composite APC. When the
criteria are not met, the costs of
observation care are packaged with the
costs of the separately payable
independent services on the claim,
usually the clinic or emergency
department visit. Those costs are
reflected in the APC payments for the
independent services. Therefore,
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payment is made for observation care as
part of the payment for the independent
service. The absence of separate
payment for observation care does not
equate to the absence of Medicare
coverage for the service.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41444), we also proposed
that the payment policy for separate
payment of HCPCS code G0379 that was
finalized for the CY 2008 OPPS (72 FR
66814 through 66815) would continue
to apply for CY 2009 when the criteria
for payment of this service through
composite APC 8002 are not met. The
criteria for payment of HCPCS code
G0379 under either composite APC
8002, as part of the extended assessment
and management composite service, or
APC 0604, as a separately payable
individual service are: (1) Both HCPCS
codes G0378 and G0379 are reported
with the same date of service; and (2) no
service with a status indicator of ‘‘T’’ or
‘‘V’’ or Critical Care (APC 0617) is
provided on the same date of service as
HCPCS code G0379. If either of the
above criteria is not met, HCPCS code
G0379 is assigned status indicator ‘‘N’’
and its payment is packaged into the
payment for other separately payable
services provided in the same
encounter.
We did not receive any public
comments concerning this proposal.
Therefore, we are finalizing our CY 2009
proposal, without modification, for
separate or composite APC payment of
HCPCS code G0379 under the same
circumstances as the final CY 2008
policy. If the criteria for separate or
composite APC payment are not met,
payment for HCPCS code G0379 is
packaged into payment for the other
separately payable services provided.
(2) LDR Prostate Brachytherapy
Composite APC (APC 8001)
LDR prostate brachytherapy is a
treatment for prostate cancer in which
needles or catheters are inserted into the
prostate, followed by permanent
implantation of radioactive sources into
the prostate through hollow needles or
catheters. At least two CPT codes are
used to report the composite treatment
service because there are separate codes
that describe placement of the needles/
catheters and the application of the
brachytherapy sources: CPT code 55875
(Transperineal placement of needles or
catheters into prostate for interstitial
radioelement application, with or
without cystoscopy) and CPT code
77778 (Interstitial radiation source
application; complex). Generally, the
component services represented by both
codes are provided in the same
operative session in the same hospital
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on the same date of service to the
Medicare beneficiary treated with LDR
brachytherapy for prostate cancer. As
discussed in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66653), OPPS payment rates for CPT
code 77778, in particular, have
fluctuated over the years. We were
frequently informed by the public that
reliance on single procedure claims to
set the median costs for these services
resulted in use of only incorrectly coded
claims for LDR prostate brachytherapy
because a correctly coded claim should
include, for the same date of service,
CPT codes for both needle/catheter
placement and application of radiation
sources, as well as separately coded
imaging and radiation therapy planning
services (that is, a multiple procedure
claim).
In order to base payment on claims for
the most common clinical scenario, and
to contribute to our goal of providing
payment under the OPPS for a larger
bundle of component services provided
in a single hospital encounter,
beginning in CY 2008 we provide a
single payment for LDR prostate
brachytherapy when the composite
service, billed as CPT codes 55875 and
77778, is furnished in a single hospital
encounter. We base the payment for
composite APC 8001 (LDR Prostate
Brachytherapy Composite) on the
median cost derived from claims for the
same date of service that contain both
CPT codes 55875 and 77778 and that do
not contain other separately paid codes
that are not on the bypass list. In
uncommon occurrences in which the
services are billed individually,
hospitals continue to receive separate
payments for the individual services.
We refer readers to the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66652 through 66655) for a full
history of OPPS payment for LDR
prostate brachytherapy and a detailed
description of how we developed the
LDR prostate brachytherapy composite
APC.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41445), we proposed to
continue paying for LDR prostate
brachytherapy services in CY 2009
using the composite APC methodology
proposed and implemented for CY 2008.
That is, we proposed to use CY 2007
claims on which both CPT codes 55875
and 77778 were billed on the same date
of service with no other separately paid
procedure codes (other than those on
the bypass list) to calculate the payment
rate for composite APC 8001. Consistent
with our CY 2008 practice, we would
not use the claims that meet these
criteria in the calculation of the median
costs for APCs 0163 (Level IV
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Cystourethroscopy and Other
Genitourinary Procedures) and 0651
(Complex Interstitial Radiation Source
Application) to which CPT codes 55875
and 77778 are assigned respectively;
median costs for APCs 0163 and 0651
would continue to be calculated using
single procedure claims. We note that
we inadvertently cited APC 0313
instead of APC 0651 as the assigned
APC for CPT code 77778 in the CY 2009
OPPS/ASC proposed rule at 73 FR
41445. However, the correct APC (0651)
assignment for CPT code 77778 was
included in Addenda B and M to the
proposed rule, and our CY 2009
proposal was to continue to assign CPT
code 77778 to APC 0651. As discussed
in section XIII.A.1. of this final rule
with comment period, we also proposed
to use new status indicator ‘‘Q3’’ (Codes
that May be Paid Through a Composite
APC), to denote HCPCS codes such as
CPT codes 55875 and 77778 that may be
paid through a composite APC for
publication and payment purposes for
CY 2009, rather than status indicator
‘‘Q’’ that is being used in CY 2008. In
the CY 2009 OPPS/ASC proposed rule
(73 FR 41520 through 41521), we
proposed the status indicator change to
facilitate identification of HCPCS codes
that may be paid through composite
APCs and to facilitate development of
the composite APC median costs for CY
2009.
We continue to believe that this
composite APC contributes to our goal
of creating hospital incentives for
efficiency and cost containment, while
providing hospitals with the most
flexibility to manage their resources. We
also continue to believe that data from
claims reporting both services required
for LDR prostate brachytherapy provide
the most accurate median cost upon
which to base the composite APC
payment rate.
Using partial year CY 2007 claims
data available for the CY 2009 proposed
rule, we were able to use 6,897 claims
that contained both CPT code 77778 and
55875 to calculate the median cost upon
which the CY 2009 proposed payment
for composite APC 8001 was based. The
proposed median cost for composite
APC 8001 for CY 2009 was
approximately $3,509. This was an
increase compared to the CY 2008
OPPS/ASC final rule with comment
period in which we calculated a final
median cost for this composite APC of
approximately $3,391 based on a full
year of CY 2006 claims data. The CY
2009 proposed composite APC median
was slightly less than $3,581, the sum
of the proposed median costs for APCs
0163 and 0651 ($2,388 + $1,193), the
APCs to which CPT codes 55875 and
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68555
77778 map if one service is billed on a
claim without the other. We stated in
the CY 2009 OPPS/ASC proposed rule
(73 FR 41445) that we believe the
proposed CY 2009 median cost for
composite APC 8001 of approximately
$3,509, calculated from claims we
believe to be correctly coded, would
result in a reasonable and appropriate
payment rate for this service in CY
2009.
Comment: One commenter supported
the continuation of the LDR prostate
brachytherapy composite APC but urged
CMS to closely monitor utilization to
ensure access to this therapy is not
compromised by this change in payment
policy.
Response: We appreciate the
commenter’s thoughts on the LDR
prostate brachytherapy composite APC.
As stated previously, we believe that the
composite payment methodology
improves the accuracy of OPPS
payment, and we would not expect
access problems or other difficulties to
arise from a methodology that utilizes
more complete and valid claims in
ratesetting than our standard APC
ratesetting methodology for the services
described by CPT codes 55875 and
77778 when performed together on the
same date of service. When the CY 2008
claims become available for the CY 2010
OPPS rulemaking cycle, we will
examine utilization of LDR prostate
brachytherapy services to ensure no
inappropriate changes in utilization
have occurred.
After consideration of the public
comment received, we are finalizing our
CY 2009 proposal, without
modification, to continue paying for
LDR prostate brachytherapy services
using the composite APC methodology
implemented for CY 2008. We were able
to use 845 claims that contained both
CPT codes 77778 and 55875 to calculate
the median cost upon which the CY
2009 final payment for composite APC
8001 is based. The final median cost for
composite APC 8001 for CY 2009 is
approximately $2,967. We note that this
is a decrease in median cost compared
to the CY 2009 OPPS/ASC proposed
rule in which we calculated a proposed
median cost for this composite APC of
approximately $3,509. We also note that
there is a significant decrease in the
number of claims used for calculating
the median cost for APC from the CY
2009 proposed rule to this final rule
with comment period.
We believe that the decreases in both
the median cost for APC 8001 and the
number of claims used to calculate the
median cost are attributable to the
removal of CPT codes in the radiation
oncology series of CPT codes from the
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bypass list in response to public
comments because the codes did not
meet the empirical criteria for inclusion
on the bypass list, as discussed in
section II.A.1.b.of this final rule with
comment period. We believe that some
of the CPT codes that were removed
from the bypass list, which are paid
separately in addition to the LDR
prostate brachytherapy composite APC,
occur so frequently on claims that meet
the criteria for LDR prostate
brachytherapy composite payment that
their removal from the bypass list
resulted in the significant drop in the
number of claims that could be used to
calculate the median cost for APC 8001.
However, our final CY 2009 median cost
for APC 8001 should be a more accurate
reflection of the cost of the services for
which the composite payment is made
than the proposed CY 2009 median cost,
because it is most likely that the
packaged costs that should have been
associated with the radiation oncology
codes on the bypass list were wrongly
attributed to the cost of the LDR prostate
brachytherapy composite APC in the CY
2009 proposed rule, as discussed in
more detail in response to public
comments in section II.A.1.b. of this
final rule with comment period. The
APC 8001 median cost that we
calculated for this final rule with
comment period no longer includes the
packaging that should have been
attributed to the codes that were on the
bypass list but did not meet the
empirical criteria for the bypass list.
Moreover, the line-item costs for the
radiation oncology codes that failed the
empirical criteria for the bypass list are
no longer being used as ‘‘pseudo’’ single
claims without their associated
packaging to set the payment rates for
those codes. The median costs for these
codes should also be more accurate
because the ‘‘pseudo’’ single procedure
claims that lacked the appropriate
packaging are no longer being used to
set the medians for them.
The final CY 2009 median cost for
composite APC 8001 of approximately
$2,967 is slightly less than $3,163, the
sum of the median costs for APC 0163
and APC 0651 ($2,316 + $847), the
APCs to which CPT codes 55875 and
77778 map if one service is billed on a
claim without the other. These CPT
codes are assigned status indicator ‘‘Q3’’
in Addendum B to this final rule with
comment period to identify their status
as potentially payable through a
composite APC. Their composite APC
assignment is identified in Addendum
M to this final rule with comment
period.
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(3) Cardiac Electrophysiologic
Evaluation and Ablation Composite
APC (APC 8000)
Cardiac electrophysiologic evaluation
and ablation services frequently are
performed in varying combinations with
one another during a single episode-ofcare in the hospital outpatient setting.
Therefore, correctly coded claims for
these services often include multiple
codes for component services that are
reported with different CPT codes and
that, prior to CY 2008, were always paid
separately through different APCs
(specifically, APC 0085 (Level II
Electrophysiologic Evaluation), APC
0086 (Ablate Heart Dysrhythm Focus),
and APC 0087 (Cardiac
Electrophysiologic Recording/
Mapping)). As a result, there would
never be many single bills for cardiac
electrophysiologic evaluation and
ablation services, and those that are
reported as single bills would often
represent atypical cases or incorrectly
coded claims. As described in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66655 through
66659), the APC Panel and the public
expressed persistent concerns regarding
the limited and reportedly
unrepresentative single bills available
for use in calculating the median costs
for these services according to our
standard OPPS methodology.
Effective January 1, 2008, we
established APC 8000 (Cardiac
Electrophysiologic Evaluation and
Ablation Composite) to pay for a
composite service made up of at least
one specified electrophysiologic
evaluation service and one
electrophysiologic ablation service.
Calculating a composite APC for these
services allowed us to utilize many
more claims than were available to
establish the individual APC median
costs for these services, and we also saw
this composite APC as an opportunity to
advance our stated goal of promoting
hospital efficiency through larger
payment bundles. In order to calculate
the median cost upon which the
payment rate for composite APC 8000
was based, we used multiple procedure
claims that contained at least one CPT
code from group A for evaluation
services and at least one CPT code from
group B for ablation services reported
on the same date of service on an
individual claim. Table 9 in the CY
2008 OPPS/ASC final rule with
comment period, and Table 6 in the CY
2009 OPPS/ASC proposed rule,
reprinted as Table 7 below, identified
the CPT codes that were assigned to
groups A and B. For a full discussion of
how we identified the group A and
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group B procedures and established the
CY 2008 payment rate for the cardiac
electrophysiologic evaluation and
ablation composite APC, we refer
readers to the CY 2008 OPPS/ASC final
rule with comment period (72 FR 66655
through 66659). Where a service in
group A is furnished on a date of service
that is different from the date of service
for a code in group B for the same
beneficiary, payments are made under
the appropriate single procedure APCs
and the composite APC does not apply.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41446), we proposed to
continue paying for cardiac
electrophysiologic evaluation and
ablation services in CY 2009 using the
composite APC methodology
established for CY 2008. Consistent with
our CY 2008 practice, we would not use
the claims that met the composite
payment criteria in the calculation of
the median costs for APCs 0085 (Level
II Electrophysiologic Procedures) and
0086 (Level III Electrophysiologic
Procedures), to which the HCPCS codes
in both groups A and B for composite
APC 8000 were otherwise assigned.
Median costs for APCs 0085 and 0086
would continue to be calculated using
single procedure claims. As discussed
in section XIII.A.1. of this final rule
with comment period, we also proposed
to use new status indicator ‘‘Q3’’ (Codes
that May be Paid Through a Composite
APC) to denote HCPCS codes such as
the cardiac electrophysiologic
evaluation and ablation CPT codes that
may be paid through a composite APC
for publication and payment purposes
for CY 2009, rather than the status
indicator ‘‘Q’’ that is being used in CY
2008.
We continue to believe that the
composite APC for cardiac
electrophysiologic evaluation and
ablation services is the most efficient
and effective way to use the claims data
for the majority of these services and
best represents the hospital resources
associated with performing the common
combinations of these services that are
clinically typical. Furthermore, this
approach creates incentives for
efficiency by providing a single
payment for a larger bundle of major
procedures when they are performed
together, in contrast to continued
separate payment for each of the
individual procedures.
Using partial year CY 2007 claims
data available for the CY 2009 OPPS/
ASC proposed rule, we were able to use
5,603 claims containing a combination
of group A and group B codes and
calculated a proposed median cost of
approximately $9,174 for composite
APC 8000. This was an increase
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compared to the CY 2008 OPPS/ASC
final rule with comment period in
which we calculated a final median cost
for this composite APC of
approximately $8,438 based on a full
year of CY 2006 claims data. We stated
in the CY 2009 OPPS/ASC proposed
rule (73 FR 41446) that we believe that
the proposed median cost of $9,174
calculated from a high volume of
correctly coded multiple procedure
claims resulted in an accurate and
appropriate proposed payment for
cardiac electrophysiologic evaluation
and ablation services when at least one
evaluation service is furnished during
the same clinical encounter as at least
one ablation service. Table 6 of the CY
2009 OPPS/ASC proposed rule,
reprinted as Table 7 below, listed the
groups of procedures upon which we
proposed to base composite APC 8000
for CY 2009.
Comment: One commenter expressed
support for CMS’ proposal to continue
using the composite APCs created in CY
2008, in particular the composite APC
for cardiac electrophysiologic
evaluation and ablation services.
Response: We appreciate the
commenter’s support for the composite
payment methodology in general and
the composite APC for cardiac
electrophysiologic evaluation and
ablation in particular.
After consideration of the public
comment received, we are finalizing our
CY 2009 proposal, without
modification, to continue paying for
cardiac electrophysiologic evaluation
and ablation services using the
composite APC methodology
implemented for CY 2008. For this final
rule with comment period, we were able
to use 6,105 claims from CY 2007
containing a combination of group A
and group B codes and calculated a final
median cost of approximately $9,206 for
composite APC 8000. This is an increase
compared to the CY 2008 OPPS/ASC
final rule with comment period in
68557
which we calculated a final median cost
for this composite APC of
approximately $8,438 based on a full
year of CY 2006 claims data. We believe
that the final median cost of $9,206
calculated from a high volume of
correctly coded multiple procedure
claims results in an accurate and
appropriate final payment for cardiac
electrophysiologic evaluation and
ablation services when at least one
evaluation service is furnished during
the same clinical encounter as at least
one ablation service. Table 7, below,
lists the groups of procedures upon
which we are basing composite APC
8000 for CY 2009. These CPT codes are
assigned status indicator ‘‘Q3’’ in
Addendum B to this final rule with
comment period to identify their status
as potentially payable through a
composite APC. Their composite APC
assignment is identified in Addendum
M to this final rule with comment
period.
TABLE 7—GROUPS OF CARDIAC ELECTROPHYSIOLOGIC EVALUATION AND ABLATION PROCEDURES UPON WHICH
COMPOSITE APC 8000 IS BASED
CY 2009
HCPCS code
Codes used in combinations: At least one in Group A and one in Group B
Final single
code CY 2009
APC
Final CY 2009
SI
(composite)
93619
0085
Q3
93620
0085
Q3
93650
0085
Q3
93651
0086
Q3
93652
0086
Q3
Group A
Comprehensive electrophysiologic evaluation with right atrial pacing and recording, right ventricular pacing and recording, His bundle recording, including insertion and repositioning of
multiple electrode catheters, without induction or attempted induction of arrhythmia ............
Comprehensive electrophysiologic evaluation including insertion and repositioning of multiple
electrode catheters with induction or attempted induction of arrhythmia; with right atrial
pacing and recording, right ventricular pacing and recording, His bundle recording ..............
Group B
Intracardiac catheter ablation of atrioventricular node function, atrioventricular conduction for
creation of complete heart block, with or without temporary pacemaker placement ..............
Intracardiac catheter ablation of arrhythmogenic focus; for treatment of supraventricular tachycardia by ablation of fast or slow atrioventricular pathways, accessory atrioventricular connections or other atrial foci, singly or in combination ..............................................................
Intracardiac catheter ablation of arrhythmogenic focus; for treatment of ventricular tachycardia ........................................................................................................................................
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(4) Mental Health Services Composite
APC (APC 0034)
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41446), we proposed to
continue our longstanding policy of
limiting the aggregate payment for
specified less intensive mental health
services furnished on the same date to
the payment for a day of partial
hospitalization, which we consider to be
the most resource intensive of all
outpatient mental health treatment for
CY 2009. We refer readers to the April
7, 2000 OPPS final rule with comment
period (65 FR 18455) for the initial
discussion of this longstanding policy.
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We continue to believe that the costs
associated with administering a partial
hospitalization program represent the
most resource intensive of all outpatient
mental health treatment, and we do not
believe that we should pay more for a
day of individual mental health services
under the OPPS than the partial
hospitalization per diem payment.
For CY 2009, as discussed further in
section X.B. of this final rule with
comment period, we proposed to create
two new APCs, 0172 (Level I Partial
Hospitalization (3 services)) and 0173
(Level II Partial Hospitalization (4 or
more services)), to replace APC 0033
(Partial Hospitalization), which we
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proposed to delete for CY 2009 (73 FR
41446). In summary, when a community
mental health center (CMHC) or hospital
provides three units of partial
hospitalization services and meets all
other partial hospitalization payment
criteria, the CMHC or hospital would be
paid through APC 0172. When the
CMHC or hospital provides four or more
units of partial hospitalization services
and meets all other partial
hospitalization payment criteria, the
hospital would be paid through APC
0173. In the CY 2009 OPPS/ASC
proposed rule (73 FR 41446 through
41447), we proposed to set the CY 2009
payment rate for mental health
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composite APC 0034 at the same rate as
APC 0173, which is the maximum
partial hospitalization per diem
payment. In the proposed rule, we
explained that we believed this APC
payment rate would provide the most
appropriate payment for composite APC
0034, taking into consideration the
intensity of the mental health services
and the differences in the HCPCS codes
for mental health services that could be
paid through this composite APC
compared with the HCPCS codes that
could be paid through partial
hospitalization APC 0173. Through the
I/OCE, when the payment for specified
mental health services provided by one
hospital to a single beneficiary on one
date of service based on the payment
rates associated with the APCs for the
individual services would exceed the
maximum per diem partial
hospitalization payment [listed as APC
0173 (Level II Partial Hospitalization (4
or more services))], those specified
mental health services would be
assigned to APC 0034 (Mental Health
Services Composite), which has the
same payment rate as APC 0173, and the
hospital would be paid one unit of APC
0034. In the CY 2008 OPPS/ASC final
rule with comment period (72 FR
66651), we clarified that this
longstanding policy regarding payment
of APC 0034 for combinations of
independent mental health services
provided in a single hospital encounter
resembles the payment policy for
composite APCs that we finalized for
LDR prostate brachytherapy and cardiac
electrophysiologic evaluation and
ablation services for CY 2008. Similar to
the logic for those two composite APCs,
the I/OCE currently determines, and we
proposed for CY 2009 that it would
continue to determine, whether to pay
these specified mental health services
individually or to make a single
payment at the same rate as the APC
0173 per diem rate for partial
hospitalization for all of the specified
mental health services furnished on that
date of service. However, we note that
this established policy for payment of
APC 0034 differs from the payment
policies for the LDR prostate
brachytherapy and cardiac
electrophysiologic evaluation and
ablation composite APCs because APC
0034 is only paid if the sum of the
individual payment rates for the
specified mental health services
provided on one date of service exceeds
the APC 0034 payment rate.
For CY 2008 (72 FR 66651), we
changed the status indicator to ‘‘Q’’ for
the HCPCS codes that describe the
specified mental health services to
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which APC 0034 applies because those
codes are conditionally packaged when
the sum of the payment rates for the
single code APCs to which they are
assigned exceeds the per diem payment
rate for partial hospitalization. For CY
2009, we proposed to change the status
indicator from ‘‘Q’’ (Packaged Services
Subject to Separate Payment under
OPPS Payment Criteria) to ‘‘Q3’’ (Codes
that May be Paid Through a Composite
APC), for those HCPCS codes that
describe the specified mental health
services to which APC 0034 applies.
This was consistent with our proposal
to change the status indicator from ‘‘Q’’
to ‘‘Q3’’ for all HCPCS codes that may
be paid through composite APCs, in
order to further refine our identification
of the different types of conditionally
packaged HCPCS codes that were
previously all assigned the same status
indicator ‘‘Q’’ under the OPPS. In the
CY 2009 OPPS/ASC proposed rule (73
FR 41447), we proposed to apply this
status indicator policy to the HCPCS
codes that were assigned to composite
APC 0034 in Addendum M to the
proposed rule. We also proposed to
change the status indicator from ‘‘P’’
(Partial Hospitalization) to ‘‘S’’
(Significant Procedure, Not Discounted
when Multiple), for APC 0034.
Although APC 0034 has been
historically assigned status indicator
‘‘P’’ under the OPPS, this APC provides
payment for mental health services that
are furnished in an HOPD outside of a
partial hospitalization program. As we
noted in the CY 2009 OPPS/ASC
proposed rule (73 FR 41447), this
proposed status indicator change should
have no practical implications for
hospitals from a billing or payment
perspective. Rather, we believed that it
would be more appropriate to assign
status indicator ‘‘S’’ to an APC that
describes mental health services that are
provided outside of a partial
hospitalization program (73 FR 41447).
We refer readers to section XIII.A. of
this final rule with comment period for
a complete discussion of status
indicators and our status indicator
changes for CY 2009.
Comment: Several commenters were
concerned that claims data from CMHCs
and hospitals were used to calculate the
proposed payment for APC 0173. The
payment for APC 0173 would be the
upper limit of payment a hospital could
receive for outpatient mental health
services provided in one day. These
commenters believed that hospital cost
data, and not CMHC cost data, should
be used to set payment rates for hospital
services. One commenter believed that
the proposed payment rate for APC 0173
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was too low and, therefore, established
the mental health cap on payment of
HOPD mental health services at an
inappropriately low payment rate. The
commenter noted that most patients
receiving hospital outpatient mental
health services generally receive four or
more services per day, for 1 to 3 days.
In these cases, according to the
commenter, if an HOPD provided four
particular mental health services in one
day, that department of the hospital
would receive full payment for the first
two services, partial payment for the
third service, and no payment for the
fourth service.
Response: As discussed in detail in
section X. of this final rule with
comment period, the payment rates for
APCs 0172 and 0173 are set consistent
with hospital-only cost data for CY
2009, instead of using both hospital and
CMHC cost data. This final policy
results in an increase of the median cost
of APC 0173 from approximately $174
as proposed to approximately $200,
using hospital-only cost data. Hospitalonly data have been used in the past to
set the PHP payment rates when the
CMHC data were unavailable or too
volatile to use. This year using the
CMHC data would significantly reduce
the current rate and negatively impact
hospital-based PHPs. Additionally,
using only the hospital-based PHP data
results in a Level II Partial
Hospitalization rate (APC 0173) that is
close to the current payment level
($203). Therefore, we are finalizing the
two-tiered payment rates as proposed,
but using hospital-based PHP data only.
As noted in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66739), we continue to believe that the
costs associated with administering a
partial hospitalization program
represent the most resource intensive of
all outpatient mental health treatment,
and we do not believe that we should
pay more for a day of individual mental
health services under the OPPS. The
mental health payment limitation will
rise and fall in the same manner as
payment for partial hospitalization
services. We note that our final CY 2009
policy which sets the payment rate for
APC 0173 for partial hospitalization
services based on hospital-only cost
data for CY 2009 results in payment for
APC 0034, the limit on aggregate
payment for specified less intensive
mental health services provided on one
day in the HOPD, to now be based on
hospital cost data, as requested by
several commenters.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to limit the aggregate
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payment for specified less intensive
outpatient mental health services
furnished on the same date by a hospital
to the payment for a day of partial
hospitalization, specifically APC 0173.
For CY 2009, we are also finalizing,
without modification, our proposal to
change the status indicator from ‘‘Q’’ to
‘‘Q3’’ for those HCPCS codes that
describe the specified mental health
services to which APC 0034 applies. For
CY 2009, we also are finalizing the
proposal to change the status indicator
for APC 0034 from ‘‘P’’ to ‘‘S.’’
(5) Multiple Imaging Composite APCs
(APCs 8004, 8005, 8006, 8007, and
8008)
Under current OPPS policy, hospitals
receive a full APC payment for each
imaging service on a claim, regardless of
how many procedures are performed
during a single session using the same
imaging modality or whether the
procedures are performed on contiguous
body areas. In response to a 2005
MedPAC recommendation to reduce the
technical component payment for
multiple imaging services performed on
contiguous body areas, CMS proposed a
payment reduction policy for multiple
imaging procedures performed on
contiguous body areas in both the CY
2006 MPFS proposed rule (70 FR 45849
through 45851) and the CY 2006 OPPS
proposed rule (70 FR 42748 through
42751). In the March 2005 MedPAC
report entitled, ‘‘Report to the Congress:
Medicare Payment Policy,’’ MedPAC
concluded that Medicare’s physician’s
office payment rates for imaging
services were based on each service
being provided independently and that
the rates did not account for efficiencies
that may be gained when multiple
studies using the same imaging
modality are performed in the same
session. In both the CY 2006 MPFS
proposed rule (70 FR 45849) and the CY
2006 OPPS proposed rule (70 FR
42751), we suggested that although each
imaging procedure entails the use of
hospital resources, including certain
staff, equipment, and supplies, some of
those resource costs are not incurred
twice when the procedures are
performed in the same session and thus,
should not be paid as if they were
incurred twice. Specifically, for CY
2006, for both the MPFS and the OPPS,
we proposed to apply a 50-percent
reduction in the payment for certain
second and subsequent imaging
procedures performed during the same
session, similar to the longstanding
OPPS policy of reducing payments for
certain second and subsequent surgical
procedures performed during the same
operative session. We developed the 50percent reduction estimate using MPFS
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input data to estimate the practice
expense resources associated with
equipment time and indirect costs that
would not occur for the second and
subsequent procedures. We proposed
that the reduction would apply only to
individual services within 11
designated imaging families, which
were comprised of procedures utilizing
similar modalities across contiguous
body areas and developed based on
MPFS billing data. The imaging
modalities included in the proposal
were ultrasound, computed tomography
(CT), computed tomographic
angiography (CTA), magnetic resonance
imaging (MRI), and magnetic resonance
angiography (MRA). Prior to making the
proposal for the OPPS, we confirmed
that the CY 2004 OPPS claims for the
CY 2006 OPPS update demonstrated
comparable clustering of imaging
procedures by modality and within
family. The OPPS and MPFS imaging
services provided across families would
not be subject to the reduction policy as
proposed for CY 2006. The proposed 11
families of imaging services for the
proposed CY 2006 OPPS and MPFS
multiple imaging payment reduction
policy were as follows:
• Ultrasound (Chest/Abdomen/
Pelvis-Non-Obstetrical)
• CT and CTA (Chest/Thorax/Abd/
Pelvis)
• CT and CTA (Head/Brain/Orbit/
Maxillofacial/Neck)
• MRI and MRA (Chest/Abd/Pelvis)
• MRI and MRA (Head/Brain/Neck)
• MRI and MRA (Spine)
• CT (Spine)
• MRI and MRA (Lower Extremities)
• CT and CTA (Lower Extremities)
• MR and MRI (Upper Extremities
and Joints)
• CT and CTA (Upper Extremities)
In response to the multiple imaging
payment reduction policy proposed for
the CY 2006 OPPS (70 FR 68707
through 68708), several commenters
requested that we postpone
implementation until we performed
further analyses and were able to find
more substantial, hospital-based data to
support the 50-percent payment
reduction rather than base the policy on
MPFS data. The commenters argued
that, unlike a relative value unit (RVU)
estimate of the total resources associated
with a single service for the MPFS, the
OPPS cost-based methodology already
incorporates the efficiencies of
performing multiple procedures during
the same session and that median cost
estimates for single procedures reflect
these savings. Specifically, an imaging
CCR consists of the labor and allocated
capital and overhead costs for all
imaging provided in a department
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specified by each hospital on its cost
report, divided by the total charges for
all imaging services provided. In short,
commenters stated that because the
OPPS cost estimates used for setting the
OPPS payment rates for imaging
services already reflect costs for a
department in general, the CCR used to
adjust charges to costs currently
incorporated savings from the imaging
efficiencies associated with multiple
procedures provided in a single session.
By applying this CCR to every charge on
a claim, the commenters noted that CMS
averages multiple imaging efficiencies
for all imaging services across all service
costs estimated with the departmental
CCR. At its August 2005 meeting, the
APC Panel heard this and other
arguments and recommended that CMS
postpone implementation of the policy
for a year in order to gather more data
on the impact of the proposed changes.
In the CY 2006 OPPS final rule with
comment period (70 FR 68516), we
acknowledged that, based on our
analysis of how hospitals report charges
and costs for diagnostic radiology
services, it may be correct that the
median costs from hospital claims data
for the imaging services in the 11
families proposed for the reduction
policy already reflect reduced median
costs based, in part, on hospitals’
provision of multiple imaging services
in a single session. However, we
expressed concern that the marginal
effect of imaging efficiencies on a given
CCR may be negligible, thereby
underestimating the impact of multiple
imaging efficiencies, especially where
hospitals reported all diagnostic
radiology services in one cost center and
did not split the costs and charges for
advanced imaging with CT, MRI, or
ultrasound into separate cost centers.
Because efficiencies are inherent in our
cost methodology, our analysis did not
provide a definitive answer regarding
how much, on average, the OPPS
median costs for single imaging services
in the 11 families are reduced due to
existing hospital efficiencies related to
multiple services provided in a single
session. Accordingly, we did not
implement a multiple imaging payment
reduction policy for the OPPS in CY
2006 (a modified MPFS multiple
imaging payment reduction policy was
implemented with a 25-percent
reduction for certain second and
subsequent imaging services for CY
2006, and that same reduction policy
currently remains in effect under the
MPFS). In the CY 2006 OPPS final rule
with comment period (70 FR 68707
through 68708), we stated that,
depending upon the results of future
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analyses, we might revisit this issue and
propose revisions to the structure of our
payment rates for imaging procedures in
order to ensure that those rates properly
reflect the relative costs of initial and
subsequent imaging procedures. Since
publication of the CY 2006 OPPS final
rule with comment period, MedPAC has
encouraged us to continue our analyses
in order to improve payment accuracy
for imaging services under the OPPS,
including considering adoption of a
multiple procedure payment reduction
policy.
In preparation for the CY 2009 OPPS
proposed rule, we revisited the issue of
how we could improve the accuracy of
OPPS payment for multiple imaging
procedures and incorporate the lower
marginal cost for conducting second and
subsequent imaging procedures in the
same imaging session. As already noted,
for CY 2008, we developed a composite
APC methodology to provide a single
payment for two or more major
independent procedures that are
typically performed together during a
single operative session and that result
in the provision of a complete service
(72 FR 66650 through 66652). The
composite APCs for LDR prostate
brachytherapy services and cardiac
electrophysiologic evaluation and
ablation services discussed in sections
II.A.2.e.(2) and (3), respectively, of this
final rule with comment period are
classic examples. Providing one
payment for an entire session
encourages hospitals to closely evaluate
the resources they use for all
components of the composite service in
order to improve their payment relative
to the costs of performing the composite
service. We decided to explore
capturing efficiencies for multiple
imaging procedures through a
composite APC payment methodology
when a hospital provides more than one
imaging procedure using the same
modality during a single session.
We began by reexamining the 11
imaging families of HCPCS codes for
contiguous body areas involving a single
imaging modality that we had proposed
for CY 2006 and that are currently in
use under the MPFS for the multiple
imaging procedure payment reduction
policy. We based this code-specific
analysis on the HCPCS codes recognized
under the OPPS for the same procedures
that are included in the 11 CY 2008
MPFS imaging families, and in addition,
we incorporated the 10 HCPCS codes
that were proposed for inclusion in
these 11 families for the CY 2009 MPFS.
We collapsed the 11 MPFS imaging
families into 3 OPPS imaging families
according to their modality—1 for
ultrasound, 1 for CT and CTA, and 1 for
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MRI and MRA services. These larger
OPPS imaging families generally
corresponded to the larger APC groups
of services paid under the OPPS relative
to the service-specific payment under
the MPFS. We believed that these larger
OPPS imaging families were appropriate
because eliminating the contiguous
body area concept that is central to the
MPFS imaging families should not
significantly limit potential efficiencies
in an imaging session. For example, we
would not expect second and
subsequent imaging procedures of the
same modality involving noncontiguous
body areas to require duplicate facility
services such as greeting the patient,
providing education and obtaining
consent, retrieving prior exams, setting
up an intravenous infusion, and
preparing and cleaning the room, any
more than second and subsequent
imaging procedures of the same
modality on contiguous body areas. The
contiguous body area concept was a
component of MedPAC’s
recommendation for reducing physician
payment, but we believed it was less
appropriate for a single, session-based
OPPS composite imaging payment. In
addition, we estimated that using these
collapsed OPPS families would add
only 12 percent additional claims to
those eligible for composite payment
relative to using the 11 MPFS imaging
families, suggesting that under the
OPPS, multiple imaging claims were
within the same imaging modality and
involved contiguous body areas the vast
majority of the time. Nevertheless, the
three OPPS imaging families would
allow us to capture additional claims for
payment under an imaging composite
payment methodology.
Another unique aspect of imaging
procedures for OPPS ratesetting, in
general, is their inclusion on our bypass
list and contribution to creating
‘‘pseudo’’ single claims, particularly
those procedures that are specifically
performed without the administration of
contrast. Our creation of ‘‘pseudo’’
single claims from multiple procedure
claims is discussed in section II.A.1.b.
of this final rule with comment period.
In beginning to model these potential
multiple imaging composite APCs for
the CY 2009 OPPS/ASC proposed rule,
we noted that there would be overlap
between the bypass list and noncontrast
imaging HCPCS codes that are included
in the three OPPS imaging families. The
bypass process removes any line-item
for a bypass HCPCS code, irrespective of
units, from multiple procedure claims.
The line-item information is used to
make at least one ‘‘pseudo’’ single bill
and the line-items remaining on the
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claim are split by date and reassessed
for single bill status. To model the
median costs for the potential multiple
imaging composite APCs for the CY
2009 OPPS/ASC proposed rule, we
removed any HCPCS codes in the OPPS
imaging families that overlapped with
codes on our bypass list to avoid
splitting claims with multiple units or
multiple occurrences of codes in an
OPPS imaging family into new
‘‘pseudo’’ single claims. The imaging
HCPCS codes that we removed from the
bypass list for purposes of calculating
proposed multiple imaging composite
APC median costs appeared in Table 7
of the CY 2009 OPPS/ASC proposed
rule. We integrated the identification of
imaging composite ‘‘single session’’
claims, that is, claims with multiple
imaging procedures within the same
family on the same date of service, into
the creation of ‘‘pseudo’’ single claims
to ensure that claims were split in the
‘‘pseudo’’ single process into accurate
reflections of either a composite ‘‘single
session’’ imaging service or a standard
sole imaging service resource cost. Like
all single bills, the new composite
‘‘single session’’ claims were for the
same date of service and contained no
other separately paid services in order
to isolate the session imaging costs. For
the CY 2009 OPPS/ASC proposed rule,
our last step after processing all claims
through the ‘‘pseudo’’ single process
was to make line-items for HCPCS codes
in the OPPS imaging families remaining
on multiple procedure claims with one
unit of the imaging HCPCS code and no
other imaging services in the families
into ‘‘pseudo’’ single bills for use in
calculating the median costs for sole
imaging services.
One final requirement of our
assessment of multiple imaging
composite APCs was our expansion of
the OPPS families for the three
modalities—ultrasound, CT and CTA,
and MRI and MRA—into five composite
APCs to accommodate the statutory
requirement in section 1833(t)(2)(G) of
the Act, that the OPPS provide payment
for imaging services provided with
contrast and without contrast through
separate payment groups. The
ultrasound studies proposed for
inclusion in the multiple imaging
composite policy do not utilize contrast
and thus this family constituted a single
composite APC. However, we had to
split the families for CT and CTA, and
MRI and MRA, into two separate
composite APCs each to reflect whether
the procedures were performed with or
without contrast. We examined the
HCPCS codes on our ‘‘single session’’
claims and, if the claim had at least one
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HCPCS code that was performed with
contrast, we classified the ‘‘single
session’’ bill as ‘‘with contrast.’’ For
both CT and CTA, and MRI and MRA,
some claims classified as ‘‘with
contrast’’ contained one or more
‘‘without contrast’’ HCPCS code. We
then recalculated the median costs for
the standard (sole service) imaging
APCs based on single and ‘‘pseudo’’
single bills and the imaging composite
APC median costs based on appropriate
‘‘single session’’ bills with multiple
imaging procedures.
For the CY 2009 OPPS/ASC proposed
rule, we were able to identify 1.7
million ‘‘single session’’ claims out of
an estimated 3 million potential
composite cases from our ratesetting
claims database to calculate the
proposed median costs for the 5 OPPS
multiple imaging composite APCs. We
specifically noted that the proposed CY
2009 payment rates for multiple imaging
services provided during the same
session and within the same OPPS
imaging family were based entirely on
median costs derived empirically from
OPPS claims and Medicare cost report
data.
In general, we found that the per
procedure median cost for each of the
multiple imaging procedures performed
during a single session, and reflected in
the composite APC median costs, was
modestly less than the sole service
median cost when only one imaging
procedure was performed during a
single session, as reflected in the
median cost of the standard (sole
service) imaging APCs (that is, those
imaging services that would not have
qualified for payment through a
multiple imaging composite APC under
the proposed composite methodology).
We also noticed that the proposed CY
2009 median costs for the standard (sole
service) imaging APCs increased slightly
compared to the median costs that we
would calculate using the current OPPS
imaging service payment policy. These
variations in median costs were
consistent with our expectations.
Because the OPPS cost-based payment
weight methodology estimates a
standard cost per imaging procedure for
each hospital, these results suggested
that the imaging composite ‘‘single
session’’ claims disproportionately
represented services furnished by more
efficient providers that frequently
performed more than one imaging
procedure during a single session. The
lower cost claims also may have
included more providers that reported
costs and charges for nonstandard cost
centers for advanced imaging on their
Medicare hospital cost reports.
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In light of these findings, we
determined that a proposal to revise our
methodology for paying for multiple
imaging procedures was warranted
because the current OPPS policy of
providing a full APC payment for each
imaging procedure on a claim,
regardless of how many procedures are
performed during a single session using
the same imaging modality, neither
reflects nor promotes the efficiencies
hospitals can achieve when they
perform multiple imaging procedures
during a single session, as seen in the
claims data.
Therefore, in the CY 2009 OPPS/ASC
proposed rule (73 FR 41450 through
41451), we proposed to utilize the three
OPPS imaging families discussed above,
incorporating statutory requirements to
differentiate OPPS payment for imaging
services provided with contrast and
without contrast as required by section
1833(t)(2)(G) of the Act, to create five
multiple imaging composite APCs for
payment in CY 2009. The proposed
APCs were: APC 8004 (Ultrasound
Composite); APC 8005 (CT and CTA
without Contrast Composite); APC 8006
( CT and CTA with Contrast Composite);
APC 8007 (MRI and MRA without
Contrast Composite); and APC 8008
(MRI and MRA with Contrast
Composite). We calculated the proposed
median costs for these APCs using CY
2007 claims data by isolating ‘‘single
session’’ claims with more than one
imaging procedure within a family as
discussed above. Unlike our CY 2006
proposal where we would have applied
a 50-percent payment reduction for
second and subsequent imaging
procedures comparable to the proposed
MPFS policy, the CY 2009 OPPS
proposal calculated the composite APC
payment amounts empirically from
estimated costs on claims for multiple
imaging procedures provided in a single
session. This proposed composite
methodology for multiple imaging
services paralleled the payment
methodologies that we proposed for
other composite APCs under the CY
2009 OPPS. Table 8 of the CY 2009
OPPS/ASC proposed rule presented the
HCPCS codes comprising the three
OPPS imaging families and five
composite APCs that would be created
under this proposal for CY 2009, along
with the proposed median costs upon
which the proposed payment rates for
these composite APCs were based.
During the August 2008 APC Panel
meeting, the APC Panel recommended
that CMS work with stakeholders to
review the proposed multiple imaging
composite APCs and to assess the
potential impact of the proposal on
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Medicare beneficiaries affected by
trauma or cancer.
Comment: Some commenters stated
that the proposed multiple imaging
composite payment methodology would
improve the accuracy of OPPS payment
for imaging services and that CMS
should implement the policy as
proposed. In particular, MedPAC stated
that the proposed multiple imaging
composite APCs are consistent with
larger payment bundles and should
increase hospitals’ incentives to furnish
care efficiently. MedPAC further
asserted that the multiple imaging
composite policy could serve as a
starting point for creating more
comprehensive payment bundles that
reflect encounters or episodes of care.
However, many commenters urged
CMS to perform additional data
analyses of CY 2007 claims with
multiple imaging services and,
depending on the results, modify the
final policy to ensure sufficient
payments are made to hospitals for
providing an appropriate number of
imaging services. In particular,
commenters indicated that the proposed
policy could have a disproportionately
negative effect on cancer centers and
trauma units, where patients frequently
require more than two imaging services
and hospitals have limited flexibility to
gain greater efficiencies. The
commenters also questioned the
adequacy of the proposed multiple
imaging composite payment rates for
sessions involving three or more or four
or more procedures, particularly in the
case of CT and CTA procedures,
expressing general concern that the
proposed payment rates would limit
beneficiary access to imaging services.
According to these commenters, the
proposed policy could create incentives
for hospitals to require patients who
need more than two imaging procedures
to return for additional visits if the costs
for sessions in which more than two
procedures are performed far exceed the
multiple imaging composite APC
payment rates. Some commenters also
requested that CMS thoroughly evaluate
the impact of the multiple imaging
composite APCs after the policy has
been implemented to ensure that
hospitals are being adequately
compensated for providing multiple
imaging services. Other commenters
remarked generally that CMS should
proceed cautiously as it expands service
bundling, should accompany composite
proposals with data and a clear and
transparent description of the datagenerating process, and should not
implement additional composite
methodologies until adequate data are
available to evaluate the effectiveness
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and impact on beneficiary access to care
of the composite policies implemented
in CY 2008.
In order to address perceived payment
inadequacies or incentives for hospitals
to require patients to return on separate
days for multiple imaging services, the
commenters suggested a variety of
alternative approaches to the proposed
multiple imaging composite payment
methodology, such as a multiple
imaging payment reduction policy for
second and subsequent imaging
procedures, additional composite APCs
for sessions involving three or more
imaging procedures, or an exemption
from composite payment for multiple
imaging services provided to cancer or
trauma patients. One commenter
specifically recommended two new
composite APCs for CT scans of the
chest, abdomen, and pelvis with and
without contrast.
Some commenters, however, opposed
the implementation of any payment
policy to account for the efficiencies of
multiple imaging procedures provided
during the same session, arguing that
the OPPS cost-based methodology
already incorporates the efficiencies of
performing multiple procedures during
the same session. They believed that
adding a composite policy essentially
‘‘double counts’’ imaging efficiencies.
One commenter opposed the policy
because, according to the commenter,
hospitals do not have the option of
refusing to provide services that are
ordered by a physician, and cannot
control the cost of providing a service in
relationship to the cost of the
equipment. Another commenter noted
that MRI equipment costs are fixed in
the short term.
Response: We have reviewed all of the
public comments we received on the
proposed multiple imaging composite
methodology, and we have decided to
finalize our proposal to provide a single
composite payment each time a hospital
bills more than one procedure from an
imaging family on a single date of
service for CY 2009. We appreciate the
commenters’ thoughtful observations
and suggestions.
In response to the commenters’
concerns about the adequacy of the
proposed composite APC payment rates
for sessions involving more than two
imaging procedures, we analyzed data
from the CY 2007 claims from which the
median costs used to calculate those
payment rates were calculated. We
found that the vast majority of CY 2007
claims used for ratesetting included two
procedures, ranging from 73 percent of
multiple imaging procedure claims for
APC 8008, to 97 percent of multiple
imaging procedure claims for APC 8004.
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We do not believe that, in aggregate,
OPPS payment for multiple imaging
services will be inadequate under the
multiple imaging composite payment
methodology, even considering the
minority of cases in which hospitals
provide more than two imaging
procedures on a single date of service.
The median costs upon which the
payment rates for the multiple imaging
composite APCs are based are
calculated using CY 2007 claims that
would have qualified for composite
payment, including those with only two
imaging procedures and those with
substantially higher numbers of imaging
procedures. Payment based on a
measure of central tendency is a
principle of any prospective payment
system. In some individual cases
payment exceeds the average cost and in
other cases payment is less than the
average cost. On balance, however,
payment should approximate the
relative cost of the average case,
recognizing that, as a prospective
payment system, the OPPS is a system
of averages.
Furthermore, the purpose of the
composite payment methodology
overall is to establish incentives for
efficiency through larger payment
bundles. Based on our observations of
only small to moderate percentages of
single sessions with three or more
imaging procedures, we do not believe
it would be appropriate to create
additional multiple imaging composite
APCs for sessions involving more than
two or three imaging procedures. The
various suggestions by some
commenters regarding the creation of
additional composite APCs for payment
of three or more procedures or for
specific combinations of scans all would
remove some of the efficiency
incentives associated with a single
bundled payment and would make the
multiple imaging policy more closely
resemble standard payment for single
procedures. Additional composite APCs
would not be consistent with
encouraging value-based purchasing
under the OPPS. We note that the OPPS
does have an outlier policy for cases
involving extremely high costs, as
discussed in section II.F. of this final
rule with comment period.
We also do not believe that the
multiple imaging composite payment
methodology will inhibit beneficiary
access to imaging services, because the
policy will result in only relatively
modest payment redistributions in the
short term. We estimate that total
payment impact among classes of
hospitals attributable to changes in
imaging payment will be relatively
small, and we expect that the multiple
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imaging composite policy will
redistribute about 0.4 percent of total
OPPS payment. We believe this policy
does more to redesign incentives in
providing imaging services than to
significantly reduce imaging payment to
hospitals for CY 2009.
Further, we do not agree with some
commenters that the multiple imaging
composite payment methodology would
result in hospitals requiring patients
who need more than two imaging
procedures to return for additional
visits. We do not believe that, in
general, hospitals would routinely and
for purposes of financial gain put
patients at unnecessary risk of harm
from radiation or contrast exposure, or
inconvenience them or risk lack of
timely follow up to the point of making
them return to the hospital on separate
days to receive medically necessary
diagnostic studies. However, we note
that we do have the capacity to examine
our claims data for patterns of
fragmented care. If we were to find a
pattern in which a hospital appears to
be fragmenting care across multiple
days, we could refer it for review by the
Quality Improvement Organizations
(QIOs) with respect to the quality of care
furnished, or for review by the Program
Safeguard Contractors of claims against
the medical record, as appropriate to the
circumstances we found.
In addition, we explored data from
the CY 2007 claims from which the
median costs used to calculate the
multiple imaging composite APC
payment rates were calculated in
response to comments that the policy
would have a disproportionate effect on
cancer centers and trauma units and the
recommendation by the APC Panel at its
August 2008 meeting, which we are
accepting. An analysis of diagnosis
codes present on the CY 2007 multiple
imaging ‘‘single session’’ claims did
show more variability in the number of
scans for cancer patients compared to
other types of patients, consistent with
commenters’ concerns. We saw that, for
several of the more commonly reported
cancer diagnoses, more than half of the
patients received more than two
imaging procedures, while lower
proportions of other types of patients
received more than two imaging
procedures on a single date of service.
We did not observe the same pattern for
trauma diagnoses. We do not believe
that the higher rate of variability that we
observed in the number of scans cancer
patients receive was so extreme,
however, that the mix of services
hospitals provide to patients with
diagnoses other than cancer would not
balance out higher numbers of scans for
cancer patients.
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We do not have a current list of
cancer centers other than those held
permanently harmless under section
1833(t)(7)(D)(ii) of the Act or a current
list of hospitals with significant trauma
units in order to assess outcomes for
these particular classes of hospitals.
However, as noted above, we do not
estimate significant redistributions
among hospitals as a result of this
policy. Further, the goal of introducing
a single composite payment for any
multiple imaging session is to encourage
hospitals to consider their patterns of
service provision in general, and not
payment per patient. Therefore, we do
not believe that the multiple imaging
composite methodology will result in
disproportionate effects on either
hospitals with cancer centers or trauma
units, and we do not agree with some
commenters that it would be
appropriate to exempt services provided
to cancer and trauma patients from the
multiple imaging composite APC
payment policy. We see no justification
for paying differently for the same
imaging services according to patient
diagnosis or care setting, because we
believe that most hospitals demonstrate
sufficient variability in the number of
imaging procedures they provide to a
single patient on the same day that it is
unlikely that certain hospitals would
disproportionately experience negative
financial effects from the multiple
imaging composite APC payment
policy.
We also do not agree that the multiple
imaging composite APCs are
unnecessary, as some commenters
argued, because the OPPS cost-based
methodology already incorporates the
efficiencies of performing multiple
imaging procedures during the same
session. While we agree that efficiencies
due to multiple imaging procedures are
generally reflected in hospitals’ CCRs
used to develop costs, we believe that
the advantage of a composite
methodology for imaging services is that
it allows us to use naturally occurring
multiple procedure claims to calculate
the median costs for sessions involving
multiple procedures, rather than using
single procedure claims which do not
reflect as accurately how hospitals
provide care in those instances. The
lower per case median cost for multiple
imaging services suggests that hospitals
providing more multiple imaging
services generally have lower costs. We
note that a small increase in the median
cost of standard (sole service) APCs
accompanied our lower multiple
imaging composite APC median costs.
The multiple imaging policy does not
‘‘double count’’ efficiencies for imaging;
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rather, it more accurately estimates the
costs of single versus multiple imaging
sessions.
We believe that we are proceeding
with an appropriate level of caution, as
several commenters recommended, by
developing one new composite APC
policy for CY 2009. We did not receive
any comments to the CY 2009 OPPS/
ASC proposed rule indicating there
were access problems resulting from the
implementation of composite APCs in
CY 2008, which was consistent with our
expectations given the composite
methodology improves the accuracy of
the OPPS payment rates by utilizing
more complete and valid claims in
ratesetting. With regard to providing
data and a transparent methodology, we
point out that we make our claims data
available to the public, and we discuss
our calculation of these multiple
imaging composite APC payment rates
in both this section and in section
II.A.1. of the CY 2009 OPPS/ASC
proposed rule (73 FR 41423 through
41425). We also have a claims
accounting narrative available under
supporting documentation for this final
rule with comment period on the CMS
Web site at: https://www.cms.hhs.gov/
HospitalOutpatientPPS/HORD/.
We disagree with commenters who
asserted that we should not implement
the multiple imaging composite
methodology because hospitals do not
have the option of refusing to provide
services that are ordered by a physician,
and cannot control the cost of providing
a service in relationship to the cost of
the equipment. While physicians, rather
than hospital staff, may order specific
services for patients, hospitals decide
what services they will and will not
furnish, and how they will furnish those
services. We also disagree that fixed
capital equipment costs are a deterrent
to implementing a multiple imaging
composite payment methodology. As
discussed earlier, data analyses
performed for the CY 2009 OPPS/ASC
proposed rule showed that some
hospitals are more efficient than other
hospitals when providing multiple
imaging services. A prospective
payment system sets payments based on
a median or average cost to encourage
providers to carefully consider their
costs of providing services, and in any
individual case payment may exceed
the average or median cost. We would
expect less efficient hospitals to
construct ways to become more
efficient, such as negotiating lower costs
on equipment, even if they do not have
the latitude to perform fewer imaging
services.
Comment: Some commenters urged
CMS to standardize cost reporting for
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both advanced imaging procedures and
other problematic cost centers before it
makes any methodological changes to
OPPS payment methodologies,
including a composite policy for
multiple imaging procedures. According
to the commenters, additional
efficiencies can only be gained from
improved accuracy in cost reporting for
diagnostic radiology services, including
use of several standard cost centers for
diagnostic imaging services. The
commenters were concerned that
observed efficiencies in the multiple
imaging composite median costs are the
result of inaccurate cost report data only
and do not reflect true efficiencies from
multiple imaging services provided
during a single session. These
commenters stated that the
implementation of separate cost centers
for CT and MRI procedures, as
recommended in the July 2008 report by
RTI entitled, ‘‘Refining Cost to Charge
Ratios for Calculating APC and DRG
Relative Payment Weights,’’ would
provide much more accurate charge and
cost data for these imaging modalities,
and that the efficiencies associated with
providing multiple imaging procedures
in a single session may only be
discernable once these data are
available. The commenters
recommended that CMS analyze claims
data for a 2 to 3 year period following
cost reporting changes before
considering a multiple imaging
composite payment methodology.
Response: As discussed in section
II.A.1.c.(2) of this final rule with
comment period, we agree with
commenters that improved and more
precise cost reporting would improve
OPPS payment accuracy. Even if we
were to make changes to create new
diagnostic radiology cost centers for CT
and MRI procedures as recommended
by the commenters for future years, it
would be several years after initial
implementation before data would be
available to reevaluate OPPS payment
rates for imaging services. In the
meantime, we see no reason not to move
forward with other changes in OPPS
payment policies, such as the multiple
imaging composite APC payment
methodology, that could improve the
accuracy of OPPS payment rates and
promote efficiency among hospitals.
The most recent hospital cost report
data are the best and most consistent
estimate of relative costs that we have
available to us for all hospitals for all
hospital services. We will continue to
use these data to estimate APC median
costs. Our goal in creating this new
payment structure is to encourage longterm efficiencies in the provision of
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multiple imaging services. Should
improved, revised cost report data
become available for CT and MRI
procedures, our composite methodology
would automatically incorporate that
additional precision into the multiple
imaging composite APC median cost
estimates.
Comment: Several commenters
expressed concern that the proposed
composite payment methodology for
multiple imaging procedures may not
comply with the statutory requirement
in section 1833(t)(2)(G) of the Act that
the OPPS provide payment for imaging
services furnished with and without
contrast through separate payment
groups. They requested that CMS not
use data from services performed
without contrast to set the payment
rates for the ‘‘with contrast’’ composite
APCs, arguing that the inclusion of cost
data from procedures performed
without contrast in the median cost
calculation for the ‘‘with contrast’’
composite APCs may fail to capture the
full costs of imaging services provided
with contrast agents. A handful of
commenters sought clarification about
whether CMS had included ‘‘single
session’’ claims that incorporated
‘‘without contrast’’ HCPCS codes in the
‘‘with contrast’’ composite. Another
commenter requested that the more
costly CT and MRI studies performed
without contrast and then followed by
contrast, and described by a single
combination CPT code, be paid through
separate composite APCs. According to
the commenter, the inclusion of these
procedures with other ‘‘with contrast’’
studies would cause their median
payment level to decrease.
Response: We believe that the
composite payment methodology for
multiple imaging procedures complies
with the statutory requirement in
section 1833(t)(2)(G) of the Act that the
OPPS provide separate payment groups
for imaging services provided with and
without contrast. As discussed in the
CY 2008 OPPS/ASC final rule with
comment period (72 FR 66650), section
1833(t)(1)(B) of the Act permits us to
define what constitutes a covered HOPD
‘‘service’’ for purposes of payment
under the OPPS, and we have not
restricted a ‘‘service’’ to a single HCPCS
code. Defining the service paid under
the OPPS by combinations of HCPCS
codes for procedures that are commonly
performed in the same encounter and
that result in the provision of a
complete service enables us to use more
claims data and establish payment rates
that we believe more appropriately
capture the costs of services paid under
the OPPS. Consistent with our statutory
flexibility to define what constitutes a
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service under the OPPS, we have
redefined an imaging service for
purposes of the multiple imaging
composite methodology as a ‘‘single
session’’ involving multiple imaging
procedures within an imaging family
performed on the same date of service.
Furthermore, if a contrast agent is
provided to a Medicare beneficiary as
part of any imaging procedure furnished
during that single imaging session, then
we have defined that session as a ‘‘with
contrast’’ imaging session to allow for
payment through a separate group from
a ‘‘without contrast’’ single imaging
session.
Therefore, in order to calculate the
median costs for the multiple imaging
composite APCs, we designate an entire
session as a ‘‘with contrast’’ service and
use the claim to calculate the median
cost for the ‘‘with contrast’’ composite
APC when at least one of the imaging
procedures within an imaging family
performed on the same date of service
involves contrast. If none of the imaging
procedures within an imaging family
performed on the same date of service
involve contrast, we designate the entire
session a ‘‘without contrast’’ service and
use the claim to calculate the median
cost for the ‘‘without contrast’’
composite APC.
The statutory requirement that we
create separate payment groups to
classify imaging procedures performed
with contrast and without contrast
allows us to recognize that imaging
services involving contrast require
different hospital resources than
imaging services performed without
contrast. As shown in Table 8 below,
the median costs upon which payment
rates are calculated for the ‘‘with
contrast’’ composite APCs (APC 8006
and APC 8008) are higher than the
median costs for the ‘‘without contrast’’
composite APCs (APC 8005 and APC
8007). We believe that when multiple
imaging services are provided in a
single imaging session and only one of
the studies uses contrast, hospitals still
incur many of the same costs as they
would incur if all of the studies used
contrast, such as a screening by hospital
staff for patient allergies, the
establishment of venous access, and the
initiation of necessary monitoring. As
such, we would not expect that the costs
of sessions involving a ‘‘with contrast’’
procedure along with other ‘‘with
contrast’’ procedures in the same family
would differ significantly from the costs
of sessions involving a ‘‘with contrast’’
procedure and procedures that do not
involve contrast. Our analysis of the CY
2007 claims data used to calculate the
median costs for the multiple imaging
composite APCs supported this
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argument. If we were to remove all
‘‘single session’’ claims that included
procedures both with contrast and
without contrast from the median cost
calculation of the two ‘‘with contrast’’
composite APCs, the impact on the APC
median costs would be negligible—the
median cost for APC 8006 would
increase by less than 1 percent, and the
median cost for APC 8008 would
increase by only 4 percent.
In addition, we do not believe it
would be appropriate to create a
separate composite APC for payment of
CT or MRI procedures performed
without contrast and then followed by
contrast, as described by a single
combination CPT code. In effect, these
codes already describe a multiple
imaging session—a ‘‘without contrast’’
imaging service followed by a ‘‘with
contrast’’ imaging service. This is
comparable to some of the other ‘‘single
session’’ claims in the CT/CTA and
MRI/MRA ‘‘with contrast’’ composite
APCs (APC 8006 and APC 8008,
respectively), in that these composite
APCs incorporate in some ‘‘single
session’’ claims certain ‘‘without
contrast’’ imaging services. We believe
that our definition of a single session
with contrast as including the costs
associated with providing a contrast
agent for any one or more individual
procedures appropriately places these
combination CPT codes in APCs 8006
and 8008 and meets the statutory
requirements.
Finally, we agree with several
commenters that APC 8004 includes
only ultrasound studies performed
without contrast. Should we revise the
HCPCS codes in APC 8004 to include
ultrasound imaging services performed
with contrast in the future, we would
create a new composite APC for ‘‘with
contrast’’ ultrasound procedures to
comply with section 1833(t)(2)(G) of the
Act.
In summary, we believe the payment
differential between the ‘‘with contrast’’
composite APCs and the ‘‘without
contrast’’ composite APCs is
appropriate, regardless of whether or
not the other imaging procedures
provided within the same session as an
imaging procedure performed with
contrast are also performed with
contrast. We believe we are in full
compliance with the statutory
requirement that we create groups of
covered OPPS services that utilize
contrast agents and those that do not
utilize contrast agents by redefining
multiple imaging services provided in
one encounter as a ‘‘single session’’ in
which more than one procedure from an
imaging family is provided on the same
date of service and assigning ‘‘with
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contrast’’ composite APCs when at least
one of the procedures involves contrast.
Comment: One commenter stated that,
before implementing the multiple
imaging composite policy, CMS should
consult with relevant stakeholders about
which CPT codes should be subject to
the policy. The commenter also urged
CMS to provide hospitals with
instructions to continue coding for
packaged and bundled services to
ensure adequate data collection.
Another commenter stated that CMS
should delay implementation of the
multiple imaging composite policy to
allow hospitals that use the charging of
single CPT codes to determine staff
levels and productivity to adjust to the
proposed changes. One commenter
recommended that CMS work with the
AMA to create new CPT codes that
describe combined procedures so that
providers could use those codes when
they provide multiple imaging services
in a single session. The commenter
argued that utilization of such codes
would be easier for providers and would
facilitate the capturing of charge data
that could be used to create new APCs
or payment policies that reflect
economies of scale for combined
procedures reported through claims
data.
Response: Consistent with our
standard process for securing the views
of stakeholders through the rulemaking
cycle, we published a detailed account
of the multiple imaging composite
payment methodology proposed for CY
2009 in the CY 2009 OPPS/ASC
proposed rule (73 FR 41447 through
41451) and requested comment. Table 8
of the CY 2009 OPPS/ASC proposed
rule presented the HCPCS codes
comprising the three OPPS imaging
families and five composite APCs that
would be created under the multiple
imaging composite proposal for CY
2009. We did not receive any comments
on the particular imaging HCPCS codes
or the families of codes we proposed for
composite payment. Therefore, we will
apply the multiple imaging composite
methodology to the HCPCS codes listed
in Table 8 below, for CY 2009. These
HCPCS codes are assigned status
indicator ‘‘Q3’’ in Addendum B to this
final rule with comment period to
identify their status as potentially
payable through a composite APC. Their
composite APC assignments are
identified in Addendum M to this final
rule with comment period.
We continue to encourage hospitals to
report the HCPCS codes and associated
charges for all services they provide,
taking into consideration all CPT, CMS,
and local Medicare contractor
instructions, whether payment for those
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HCPCS codes is packaged or separately
provided. We note that the multiple
imaging composite APC payment policy
should have no operational impact on
hospital billing practices, because
hospitals should continue reporting the
same HCPCS codes they currently use to
report imaging procedures. The I/OCE
will assess claims to determine whether
a composite APC or a standard (sole
service) imaging APC should be
assigned. We believe that an advantage
of the multiple imaging composite
methodology is that it can improve the
accuracy of OPPS payment without
imposing burdens on hospitals to use
different codes or change the way they
report services.
We do not agree with the commenter
that it would be necessary to create new
CPT codes that describe combined
services to ease the burden of hospital
billing and improve claims data for
ratesetting. As discussed earlier, certain
combination CPT codes, specifically
those single codes that describe imaging
procedures without contrast and then
followed by contrast, already allow for
hospitals to report commonly performed
combinations of imaging procedures in
one anatomic area using a single CPT
code. Hospitals can continue to use
existing codes to report combined
services by reporting multiple HCPCS
codes, and for ratesetting, we use the
charges reported to us by hospitals for
combined services to calculate
composite APC payment rates.
Comment: The commenters asked for
clarifications and offered
recommendations regarding how the
multiple imaging composite policy
would be implemented. A few
commenters also requested that CMS
clarify what constitutes a ‘‘single
session’’ and provide guidance on how
hospitals are to bill and receive payment
for multiple imaging procedures
provided on the same date of service but
during different encounters. According
to the commenters, a composite
payment would not be appropriate in
such cases because facility resources are
expended each and every time a patient
is seen for a separate procedure. Some
commenters suggested CMS address
these cases by allowing the use of the
‘‘59’’ modifier to signify a distinct
procedural service and implementing I/
OCE logic that would not assign
composite payment in those instances.
Other commenters stated that hospitals
would not track whether multiple scans
took place during single or separate
sessions on the same day, and asked
that CMS provide standard (sole service)
APC payment when hospitals provide
imaging services that would otherwise
be subject to the composite
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methodology on the same date of service
but at different times.
Response: A single imaging session
for purposes of the multiple imaging
composite APC payment policy involves
more than one procedure within the
same family provided on a single date
of service. We believe that composite
payment is appropriate even when
procedures are provided on the same
date of service but at different times,
because hospitals do not expend the
same facility resources each and every
time a patient is seen for a distinct
imaging service in a separate imaging
session. In most cases, we expect that
patients in these circumstances would
receive imaging procedures at different
times during a single prolonged hospital
outpatient encounter. The efficiencies
that may be gained from providing
multiple imaging procedures during a
single session are achieved in ways
other than merely not having to
reposition the patient. For example, a
patient who has two MRI procedures
three hours apart during a single
hospital outpatient encounter would not
have to be registered again, and hospital
staff might not have to explain the
procedure in detail prior to the second
scan. In the case of multiple procedures
involving contrast that are provided at
different times during a single hospital
outpatient encounter, establishment of
new intravenous access for the second
study would not be necessary. Even if
the same level of efficiencies could not
be gained for multiple imaging
procedures performed on the same date
of service but at different times, we
expect that any higher costs associated
with these cases would be reflected in
the claims data and cost reports we use
to calculate the median costs for the
multiple imaging composite APCs, and
therefore, in the payment rates for the
multiple imaging composite APCs. We
do not believe it is necessary or
appropriate for hospitals to report
imaging procedures provided on the
same date of service but during different
encounters any differently than they
would report imaging procedures
performed consecutively with no time
in between.
In all cases, hospitals that furnish
more than one imaging procedure to a
Medicare beneficiary in the HOPD on
the same date of service must bill all
imaging services on the same claim. We
expect to carefully monitor any changes
in billing practices on a service-specific
and hospital-specific basis to determine
whether there is reason to request that
QIOs review the quality of care
furnished or to request that Program
Safeguard Contractors review the claims
against the medical record.
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Comment: Several commenters asked
whether the multiple imaging composite
policy would affect application of
section 5102(b)(1) of the Deficit
Reduction Act (DRA), which requires
CMS to cap the technical component of
the MPFS payment amount by the OPPS
payment amount for certain imaging
procedures. One commenter asked if the
savings from this proposal are budget
neutral.
Response: The payment comparison
for the DRA cap on the MPFS technical
component payment for imaging
services will continue to be made
between the applicable MPFS technical
component payment and the payment
for the standard (sole service) imaging
APC payment for services subject to the
cap, even if multiple MPFS imaging
services subject to the DRA cap are
provided in one imaging session.
Modest imaging savings from the
multiple imaging composite
methodology of 0.4 percent are budget
neutral and are redistributed to other
services paid under the OPPS for CY
2009.
In summary, after consideration of the
public comments received, we are
adopting our CY 2009 proposal, without
modification, to utilize the three OPPS
imaging families discussed above in this
section, incorporating statutory
requirements to differentiate OPPS
payment for imaging services provided
with contrast and without contrast as
required by section 1833(t)(2)(G) of the
Act, to create five multiple imaging
composite APCs for payment in CY
2009. The multiple imaging composite
APCs for CY 2009 are: APC 8004
(Ultrasound Composite); APC 8005 (CT
and CTA without Contrast Composite);
APC 8006 ( CT and CTA with Contrast
Composite); APC 8007 (MRI and MRA
without Contrast Composite); and APC
8008 (MRI and MRA with Contrast
Composite). The composite APCs have
status indicators of ‘‘S,’’ signifying that
payment for the APC is not reduced
when it appears on the same claim with
other significant procedures.
We will provide one composite APC
payment each time a hospital bills more
than one procedure described by the
HCPCS codes in an OPPS imaging
family displayed in Table 8 below, on
a single date of service. If the hospital
performs a procedure without contrast
during the same session as at least one
other procedure with contrast using the
same imaging modality, then the
hospital will receive payment for the
‘‘with contrast’’ composite APC. A
single imaging procedure, or imaging
procedures reported with HCPCS codes
assigned to different OPPS imaging
families, will be paid according to the
standard OPPS methodology through
the standard (sole service) imaging
APCs to which they are assigned in CY
2009. Hospitals will continue to use the
same HCPCS codes to report imaging
procedures, and the I/OCE will
determine when combinations of
imaging procedures qualify for
composite APC payment or map to
standard (sole service) APCs for
payment. We will make a single
payment for those imaging procedures
that qualify for composite APC
payment, as well as any packaged
services furnished on the same date of
service.
To calculate the final rule median
costs for the five multiple imaging
composite APCs, we removed any
HCPCS codes in the OPPS imaging
families that overlapped with codes on
our bypass list to avoid splitting claims
with multiple units or multiple
occurrences of codes in an OPPS
imaging family into new ‘‘pseudo’’
single claims. The imaging HCPCS
codes that we removed from the bypass
list for purposes of calculating the
multiple imaging composite APC
median costs appear in Table 9 below.
(We refer readers to section II.A.1.b. of
this final rule with comment period for
further discussion of how we treat
claims with HCPCS codes in the OPPS
imaging families that are also on the
bypass list.) We integrated the
identification of imaging composite
‘‘single session’’ claims, that is, claims
with multiple imaging procedures
within the same family on the same date
of service, into the creation of ‘‘pseudo’’
single claims to ensure that claims were
split in the ‘‘pseudo’’ single process into
accurate reflections of either a
composite ‘‘single session’’ imaging
service or a standard sole imaging
service resource cost. Like all single
bills, the new composite ‘‘single
session’’ claims were for the same date
of service and contained no other
separately paid services in order to
isolate the session imaging costs. Our
last step after processing all claims
through the ‘‘pseudo’’ single process
was to reassess the remaining multiple
procedure claims using the full bypass
list and bypass process. This enhanced
our proposed rule methodology of only
identifying line-item costs for HCPCS
codes in the OPPS imaging families
remaining on multiple procedure claims
with one unit of the imaging HCPCS
code and no other imaging services in
the families as potential ‘‘pseudo’’
single bills for use in calculating the
median costs for sole imaging services.
For this final rule with comment period,
we not only made ‘‘pseudo’’ single bills
out of line-items for the HCPCS codes in
the OPPS imaging families overlapping
with the HCPCS codes on the bypass
list, which appear in Table 9 below, but
we reassessed each claim after removing
these line-items in order to see if we
could make other ‘‘pseudo’’ single bills.
That is, we assessed whether a single
separately paid service remained on the
claim after removing line-items for the
‘‘overlap bypass codes.’’ In particular,
this change significantly increased the
number of single bills available for APC
0274 (Myelography) for this final rule
with comment period. We were able to
identify 1.8 million ‘‘single session’’
claims out of an estimated 3 million
potential composite cases from our
ratesetting claims database, or over half
of all eligible claims, to calculate
median costs for the 5 final CY 2009
OPPS multiple imaging composite
APCs.
TABLE 8—OPPS IMAGING FAMILIES AND MULTIPLE IMAGING PROCEDURE COMPOSITE APCS
Family 1—Ultrasound
dwashington3 on PRODPC61 with RULES2
Final CY 2009 APC 8004 (Ultrasound Composite)
76604
76700
76705
76770
76775
76776
76831
76856
76870
Final CY 2009 Approximate APC Median Cost = $188
......................................................................
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......................................................................
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Us exam, chest.
Us exam, abdom, complete.
Echo exam of abdomen.
Us exam abdo back wall, comp.
Us exam abdo back wall, lim.
Us exam k transpl w/Doppler.
Echo exam, uterus.
Us exam, pelvic, complete.
Us exam, scrotum.
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TABLE 8—OPPS IMAGING FAMILIES AND MULTIPLE IMAGING PROCEDURE COMPOSITE APCS—Continued
76857 ......................................................................
Us exam, pelvic, limited.
Family 2—CT and CTA with and without Contrast
Final CY 2009 APC 8005 (CT and CTA without
Contrast Composite) *
0067T
70450
70480
70486
70490
71250
72125
72128
72131
72192
73200
73700
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
Final CY 2009 APC 8006 (CT and CTA with
Contrast Composite)
70487
70460
70470
70481
70482
70488
70491
70492
70496
70498
71260
71270
71275
72126
72127
72129
72130
72132
72133
72191
72193
72194
73201
73202
73206
73701
73702
73706
74160
74170
74175
75635
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
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......................................................................
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......................................................................
......................................................................
Final CY 2009 Approximate APC Median Cost = $406
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
colonography;dx.
head/brain w/o dye.
orbit/ear/fossa w/o dye.
maxillofacial w/o dye.
soft tissue neck w/o dye.
thorax w/o dye.
neck spine w/o dye.
chest spine w/o dye.
lumbar spine w/o dye.
pelvis w/o dye.
upper extremity w/o dye.
lower extremity w/o dye.
Final CY 2009 Approximate APC Median Cost = $621
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
maxillofacial w/dye.
head/brain w/dye.
head/brain w/o & w/dye.
orbit/ear/fossa w/dye.
orbit/ear/fossa w/o&w/dye.
maxillofacial w/o & w/dye.
soft tissue neck w/dye.
sft tsue nck w/o & w/dye.
angiography, head.
angiography, neck.
thorax w/dye.
thorax w/o & w/dye.
angiography, chest.
neck spine w/dye.
neck spine w/o & w/dye.
chest spine w/dye.
chest spine w/o & w/dye.
lumbar spine w/dye.
lumbar spine w/o & w/dye.
angiograph pelv w/o&w/dye.
pelvis w/dye.
pelvis w/o & w/dye.
upper extremity w/dye.
uppr extremity w/o&w/dye.
angio upr extrm w/o&w/dye.
lower extremity w/dye.
lwr extremity w/o&w/dye.
angio lwr extr w/o&w/dye.
abdomen w/dye.
abdomen w/o & w/dye.
angio abdom w/o & w/dye.
angio abdominal arteries.
Family 3—MRI and MRA with and without Contrast
dwashington3 on PRODPC61 with RULES2
Final CY 2009 APC 8007 (MRI and MRA without
Contrast Composite) *
70336
70540
70544
70547
70551
70554
71550
72141
72146
72148
72195
73218
73221
73718
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
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Final CY 2009 Approximate APC Median Cost = $695
Magnetic image, jaw joint.
Mri orbit/face/neck w/o dye.
Mr angiography head w/o dye.
Mr angiography neck w/o dye.
Mri brain w/o dye.
Fmri brain by tech.
Mri chest w/o dye.
Mri neck spine w/o dye.
Mri chest spine w/o dye.
Mri lumbar spine w/o dye.
Mri pelvis w/o dye.
Mri upper extremity w/o dye.
Mri joint upr extrem w/o dye.
Mri lower extremity w/o dye.
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68567
68568
Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations
TABLE 8—OPPS IMAGING FAMILIES AND MULTIPLE IMAGING PROCEDURE COMPOSITE APCS—Continued
73721
74181
75557
75559
C8901
C8904
C8907
C8910
C8913
C8919
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
Final CY 2009 APC 8008 (MRI and MRA with
Contrast Composite)
70549
70542
70543
70545
70546
70548
70552
70553
71551
71552
72142
72147
72149
72156
72157
72158
72196
72197
73219
73220
73222
73223
73719
73720
73722
73723
74182
74183
75561
75563
C8900
C8902
C8903
C8905
C8906
C8908
C8909
C8911
C8912
C8914
C8918
C8920
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
......................................................................
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Mri jnt of lwr extre w/o dye.
Mri abdomen w/o dye.
Cardiac mri for morph.
Cardiac mri w/stress img.
MRA w/o cont, abd.
MRI w/o cont, breast, uni.
MRI w/o cont, breast, bi.
MRA w/o cont, chest.
MRA w/o cont, lwr ext.
MRA w/o cont, pelvis.
Final CY 2009 Approximate APC Median Cost = 968
Mr angiograph neck w/o&w/dye.
Mri orbit/face/neck w/dye.
Mri orbt/fac/nck w/o & w/dye.
Mr angiography head w/dye.
Mr angiograph head w/o&w/dye.
Mr angiography neck w/dye.
Mri brain w/dye.
Mri brain w/o & w/dye.
Mri chest w/dye.
Mri chest w/o & w/dye.
Mri neck spine w/dye.
Mri chest spine w/dye.
Mri lumbar spine w/dye.
Mri neck spine w/o & w/dye.
Mri chest spine w/o & w/dye.
Mri lumbar spine w/o & w/dye.
Mri pelvis w/dye.
Mri pelvis w/o & w/dye.
Mri upper extremity w/dye.
Mri uppr extremity w/o&w/dye.
Mri joint upr extrem w/dye.
Mri joint upr extr w/o&w/dye.
Mri lower extremity w/dye.
Mri lwr extremity w/o&w/dye.
Mri joint of lwr extr w/dye.
Mri joint lwr extr w/o&w/dye.
Mri abdomen w/dye.
Mri abdomen w/o & w/dye.
Cardiac mri for morph w/dye.
Card mri w/stress img & dye.
MRA w/cont, abd.
MRA w/o fol w/cont, abd.
MRI w/cont, breast, uni.
MRI w/o fol w/cont, brst, un.
MRI w/cont, breast, bi.
MRI w/o fol w/cont, breast,
MRA w/cont, chest.
MRA w/o fol w/cont, chest.
MRA w/cont, lwr ext.
MRA w/o fol w/cont, lwr ext.
MRA w/cont, pelvis.
MRA w/o fol w/cont, pelvis.
* If a ‘‘without contrast’’ CT or CTA procedure is performed during the same session as a ‘‘with contrast’’ CT or CTA procedure, the I/OCE will
assign APC 8006 rather than 8005.
* If a ‘‘without contrast’’ MRI or MRA procedure is performed during the same session as a ‘‘with contrast’’ MRI or MRA procedure, the I/OCE
will assign APC 8008 rather than 8007.
TABLE 9—OPPS IMAGING FAMILY SERVICES OVERLAPPING WITH HCPCS CODES ON THE CY 2009 BYPASS LIST
dwashington3 on PRODPC61 with RULES2
Family 1—Ultrasound
76700
76705
76770
76775
76776
76856
76870
76857
.....................................................................................................................................................................
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Us exam, abdom, complete.
Echo exam of abdomen.
Us exam abdo back wall, comp.
Us exam abdo back wall, lim.
Us exam k transpl w/doppler.
Us exam, pelvic, complete.
Us exam, scrotum.
Us exam, pelvic, limited.
18NOR2
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68569
TABLE 9—OPPS IMAGING FAMILY SERVICES OVERLAPPING WITH HCPCS CODES ON THE CY 2009 BYPASS LIST—
Continued
Family 2—CT and CTA with and without Contrast
70450
70480
70486
70490
71250
72125
72128
72131
72192
73200
73700
74150
.....................................................................................................................................................................
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Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
Ct
head/brain w/o dye.
orbit/ear/fossa w/o dye.
maxillofacial w/o dye.
soft tissue neck w/o dye.
thorax w/o dye.
neck spine w/o dye.
chest spine w/o dye.
lumbar spine w/o dye.
pelvis w/o dye.
upper extremity w/o dye.
lower extremity w/o dye.
abdomen w/o dye.
Family 3—MRI and MRA with and without Contrast
dwashington3 on PRODPC61 with RULES2
70336
70544
70551
72141
72146
72148
73218
73221
73718
73721
.....................................................................................................................................................................
.....................................................................................................................................................................
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3. Calculation of OPPS Scaled Payment
Weights
Using the APC median costs
discussed in sections II.A.1. and 2. of
this final rule with comment period, we
calculated the final relative payment
weights for each APC for CY 2009
shown in Addenda A and B to this final
rule with comment period. In years
prior to CY 2007, we standardized all
the relative payment weights to APC
0601 (Mid Level Clinic Visit) because
mid-level clinic visits were among the
most frequently performed services in
the hospital outpatient setting. We
assigned APC 0601 a relative payment
weight of 1.00 and divided the median
cost for each APC by the median cost for
APC 0601 to derive the relative payment
weight for each APC.
Beginning with the CY 2007 OPPS (71
FR 67990), we standardized all of the
relative payment weights to APC 0606
(Level 3 Clinic Visits) because we
deleted APC 0601 as part of the
reconfiguration of the visit APCs. We
selected APC 0606 as the base because
APC 0606 was the middle level clinic
visit APC (that is, Level 3 of five levels).
We had historically used the median
cost of the middle level clinic visit APC
(that is APC 0601 through CY 2006) to
calculate unscaled weights because midlevel clinic visits were among the most
frequently performed services in the
hospital outpatient setting. Therefore,
for CY 2009, to maintain consistency in
using a median for calculating unscaled
weights representing the median cost of
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some of the most frequently provided
services, we proposed to continue to use
the median cost of the mid-level clinic
visit APC, proposed APC 0606, to
calculate unscaled weights. Following
our standard methodology, but using the
proposed CY 2009 median cost for APC
0606, for CY 2009 we assigned APC
0606 a relative payment weight of 1.00
and divided the median cost of each
APC by the proposed median cost for
APC 0606 to derive the unscaled
relative payment weight for each APC.
The choice of the APC on which to base
the relative weights for all other APCs
does not affect the payments made
under the OPPS because we scale the
weights for budget neutrality.
Section 1833(t)(9)(B) of the Act
requires that APC reclassification and
recalibration changes, wage index
changes, and other adjustments be made
in a budget neutral manner. Budget
neutrality ensures that estimated
aggregate payments under the OPPS for
CY 2009 are neither greater than nor less
than the estimated aggregate payments
that would have been made without the
changes. To comply with this
requirement concerning the APC
changes, we proposed to compare
aggregate payments using the CY 2008
scaled relative weights to aggregate
payments using the CY 2009 unscaled
relative weights. Again this year, we
included payments to CMHCs in our
comparison. Based on this comparison,
we adjusted the unscaled relative
weights for purposes of budget
PO 00000
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Magnetic image, jaw joint.
Mr angiography head w/o dye.
Mri brain w/o dye.
Mri neck spine w/o dye.
Mri chest spine w/o dye.
Mri lumbar spine w/o dye.
Mri upper extremity w/o dye.
Mri joint upr extrem w/o dye.
Mri lower extremity w/o dye.
Mri jnt of lwr extre w/o dye.
neutrality. The unscaled relative
payment weights were adjusted by a
weight scaler of 1.3354 for budget
neutrality in the CY 2009 OPPS/ASC
proposed rule (73 FR 41452). In
addition to adjusting for increases and
decreases in weight due to the
recalibration of APC medians, the scaler
also accounts for any change in the base,
other than changes in volume which are
not a factor in the weight scaler.
Section 1833(t)(14)(H) of the Act, as
added by section 621(a)(1) of Public
Law 108–173, states that, ‘‘Additional
expenditures resulting from this
paragraph shall not be taken into
account in establishing the conversion
factor, weighting and other adjustment
factors for 2004 and 2005 under
paragraph (9) but shall be taken into
account for subsequent years.’’ Section
1833(t)(14) of the Act provides the
payment rates for certain ‘‘specified
covered outpatient drugs.’’ Therefore,
the cost of those specified covered
outpatient drugs (as discussed in section
V. of this final rule with comment
period) is included in the budget
neutrality calculations for the CY 2009
OPPS.
We did not receive any public
comments on the proposed
methodology for calculating scaled
weights from the median costs for the
CY 2009 OPPS. Therefore, we are
finalizing our proposed methodology,
without modification, including
updating of the budget neutrality scaler
for this final rule with comment period,
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as we proposed. Under this
methodology, the final unscaled
payment weights were adjusted by a
weight scaler of 1.3585 for this final rule
with comment period. The final scaled
relative payment weights listed in
Addenda A and B to this final rule with
comment period incorporate the
recalibration adjustments discussed in
sections II.A.1. and 2. of this final rule
with comment period.
dwashington3 on PRODPC61 with RULES2
4. Changes to Packaged Services
a. Background
The OPPS, like other prospective
payment systems, relies on the concept
of averaging, where the payment may be
more or less than the estimated costs of
providing a service or package of
services for a particular patient, but
with the exception of outlier cases, is
adequate to ensure access to appropriate
care. Packaging and bundling payment
for multiple interrelated services into a
single payment create incentives for
providers to furnish services in the most
efficient way by enabling hospitals to
manage their resources with maximum
flexibility, thereby encouraging longterm cost containment. For example,
where there are a variety of supplies
that could be used to furnish a service,
some of which are more expensive than
others, packaging encourages hospitals
to use the least expensive item that
meets the patient’s needs, rather than to
routinely use a more expensive item.
Packaging also encourages hospitals to
negotiate carefully with manufacturers
and suppliers to reduce the purchase
price of items and services or to explore
alternative group purchasing
arrangements, thereby encouraging the
most economical health care. Similarly,
packaging encourages hospitals to
establish protocols that ensure that
necessary services are furnished, while
carefully scrutinizing the services
ordered by practitioners to maximize
the efficient use of hospital resources.
Finally, packaging payments into larger
payment bundles promotes the stability
of payment for services over time.
Packaging and bundling also may
reduce the importance of refining
service-specific payment because there
is more opportunity for hospitals to
average payment across higher cost
cases requiring many ancillary services
and lower cost cases requiring fewer
ancillary services.
Decisions about packaging and
bundling payment involve a balance
between ensuring some separate
payment for individual services and
establishing incentives for efficiency
through larger units of payment. Over
the past several years of the OPPS,
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greater unpackaging of payment has
occurred simultaneously with
continued growth in OPPS expenditures
as a result of increasing volumes of
individual services. In an attempt to
address this increase in volume of
services, in the CY 2008 OPPS/ASC
final rule with comment period, we
finalized additional packaging for the
CY 2008 OPPS, which included the
establishment of four new composite
APCs for CY 2008, specifically APC
8000 (Cardiac Electrophysiologic
Evaluation and Ablation Composite),
APC 8001 (LDR Prostate Brachytherapy
Composite), APC 8002 (Level I Extended
Assessment & Management Composite),
and APC 8003 (Level II Extended
Assessment & Management Composite)
(72 FR 66650 through 66659). HCPCS
codes that may be paid through a
composite APC if certain compositespecific criteria are met or otherwise
may be paid separately are assigned
status indicator ‘‘Q’’ for CY 2008, and
we consider them to be conditionally
packaged. We discuss composite APCs
in more detail in section II.A.2.e. of this
final rule with comment period.
In addition, in the CY 2008 OPPS/
ASC final rule with comment period,
(72 FR 66610 through 66659), we
adopted the packaging of payment for
items and services in the seven
categories listed below into the payment
for the primary diagnostic or therapeutic
modality to which we believe these
items and services are typically
ancillary and supportive. The seven
categories are: guidance services, image
processing services, intraoperative
services, imaging supervision and
interpretation services, diagnostic
radiopharmaceuticals, contrast media,
and observation services. We
specifically chose these categories of
HCPCS codes for packaging because we
believe that the items and services
described by the codes in these
categories are the HCPCS codes that are
typically ancillary and supportive to a
primary diagnostic or therapeutic
modality and, in those cases, are an
integral part of the primary service they
support. We finalized our assignment of
status indicator ‘‘N’’ to those HCPCS
codes that we believe are always
integral to the performance of the
primary modality, so we always package
their costs into the costs of the
separately paid primary services with
which they are billed. Services assigned
status indicator ‘‘N’’ in CY 2008 are
unconditionally packaged. We also
finalized our assignment of status
indicator ‘‘Q’’ to those HCPCS codes
that we believe are typically integral to
the performance of the primary
PO 00000
Frm 00070
Fmt 4701
Sfmt 4700
modality and, in such cases, we package
payment for their costs into the costs of
the separately paid primary services
with which they are usually billed. An
‘‘STVX-packaged code’’ describes a
HCPCS code whose payment is
packaged when one or more separately
paid primary services are furnished in
the hospital outpatient encounter. A ‘‘Tpackaged code’’ describes a code whose
payment is packaged when one or more
separately paid surgical procedures are
provided during the hospital encounter.
‘‘STVX-packaged codes’’ and ‘‘Tpackaged codes’’ are paid separately in
those uncommon cases when they do
not meet their respective criteria for
packaged payment. ‘‘STVX-packaged
codes’’ and ‘‘T-packaged HCPCS codes’’
assigned status indicator ‘‘Q’’ in CY
2008 are conditionally packaged.
We use the term ‘‘dependent service’’
to refer to the HCPCS codes that
represent services that are typically
ancillary and supportive to a primary
diagnostic or therapeutic modality. We
use the term ‘‘independent service’’ to
refer to the HCPCS codes that represent
the primary therapeutic or diagnostic
modality into which we package
payment for the dependent service. We
note that, in future years as we consider
the development of larger payment
groups that more broadly reflect services
provided in an encounter or episode-ofcare, it is possible that we might
propose to bundle payment for a service
that we now refer to as ‘‘independent.’’
An example of a CY 2008 change in
the OPPS packaging status for a
dependent HCPCS code that is ancillary
and supportive is CPT code 61795
(Stereotactic computer-assisted
volumetric (navigational) procedure,
intracranial, extracranial, or spinal (List
separately in addition to code for
primary procedure)). CPT code 61795
was assigned separate payment in CY
2007 but its payment is packaged during
CY 2008. This service is only performed
during the course of a surgical
procedure. Several of the surgical
procedures that we would expect to be
reported in association with CPT code
61795 are assigned to APC 0075 (Level
V Endoscopy Upper Airway) for CY
2008. We consider the stereotactic
guidance service to be an ancillary and
supportive service that may be
performed only in the same operative
session as a procedure that could
otherwise be performed independently
of the stereotactic guidance service.
During its March 2008 meeting, the
APC Panel recommended that CMS
report to the APC Panel at its first CY
2009 meeting the impact of packaging
on the net payments for patient care. We
will take this recommendation into
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consideration and determine which data
we can provide at the first CY 2009 APC
Panel meeting that would best respond
to this recommendation. The APC Panel
also recommended that CMS present
data at the first CY 2009 APC Panel
meeting on usage and frequency,
geographic distribution, and size and
type of hospitals performing nuclear
medicine examinations and using
radioisotopes to ensure that access to
these services is preserved for Medicare
beneficiaries. This recommendation is
discussed in more detail in section
V.B.2.c. of this final rule with comment
period.
Hospitals include charges for
packaged services on their claims, and
the costs associated with those packaged
services are then added to the costs of
separately payable procedures on the
same claims in establishing payment
rates for the separately payable services.
We encourage hospitals to report all
HCPCS codes that describe packaged
services that were provided, unless CPT
or CMS provide other guidance. If a
HCPCS code is not reported when a
packaged service is provided, it can be
challenging to track utilization patterns
and resource costs.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41453), we proposed to
further refine our identification of the
different types of conditionally
packaged HCPCS codes that were
previously all assigned status indicator
‘‘Q’’ (Packaged Services Subject to
Separate Payment under OPPS Payment
Criteria) under the OPPS for CY 2009.
We proposed to create and assign status
indicators ‘‘Q1’’ (‘‘STVX-Packaged
Codes’’), ‘‘Q2’’ (‘‘T-Packaged Codes’’), or
‘‘Q3’’ (Codes that may be paid through
a composite APC) to each conditionally
packaged HCPCS code. We refer readers
to section XIII.A.1. of this final rule with
comment period for a complete
discussion of status indicators and our
status indicator changes for CY 2009.
While most conditionally packaged
HCPCS codes are assigned to only one
of the conditionally packaged categories
described above, in the CY 2009 OPPS/
ASC proposed rule (73 FR 41453), we
proposed to assign one particular
HCPCS code to two conditionally
packaged categories for CY 2009.
Specifically, we proposed to treat CPT
code 75635 (Computed tomographic
angiography, abdominal aorta and
bilateral iliofemoral lower extremity
runoff, with contrast material(s),
including noncontrast images, if
performed, and image postprocessing)
as both a ‘‘T-packaged code’’ and a
component of composite APC 8006 (CT
and CTA with Contrast Composite). We
proposed to assign this code status
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indicator ‘‘Q2’’ in Addendum B and
‘‘Q3’’ in Addendum M, to signify its
dual treatment. For CY 2009, we
proposed to first assess whether CPT
code 75635 would be packaged or
separately payable, based on its status as
a ‘‘T-packaged code.’’ If the service
reported with CPT code 75635 would be
separately payable due to the absence of
another procedure on the claim with
status indicator ‘‘T’’ for the same date of
service, the code would then be
assessed in the context of any other
relevant imaging services reported on
the claim for the same date of service to
determine whether payment for CPT
code 75635 under composite APC 8006
would be appropriate. If the criteria for
payment of the code under composite
APC 8006 are not met, then CPT code
75635 would be separately paid based
on APC 0662 (CT Angiography) and its
corresponding payment rate displayed
in Addendum B to this final rule with
comment period.
We received many public comments
related to the CY 2009 proposals for
payment of packaged services that are
not drugs. We have responded to public
comments on the packaging of payment
for drugs, including contrast media and
diagnostic radiopharmaceuticals, in
section V.B.2.c. of this final rule with
comment period.
Comment: Several commenters were
pleased that CMS did not propose to
extend packaging to additional
categories of services for CY 2009. These
commenters believed that it was
appropriate for CMS to study the effects
of newly packaging many services for
CY 2008 before choosing to package
additional services. One commenter
asked that we reconsider all packaging
in general because of the adverse
financial impact it has on some
hospitals.
Many commenters recommended that
CMS define principles and/or
thresholds to determine whether a
HCPCS code should be packaged,
consistent with the August 2008 APC
Panel recommendation that CMS
establish a threshold (for example, a
proportion of cases in which the service
is provided ancillary and dependent to
another service, rate of change in
utilization over time, and market
penetration) when packaging will be
considered. While the APC Panel
recommendation was discussed in the
context of packaging intravascular
ultrasound, intracardiac
echocardiography, and fractional flow
reserve, those general comments related
to a threshold are summarized here.
One commenter suggested the
following packaging principles:
packaging should be reserved for higher-
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volume, lower-cost, minor and ancillary
services that are frequently performed
with an independent service; low
volume procedures performed only
occasionally in conjunction with the
independent service should not be
packaged; device-dependent procedures
or procedures utilizing both single-use
devices and capital equipment designed
exclusively for use with that unique
service should not be packaged; add-on
codes that are infrequently performed
among all cases of the independent
services they accompany should not be
packaged; and exceptions to the
packaging policy should be permitted
when packaging could unreasonably
impede access to valuable technologies.
Many commenters suggested that
resource costs should be considered
when determining whether to package
services, in accordance with MedPAC’s
comment, which stated that packaging
should be reserved for ‘‘ancillaries that
are frequently provided or inexpensive
in relation to the associated
independent service.’’ Another
commenter recommended that CMS
should only package items that have
substitutes; that CMS should take cost
and volume into consideration when
determining whether to package a
service; and that CMS should package
the charges for packaged services in a
logical and more deliberate manner,
ensuring that packaged costs
representing dependent services are
allocated only to corresponding
independent services. One commenter
suggested that CMS should only
package payment for a dependent
service if the payment rate for the
independent service increases
appropriately. Many commenters
recommended that CMS consider a
simple cost threshold, similar to the $60
per day drug packaging threshold that
CMS proposed would determine
whether payment for most drugs would
be packaged or separately paid in CY
2009.
Response: We agree with the
commenters that we should examine
claims data from CY 2008 that reflect
the first year of a significant change in
packaging under the OPPS and note that
we did not propose to package
additional large categories of services
for CY 2009 because we wanted a
chance to study the effects of packaging
payment. We will have CY 2008 claims
available for the CY 2010 rulemaking
cycle and will determine at that time
whether it would be appropriate to
propose to package additional categories
of services. As noted below in section
II.A.4.b.(1) of this final rule with
comment period, we plan to review CY
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2008 claims data with the APC Panel to
assess any changes in utilization
patterns of packaged services as
previously recommended by the APC
Panel.
While we are not adopting additional
packaging principles or a nondrug
packaging threshold for CY 2009, we
understand the concerns of the
commenters and are committed to
considering this issue further in the
future, balancing the concerns of the
commenters with our goal of continuing
to encourage efficient use of hospital
resources. The criteria that the
commenters provided are focused
almost exclusively on preventing
packaging, rather than on determining
when packaging would be appropriate.
We believe that packaging is appropriate
when the nature of a service is such that
it is supportive and ancillary to another
service, whether or not the dependent
service is always furnished with the
independent service and regardless of
the cost of the supportive ancillary
service. For example, we do not want to
create financial incentives to use one
form of guidance instead of another, or
to use guidance all the time, even if a
procedure could be performed safely
without guidance. In addition, it is not
clear whether one set of packaging
principles or one threshold could apply
to the wide variety of services paid
under the OPPS. Moreover, we are fully
committed to continuing to advance
value-based purchasing by Medicare in
the hospital outpatient setting, to further
the focus on value of care rather than
volume, and we believe that packaging
payment into larger payment bundles
under the OPPS is an appropriate
component of our strategy.
In general, we believe that packaging
should reflect the reality of how services
are furnished and reported on claims by
hospitals. We believe that nonspecific
packaging (as opposed to selected code
packaging) based on combinations of
services observed on hospital claims is
appropriate because of the myriad
combinations of services that can be
appropriately provided together. As
explained in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66617), we have used this approach to
ratesetting throughout the history of the
OPPS, and note that payment for APC
groups currently reflects significant
nonspecific packaging in many cases.
We do not agree with the commenters
that we should only package services
that are low cost ancillary and
supportive services that appear
frequently with an independent service.
To adopt that policy would essentially
negate the concept of averaging that is
an underlying premise of a prospective
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payment system because we would
package only services that would
increase the payment for the
independent service, and hospitals
would not have a particular incentive to
provide care more efficiently.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to package payment for
five categories of ancillary and
supportive services for CY 2009,
specifically guidance services, image
processing services, intraoperative
services, imaging supervision and
interpretation services, and observation
services, that are provided in
association with independent,
separately paid services, without a
specific threshold for the cost or
utilization of those supportive services.
The final CY 2009 payment policies for
contrast media and diagnostic
radiopharmaceuticals are discussed in
section V.B.2.b. of this final rule with
comment period.
b. Service-Specific Packaging Issues
(1) Packaged Services Addressed by the
APC Panel Recommendations
The Packaging Subcommittee of the
APC Panel was established to review all
packaged HCPCS codes. In deciding
whether to package a service or pay for
a code separately, we have historically
considered a variety of factors,
including whether the service is
normally provided separately or in
conjunction with other services; how
likely it is for the costs of the packaged
code to be appropriately mapped to the
separately payable codes with which it
was performed; and whether the
expected cost of the service is relatively
low. As discussed in section II.A.4.a. of
this final rule with comment period
regarding our packaging approach for
CY 2008, we established packaging
criteria that apply to seven categories of
codes whose payments are packaged.
Four of the APC Panel’s packaging
recommendations from its March 2008
meeting reference codes are included in
the seven categories of services that we
packaged for CY 2008. For these four
recommendations, we specifically
applied the packaging considerations
that apply to those seven categories of
codes in determining whether a code
should be proposed as packaged or
separately payable for CY 2009.
Specifically, we determined whether a
service is a dependent service falling
into one of the seven specified
categories that is always or almost
always provided integral to an
independent service. For those two APC
Panel recommendations that do not fit
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into any of the seven categories of
services that were part of the CY 2008
packaging approach, we applied the
packaging criteria noted above in this
section that were historically used
under the OPPS. Moreover, we took into
consideration our interest in possibly
expanding the size of payment groups
for component services to provide
encounter-based or episode-of-carebased payment in the future in order to
encourage hospital efficiency and
provide hospitals with maximal
flexibility to manage their resources.
The Packaging Subcommittee
reviewed the packaging status of
numerous HCPCS codes and reported its
findings to the APC Panel at its March
2008 meeting. The APC Panel accepted
the report of the Packaging
Subcommittee, heard several
presentations on certain packaged
services, discussed the deliberations of
the Packaging Subcommittee, and
recommended that—
1. CMS provide additional data to
support packaging radiation oncology
guidance services for review by the Data
Subcommittee at the next APC Panel
meeting. (Recommendation 1)
2. CPT code 36592 (Collection of
blood specimen using established
central or peripheral catheter, venous,
not otherwise specified) be treated as an
‘‘STVX-packaged code’’ for CY 2009 and
assigned to the same APC as CPT code
36591 (Collection of blood specimen
from a completely implantable venous
access device) until adequate data are
collected that would enable CMS to
determine its own payment rate.
(Recommendation 2)
3. HCPCS code A4306 (Disposable
drug delivery system, flow rate of less
than 50 mL per hour) remain packaged
for CY 2009. (Recommendation 3)
4. CPT code 74305 (Cholangiography
and/or pancreatography; through
existing catheter, radiological
supervision and interpretation) be
treated as a ‘‘T-packaged code’’ for CY
2009 and that CMS consider assigning
this code to APC 0263 (Level I
Miscellaneous Radiology Procedures).
(Recommendation 4)
5. CMS reinstate separate payment for
the following intravascular ultrasound
and intracardiac echocardiography
codes: CPT codes 37250 (Intravascular
ultrasound (non-coronary vessel) during
diagnostic evaluation and/or therapeutic
intervention; initial vessel); 37251
(Intravascular ultrasound (non-coronary
vessel) during diagnostic evaluation
and/or therapeutic intervention; each
additional vessel); 92978 (Intravascular
ultrasound (coronary vessel or graft)
during diagnostic evaluation and/or
therapeutic intervention including
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imaging supervision, interpretation and
report; initial vessel); 92979
(Intravascular ultrasound (coronary
vessel or graft) during diagnostic
evaluation and/or therapeutic
intervention including imaging
supervision, interpretation and report;
each additional vessel); and 93662
(Intracardiac echocardiography during
therapeutic/diagnostic intervention,
including imaging supervision and
interpretation). (Recommendation 5)
6. CMS continue to package
diagnostic radiopharmaceuticals for CY
2009. (Recommendation 6)
7. The Packaging Subcommittee
continue its work. (Recommendation 7)
In addition, the Packaging
Subcommittee reported its findings to
the APC Panel at its August 2008
meeting. The APC Panel accepted the
report of the Packaging Subcommittee,
heard presentations on several packaged
services, discussed the deliberations of
the Packaging Subcommittee and
recommended that—
8. CMS pay separately for the
following IVUS, ICE, and FFR CPT
codes: 37250 (Intravascular ultrasound
(non-coronary vessel) during diagnostic
evaluation and/or therapeutic
intervention; initial vessel); 37251
(Intravascular ultrasound (non-coronary
vessel) during diagnostic evaluation
and/or therapeutic intervention; each
additional vessel); 92978 (Intravascular
ultrasound (coronary vessel or graft)
during diagnostic evaluation and/or
therapeutic intervention including
imaging supervision, interpretation and
report; initial vessel); 92979
(Intravascular ultrasound (coronary
vessel or graft) during diagnostic
evaluation and/or therapeutic
intervention including imaging
supervision, interpretation and report;
each additional vessel); 93662
(Intracardiac echocardiography during
therapeutic/diagnostic intervention,
including imaging supervision and
interpretation); 93571 (Intravascular
Doppler velocity and/or pressure
derived coronary flow reserve
measurement (coronary vessel or graft)
during coronary angiography including
pharmacologically induced stress,
initial vessel); and 93572 (Intravascular
Doppler velocity and/or pressure
derived coronary flow reserve
measurement (coronary vessel or graft)
during coronary angiography including
pharmacologically induced stress, each
additional vessel).
The APC Panel further recommended
that CMS establish a threshold (for
example, a proportion of cases in which
the service is provided ancillary and
dependent to another service, rate of
change in utilization over time, and
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market penetration) when packaging
will be considered. The APC Panel also
recommended that CMS reconsider
packaging these codes after 2 years of
claims data are available from their
period of payment as a separate service.
(Recommendation 8)
9. CMS pay separately for radiation
therapy guidance for 2 years and then
reevaluate packaging on the basis of
claims data. The APC Panel further
recommended that CMS evaluate
possible models for threshold levels for
packaging radiation therapy guidance
and other new technologies.
(Recommendation 9)
10. The Packaging Subcommittee
continue its work. (Recommendation
10)
We address each of these
recommendations in turn in the
discussion that follows.
Recommendation 1 and
Recommendation 9
We indicated in the CY 2009 OPPS/
ASC proposed rule (73 FR 41454) that
we are adopting this APC Panel
recommendation for CY 2009 and as
requested, we provided data related to
radiation oncology guidance services to
the Data Subcommittee at the APC
Panel’s August 2008 meeting. The APC
Panel at its August 2008 meeting
recommended that CMS pay separately
for image-guidance for radiation therapy
(IGRT) for 2 years and then reevaluate
packaging on the basis of claims data.
The APC Panel further recommended
that CMS evaluate possible models for
threshold levels for packaging radiation
therapy guidance and other new
technologies.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41454), we proposed to
maintain the packaged status of
radiation oncology guidance services for
CY 2009. Specifically, we proposed to
continue to package payment for the
services reported with CPT codes 76950
(Ultrasonic guidance for placement of
radiation therapy fields); 76965
(Ultrasonic guidance for interstitial
radioelement application); 77014
(Computed tomography guidance for
placement of radiation therapy fields);
77417 (Therapeutic radiation port
film(s)); and 77421 (Stereoscopic X-ray
guidance for localization of target
volume for the delivery of radiation
therapy). These services are ancillary
and dependent in relation to the
radiation therapy services with which
they are most commonly furnished.
Consistent with the principles of a
prospective payment system, in some
cases payment in an individual case
exceeds the average cost, and in other
cases payment is less than the average
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cost, but on balance, payment should
approximate the relative cost of the
average case. While we noted that we
are aware that some of the radiation
oncology guidance codes describe
relatively new technologies, we do not
believe that beneficiary access to care
would be harmed by packaging payment
for radiation oncology guidance
services. We believe that packaging
creates incentives for hospitals and their
physician partners to work together to
establish appropriate protocols that will
eliminate unnecessary services where
they exist and institutionalize
approaches to providing necessary
services more efficiently. Therefore, we
saw no basis for treating radiation
oncology services differently from other
guidance services that are ancillary and
dependent to the procedures they
facilitate.
Comment: Several commenters asked
that CMS pay separately for IGRT
guidance that represent new guidance
technologies for at least the first 2 to 3
years of the use of the new service so
that diffusion of the new service is not
compromised by the absence of separate
payment for it and that CMS evaluate
possible models for threshold levels for
packaging radiation therapy guidance
and other new technologies. The
commenters objected to the continued
packaging of these services for CY 2009
on the basis that packaging creates
significant financial disincentives to the
use of these services which they
believed enhance the quality of care.
These commenters believed that
packaging will delay adoption of new
technologies by hospitals and that this
will hinder access to improved care for
Medicare beneficiaries. They suggested
that advances in radiation therapy
delivery are associated with higher
technical costs and more demanding,
time-consuming services that ensure the
safe delivery of high quality care. The
commenters asked that if CMS
continues to package these services, it
should closely monitor the impact of
packaging imaging guidance on the
quality of care furnished to Medicare
beneficiaries and to provide transparent
and meaningful data associated with the
packaging, which would allow
stakeholders to determine if payment for
imaging guidance technology is
reasonable and appropriate. Several
commenters raised concern that the
packaging policy for new guidance
technologies may make it more difficult
for new services to be approved for
payment under New Technology APCs
if CMS considers guidance to be
supportive and ancillary, rather than a
separately paid complete service.
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Response: From the perspective of the
Medicare program as a value-based
purchaser, we believe that packaged
payment causes hospitals to carefully
consider whether the purchase of or use
of a technology is appropriate in an
individual case, while separate payment
may create incentives to furnish services
regardless of whether they are the most
appropriate for an individual patient’s
particular needs. We also believe that
where new technologies are proven to
improve the quality of care, their
utilization will increase appropriately,
whether the payment for them is
packaged or not. Moreover, we note that
the history of technology development
shows that new technologies do not
necessarily result in the forecasted
improvements over existing
technologies. Often a period of some
years of broad use is necessary to
effectively assess whether the new
technology improves, harms, or yields
no improvement in patient health and
quality of life. Furthermore, we also do
not believe that hospitals would fail to
provide services to Medicare
beneficiaries while furnishing the same
services to other patients with the same
clinical needs, because to do so would
jeopardize the hospital’s continued
participation in Medicare. Specifically,
under § 489.53, CMS may terminate the
Medicare participation of a hospital that
places restrictions on the persons it will
accept for treatment and either fails to
exempt Medicare beneficiaries from
those restrictions or to apply them to
Medicare beneficiaries the same as to all
other persons seeking treatment. We
have already addressed the issue of
establishing a threshold for a
determination of whether to package a
service in our response to general
comments on packaging above in this
section.
We understand the concerns of the
commenters who noted that it may be
harder for new guidance services to
become eligible for assignment to a New
Technology APC. As we stated in the
CY 2008 OPPS/ASC final rule with
comment period (72 FR 66621), we
assess applications for New Technology
APC placement on a case-by-case basis.
The commenters are correct that, to
qualify for New Technology APC
placement, the service must be a
complete service, by which we mean a
comprehensive service that stands alone
as a meaningful diagnostic or
therapeutic service. To the extent that a
service for which New Technology APC
status is being requested is ancillary and
supportive of another service, for
example, a new intraoperative service or
a new guidance service, we might not
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consider it to be a complete service
because its value is as part of an
independent service. However, if the
entire, complete service, including the
guidance component of the service, for
example, is ‘‘truly new,’’ as we
explained that term at length in the
November 30, 2001 final rule (66 FR
59898) which sets forth the criteria for
eligibility for assignment of services to
New Technology APCs, we would
consider the new complete procedure
for New Technology APC assignment.
As stated in that November 30, 2001
final rule, by way of examples provided,
‘‘The use of a new expensive instrument
for tissue debridement or a new,
expensive wound dressing does not in
and of itself warrant creation of a new
HCPCS code to describe the instrument
or dressing; rather, the existing wound
repair code appropriately describes the
service that is being furnished * * *’’
(66 FR 59898). This example may be
applicable for some new guidance
technologies as well.
The OPPS pays for certain new
technology services through New
Technology APC assignment. One of the
criteria requires the new technology
service to be a complete service. If we
were to pay separately for new guidance
technologies, in many cases hospitals
would receive duplicate payment when
providing a comprehensive,
independent service, through payment
for the independent service that already
has guidance costs packaged into its
payment rate and the new guidance
service that was provided separate
payment. In addition, if we were to pay
separately for new guidance
technologies, we would create a
payment incentive to use one form of
guidance instead of another. Therefore,
by packaging payment for all forms of
guidance, we specifically encourage
hospitals to utilize the most cost
effective and clinically advantageous
method of guidance that is appropriate
in each situation by providing hospitals
with the maximum flexibility associated
with a single payment for the
independent procedure.
We further note that the OPPS pays
separately for new items through the
pass-through payment provisions for
drugs, biologicals, and device
categories. The criteria for a drug,
biological, or device category to be
eligible for pass-through payment status
are different than the criteria for a new
service to be eligible for assignment to
a New Technology APC. These criteria
and processes are listed on the CMS
Web site at: https://www.cms.hhs.gov/
HospitalOutpatientPPS/04_pass
through_payment.asp#TopOfPage. One
requirement for separate pass-through
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payment for implantable devices, which
are all packaged if they do not have
pass-through status, is that the applicant
for the pass-through device category
must demonstrate that use of the device
results in substantial clinical
improvement in the diagnosis or
treatment of a Medicare beneficiary in
comparison with currently available
tests or treatments. Thus, in some cases
we may not pay separately under the
pass-through provisions for some new
or modified implantable devices
because the evidence to support
substantial clinical improvement may
not be available early in the device’s
use. Instead, like new or modified
guidance or other nonimplantable
technologies that are not complete
services, the cost of the new or modified
device is incorporated into the OPPS
payment rates for the associated
procedures as the device is adopted into
medical practice and its utilization
increases, and OPPS payment rates
come to reflect hospital charges for the
new or modified device. In many cases,
the new or modified device may be
replacing a predecessor device whose
cost is already reflected in the OPPS
payments for the associated procedures.
As stated in the ‘‘Innovator’s Guide to
Navigating CMS,’’ posted on the CMS
Web site at https://www.cms.hhs.gov/
CouncilonTechInnov/Downloads/
InnovatorsGuide8_25_08.pdf , CMS
pays for many new technologies under
various payment systems, including the
OPPS, without requiring an explicit
payment decision by CMS.
Comment: Several commenters
objected to the packaging of IGRT
guidance because they believed that
there is a fundamental difference
between diagnostic imaging support
services, which they suggested may be
more easily correlated with specific
independent procedures, and
therapeutic imaging guidance services,
which they stated are used to enhance
the precise delivery of many different
radiation therapy procedures. They
believed that CMS should not package
IGRT guidance services because they
cannot be identified with a single
specific therapeutic service.
Response: We disagree that IGRT
guidance services are so fundamentally
different in function from other imaging
support services that the packaging
policy is inappropriately applied to
them. In both cases, the dependent
services are being furnished to support
a service that could be performed
independently of the image guidance
service, whether on the same day or
soon thereafter. Moreover, we do not
believe that diagnostic imaging support
services are necessarily more
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specifically linked to any one specific
diagnostic service than are the IGRT
guidance services, nor do we believe
that this is relevant in considering
whether the service can be
appropriately packaged. Therefore, we
do not believe that there is a
fundamental distinction between IGRT
and other guidance services that causes
packaging to be inappropriate for the
IGRT subset of these services.
Comment: A number of commenters
indicated that packaging for radiation
therapy guidance was particularly
inappropriate because the OPPS
payments for the separately paid
independent services were
simultaneously reduced. The
commenters explained that their review
of the CY 2007 claims data on which the
proposed CY 2009 OPPS payment rates
are based revealed that fewer than 10
percent of the billed lines for these
radiation therapy guidance codes were
used in setting the proposed CY 2009
OPPS payment rates. They also stated
that more than one-third of the billed
lines for IGRT guidance services were
being packaged into single claims for
services that are totally unrelated to
radiation oncology. These commenters
believed that this may occur in part as
a result of the inclusion of radiation
oncology services on the bypass list, but
that nevertheless, it is inequitable and
inappropriate to impose a packaging
policy for IGRT guidance that does not
package the costs of these services into
payment for the associated radiation
oncology services. Moreover, the
commenters feared that the problem of
packaged costs that were lost in
ratesetting would be exacerbated in the
future because hospitals would cease to
report the IGRT services they provide
because no separate payment would be
made. Without reporting of the HCPCS
codes, the commenter asserted, the costs
of IGRT guidance would not be
available to be packaged in ratesetting
for radiation oncology services.
Response: In response to the
commenters’ concerns with the data, we
examined our claims data and
determined that the inclusion on the
bypass list of certain radiation oncology
CPT codes, specifically 77261
(Therapeutic radiology treatment
planning, simple) through and
including 77799 (Unlisted procedure
clinical brachytherapy), may be
responsible for the loss or
misassignment of packaging for the
IGRT guidance codes. A number of
these codes had been historically
included on the bypass list based on
clinical evaluation and past public
comments although they failed to meet
the empirical criteria for inclusion on
the bypass list. Therefore, for CY 2009,
we are removing those radiation
oncology codes from the bypass list that
68575
do not meet the empirical criteria. We
discuss these changes to the bypass list
in section II.A.1.b. of this final rule with
public comment period.
As a result of these changes to the
bypass list, the median costs for APCs
0412 (IMRT Treatment Delivery) and
0304 (Level I Therapeutic Treatment
Preparation) increased by more than 9
percent compared to the median costs
used to calculate the proposed CY 2009
OPPS payment rates. Furthermore,
Table 10 below displays the historical
and final CY 2009 payment rates for the
common combination of intensity
modulated radiation therapy (IMRT)
described by CPT code 77418 (Intensity
modulated treatment delivery, single or
multiple fields/arcs, via narrow
spatially and temporally modulated
beams, binary, dynamic MLC, per
treatment session) and IGRT guidance
described by CPT code 77421
(Stereoscopic X-ray guidance for
localization of target volume for the
delivery of radiation therapy). Packaging
payment for IGRT guidance services
notably increases the payment rate for
IMRT. Specifically, the packaging of
IGRT guidance services results in an
approximately $50 increase to the CY
2009 median cost for APC 0412, the
APC that includes IMRT, as compared
to the APC’s median cost without
packaged IGRT guidance.
TABLE 10—HISTORICAL PAYMENT FOR RADIATION TREATMENT AND IGRT GUIDANCE SERVICES
CY 2006
Payment for Radiation Treatment—IMRT (CPT code 77418) ........................................................
Payment for IGRT Guidance (CPT Code 77421) ...........................................................................
Total Payment for IMRT & IGRT Guidance ....................................................................................
CY 2007
CY 2008
CY 2009
$319
75
394
$336
67
403
$348
N/A *
348
$411
N/A *
411
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* Packaged payment.
On the other hand, as a result of these
changes to the bypass list we were
unable to use nearly a million claims
that would otherwise have been used, in
whole or in part, to calculate median
costs for the radiation oncology APCs
and other APCs. Moreover, the median
costs for some of the radiation oncology
APCs declined, most notably the
brachytherapy source application APCs,
0651 (Complex interstitial radiation
source application); 0312 (Radioelement
applications); and 8001 (Low dose rate
prostate brachytherapy). As we discuss
in section II.A.1.b. of this final rule with
comment period, we are exploring
whether we can identify specific
radiation oncology codes that could
safely be added back into the bypass list
that would enable us to use more claims
data for these APCs without the effect of
loss or misassignment of packaging. We
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welcome comments on the specific
radiation oncology CPT codes that
would achieve this goal. However, for
CY 2009, we will base payments on the
median costs calculated from the
smaller number of single bills for the
brachytherapy source application APCs
that result from the removal of radiation
oncology codes that do not meet the
empirical bypass list criteria from the
bypass list because we want to ensure
that all costs of IGRT guidance services
are packaged appropriately for CY 2009
ratesetting.
We strongly encourage hospitals to
report a charge for each packaged
service they furnish, either by billing
the packaged HCPCS code and a charge
for that service if separate reporting is
consistent with CPT and CMS
instructions, by increasing the charge
for the separately paid associated
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service to include the charge for the
packaged service, or by reporting the
charge for the packaged service with an
appropriate revenue code but without a
HCPCS code. Any of these means of
charging for the packaged service will
result in the costs of the packaged
service being incorporated into the cost
we estimate for the separately paid
service. We believe that hospitals will
continue to charge for these packaged
services, individually or as part of the
charge for the independent service,
because hospitals must charge all payers
the same amount for services they
furnish to patients and because some
other payers pay a percentage of
charges. To fail to charge for the
packaged service would result in
immediately reduced payment from
sources other than Medicare, and over
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time, could also lead to a reduction in
payment under the OPPS.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to package payment for all
IGRT guidance services into payment
for the separately paid independent
services to which they are ancillary and
supportive. We will base all final CY
2009 payments on claims data derived
with the use of a bypass list that has
been revised to remove the radiation
oncology services that do not meet the
empirical criteria. We are not adopting
the APC Panel recommendation to pay
separately for radiation therapy
guidance for CY 2009. We will consider
the issue of a threshold for packaging,
as recommended by the APC Panel, in
the future, balancing the concerns over
access to high quality medical care with
the goal of continuing to encourage
efficient use of hospital resources.
Recommendation 2
We indicated in the CY 2009 OPPS/
ASC proposed rule (73 FR 41454) that
we are adopting this APC Panel
recommendation. For CY 2009, we
proposed to treat CPT code 36592
(Collection of blood specimen using
established central or peripheral
catheter, venous, not otherwise
specified) as an ‘‘STVX-packaged code’’
and assign it to APC 0624 (Phlebotomy
and Minor Vascular Access Device
Procedures), the same APC to which we
proposed to assign CPT code 36591
(Collection of blood specimen from a
completely implantable venous access
device). CPT code 36591 became
effective January 1, 2008, and was
assigned interim status indicator ‘‘Q,’’
with treatment as an ‘‘STVX-packaged
code’’ and assignment to APC 0624. CPT
code 36591 was a direct replacement for
CPT code 36540, which was deleted
effective January 1, 2008, but was an
‘‘STVX-packaged code’’ with
assignment to APC 0624 for CY 2007.
CPT code 36592 became effective
January 1, 2008, and was assigned
interim status indicator ‘‘N’’ in the CY
2008 OPPS/ASC final rule with
comment period.
In summary, for CY 2009, we
proposed to change the packaged status
of CPT code 36592 from
unconditionally packaged to
conditionally packaged, as an ‘‘STVXpackaged code,’’ which was parallel to
the proposed treatment of CPT code
36591. This service would be paid
separately when it is provided in an
encounter without a service assigned
status indicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X.’’
In all other circumstances, its payment
would be packaged. As noted above in
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section II.A.4.a. of this final rule with
comment period, for CY 2009, we
proposed to further refine our
identification of the different types of
conditionally packaged HCPCS codes
that were previously all assigned status
indicator ‘‘Q’’ (Packaged Services
Subject to Separate Payment under
OPPS Payment Criteria) under the
OPPS. Therefore, we proposed to assign
status indicator ‘‘Q1’’ to CPT code
36592 for CY 2009, which indicates that
it is an ‘‘STVX-packaged code.’’ We
refer readers to section XIII.A.1. of this
final rule with comment period for a
complete discussion of status indicators
and our status indicator changes for CY
2009.
Comment: One commenter requested
that CMS change the status of CPT code
36592 from unconditionally to
conditionally packaged, treating it like
CPT code 36591. The commenter stated
that the resource costs associated with
drawing blood from an established
central or peripheral catheter were
almost identical to the resources
associated with drawing blood from an
implanted venous access device. Several
other commenters noted that they
supported the proposal to assign status
indicator ‘‘Q1’’ to CPT code 36592 for
CY 2009.
Response: We appreciate the
commenters’ support. We agree that the
resource costs associated with CPT code
36592 may be similar to the resource
costs associated with CPT code 36591.
When CY 2008 cost data for CPT code
36592 are available for the CY 2010
OPPS annual update, we will reevaluate
whether assignment to APC 0624
continues to be appropriate.
Comment: One commenter asked
whether hospitals must follow the
parenthetical CPT guidance listed
immediately following the code
descriptor that states that CPT code
36592 may not be reported with any
other service. The commenter asked
why CMS proposed to change the status
of this code from unconditionally
packaged to conditionally packaged if
the code descriptor states that this code
would never be provided with another
service. The commenter contended that
there does not appear to be any reason
to treat this code as conditionally
packaged.
Response: Hospitals must follow the
coding guidance provided by CPT. We
are not recommending that hospitals
report CPT code 36592 every time it is
performed, even if provided at the same
time as another procedure or visit. Our
proposed payment policy would ensure
that, if CPT code 36592 was reported
with other services paid under the
OPPS, hospitals would not receive
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separate payment. Therefore, our
payment proposal to conditionally
package CPT code 36592 is consistent
with the reporting guidance provided by
CPT.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, and adopting the APC
Panel’s recommendation to
conditionally package CPT code 36592
as an ‘‘STVX-packaged code’’ for CY
2009. This CPT code will be paid
separately through APC 0624 when
criteria for packaged payment are not
met. As noted in the CY 2009 OPPS/
ASC proposed rule (73 FR 41454), we
expect hospitals to follow the CPT
guidance related to CPT codes 36591
and 36592 regarding when these
services should be appropriately
reported.
Recommendation 3
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41455), we indicated that we
are adopting this APC Panel
recommendation. For CY 2009, we
proposed to maintain the packaged
status of HCPCS code A4306
(Disposable drug delivery system, flow
rate of less than 50 mL per hour).
HCPCS code A4306 describes a
disposable drug delivery system with a
flow rate of less than 50 mL per hour.
Beginning in CY 2007, HCPCS code
A4306 is payable under the OPPS with
status indicator ‘‘N,’’ indicating that its
payment is unconditionally packaged.
We packaged this code because it is
considered a supply, and under the
OPPS it is standard to package payment
for all supplies, including implantable
and nonimplantable supplies, into
payment for the procedures in which
the supplies are used. We first discussed
this code with the APC Panel in March
2007. During the APC Panel’s March
2007 meeting, a manufacturer noted in
a presentation that a particular
disposable drug delivery system
reported with HCPCS code A4306 is
specifically used to treat postoperative
pain. The manufacturer requested that
this code be moved to its own APC for
CY 2008 in order for the service to
receive separate payment. During its
September 2007 meeting, the APC Panel
recommended that CPT code A4306
remain packaged for CY 2008 and asked
CMS to present additional data
regarding this code to the APC Panel
when available.
During the APC Panel’s March 2008
meeting, we provided to the Packaging
Subcommittee additional cost data
related to this code. Our CY 2007
proposed rule claims data indicate that
HCPCS code A4306 was billed on OPPS
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claims approximately 2,400 times,
yielding a line-item median cost of
approximately $4. The individual costs
for this supply range from $4 per unit
to $2,056 per unit. The Packaging
Subcommittee suggested that this code
may not always be correctly reported by
hospitals as the data also show that this
code was frequently billed together with
computed tomography (CT) scans of
various regions of the body, without
surgical procedures on the same date of
service. The APC Panel speculated that
this code may be currently reported
when other types of drug delivery
devices are utilized for nonsurgical
procedures or for purposes other than
the treatment of postoperative pain. It
was also noted that hospitals may
actually be appropriately reporting
HCPCS code A4306, which may be used
to describe supplies used for purposes
other than postoperative pain relief.
In summary, because HCPCS code
A4306 represents a supply and payment
of supplies is packaged under the OPPS
according to longstanding policy, we
proposed to maintain the
unconditionally packaged status of
HCPCS code A4306 for CY 2009.
Comment: One commenter believed
that hospitals are misreporting CPT
code A4306, leading to inaccurate cost
estimates and payment rates. The
commenter asked CMS to clarify that
this supply code is for single use
infusion pump devices used for
chemotherapy, not syringes for
chemotherapy or pain drugs. The
commenter also asked CMS to clarify
that hospitals should not report HCPCS
code A4306 for syringes prefilled with
sodium chloride or other material.
Response: In general, it is not our
practice to provide specific coding
guidance regarding permanent Level II
HCPCS codes, such as HCPCS code
A4306. As noted in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66669), we encourage interested
parties to submit any questions or
requests for clarification of the HCPCS
codes to the AHA coding clinic.
After consideration of the public
comment received, we are finalizing our
CY 2009 proposal, without
modification, and adopting the APC
Panel recommendation to maintain the
unconditionally packaged status of
HCPCS code A4306.
Recommendation 4
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41455), we indicated that we
are adopting this APC Panel
recommendation. For CY 2009, we
proposed to treat CPT code 74305
(Cholangiography and/or
pancreatography; through existing
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catheter, radiological supervision and
interpretation) as a ‘‘T-packaged code’’
and assign it to APC 0263 (Level I
Miscellaneous Radiology Procedures).
Effective January 1, 2008, CPT code
74305 is unconditionally packaged and
falls into the imaging supervision and
interpretation category of codes that we
created as part of the CY 2008 packaging
approach. Several members of the
public recently noted that CPT code
74305 may sometimes be provided in a
single hospital encounter with CPT code
47505 (Injection procedure for
cholangiography through an existing
catheter (e.g., percutaneous transepatic
or T-tube)), which is unconditionally
packaged itself, when these are the only
two services reported on a claim. In the
case where only these two services were
performed, the hospital would receive
no separate payment. Our claims data
indicate that CPT code 74305 is
infrequently provided without any other
separately payable services on the same
date of service.
Therefore, for CY 2009, we proposed
to change the packaged status of CPT
code 74305 from unconditionally
packaged to conditionally packaged, as
a ‘‘T-packaged code,’’ which is parallel
to the treatment of many other
conditionally packaged imaging
supervision and interpretation codes.
Hospitals would receive separate
payment for this service when it appears
on a claim without a surgical procedure.
The payment for this service would be
packaged into payment for a status
indicator ‘‘T’’ surgical procedure when
it appears on the same date as a surgical
procedure. Hospitals that furnish this
imaging supervision and interpretation
service on the same date as an
independent surgical procedure
assigned status indicator ‘‘T’’ must bill
both services on the same claim.
As noted above in section II.A.4.a. of
this final rule with comment period, for
CY 2009, we proposed to further refine
our identification of the different types
of conditionally packaged HCPCS codes
that were previously all assigned status
indicator ‘‘Q’’ (Packaged Services
Subject to Separate Payment under
OPPS Payment Criteria) under the
OPPS. Therefore, we proposed to assign
status indicator ‘‘Q2’’ to CPT code
74305 for CY 2009, which indicates that
it is a ‘‘T-packaged code.’’ We refer
readers to section XIII.A.1. of this final
rule with comment period for a
complete discussion of status indicators
and our status indicator changes for CY
2009.
In summary, for CY 2009, we
proposed to change the status indicator
for CPT code 74305 from ‘‘N’’ to ‘‘Q2,’’
with assignment to APC 0263 (Level I
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Miscellaneous Radiology Procedures)
when it would be paid separately.
Comment: Several commenters
supported the CY 2009 proposal to
change the status indicator for CPT code
74305 from ‘‘N’’ to ‘‘Q2,’’ with
assignment to APC 0263 when it would
be paid separately. One commenter
requested that CMS change the status
indicator of this code retroactive to
January 1, 2008, when this code became
unconditionally packaged.
Response: We are pleased that
commenters supported this proposal.
We established the final
unconditionally packaged status of CPT
code 74305 for CY 2008 through the CY
2008 OPPS/ASC rulemaking cycle. We
note that we proposed to
unconditionally package CPT code
74305 in the CY 2008 OPPS/ASC
proposed rule and we did not receive
any public comments opposing this
proposal. Therefore, we finalized our
policy to unconditionally package CPT
code 74305 for CY 2008.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, and adopting the APC
Panel recommendation to conditionally
package CPT code 74305 as a ‘‘Tpackaged code’’ for CY 2009, with
payment through APC 0263 when the
criteria for packaged payment are not
met.
Recommendation 5 and
Recommendation 8
For CY 2009, we proposed to
maintain the packaged status of CPT
codes 37250 (Intravascular ultrasound
(non-coronary vessel) during diagnostic
evaluation and/or therapeutic
intervention; initial vessel); 37251
(Intravascular ultrasound (non-coronary
vessel) during diagnostic evaluation
and/or therapeutic intervention; each
additional vessel); 92978 (Intravascular
ultrasound (coronary vessel or graft)
during diagnostic evaluation and/or
therapeutic intervention including
imaging supervision, interpretation and
report; initial vessel); 92979
(Intravascular ultrasound (coronary
vessel or graft) during diagnostic
evaluation and/or therapeutic
intervention including imaging
supervision, interpretation and report;
each additional vessel); and 93662
(Intracardiac echocardiography during
therapeutic/diagnostic intervention,
including imaging supervision and
interpretation). Our CY 2009 proposal
indicated that we are not adopting the
APC Panel’s recommendation to pay
separately for these intraoperative
intravascular ultrasound (IVUS) and
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intracardiac echocardiography (ICE)
services for CY 2009.
These services were newly packaged
for CY 2008 because they were members
of the intraoperative category of services
that were included in the CY 2008
packaging approach. The intraoperative
category includes those codes that are
reported for supportive dependent
diagnostic testing or other minor
procedures performed during surgical or
other independent procedures. Because
these intraoperative IVUS and ICE
services support the performance of an
independent procedure and are
provided in the same operative session
as the independent procedure, we
packaged their payment into the OPPS
payment for the independent procedure
performed in CY 2008. We believe these
IVUS and ICE services are always
integral to and dependent upon the
independent services that they support
and, therefore, we believe their payment
would be appropriately packaged into
the independent procedure.
A presenter at the March 2008 APC
Panel meeting requested separate
payment for these services, noting that
they are high cost and provided with
relatively low frequency compared to
the services they typically accompany.
We continue to believe that these
services are ancillary and dependent in
relation to the independent cardiac and
vascular procedures with which they
are most commonly furnished. We note
that resource cost was not a factor we
considered when deciding to package
intraoperative services. Packaging
payment for items and services that are
directly related to performing a
procedure, even when those packaged
items and services have variable
resource costs or different frequencies of
use in relationship to one another or to
the independent services into which
their payment is packaged, has been a
principle of the OPPS since the
inception of that payment system. For
example, once an implantable device is
no longer eligible for device passthrough payment, our standard policy is
to package the payment for the device
into the payment for the procedures
with which the device was reported.
These former pass-through devices may
be high or low cost in relationship to the
other costs of the associated surgical
procedures, or the devices may be
implanted in a large or small proportion
of those surgical procedures, but the
device payment is nevertheless
packaged. We do not believe that the
fact that a procedure may be performed
with assorted technologies of varying
resource costs is a sufficient reason to
pay separately for a particular
technology that is clearly ancillary and
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dependent in relationship to
independent associated procedures. We
acknowledged in the CY 2009 OPPS/
ASC proposed rule that the costs
associated with packaged services may
contribute more or less to the median
cost of the independent service,
depending on how often the dependent
service is billed with the independent
service (73 FR 41456). Consistent with
the principles of a prospective payment
system, in some cases payment in an
individual case exceeds the average
cost, and in other cases payment is less
than the average cost, but on balance,
payment should approximate the
relative cost of the average case. While
we understand that these services
represent technologies that are not
commonly used in most hospitals, we
do not believe that beneficiary access to
care would be harmed by packaging
payment for IVUS and ICE services. We
noted that IVUS and ICE services are
existing, established technologies and
that hospitals have provided some of
these services in the HOPD since the
implementation of the OPPS in CY
2000. We believe that packaging will
create incentives for hospitals and their
physician partners to work together to
establish appropriate protocols that will
eliminate unnecessary services where
they exist and institutionalize
approaches to providing necessary
services more efficiently. Therefore, in
the CY 2009 OPPS/ASC proposed rule
(73 FR 41456), we indicated that we saw
no basis for treating IVUS and ICE
services differently from other
intraoperative services that are ancillary
and dependent to the procedure they
facilitate.
In summary, we proposed to maintain
the unconditionally packaged status of
CPT codes 37250, 37251, 92978, 92979,
and 93662 for CY 2009.
As noted above in this section, during
its August 2008 meeting, the APC Panel
discussed these services and
recommended that CMS pay separately
for CPT codes 37250, 37251, 92978,
92979, 93662, as well as 93571
(Intravascular Doppler velocity and/or
pressure derived coronary flow reserve
measurement (coronary vessel or graft)
during coronary angiography including
pharmacologically induced stress,
initial vessel); and 93572 (Intravascular
Doppler velocity and/or pressure
derived coronary flow reserve
measurement (coronary vessel or graft)
during coronary angiography including
pharmacologically induced stress, each
additional vessel).
In addition, the APC Panel further
recommended that CMS establish a
threshold (for example, a proportion of
cases in which the service is provided
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ancillary and dependent to another
service, rate of change in utilization
over time, and market penetration)
when packaging will be considered. The
APC Panel also recommended that CMS
reconsider packaging these codes after it
has 2 years of claims data available from
their period of payment as a separate
service.
Comment: Many commenters were
disappointed that CMS did not propose
to provide separate payment for CPT
codes 37250, 37251, 92978, 92979, and
93662 for CY 2009, in accordance with
the March 2008 APC Panel
recommendation, and requested that
CMS adopt the APC Panel’s August
2008 recommendation to pay separately
for these services (and CPT codes 93571
and 93572) for CYs 2009 and 2010.
These commenters believed that
separate payment for 2 years would
allow CMS to accurately capture cost
data. Other commenters clarified that
services should only be eligible for
packaging if they have been separately
payable for 2 years, thereby enabling
CMS to capture complete cost data. The
commenters indicated that payment for
the independent procedures provided in
conjunction with IVUS are not sufficient
to cover the incremental cost of
providing IVUS. The commenters also
were concerned that packaging these
technologies creates a strong
disincentive for hospitals to use these
important technologies. Other
commenters requested that CMS
develop a composite APC whose
payment criteria would be met when
IVUS, ICE, or FFR are provided.
The commenters estimated the IVUS
and ICE are utilized in less than 10
percent of Medicare beneficiaries
undergoing a diagnostic cardiac
catheterization procedure, or other
related procedures, which results in
their costs having little or no impact on
the payment for the independent
procedure. Furthermore, many
commenters emphasized that limited
access to these technologies would
result in greater utilization of
interventional procedures that could
have been avoided had these
interventions been used. One
commenter disputed describing FFR
services as ‘‘ancillary’’ and stated that
they are ‘‘decisional’’ and, therefore,
should not be packaged, or should
become conditionally packaged. Several
commenters were concerned that
packaged payment would create a
significant financial disincentive to
provide these services. The commenters
also noted that these procedures should
not be described as ‘‘intraoperative’’
because they precede the independent
procedure, and may even result in
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canceling the independent procedure.
One commenter acknowledged the
reference in the CY 2009 OPPS/ASC
proposed rule (73 FR 41555 to 41556)
that CMS does not believe that
beneficiary access would be harmed, but
asked CMS to provide support for this
assumption. Another commenter
indicated that even with separate
payment in the past, only a small
number of hospitals purchased this
technology. Therefore, the commenter
was concerned that with packaged
payment, access to this technology
would be even more severely limited.
Many commenters developed and
shared criteria and/or principles that
they suggested should dictate whether
an item or service is eligible for
packaged payment, both for determining
the packaged status of IVUS, ICE, and
FFR, as well as other services.
Response: We appreciate the many
detailed comments related to the
packaged status of IVUS, FFR, and ICE
services. We acknowledge that the costs
associated with packaged services may
contribute more or less to the median
cost of the independent service,
depending on how often the dependent
service is billed with the independent
service. It is our goal to adhere to the
principles inherent in a prospective
payment system and to encourage
hospitals to utilize resources in a costeffective manner. In this case, hospitals
may choose whether to utilize IVUS,
FFR, and ICE services, balancing the
needs of the patient with the costs
associated with the services.
We note that IVUS, ICE, and FFR
services had been separately payable
under the OPPS prior to CY 2008, and
hospitals were paid separately each time
they provided IVUS, ICE, or FFR
services. In addition, according to
several manufacturers, these
technologies are not new and have been
widely available for at least the past 5
to 10 years. In fact, every one of the CPT
codes describing IVUS and ICE services
(CPT codes 37250, 37251, 92978, 92979,
and 93662) has been separately payable
under the OPPS since CY 2001, or
earlier. FFR services (CPT code 93571
and 93572) have been separately
payable since CY 2005.
In general, we believe that hospitals
adopt technologies when it is clinically
advantageous and financially feasible to
do so. The fact that these technologies
have not been provided by a larger
number of hospitals prior to CY 2008 is,
therefore, not a function of separate
versus packaged Medicare hospital
outpatient payment. We do not believe
that packaged payment is harming
access to these technologies that have
been separately paid for many years.
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Similarly, we do not believe that
another 2 years of separate payment is
necessary to increase Medicare
beneficiaries’ access to these services.
We also do not agree that beneficiary
access to care will be harmed by
packaging payment for these services.
We believe that packaging will create
incentives for hospitals and their
physician partners to work together to
establish appropriate protocols that will
eliminate unnecessary services where
they exist and will institutionalize
approaches to providing necessary
services more efficiently. Where this
review results in the reductions in
services that are only marginally
beneficial, we believe that this could
improve rather than harm the quality of
care for beneficiaries because every
service furnished in a hospital carries
some level of risk to the patient.
Similarly, where this review results in
the concentration of some services in a
reduced number of hospitals in the
community, we believe that the quality
of care and hospital efficiency may both
be enhanced as a result. The medical
literature shows that concentration of
services in certain hospitals often
results in both greater efficiency and
higher quality of care for patients.
We continue to believe that IVUS,
FFR, and ICE are dependent services
that are always provided in association
with independent services. Those
independent services may be diagnostic
and/or therapeutic or interventional.
This is different than stating that every
angioplasty or other related
independent procedure utilizes IVUS,
FFR, or ICE. In fact, all of the codes
about which we received public
comments are listed as add-on codes in
the CY 2007 CPT book. While we agree
that some of these services may
contribute to decisionmaking regarding
a potential therapeutic procedure, we
still believe that these services are never
provided without another independent
service that is separately paid under the
OPPS also performed on the same day.
Therefore, we do not believe it would be
appropriate to conditionally package
CPT codes 93571 and 93572, or any of
the other IVUS or ICE services.
We have responded to public
comments related to general packaging
criteria, thresholds, and/or principles
earlier in this section. After
consideration of the public comments
received, we are finalizing our CY 2009
proposal, without modification, to
unconditionally packaged payment for
IVUS, ICE, and FFR services for CY
2009. We are not adopting the APC
Panel recommendation to pay separately
for these services. We will discuss these
services with the APC Panel at its first
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2009 meeting, in addition to reviewing
CY 2008 claims data with the APC Panel
to assess any changes in utilization
patterns of the packaged services as
previously recommended by the APC
Panel.
Recommendation 6
We indicated in the CY 2009 OPPS/
ASC proposed rule (73 FR 41456) that
we are adopting this APC Panel
recommendation. For CY 2009, we
proposed to maintain the packaged
status of diagnostic
radiopharmaceuticals. This
recommendation is discussed in detail
in section V.B.2.b. of this final rule with
comment period.
Recommendation 7 and
Recommendation 10
In response to the APC Panel’s
recommendation for the Packaging
Subcommittee to remain active until the
next APC Panel meeting, we note that
the APC Panel Packaging Subcommittee
remains active, and additional issues
and new data concerning the packaging
status of codes will be shared for its
consideration as information becomes
available. We continue to encourage
submission of common clinical
scenarios involving currently packaged
HCPCS codes to the Packaging
Subcommittee for its ongoing review,
and we also encourage
recommendations of specific services or
procedures whose payment would be
most appropriately packaged under the
OPPS. Additional detailed suggestions
for the Packaging Subcommittee should
be submitted by e-mail to
APCPanel@cms.hhs.gov with Packaging
Subcommittee in the subject line.
Comment: Several commenters
supported the recommendation that the
Packaging Subcommittee continue,
noting that they rely on the
Subcommittee to thoroughly review
data and carefully deliberate regarding
the proper packaged status of various
services.
Response: We are pleased that
commenters support the work of the
Packaging Subcommittee. The
Packaging Subcommittee will continue
to remain active.
(2) IVIG Preadministration-Related
Services
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41456 and 41457), we
proposed to package payment for
HCPCS code G0332 (Services for
intravenous infusion of
immunoglobulin prior to administration
(this service is to be billed in
conjunction with administration of
immunoglobulin)) for CY 2009. Immune
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globulin is a complicated biological
product that is purified from human
plasma obtained from human plasma
donors. In past years, there have been
issues reported with the supply of
intravenous immune globulin (IVIG)
due to numerous factors, including
decreased manufacturing capacity,
increased usage, more sophisticated
processing steps, and low demand for
byproducts from IVIG fractionation.
Under the OPPS, the current CY 2008
payment methodology for IVIG
treatments consists of three
components, which include payment for
the drug itself (described by a HCPCS Jcode), administration of the IVIG
product (described by one or more CPT
codes), and the preadministrationrelated services (HCPCS code G0332).
The CY 2009 OPPS payment rates for
IVIG products are established based on
the Part B ASP drug methodology, as
discussed further in section V.B.3. of
this final rule with comment period.
Under the OPPS, payment is made
separately for the administration of IVIG
and those services are reported using
the CPT code for the first hour and, as
needed, additional hour CPT infusion
codes. The CY 2009 OPPS payments for
drug administration services are
discussed in section VIII.B. of this final
rule with comment period.
As explained in detail in the CY 2006
OPPS, CY 2007 OPPS/ASC, and CY
2008 OPPS/ASC final rules with
comment period (70 FR 68648 to 68650,
71 FR 68092 to 68093, and 72 FR 66697
to 66698, respectively), we temporarily
paid separately for the IVIG
preadministration-related services in
CYs 2006, 2007, and 2008 in order to
assist in ensuring appropriate access to
IVIG during a period of market
instability due, in part, to the
implementation of the new ASP
payment methodology for IVIG drugs.
The preadministration-related payment
was designed to pay the hospital for the
added costs of obtaining the IVIG and
scheduling the patient infusion during a
period of market uncertainty. Under the
CYs 2006 and 2007 OPPS, HCPCS code
G0332 was assigned to New Technology
APC 1502 (New Technology—Level II
($50–$100)), with a payment rate of $75.
For CY 2008, HCPCS code G0332 was
reassigned to APC 0430 (Drug
Preadministration-Related Services),
with a payment rate of approximately
$38 set prospectively based on robust
CY 2006 claims data for this code. In
addition, a separate payment for HCPCS
code G0332 has been made under the
MPFS during the same time period, CY
2006 to CY 2008.
We specifically indicated in the CY
2008 OPPS/ASC final rule with
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comment period (72 FR 66697 through
66698) that we would consider
packaging payment for HCPCS code
G0332 in future years and that we
intended to reevaluate the
appropriateness of separate payment for
IVIG preadministration-related services
for the CY 2009 OPPS rulemaking cycle,
especially as we explore the potential
for greater packaging under the OPPS. In
the CY 2009 OPPS/ASC proposed rule
(73 FR 41457), we noted that the Office
of the Inspector General’s (OIG’s) study
on the availability and pricing of IVIG
published in a report in April 2007
entitled, ‘‘Intravenous Immune
Globulin: Medicare Payment and
Availability (OEI–03–05–00404),’’ found
that for the third quarter of CY 2006,
just over half of the IVIG sales to
hospitals and physicians were at prices
below Medicare payment amounts.
Relative to the previous three quarters,
this represented a substantial increase
in the percentage of sales with prices
below Medicare amounts. During the
third quarter of CY 2006, 56 percent of
IVIG sales to hospitals and over 59
percent of IVIG sales to physicians by
the three largest distributors occurred at
prices below the Medicare payment
amounts. We reviewed national CY
2006 and CY 2007 claims data for IVIG
drug utilization, as well as utilization of
the preadministration-related services
HCPCS code. These data show modest
increases in the utilization of IVIG drugs
and the preadministration-related
services code, which suggest that IVIG
pricing and access may be improving.
IVIG preadministration-related
services are dependent services that are
always provided in conjunction with
other separately payable services, such
as drug administration services, and
thus are well suited for packaging into
the payment for the separately payable
services that they usually accompany.
Therefore, consistent with our OPPS
payment policy for the facility resources
expended to prepare for the
administration of all other drugs and
biologicals under the OPPS, we believe
that payment for the hospital resources
required to locate and obtain the
appropriate IVIG products and to
schedule patients’ infusions should be
made through the OPPS payment for the
associated drug administration services.
Furthermore, the cost data that we
gathered for the services described by
HCPCS code G0332 since CY 2006,
including the line-item median cost for
the code of approximately $37 from CY
2007 claims data, indicated that the cost
of the services is relatively low.
Therefore, because HCPCS code G0332
meets our historical criteria for
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packaged payment, because we paid
separately for these services on a
temporary basis only, and because we
believe that the reported transient
market conditions that led us to adopt
the separate payment for IVIG
preadministration-related services have
improved, we indicated in the CY 2009
OPPS/ASC proposed rule our belief that
packaged payment is more appropriate
for the CY 2009 OPPS, consistent with
our ongoing efforts to expand the size of
the OPPS payment bundles (73 FR
41457). Therefore, we proposed to
assign status indicator ‘‘N’’ to HCPCS
code G0332 for CY 2009.
For CY 2009, under the MPFS, a
proposal was made to discontinue
payment for HCPCS code G0332 for CY
2009 (73 FR 38518).
Comment: Most commenters opposed
the elimination of the
preadministration-related payment in
CY 2009. A few commenters requested
that the preadministration services
payment become permanent for both the
OPPS and the MPFS. Some commenters
stated that the market conditions for
IVIG are not fundamentally different
than they were when CMS initially
instituted the preadministration services
payment in CY 2006. The commenters
requested that CMS continue the
separate payment until there is more
stability in the IVIG market. Several
commenters stated that the information
CMS presented in the CY 2009 OPPS/
ASC proposed rule did not conclusively
prove that the IVIG market was
stabilizing. They alleged that significant
access problems remain.
In response to the findings of the OIG
report, some commenters stated that the
lag inherent to the ASP pricing system
may have played a role in substantially
increasing the percentage of IVIG sales
at prices below the Medicare payment
amounts in the third quarter of 2006.
The preadministration-related services
payment was cited as providing some
assistance to physicians and hospitals
who are experiencing problems
obtaining IVIG. Several commenters
noted that the OIG report could be
interpreted as leaving a large percentage
of hospitals and physicians unable to
acquire IVIG at prices below Medicare’s
payment amounts. Many commenters
stated that they did not believe the
introduction of new brand-specific
reporting codes for IVIG would result in
a more stable marketplace.
One commenter presented patient
surveys conducted in CYs 2006, 2007,
and 2008 which described access
limitations and shifts in the site of
service. These surveys were limited in
size and surveyed only patients
receiving IVIG for primary immune
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deficiency. Another commenter referred
to a report on IVIG issued in February
2007 entitled, Analysis of Supply,
Distribution, Demand and Access Issues
Associated with Immune Globulin
Intravenous, prepared by the Eastern
Research Group under contract
(Contract No. HHSP23320045012XI) to
the Assistant Secretary of Planning and
Evaluation in HHS, and cited this report
as an important source of information
on IVIG usage and patient access.
Response: The separate payment for
IVIG preadministration-related services
was designed to pay the hospital for the
additional, unusual, and temporary
costs associated with obtaining IVIG
products and scheduling patient
infusions during a temporary period of
market instability. This payment was
never intended to subsidize the OPPS
payment for drugs made under the ASP
methodology.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41457), we referred to data
from the OIG study that indicated that
for the third quarter of 2006, just over
half of IVIG sales to hospitals and
physicians were at prices below
Medicare payment amounts. Relative to
the previous three quarters, this
represented a substantial increase of the
percentage of sales with prices below
Medicare amounts. We agree with the
commenters that it is likely that the
increased ASP payments were the result
of previous price increases from past
quarters influencing future ASP data.
Furthermore, we believe that the new
HCPCS codes for IVIG products allow
the hospital to report and receive
payment for the specific product
furnished to the patient.
We stated clearly in the CY 2006
OPPS final rule with comment period
(70 FR 68649 through 68650) that the
preadministration-related services
payment policy was a temporary
measure to pay hospitals for the unusual
and temporary costs associated with
procuring IVIG. We expected that these
costs would decline over time as
hospitals became more familiar with the
nuances of the IVIG market and the
availability of the limited primary and
secondary suppliers in their areas.
We did not reference the report
conducted by the Eastern Research
Group (Contract No.
HHSP23320045012XI) in the CY 2009
OPPS/ASC proposed rule. As the
commenter noted, this report provides
important comprehensive background
on the IVIG marketplace, such as an
analysis of the IVIG supply and
distribution, and an analysis of the
demand for and utilization of IVIG
products, including how they are
administered and paid, as well as
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information from the industry and
others on physician and patient
problems with access to IVIG. The study
is a collection of multisource
information and provides an
understanding of the IVIG marketplace.
One limitation of the study is that it
depicts the market only up through the
first quarter of CY 2006 and it does not
include detailed information on IVIG
pricing as was provided in the OIG
report. The OIG report also contains
data from a later time period because it
includes data through the third quarter
of CY 2006.
We note, based on the information
that follows, that the IVIG market today
appears more stable than it was in CY
2006. We have reviewed national CY
2006 and CY 2007 claims data for IVIG
drug utilization, as well as the
utilization of the preadministrationrelated services HCPCS code. These data
show a modest increase in the
utilization of IVIG and the
preadministration-related services code
in both physicians’ offices and HOPDs
from CY 2006 to CY 2007, after a period
of decreased IVIG utilization in
physicians’ offices with a shift of IVIG
infusions to the HOPD in the previous
year, which suggest that IVIG pricing
and access may be improving.
There were about 3.1 million units of
IVIG administered in physicians’ offices
in CY 2006, and 7.3 million units in
HOPDs. In CY 2007, those numbers rose
to estimates of 3.3 million units and 8.1
million units in the physician’s office
and HOPD settings, respectively. Under
the OPPS, the total number of days of
IVIG increased modestly from CY 2006
to CY 2007, from 113,000 to 119,000.
Aggregate allowed IVIG charges in the
physician’s office setting for CY 2006
were $82 million, while total payments
(including beneficiary coinsurance)
under the OPPS were $184 million for
the same time period. In CY 2007,
aggregate allowed charges in the
physician’s office setting are estimated
at $98 million, while total OPPS
payments are estimated at $246 million.
In summary, beginning in CY 2007,
IVIG utilization increased modestly in
both the physician’s office setting and
the HOPD, after a prior shift to the
hospital and away from the physicians’
offices, presumably reflecting increasing
availability of IVIG and appropriate
payment for the drug in both settings.
According to information on the
Plasma Protein Therapeutics
Association (PPTA) Web site regarding
the supply of IVIG, in the past year,
while the supply has spiked at various
times throughout the year, the supply
has remained above or near the 12month moving average. While we
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acknowledge that the supply is only one
of several factors that influence the
market, we believe that an adequate
supply is one significant factor that
contributes to better access to IVIG for
patients.
Therefore, because HCPCS code
G0332 meets our historical criteria for
packaged payment under the OPPS,
because we paid separately for these
services on a temporary basis only for 3
years, and because we believe that the
reported transient market conditions
that led us to adopt the separate
payment for IVIG preadministrationrelated services have improved, we
believe that packaged payment is more
appropriate for the CY 2009 OPPS,
consistent with our ongoing efforts to
expand the size of the OPPS payment
bundles.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to package payment for
IVIG preadministration-related services
described by HCPCS code G0332 for CY
2009. The treatment of payment for
preadministration-related services
under the MPFS is addressed separately
in that CY 2009 final rule with comment
period. We will continue to work with
IVIG stakeholders to understand their
concerns regarding the pricing of IVIG
and Medicare beneficiary access to this
important therapy.
HCPCS code G0332 will be deleted
effective January 1, 2009. Therefore,
hospitals should report charges for IVIG
preadministration-related services in the
same manner as hospitals report
preadministration-related services
charges for other drugs. Hospitals may
include the charge for IVIG
preadministration-related services on a
claim in the charge for the associated
drug administration service, in the
charge for the IVIG product infused, on
an uncoded revenue code line, or in
another appropriate manner.
(3) Other Service-Specific Packaging
Issues
Based on our CY 2009 proposal to
maintain the unconditionally and
conditionally packaged payment for
services in the seven categories that we
originally packaged for CY 2009
(guidance services, image processing
services, intraoperative services,
imaging supervision and interpretation
services, diagnostic
radiopharmaceuticals, contrast media,
and observation services), we received a
number of public comments on
individual services that were not
specifically discussed in the CY 2009
OPPS/ASC proposed rule or for which
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the APC Panel made no specific
recommendations.
Comment: Several commenters were
concerned that the proposal to package
payment for electrodiagnostic guidance
for chemodenervation procedures,
specifically, CPT codes 95873 (Electrical
stimulation for guidance in conjunction
with chemodenervation (List separately
in addition to code for primary
procedure)), and 95874 (Needle
electromyography for guidance in
conjunction with chemodenervation
(List separately in addition to code for
primary procedure)). These commenters
indicated that chemodenervation
involves the injection of
chemodenervation agents, such as
botulinum toxin, to control the
symptoms associated with dystonia and
other disorders. According to the
commenters, physicians often, but not
always, use electromyography or
electrical stimulation guidance to guide
the needle to the most appropriate
location. The commenters were
concerned that the proposal to package
payment for these guidance services
may discourage utilization of this
particular form of guidance, even when
medically appropriate. One commenter
also noted that even if the median cost
for the chemodenervation procedures
increased, the payment rate would not
increase because chemodenervation
procedures are only a small proportion
of all claims in their proposed APC.
Response: We note that the cost of the
chemodenervation guidance services
will generally be reflected in the median
cost for the independent HCPCS code as
a function of the frequency that
chemodenervation services are reported
with that particular HCPCS code. We
recognize that in some cases supportive
and ancillary dependent services are
furnished at high frequency with
independent services, and in other
cases, they are furnished with
independent services at a low
frequency. We believe that packaging
should reflect the reality of how services
are furnished. While the commenters
are correct that the chemodenervation
procedures reflect only approximately 3
percent of the services that comprise
APC 0204 (Level I Nerve Injections), and
approximately 20 percent of the services
that comprise APC 0205 (Level II Nerve
Injections), we note that they
appropriately map to these APCs both
clinically and in terms of resource use.
We also note that CPT codes 64613
(Chemodenervation of muscle(s); neck
muscle(s) (eg, for spasmodic torticollis,
spasmodic sysphonia) and 64614
(Chemodenervation of muscle(s);
extremity(s) and/or trunk muscle(s) (eg,
for dystonia, cerebral palsy, multiple
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sclerosis) are assigned to APC 0205 for
CY 2009, which has a higher payment
rate than APC 0204, where they were
assigned for CY 2008, based on our
annual review of clinical and resource
homogeneity.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to package payment for
chemodenervation guidance services
described by CPT codes 95873 and
95874 for CY 2009.
Comment: One commenter requested
separate payment for CPT codes 0174T
(Computer-aided detection (CAD)
(computer algorithm analysis of digital
image data for lesion detection) with
further physician review for
interpretation and report, with or
without digitization of film radiographic
images, chest radiograph(s), performed
concurrent with primary interpretation
(List separately in addition to code for
primary procedure)) and 0175T
(Computer-aided detection (CAD)
(computer algorithm analysis of digital
image data for lesion detection) with
further physician review for
interpretation and report, with or
without digitization of film radiographic
images, chest radiograph(s), performed
remote from primary interpretation),
and expressed concern that CMS’ CY
2009 proposal did not adopt the March
2007 APC Panel recommendation
related to these services. Another
commenter stated that computer-aided
detection services should not be treated
as image processing services because
they require extensive performance
testing by the Food and Drug
Administration (FDA), as compared to
general image processing services that
are not required to meet the same
performance standards.
Response: During its March 2007
meeting, the APC Panel recommended
conditional packaging for CPT code
0175T, but did not recommend a change
to the unconditionally packaged status
of CPT code 0174T. As discussed
extensively in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66667), after thorough discussion with
the APC Panel and repeated review by
our medical advisors, we continue to
believe that these codes are
appropriately unconditionally
packaged. Because CPT codes 0174T
and 0175T are supportive ancillary
services that fit into the ‘‘image
processing’’ category, we packaged
payment for all image processing
services in CY 2008, and we proposed
to continue packaging all image
processing services in CY 2009. We
believe it is appropriate to maintain the
packaged status of these codes because
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we received no additional data
subsequent to the CY 2009 OPPS/ASC
proposed rule that convinced us to
change this policy.
An image processing service
processes and integrates diagnostic test
data that were captured during another
independent procedure. Computeraided detection services, which
incorporate pattern recognition and
image analysis of x-rays or other
radiologic studies to aid radiologists in
the detection of abnormalities, meet this
definition. Therefore, we continue to
believe that computer-aided detection
services fit into the image processing
category, despite any additional
requirements that may apply for FDA
approval.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to unconditionally
package payment for chest x-ray CAD
services described by CPT codes 0174T
and 0175T for CY 2009. We are also
finalizing our CY 2009 proposal,
without modification, to
unconditionally package payment for all
image processing services.
Comment: Several commenters were
concerned that some ‘‘stand-alone’’
procedures and services were proposed
with status indicator ‘‘N’’ for the CY
2009 OPPS. When a hospital provides
these services without any other service
on the same day, these commenters
pointed out that the hospital would not
receive any payment for the services.
Several commenters cited CPT code
77014 (Computed tomography guidance
for placement of radiation therapy
fields) as an example of a service that
may be performed by Hospital A, while
Hospital B provides the associated main
independent procedure, the radiation
therapy. The commenters noted that in
the situation described, Hospital A
would not receive any payment and
Hospital B would receive payment that
included payment for CPT code 77014
and, therefore, they requested that CMS
treat CPT code 77014 as a conditionally
packaged code, rather than an
unconditionally packaged code. Other
commenters described a clinical
scenario in which one hospital would
provide both services, but on different
days, and requested that CMS assign a
conditionally packaged status indicator
to CPT code 77014 so that the hospital
would receive payment for services
provided on each day. One commenter
also noted that it is possible for Hospital
A to provide guidance services
associated with placement of a breast
wire or clips prior to the breast biopsy
procedure that would be performed by
Hospital B. The latter commenter stated
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that in many instances, Hospital A
would not provide the services under
arrangement with Hospital B. The
commenter further noted that if Hospital
A were to bill the service to CMS, the
bill would be returned to the provider
because there would be no separately
payable service on the claim.
Response: CMS medical advisors
reevaluated every unconditionally
packaged HCPCS code, as well as
clinical scenarios related to those
packaged codes, and determined that
the unconditionally packaged status of
every code is appropriate, except for
CPT code 76936 (Ultrasound guided
compression repair of arterial
pseudoaneurysm or arteriovenous
fistulae (includes diagnostic ultrasound
evaluation, compression of lesion and
imaging)).
For CY 2008, we unconditionally
packaged CPT code 76936 because we
classified it as a guidance service, and
we packaged all guidance services
beginning in CY 2008. We did not
receive any public comments on the CY
2008 OPPS/ASC proposed rule
requesting that we unpackage payment
for this code. However, because this
code describes a vascular repair
procedure, of which image guidance is
a component, upon further examination
we believe that separate payment is the
most appropriate payment methodology
for the service. Therefore, for CY 2009,
CPT code 76936 is assigned to APC
0096 (Non-Invasive Vascular Studies),
with status indicator ‘‘S.’’
CMS medical advisors specifically
reviewed the clinical scenarios
surrounding CPT code 77014 offered by
the commenters and determined that its
unconditional packaged status is
appropriate. If we were to treat CPT
code 77014 as a conditionally packaged
code, we would create an incentive for
a hospital to provide this service on a
different day than other services related
to radiation therapy, whereas when this
code is unconditionally packaged, the
hospital has an incentive to provide the
service described by CPT code 77014 at
the most appropriate time, from the
perspective of the patient and hospital.
We believe that it would be uncommon
for one hospital to provide the guidance
service described by CPT code 77014
and another hospital to provide
radiation therapy. Section 1866 of the
Act sets forth the requirements for
provider enrollment. More specifically,
section 1866(a)(1)(H) of the Act states,
‘‘in the case of hospitals which provide
services for which payment may be
made under this title and in the case of
critical access hospitals which provide
critical access hospital services, to have
all items and services (other than
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physicians’ services as defined in
regulations for purposes of section
1862(a)(14), and other than services
described by section 1861(s)(2)(K),
certified nurse-midwife services,
qualified psychologist services, and
services of a certified registered nurse
anesthetist) (I) that are furnished to an
individual who is a patient of the
hospital, and (II) for which the
individual is entitled to have payment
made under this title, furnished by the
hospital or otherwise under
arrangements (as defined in section
1861(w)(1)) made by the hospital.’’ In
other words, each Medicareparticipating hospital must agree to
furnish directly all covered
nonphysician facility services required
by its patients (inpatients and
outpatients) or to have the services
furnished under arrangement (as
defined in section 1861(w)(1) of the
Act). In addition, § 410.27(a)(1)(i)
through (iii) further requires that
payment is made for hospital outpatient
services (1) furnished by or under
arrangement by the hospital, (2) as an
integral though incidental part of the
physician’s services, and (3) in the
hospital or at a department of the
provider that has provider-based status
in relation to the hospital, as defined in
§ 413.65. That means when a patient
requires a particular service ordered by
the physician, such as the radiation
therapy services in question, the
hospital would be responsible for
ensuring that service is provided
directly or that the hospital arranges for
the service to be provided in that
hospital or in a provider-based
department of that hospital. Both the
independent service, here the radiation
therapy, and the dependent guidance
service are necessary to perform the
radiation therapy. If the services cannot
all be provided by the hospital, whether
directly or under arrangement as
required in § 410.27(a), then the hospital
would discharge the patient and refer
that patient to another provider to
receive the services.
If one hospital provided the service
described by CPT code 77014 on one
day, and the same hospital provided
radiation therapy services on another
day, as long as both services were
reported on one claim, we would
package payment across the dates of
service. This was discussed in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66637) in the
context of diagnostic
radiopharmaceuticals that may be
provided on a day prior to an
independent procedure. In light of the
ability of ‘‘natural’’ singles claims to
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package costs across days, we believe
that our standard OPPS ratesetting
methodology of using median costs
calculated from claims data would
adequately capture the costs of CPT
code 77014 associated with radiation
therapy services that are not provided
on the same date of service.
CMS medical advisors also reviewed
the clinical scenarios surrounding CPT
codes 19290 (Preoperative placement of
needle localization wire, breast); 19291
(Preoperative placement of needle
localization wire, breast; each additional
lesion) (List separately in addition to
code for primary procedure)); and 19295
(Image guided placement, metallic
localization clip, percutaneous, during
breast biopsy (List separately in
addition to code for primary
procedure)). Our rationale for
unconditionally packaging this service
is parallel to the rationale described for
unconditionally packaging CPT code
77014. As stated above, we believe that
it would be very unlikely that one
hospital would perform the preoperative
wire placement in the breast and then
send the patient to another facility for
the breast biopsy procedure both
because it would be potentially difficult
and uncomfortable for the beneficiary
and because this care pattern would not
conform to the requirements of the
statute and regulations that the hospital
must furnish directly or arrange to have
furnished all services required by its
patients.
In response to the commenter who
stated that a claim without any
separately payable services would be
returned to the provider, as we stated in
the CY 2007 OPPS final rule with
comment period (71 FR 67995), claims
with only packaged codes and no
separately payable codes are processed
by the I/OCE and rejected for payment,
but are included in the national claims
history file that we analyze and use to
set payment rates. Therefore, we have
hospital claims data for packaged codes
that are provided without any separately
payable service.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal to
unconditionally package all HCPCS
codes for services assigned status
indicator ‘‘N’’ in Addendum B to this
final rule with comment period, with
modification to provide separate
payment for CPT code 76936, assigned
status indicator ‘‘S,’’ through APC 0096
for CY 2009.
Comment: Many commenters
requested separate payment for CPT
code 31620 (Endobronchial ultrasound
(EBUS) during bronchoscopic diagnostic
or therapeutic intervention(s) (List
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separately in addition to code for
primary procedure)). The commenters
noted that the payment rate for
performing a bronchoscopy with EBUS
dropped significantly between CYs 2007
and 2009, from approximately $2,500 to
approximately $700, and they are
concerned that beneficiary’ access to
care will be limited if hospitals are no
longer financially able to offer this
important clinical tool. The commenters
indicated that EBUS is only represented
on a small portion of bronchoscopy
claims. The commenters believed that
packaging payment for EBUS will result
in more mediastinoscopies, a more
invasive and costly procedure. One
commenter asserted that EBUS should
be unpackaged to correct the violation
of the 2 times rule for the APCs
(specifically APC 0076 (Level I
Endoscopy Lower Airway)) that contain
bronchoscopy procedures. The
commenters recommended various
ideas for creation of composite APCs
that would include payment for EBUS,
when performed. Several commenters
requested that CMS unpackage payment
for certain ultrasound guidance services,
for similar reasons.
Response: We do not agree that
beneficiary access to care will be
harmed or that the number of
mediastinoscopies will increase as a
result of packaging payment for CPT
code 31620. We believe that packaging
created incentives for hospitals and
physician partners to work together to
establish appropriate protocols that will
eliminate unnecessary services where
they exist and institutionalize
approaches to providing necessary
services more efficiently. If this review
results in the concentration of some
services in a reduced number of
hospitals in the community, we believe
that the quality of care and hospital
efficiency may both be enhanced as a
result. The medical literature shows that
concentration of services in certain
hospitals often results in both greater
efficiency and higher quality of care for
patients. As we have stated previously,
the median cost for a particular
independent procedure generally will
be higher as a result of added packaging,
but also could change little or be lower
because median costs typically do not
reflect small distributional changes and
because changes to the packaged HCPCS
codes affect both the number and
composition of single bills and the mix
of hospitals contributing those single
bills. In this case, our data indicate
increased packaged costs associated
with the services into which CPT code
31620 is packaged, ultimately increasing
the APC payment rates for
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bronchoscopy procedures. We will
include the CY 2008 claims data for CPT
code 31620 from its first year of
packaged payment in our analysis
recommended by the APC Panel to
assess changes in utilization patterns
that may accompany packaged payment.
Regarding the comment about the 2
times rule violations for bronchoscopy
APCs, because we have traditionally
paid for a service package under the
OPPS as represented by a HCPCS code
for the major procedure that is assigned
to an APC group for payment, we assess
the applicability of the 2 times rule to
services at the HCPCS code level, not at
a more specific level based on the
individual intraoperative service that
may be performed during an
independent service reported with a
HCPCS code for the major service. If the
use of a very expensive intraoperative
service in a clinical scenario causes a
specific procedure to be much more
expensive for the hospital than the APC
payment, we consider such a case to be
the natural consequence of a
prospective payment system that
anticipates that some cases will be more
costly and other less costly than the
procedure payment. In addition, very
high cost cases could be eligible for
outlier payment. Decisions about
packaging and bundling payment
involve a balance between ensuring
some separate payment for individual
services and establishing incentives for
efficiency through larger units of
payment.
While the proposed configuration of
APC 0076 did not violate the 2 times
rule, we note that we have slightly
reconfigured APC 0076 for this final
rule with comment period as a result of
our medical advisors’ regular review of
all APCs for clinical and resource
homogeneity, using updated final rule
data. Specifically, CPT code 31615
(Tracheobronchoscopy through
established tracheostomy incision) is
reassigned from APC 0076 to APC 0252
(Level III ENT Procedures) for CY 2009.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification to package payment for
EBUS and ultrasound guidance services
for CY 2009.
We have responded to public
comments related to potential
composite APCs in section II.A.2.e. of
this final rule with comment period.
B. Conversion Factor Update
Section 1833(t)(3)(C)(ii) of the Act
requires us to update the conversion
factor used to determine payment rates
under the OPPS on an annual basis.
Section 1833(t)(3)(C)(iv) of the Act
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provides that, for CY 2009, the update
is equal to the hospital inpatient market
basket percentage increase applicable to
hospital discharges under section
1886(b)(3)(B)(iii) of the Act. The final
hospital market basket increase for FY
2009 published in the IPPS final rule on
August 19, 2008 is 3.6 percent (73 FR
48759). To set the OPPS conversion
factor for CY 2009, we increased the CY
2008 conversion factor of $63.694, as
specified in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66677), by 3.6 percent. Hospitals that
fail to meet the reporting requirements
of the Hospital Outpatient Quality Data
Reporting (HOP QDRP) program are
subject to a reduction of 2.0 percentage
points from the market basket update to
the conversion factor. For a complete
discussion of the HOP QDRP
requirements and the payment
reduction for hospitals that fail to meet
those requirements, we refer readers to
section XVI. of this final rule with
comment period.
In accordance with section
1833(t)(9)(B) of the Act, we further
adjusted the conversion factor for CY
2009 to ensure that any revisions we are
making to our updates for a revised
wage index and rural adjustment are
made on a budget neutral basis. We
calculated an overall budget neutrality
factor of 1.0013 for wage index changes
by comparing total payments from our
simulation model using the FY 2009
IPPS final wage index values as
finalized to those payments using the
current (FY 2008) IPPS wage index
values. For CY 2009, we did not propose
a change to our rural adjustment policy.
Therefore, the budget neutrality factor
for the rural adjustment is 1.000.
For this final rule with comment
period, we estimated that allowed passthrough spending for both drugs and
biologicals and devices for CY 2009
would equal approximately $33.3
million, which represents 0.11 percent
of total projected OPPS spending for CY
2009. Therefore, the conversion factor
was also adjusted by the difference
between the 0.09 percent pass-through
dollars set aside for CY 2008 and the
0.11 percent estimate for CY 2009 passthrough spending. Finally, estimated
payments for outliers remain at 1.0
percent of total OPPS payments for CY
2009.
The market basket increase update
factor of 3.6 percent for CY 2009, the
required wage index budget neutrality
adjustment of approximately 1.0013,
and the adjustment of 0.02 percent of
projected OPPS spending for the
difference in the pass-through set aside
resulted in a full market basket
conversion factor for CY 2009 of
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$66.059. To calculate the CY 2009
reduced market basket conversion factor
for those hospitals that fail to meet the
requirements of the HOP QDRP for the
full CY 2009 payment update, we made
all other adjustments discussed above,
but used a reduced market basket
increase update factor of 1.6 percent.
This resulted in a reduced market basket
conversion factor for CY 2009 of
$64.784 for those hospitals that fail to
meet the HOP QDRP requirements.
Comment: One commenter requested
that CMS update the conversion factor
using the final FY 2009 IPPS market
basket increase update factor of 3.6
percent rather than the proposed FY
2009 IPPS market basket increase
update factor of 3.0 percent.
Response: We agree and have applied
the final FY 2009 IPPS market basket
increase update factor of 3.6 percent to
calculate the CY 2009 OPPS conversion
factor. When we developed the CY 2009
OPPS/ASC proposed rule, the FY 2009
IPPS market basket increase update
factor of 3.6 percent had not yet been
finalized. Therefore, we could not use it
to update the proposed CY 2009 OPPS
conversion factor. As is our
longstanding policy, when developing
the proposed OPPS update for a given
calendar year, we use the most current
IPPS market basket update factor
available for the year applicable to the
OPPS update and adopt that finalized
IPPS value when we develop the final
rule with comment period for the OPPS
update.
After consideration of the public
comment received, we are finalizing our
CY 2009 proposal, without
modification, to update the conversion
factor by the FY 2009 IPPS market
basket increase update factor of 3.6
percent, resulting in a final full
conversion factor of $66.059 and in a
reduced conversion factor of $64.784 for
those hospitals that fail to meet the HOP
QDRP reporting requirements.
C. Wage Index Changes
Section 1833(t)(2)(D) of the Act
requires the Secretary to determine a
wage adjustment factor to adjust, for
geographic wage differences, the portion
of the OPPS payment rate, which
includes the copayment standardized
amount, that is attributable to labor and
labor-related cost. This adjustment must
be made in a budget neutral manner and
budget neutrality is discussed in section
II.B. of this final rule with comment
period.
The OPPS labor-related share is 60
percent of the national OPPS payment.
This labor-related share is based on a
regression analysis that determined that
approximately 60 percent of the costs of
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services paid under the OPPS were
attributable to wage costs. We confirmed
that this labor-related share for
outpatient services is still appropriate
during our regression analysis for the
payment adjustment for rural hospitals
in the CY 2006 OPPS final rule with
comment period (70 FR 68553).
Therefore, we did not propose to revise
this policy for the CY 2009 OPPS. We
refer readers to section II.G. of this final
rule with comment period for a
description and example of how the
wage index for a particular hospital is
used to determine the payment for the
hospital.
As discussed in section II.A.2.c. of
this final rule with comment period, for
estimating national median APC costs,
we standardize 60 percent of estimated
claims costs for geographic area wage
variation using the same FY 2009 prereclassified wage indices that the IPPS
uses to standardize costs. This
standardization process removes the
effects of differences in area wage levels
from the determination of a national
unadjusted OPPS payment rate and the
copayment amount.
As published in the original OPPS
April 7, 2000 final rule with comment
period (65 FR 18545), the OPPS has
consistently adopted the final IPPS
wage indices as the wage indices for
adjusting the OPPS standard payment
amounts for labor market differences.
Thus, the wage index that applies to a
particular acute short-stay hospital
under the IPPS will also apply to that
hospital under the OPPS. As initially
explained in the September 8, 1998
OPPS proposed rule, we believed and
continue to believe that using the IPPS
wage index as the source of an
adjustment factor for the OPPS is
reasonable and logical, given the
inseparable, subordinate status of the
HOPD within the hospital overall. In
accordance with section 1886(d)(3)(E) of
the Act, the IPPS wage index is updated
annually. Therefore, in accordance with
our established policy, we proposed to
use the final FY 2009 version of the
IPPS wage indices used to pay IPPS
hospitals to adjust the CY 2009 OPPS
payment rates and copayment amounts
for geographic differences in labor cost
for all providers that participate in the
OPPS, including providers that are not
paid under the IPPS (referred to in this
section as ‘‘non-IPPS’’ providers).
We note that the final FY 2009 IPPS
wage indices continue to reflect a
number of adjustments implemented
over the past few years, including
revised Office of Management and
Budget (OMB) standards for defining
geographic statistical areas (Core Based
Statistical Areas or CBSAs),
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reclassification to different geographic
areas, rural floor provisions and the
accompanying budget neutrality
adjustment, an adjustment for outmigration labor patterns, an adjustment
for occupational mix, and a policy for
allocating hourly wage data among
campuses of multicampus hospital
systems that cross CBSAs. We refer
readers to the FY 2009 IPPS final rule
(73 FR 48563 through 48592) and to the
Federal Register notice published
subsequent to that final rule on October
3, 2008 (73 FR 57888) for a detailed
discussion of recent changes to the FY
2009 IPPS wage indices, including
adoption of a 3-year transition from a
national budget neutrality adjustment to
a State-level budget neutrality
adjustment for the rural and imputed
floors. In addition, we refer readers to
the CY 2005 OPPS final rule with
comment period (69 FR 65842 through
65844) and subsequent OPPS rules for a
detailed discussion of the history of
these wage index adjustments as
applied under the OPPS.
The IPPS wage indices that we
proposed to adopt in the CY 2009
OPPS/ASC proposed rule include all
reclassifications that are approved by
the Medicare Geographic Classification
Review Board (MGCRB) for FY 2009.
We note that reclassifications under
section 508 of Public Law 108–173 and
certain special exception
reclassifications that were extended by
section 106(a) of the MIEA-TRHCA and
section 117(a)(1) of the MMSEA (Pub. L.
110–173) were set to terminate
September 30, 2008. Section 117(a)(2) of
the MMSEA also extended certain
special exception reclassifications. On
February 22, 2008, we published a
notice in the Federal Register (73 FR
9807) that indicated how we are
implementing section 117(a) of the
MMSEA under the IPPS. We also issued
a joint signature memorandum on
January 28, 2008, that explained how
section 117 of the MMSEA would apply
to the OPPS. As we stated in that
memorandum, most of the
reclassifications extended by the
MMSEA would expire September 30,
2008, for both the IPPS and the OPPS
(with OPPS hospitals reverting to a
previous reclassification or home area
wage index from October 1, 2008 to
December 31, 2008). However, because
we implemented the special exception
wage indices for certain hospitals on a
calendar year cycle for OPPS, we
extended special exception wage
indices through December 31, 2008, in
order to give these hospitals the special
exception wage indices under the OPPS
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for the same time period as under the
IPPS.
Since issuance of the CY 2009 OPPS/
ASC proposed rule, section 124 of
Public Law 110–275 (MIPPA) further
extended geographic reclassifications
under section 508 and certain special
exception reclassifications until
September 30, 2009. We did not make
any proposals related to these
provisions for the CY 2009 OPPS wage
indices in our proposed rule, since the
MIPPA was enacted after issuance of the
CY 2009 OPPS/ASC proposed rule. In
accordance with section 124 of Public
Law 110–275, for CY 2009, we are
adopting all section 508 geographic
reclassifications through September 30,
2009. Similar to our treatment of section
508 reclassifications extended under the
MMSEA as described above, hospitals
with section 508 reclassifications will
revert to their home area wage index,
with out-migration adjustment if
applicable, from October 1, 2009, to
December 31, 2009. As we did for CY
2008, we also are extending the special
exception wage indices for certain
hospitals through December 31, 2009,
under the OPPS in order to give these
hospitals the special exception wage
indices under the OPPS for the same
time period as under the IPPS. We refer
readers to the Federal Register notice
published subsequent to the FY 2009
IPPS final rule for a detailed discussion
of the changes to the wage indices as
required by section 124 of the Public
Law 110–275 (73 FR 57888).
For purposes of the OPPS, we
proposed to continue our policy in CY
2009 to allow non-IPPS hospitals paid
under the OPPS to qualify for the outmigration adjustment if they are located
in a section 505 out-migration county.
We note that because non-IPPS
hospitals cannot reclassify, they are
eligible for the out-migration wage
adjustment. Table 4J in the Federal
Register notice that provides final FY
2009 IPPS wage indices published
subsequent to the FY 2009 IPPS final
rule (73 FR 57988) identifies counties
eligible for the out-migration adjustment
and providers receiving the adjustment.
As we have done in prior years, we are
reprinting Table 4J, as Addendum L to
this final rule with comment period,
with the addition of non-IPPS hospitals
that will receive the section 505 outmigration adjustment under the CY
2009 OPPS.
As stated earlier in this section, we
continue to believe that using the IPPS
wage indices as the source of an
adjustment factor for the OPPS is
reasonable and logical, given the
inseparable, subordinate status of the
HOPD within the hospital overall.
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Therefore, we proposed to use the final
FY 2009 IPPS wage indices for
calculating the OPPS payments in CY
2009. With the exception of the outmigration wage adjustment table
(Addendum L to this final rule with
comment period), which includes nonIPPS hospitals paid under the OPPS, we
are not reprinting the finalized FY 2009
IPPS wage indices referenced in this
discussion of the wage index. We refer
readers to the CMS Web site for the
OPPS at: https://www.cms.hhs.gov/
providers/hopps. At this link, readers
will find a link to the final FY 2009 IPPS
wage index tables as finalized.
Comment: Several commenters
supported the CMS proposal to extend
the IPPS wage indices to the OPPS in
CY 2009 as we have done in previous
years. One commenter praised the
adoption of reclassifications approved
by the MGCRB. Another commenter
supported the extension of the special
exception reclassifications for certain
hospitals through December 31, 2008 for
the OPPS.
Response: We appreciate the support
expressed by the commenters for our
proposed CY 2009 wage index policies,
as well as our CY 2008 policy that
extended the special exception wage
indices through December 31, 2008. As
discussed earlier, in implementing
section 124 of Public Law 110–275, we
also are extending the special exception
wage indices through December 31,
2009, under the OPPS. With regard to
adopting reclassifications approved by
the MGCRB, we note that under the
OPPS we adopt the IPPS wage indices
in their entirety, including wage index
reclassifications. Therefore, any
reclassifications approved for a hospital
would apply to payment under both the
IPPS and the OPPS.
Comment: One commenter opposed
CMS’ implementation of the FY 2009
IPPS wage indices in the OPPS in light
of the revisions to the reclassification
average hourly wage comparison
criteria, as finalized in the FY 2009 IPPS
final rule. Specifically, the commenter
suggested that CMS consider the
redistributional effects of implementing
the changes to the comparison
threshold. In addition, the commenter
stated that a change in the
reclassification comparison criteria,
coupled with CMS’ implementation of a
transitional within-State rural floor
budget neutrality adjustment, could
have a substantially negative effect on
hospitals located in rural markets.
Response: We appreciate the
comment concerning our revision to the
reclassification average hourly wage
comparison criteria as discussed in the
FY 2009 IPPS final rule (73 FR 48568).
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Our consistent policy has been to adopt
the IPPS fiscal year wage indices for use
under the OPPS, including IPPS policy
on geographic reclassification. While
the commenter discussed the
redistributional effects of changes made
in the IPPS rulemaking process, the
inherent policy rationales underlying
such changes were not discussed. The
policy rationales for an update to the
geographic reclassification wage
comparison criteria and budget
neutrality for the rural and imputed
floors were fully discussed during the
FY 2009 IPPS rulemaking process, and
hospitals had the opportunity to
comment specifically on such policy
rationales during that process.
Comment: One commenter expressed
concern about the impact of the wage
index on hospital payment for specific
APCs. In particular, the commenter
argued that 60 percent, the current
percentage of the APC payment that is
adjusted for variation in labor-related
costs, is too large of a percentage for
APCs that incorporate high cost
technologies, implantable devices, and
drugs, and instead suggested a labor rate
split of 20 percent (based on the
commenter’s data) for APCs that include
high device or supply costs. The
commenter suggested a labor-related
share of 20 percent for APCs 0107
(Insertion of Cardioverter-Defibrillator);
0108 (Insertion/Replacement/Repair of
Cardioverter-Defibrillator Leads); 0222
(Level II Implantation of
Neurostimulator); 0225 (Implantation of
Neurostimulator Electrodes, Cranial
Nerve); 0227 (Implantation of Drug
Infusion Device); 0315 (Level III
Implantation of Neurostimulator); 0418
(Insertion of Left Ventricular Pacing
Elect.); 0654 (Insertion/Replacement of a
Permanent Dual Chamber Pacemaker);
0655 (Insertion/Replacement/
Conversion of a Permanent Dual
Chamber Pacemaker); 0656
(Transcatheter Placement of
Intracoronary Drug-Eluting Stents); and
others that CMS believes would meet
the criteria discussed by the commenter.
Moreover, regarding the effects of
wage adjustment on hospital payment
for certain services, MedPAC noted that
the effect of charge compression on
OPPS payment for services where
devices make up a large percentage of
the costs of the service tend to be
exacerbated among hospitals in lowwage areas and counteracted in highwage areas because CMS wage adjusts a
portion of the device cost, which
typically exceeds 40 percent of the APC
payment. The MedPAC suggested that
CMS overadjusts for the labor costs in
these services and stated its plan to
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evaluate CMS’ method for adjusting
payments for variations in labor costs.
Response: We do not believe it is
appropriate to vary the percentage of the
national payment that is wage adjusted
for different services provided under the
OPPS. Such a change could not be
considered without first assessing its
impact on the OPPS labor-related share
calculation. The OPPS labor-related
share of 60 percent was determined
through regression analyses conducted
for the initial OPPS proposed rule (63
FR 47581) and recently confirmed for
the CY 2006 OPPS final rule with
comment period (70 FR 68556). The
labor-related share is a provider-level
adjustment based on the relationship
between the labor input costs and a
provider’s average OPPS unit cost,
holding all other things constant. While
numerous individual services may have
variable labor shares, these past
analyses identified 60 percent as the
appropriate labor-related share across
all types of outpatient services and are
the basis for our current policy. The
provider-level adjustment addresses
payment for all services paid under the
OPPS. We look forward to reviewing the
results of MedPAC’s evaluation of the
CMS method for adjusting payment for
variation in labor costs in light of
differences in labor-related costs for
device-implantation services, as well as
any recommendations it may provide
regarding the OPPS wage adjustment
policy.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to use the final FY 2009
IPPS wage indices to adjust the OPPS
standard payment amounts for labor
market differences.
D. Statewide Average Default CCRs
CMS uses CCRs to determine outlier
payments, payments for pass-through
devices, and monthly interim
transitional corridor payments under
the OPPS, in addition to adjusting
hospitals’ charges reported on claims to
costs. Some hospitals do not have a CCR
because there is no cost report available.
For these hospitals, CMS uses the
statewide average default CCRs to
determine the payments mentioned
above until a hospital’s Medicare
contractor is able to calculate the
hospital’s actual CCR from its most
recently submitted Medicare cost report.
These hospitals include, but are not
limited to, hospitals that are new, have
not accepted assignment of an existing
hospital’s provider agreement, and have
not yet submitted a cost report. CMS
also uses the statewide average default
CCRs to determine payments for
hospitals that appear to have a biased
CCR (that is, the CCR falls outside the
predetermined ceiling threshold for a
valid CCR) or for hospitals whose most
recent cost report reflects an allinclusive rate status (Medicare Claims
Processing Manual, Pub. 100–04,
Chapter 4, Section 10.11). As proposed,
in this final rule with comment period,
we are updating the default ratios for CY
2009 using the most recent cost report
data, and we are codifying our policies
for using the default ratios for hospitals
that do not have a CCR for outlier
payments specifically. We refer readers
to section II.F. of this final rule with
comment period where we discuss our
final policy for default CCRs, including
setting the ceiling threshold for a valid
CCR, as part of our broader
implementation of an outlier
reconciliation process similar to that
implemented under the IPPS.
For CY 2009, we used our standard
methodology of calculating the
statewide average default CCRs using
the same hospital overall CCRs that we
use to adjust charges to costs on claims
data. Table 9 published in the CY 2009
OPPS/ASC proposed rule listed the
proposed CY 2009 default urban and
rural CCRs by State and compared them
to last year’s default CCRs. These CCRs
are the ratio of total costs to total
charges from each hospital’s most
recently submitted cost report, for those
cost centers relevant to outpatient
services weighted by Medicare Part B
charges. We also adjusted ratios from
submitted cost reports to reflect final
settled status by applying the
differential between settled to submitted
costs and charges from the most recent
68587
pair of final settled and submitted cost
reports. We then weighted each
hospital’s CCR by claims volume
corresponding to the year of the
majority of cost reports used to calculate
the overall CCR. We refer readers to
section II.E. of the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66680 through 66682) and prior OPPS
rules for a more detailed discussion of
our established methodology for
calculating the statewide average default
CCRs, including the hospitals used in
our calculations and trimming criteria.
For the CY 2009 OPPS/ASC proposed
rule, approximately 38 percent of the
submitted cost reports represented data
for cost reporting periods ending in CY
2005 and 60 percent were for cost
reporting periods ending in CY 2006.
We have since updated the cost report
data we use to calculate CCRs with
additional cost reports ending in CYs
2006 and 2007. For this final rule with
comment period, 53 percent of the
submitted cost reports utilized in the
default ratio calculation are for CY 2006
and 46 percent are for CY 2007. For
Maryland, we use an overall weighted
average CCR for all hospitals in the
nation as a substitute for Maryland
CCRs. Few hospitals in Maryland are
eligible to receive payment under the
OPPS, which limits the data available to
calculate an accurate and representative
CCR. In general, observed changes
between CYs 2008 and 2009 are modest
and the few significant changes are
associated with a small number of
hospitals.
We did not receive any public
comments concerning our CY 2009
proposal to apply our standard
methodology of calculating the
statewide average default CCRs using
the same hospital overall CCRs that we
use to adjust charges to costs on claims
data. Public comments on setting the
threshold for determining a valid CCR
are discussed in section II.F. of this final
rule with comment period. Therefore,
we are finalizing the statewide average
default CCRs as shown in Table 11
below for OPPS services furnished on or
after January 1, 2009.
TABLE 11—CY 2009 STATEWIDE AVERAGE CCRS
dwashington3 on PRODPC61 with RULES2
State
Urban/rural
ALASKA ....................................................................................
ALASKA ....................................................................................
ALABAMA .................................................................................
ALABAMA .................................................................................
ARKANSAS ..............................................................................
ARKANSAS ..............................................................................
ARIZONA ..................................................................................
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RURAL
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RURAL
URBAN
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default CCR
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.............................................
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.............................................
.............................................
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.............................................
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E:\FR\FM\18NOR2.SGM
0.562
0.345
0.221
0.202
0.256
0.268
0.267
18NOR2
Previous default
CCR (CY 2008
OPPS final rule)
0.537
0.351
0.228
0.213
0.266
0.270
0.264
68588
Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations
TABLE 11—CY 2009 STATEWIDE AVERAGE CCRS—Continued
dwashington3 on PRODPC61 with RULES2
State
Urban/rural
ARIZONA ..................................................................................
CALIFORNIA ............................................................................
CALIFORNIA ............................................................................
COLORADO .............................................................................
COLORADO .............................................................................
CONNECTICUT ........................................................................
CONNECTICUT ........................................................................
DISTRICT OF COLUMBIA .......................................................
DELAWARE ..............................................................................
DELAWARE ..............................................................................
FLORIDA ..................................................................................
FLORIDA ..................................................................................
GEORGIA .................................................................................
GEORGIA .................................................................................
HAWAII .....................................................................................
HAWAII .....................................................................................
IOWA ........................................................................................
IOWA ........................................................................................
IDAHO .......................................................................................
IDAHO .......................................................................................
ILLINOIS ...................................................................................
ILLINOIS ...................................................................................
INDIANA ...................................................................................
INDIANA ...................................................................................
KANSAS ...................................................................................
KANSAS ...................................................................................
KENTUCKY ..............................................................................
KENTUCKY ..............................................................................
LOUISIANA ...............................................................................
LOUISIANA ...............................................................................
MARYLAND ..............................................................................
MARYLAND ..............................................................................
MASSACHUSETTS ..................................................................
MAINE .......................................................................................
MAINE .......................................................................................
MICHIGAN ................................................................................
MICHIGAN ................................................................................
MINNESOTA .............................................................................
MINNESOTA .............................................................................
MISSOURI ................................................................................
MISSOURI ................................................................................
MISSISSIPPI .............................................................................
MISSISSIPPI .............................................................................
MONTANA ................................................................................
MONTANA ................................................................................
NORTH CAROLINA ..................................................................
NORTH CAROLINA ..................................................................
NORTH DAKOTA .....................................................................
NORTH DAKOTA .....................................................................
NEBRASKA ..............................................................................
NEBRASKA ..............................................................................
NEW HAMPSHIRE ...................................................................
NEW HAMPSHIRE ...................................................................
NEW JERSEY ..........................................................................
NEW MEXICO ..........................................................................
NEW MEXICO ..........................................................................
NEVADA ...................................................................................
NEVADA ...................................................................................
NEW YORK ..............................................................................
NEW YORK ..............................................................................
OHIO .........................................................................................
OHIO .........................................................................................
OKLAHOMA ..............................................................................
OKLAHOMA ..............................................................................
OREGON ..................................................................................
OREGON ..................................................................................
PENNSYLVANIA ......................................................................
PENNSYLVANIA ......................................................................
PUERTO RICO .........................................................................
RHODE ISLAND .......................................................................
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URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
URBAN
URBAN
Fmt 4701
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default CCR
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0.226
0.219
0.218
0.346
0.248
0.372
0.322
0.329
0.302
0.349
0.204
0.189
0.267
0.251
0.367
0.344
0.439
0.294
0.449
0.419
0.280
0.266
0.298
0.295
0.300
0.238
0.236
0.255
0.283
0.258
0.303
0.276
0.328
0.452
0.428
0.317
0.321
0.488
0.348
0.269
0.282
0.261
0.209
0.455
0.439
0.272
0.292
0.369
0.354
0.345
0.283
0.350
0.296
0.257
0.263
0.328
0.312
0.192
0.412
0.388
0.353
0.258
0.278
0.238
0.318
0.374
0.284
0.232
0.519
0.294
18NOR2
Previous default
CCR (CY 2008
OPPS final rule)
0.232
0.232
0.218
0.355
0.254
0.391
0.339
0.346
0.302
0.400
0.219
0.198
0.279
0.269
0.373
0.317
0.349
0.325
0.445
0.414
0.286
0.271
0.313
0.301
0.318
0.240
0.244
0.262
0.271
0.277
0.308
0.284
0.338
0.433
0.424
0.331
0.318
0.499
0.342
0.289
0.292
0.267
0.217
0.453
0.450
0.286
0.321
0.379
0.378
0.347
0.290
0.375
0.337
0.276
0.275
0.353
0.329
0.200
0.417
0.402
0.354
0.268
0.288
0.245
0.321
0.366
0.298
0.241
0.474
0.308
Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations
68589
TABLE 11—CY 2009 STATEWIDE AVERAGE CCRS—Continued
State
SOUTH CAROLINA ..................................................................
SOUTH CAROLINA ..................................................................
SOUTH DAKOTA .....................................................................
SOUTH DAKOTA .....................................................................
TENNESSEE ............................................................................
TENNESSEE ............................................................................
TEXAS ......................................................................................
TEXAS ......................................................................................
UTAH ........................................................................................
UTAH ........................................................................................
VIRGINIA ..................................................................................
VIRGINIA ..................................................................................
VERMONT ................................................................................
VERMONT ................................................................................
WASHINGTON .........................................................................
WASHINGTON .........................................................................
WISCONSIN .............................................................................
WISCONSIN .............................................................................
WEST VIRGINIA .......................................................................
WEST VIRGINIA .......................................................................
WYOMING ................................................................................
WYOMING ................................................................................
dwashington3 on PRODPC61 with RULES2
E. OPPS Payment to Certain Rural and
Other Hospitals
1. Hold Harmless Transitional Payment
Changes Made by Public Law 110–275
(MIPPA)
When the OPPS was implemented,
every provider was eligible to receive an
additional payment adjustment (called
either transitional corridor payment or
transitional outpatient payment (TOPS))
if the payments it received for covered
OPD services under the OPPS were less
than the payment it would have
received for the same services under the
prior reasonable cost-based system
(referred to as the pre-BBA amount).
Section 1833(t)(7) of the Act provides
that the transitional corridor payments
are temporary payments for most
providers to ease their transition from
the prior reasonable cost-based payment
system to the OPPS system. There are
two exceptions to this provision, cancer
hospitals and children’s hospitals, and
those hospitals receive the transitional
corridor payments on a permanent
basis. Section 1833(t)(7)(D)(i) of the Act
originally provided for transitional
corridor payments to rural hospitals
with 100 or fewer beds for covered OPD
services furnished before January 1,
2004. However, section 411 of Public
Law 108–173 amended section
1833(t)(7)(D)(i) of the Act to extend
these payments through December 31,
2005, for rural hospitals with 100 or
fewer beds. Section 411 also extended
the transitional corridor payments to
SCHs located in rural areas for services
furnished during the period that began
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Final CY 2009
default CCR
Urban/rural
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
RURAL
URBAN
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with the provider’s first cost reporting
period beginning on or after January 1,
2004, and ended on December 31, 2005.
Accordingly, the authority for making
transitional corridor payments under
section 1833(t)(7)(D)(i) of the Act, as
amended by section 411 of Public Law
108–173, for rural hospitals having 100
or fewer beds and SCHs located in rural
areas expired on December 31, 2005.
Section 5105 of Public Law 109–171
reinstituted the TOPs for covered OPD
services furnished on or after January 1,
2006, and before January 1, 2009, for
rural hospitals having 100 or fewer beds
that are not SCHs. When the OPPS
payment is less than the provider’s preBBA amount, the amount of payment is
increased by 95 percent of the amount
of the difference between the two
payment systems for CY 2006, by 90
percent of the amount of that difference
for CY 2007, and by 85 percent of the
amount of that difference for CY 2008.
For CY 2006, we implemented section
5105 of Public Law 109–171 through
Transmittal 877, issued on February 24,
2006. In the Transmittal, we did not
specifically address whether TOPs
apply to essential access community
hospitals (EACHs), which are
considered to be SCHs under section
1886(d)(5)(D)(iii)(III) of the Act.
Accordingly, under the statute, EACHs
are treated as SCHs. In the CY 2007
OPPS/ASC final rule with comment
period (71 FR 68010), we stated that
EACHs were not eligible for TOPs under
Public Law 109–171. However, we
stated they were eligible for the
adjustment for rural SCHs. In the CY
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0.399
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0.331
Previous default
CCR (CY 2008
OPPS final rule)
0.258
0.244
0.334
0.289
0.256
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0.271
0.242
0.416
0.406
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0.275
0.416
0.340
0.358
0.368
0.384
0.362
0.298
0.360
0.449
0.351
2007 OPPS/ASC final rule with
comment period (71 FR 68010 and
68228), we updated § 419.70(d) of our
regulations to reflect the requirements of
Public Law 109–171.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41461), we stated that,
effective for services provided on or
after January 1, 2009, rural hospitals
having 100 or fewer beds that are not
SCHs would no longer be eligible for
TOPs, in accordance with section 5105
of Public Law 109–171. However,
subsequent to issuance of the CY 2009
OPPS/ASC proposed rule, section 147 of
Public Law 110–275 amended section
1833(t)(7)(D)(i) of the Act by extending
the period for TOPs to rural hospitals
with 100 beds or fewer, for 1 year, for
services provided before January 1,
2010. Section 147 of Public Law 110–
275 also extended TOPs to SCHs
(including EACHs) with 100 or fewer
beds for covered OPD services provided
on or after January 1, 2009, and before
January 1, 2010. In accordance with
section 147 of Public Law 110–275,
when the OPPS payment is less than the
provider’s pre-BBA amount, the amount
of payment is increased by 85 percent
of the amount of the difference between
the two payment systems for CY 2009.
Comment: Several commenters
supported the legislative extension of
TOPs to small rural hospitals and small
SCHs for services provided before
January 1, 2010, under section 147 of
Public Law 110–275.
Response: We appreciate the
commenters’ support.
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68590
Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations
In this final rule with comment
period, we are revising §§ 419.70(d)(2)
and (d)(4) and adding a new paragraph
(d)(5) to incorporate the provisions of
section 147 of Public Law 110–275. We
note that our interpretation of the term
‘‘beds,’’ as is used in the regulation for
determining the number of beds in a
hospital, is consistent with how that
term is defined in our established hold
harmless policy in § 419.70, as stated in
the April 7, 2000, OPPS final rule with
comment period (65 FR 18501). In
addition, while we were reviewing
§ 419.70(d)(2) in order to incorporate the
change provided by section 147 of Pub.
L. 110–275, we realized that our use of
the word ‘‘paragraph’’ was incorrect.
Specifically, the provision states that for
covered hospital outpatient services
furnished in a calendar year from
January 1, 2006, through December 31,
2009, for which the prospective
payment amount is less than the preBBA amount, the amount of payment
under this paragraph is increased by the
amount of the difference. We note that
if the prospective payment amount is
less than the pre-BBA amount,
payments under this part (Part 419), not
paragraph, are increased. Therefore, in
order to more precisely capture our
existing policy and to correct an
inaccurate cross reference, we are
substituting the word ‘‘part’’ for
‘‘paragraph.’’
In addition, in our review of § 419.70
to implement section 147 of Public Law
110–275, we discovered that the crossreferences in paragraphs (e), (g), and (i)
of § 419.70 were incorrect. Paragraph (e)
defines the term ‘‘prospective payment
system amount’’ which is used
throughout § 419.70. However, the
language in paragraph (e) incorrectly
references ‘‘this paragraph’’ rather than
‘‘this section.’’ We are making a
technical correction to this crossreference to correct the error and to
accurately reflect the current policy. In
addition, paragraph (g) of § 419.70 states
that ‘‘CMS makes payments under this
paragraph * * *’’ Because paragraph (g)
is intended to specify how additional
OPPS payments will be made to
hospitals and CMHCs that result from
the application of the transitional
adjustments set forth in the entire
§ 419.70, in this final rule with
comment period, we are correcting the
cross-reference in paragraph (g) by
removing ‘‘paragraph’’ and replacing it
with ‘‘section’’ to correct the error and
to accurately reflect the current policy.
Similarly, paragraph (i) of § 419.70
cross-references the additional
payments as those made under
paragraph (i) rather than as those made
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15:50 Nov 17, 2008
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under the entire § 419.70. Therefore, in
this final rule with comment period, we
also are correcting this cross-reference
error to read ‘‘section’’ to accurately
reflect the current policy.
2. Adjustment for Rural SCHs
Implemented in CY 2006 Related to
Public Law 108–173 (MMA)
In the CY 2006 OPPS final rule with
comment period (70 FR 68556), we
finalized a payment increase for rural
SCHs of 7.1 percent for all services and
procedures paid under the OPPS,
excluding drugs, biologicals,
brachytherapy sources, and services
paid under the pass-through payment
policy in accordance with section
1833(t)(13)(B) of the Act, as added by
section 411 of Public Law 108–173.
Section 411 gave the Secretary the
authority to make an adjustment to
OPPS payments for rural hospitals,
effective January 1, 2006, if justified by
a study of the difference in costs by APC
between hospitals in rural and urban
areas. Our analysis showed a difference
in costs for rural SCHs. Therefore, for
the CY 2006 OPPS, we finalized a
payment adjustment for rural SCHs of
7.1 percent for all services and
procedures paid under the OPPS,
excluding drugs, biologicals,
brachytherapy sources, and services
paid under the pass-through payment
policy in accordance with section
1833(t)(13)(B) of the Act.
In CY 2007, we became aware that we
did not specifically address whether the
adjustment applies to EACHs, which are
considered to be SCHs under section
1886(d)(5)(D)(iii)(III) of the Act. Thus,
under the statute, EACHs are treated as
SCHs. Therefore, in the CY 2007 OPPS/
ASC final rule with comment period (71
FR 68010 and 68227), for purposes of
receiving this rural adjustment, we
revised § 419.43(g) to clarify that EACHs
are also eligible to receive the rural SCH
adjustment, assuming these entities
otherwise meet the rural adjustment
criteria. Currently, fewer than 10
hospitals are classified as EACHs and as
of CY 1998, under section 4201(c) of
Public Law 105–33, a hospital can no
longer become newly classified as an
EACH.
This adjustment for rural SCHs is
budget neutral and applied before
calculating outliers and copayment. As
stated in the CY 2006 OPPS final rule
with comment period (70 FR 68560), we
would not reestablish the adjustment
amount on an annual basis, but we may
review the adjustment in the future and,
if appropriate, would revise the
adjustment. We provided the same 7.1
percent adjustment to rural SCHs again
in CY 2008.
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For the CY 2009 OPPS, we proposed
to continue our current policy of a
budget neutral 7.1 percent payment
adjustment for rural SCHs, including
EACHs, for all services and procedures
paid under the OPPS, excluding drugs,
biologicals, and services paid under the
pass-through payment policy.
For CY 2009, we proposed to include
brachytherapy sources in the group of
services eligible for the 7.1 percent
payment increase because we proposed
to pay them for CY 2009 at prospective
rates based on their median costs as
calculated from historical claims data.
However, subsequent to issuance of the
CY 2009 OPPS/ASC proposed rule,
section 142 of Public Law 110–275
amended section 1833(t)(16)(C) of the
Act by extending payment for
brachytherapy sources at charges
adjusted to cost for services provided
prior to January 1, 2010. Our consistent
policy has been to exclude items paid at
charges adjusted to cost from the 7.1
percent payment adjustment. Therefore,
consistent with past policy,
brachytherapy sources will not be
eligible for the 7.1 percent payment
adjustment for CY 2009.
Statutory provisions to pay for
brachytherapy sources and other items
under the OPPS at charges adjusted to
cost have been common over the history
of the OPPS. In the past, we updated the
regulations at § 419.43(g)(4) each year to
exclude those items paid at charges
adjusted to cost by identifying those
items specifically. However, for
administrative ease and convenience,
we are now updating § 419.43(g)(4) to
specify in a general manner that items
paid at charges adjusted to cost by
application of a hospital-specific CCR
are excluded from the percent payment
adjustment in § 419.43(g)(2). We note
that § 419.43(g)(4) currently specifically
identifies devices or brachytherapy
consisting of a seed or seeds (including
a radioactive source) as being excluded
from the payment adjustment in
§ 419.43(g)(2) (because they are paid at
charges adjusted to cost). In addition,
section 147 of Public Law 110–275 also
provides that brachytherapy sources and
therapeutic radiopharmaceuticals are
paid at charges adjusted to cost for a
specified time period. We believe that it
would be administratively burdensome
to amend the regulations in this final
rule with comment period to
specifically identify these items as
exclusions and then to engage in notice
and comment rulemaking to later delete
their reference upon the sunset of the
provision if we were to adopt a different
payment methodology. As indicated
above in this section, we believe that the
most logical approach is to exclude all
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items paid at charges adjusted to cost as
determined by hospital-specific CCRs.
In addition, as noted in the CY 2009
OPPS/ASC proposed rule (73 FR 41461),
we intend to reassess the 7.1 percent
adjustment in the near future by
examining differences between urban
and rural hospitals’ costs using updated
claims, cost, and provider information.
Comment: Several commenters
supported the proposed 7.1 percent
payment adjustment for rural SCHs. The
commenters further requested that CMS
finalize the proposal to apply the 7.1
percent payment adjustment to rural
SCHs for CY 2009 despite the extension
of TOPs to small SCHs for CY 2009. The
commenters noted that the 7.1 percent
adjustment and TOPs for CY 2009 apply
to classes of hospitals that only partially
overlap, specifically, the 7.1 percent
adjustment applies to rural SCHs of any
size while TOPs apply to all small SCHs
(urban and rural) and small rural
hospitals. In addition, the commenters
stated that the purpose of the 7.1
percent adjustment is to compensate
rural SCHs because they are costlier
than other classes of hospitals, while the
purpose of TOPs is to compensate
certain hospitals for some of the money
that these hospitals would otherwise
have received for hospital outpatient
services under a cost-based system.
Response: We will continue to apply
the 7.1 percent payment adjustment to
rural SCHs and provide TOPS to small
SCHs (including EACHs) and small
rural hospitals for CY 2009. We
acknowledge that small rural SCHs are
potentially eligible for both the 7.1
percent payment adjustment and TOPs,
assuming all eligibility criteria are met.
Comment: One commenter requested
that CMS extend the 7.1 percent
payment adjustment to all SCHs, not
just rural SCHs, under the equitable
adjustment authority in section
1833(t)(2)(E) of the Act. The commenter
described the necessary access to
services that urban SCHs provide and
highlighted the fact that both urban and
rural SCHs have been recognized for
special protections by Congress in other
payment systems because they are the
sole source of inpatient hospital services
reasonably available to Medicare
beneficiaries. The commenter also
referenced a comment and data analysis
that the commenter previously
submitted to CMS in response to the CY
2006 OPPS proposed rule.
Response: As we have noted
previously in response to a similar
comment in the CY 2006 OPPS final
rule with comment period (70 FR 68560
and 68561), the statutory authority for
the rural adjustment relies upon a
comparison of costs between urban and
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rural hospitals. Extending this
adjustment to urban SCHs under our
equitable adjustment authority would
require urban SCHs to demonstrate
strong empirical evidence that they are
significantly more costly than other
urban hospitals. We could not find any
strong empirical evidence suggesting
that urban SCHs are significantly more
costly than other urban hospitals. In the
CY 2006 OPPS final rule with comment
period, we noted that urban SCHs’ costs
closely resembled urban hospitals’
costs. While some urban SCHs may have
unit costs as high as those of rural SCHs,
many clearly did not. Accordingly, we
are not adopting the commenters’
suggestions to extend the rural
adjustment to urban SCHs.
Comment: Several commenters
requested that CMS provide adequate
notice if the Agency plans to reassess
the 7.1 percent adjustment in a future
year. One commenter requested that
CMS provide adequate notice and a
comment period prior to applying a new
adjustment, particularly if a decrease in
the adjustment were to be proposed.
Another commenter requested that CMS
provide notice at least 12 months prior
to implementing a change in the
adjustment, to allow hospitals time to
adjust their annual budget, of which
expected payment is a key component.
Response: As noted earlier, we intend
to reassess the 7.1 percent adjustment in
the near future by examining differences
between urban and rural hospitals’ costs
using updated claims, cost, and
provider information. According to our
usual practice, we would perform the
initial analysis on the most complete
claims data available at the time the
proposed rule is published. We would
propose a new adjustment for rural
hospitals or some class of rural
hospitals, if appropriate, with an
expected implementation date of
January 1 of the next calendar year,
because the annual proposed rule is the
means we use to propose OPPS updates
and changes in policies for the
upcoming calendar year. Upon review
of the public comments that we would
expect to receive and our analysis of
fully complete claims data, we would
finalize a payment adjustment, if
appropriate, effective January 1 of the
next calendar year.
After consideration of the pubic
comments received, we are finalizing
our CY 2009 proposal, without
modification, to apply the 7.1 percent
payment adjustment to rural SCHs for
all services and procedures paid under
the OPPS in CY 2009, excluding drugs,
biologicals, services paid under the
pass-through payment policy, and items
paid at charges adjusted to cost. We are
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revising the regulations at § 419.43(g)(4)
to specify in general terms that items
paid at charges adjusted to costs by
application of a hospital-specific CCR
are excluded from the 7.1 percent
payment adjustment.
F. Hospital Outpatient Outlier Payments
1. Background
Currently, the OPPS pays outlier
payments on a service-by-service basis.
For CY 2008, the outlier threshold is
met when the cost of furnishing a
service or procedure by a hospital
exceeds 1.75 times the APC payment
amount and exceeds the APC payment
rate plus a $1,575 fixed-dollar
threshold. We introduced a fixed-dollar
threshold in CY 2005 in addition to the
traditional multiple threshold in order
to better target outliers to those high
cost and complex procedures where a
very costly service could present a
hospital with significant financial loss.
If a hospital meets both of these
conditions, the multiple threshold and
the fixed-dollar threshold, the outlier
payment is calculated as 50 percent of
the amount by which the cost of
furnishing the service exceeds 1.75
times the APC payment rate. This
outlier payment has historically been
considered a final payment by
longstanding OPPS policy.
It has been our policy for the past
several years to report the actual amount
of outlier payments as a percent of total
spending in the claims being used to
model the proposed OPPS. An
accounting error for CYs 2005, 2006,
and 2007 inflated CMS’ estimates of
OPPS expenditures, which led us to
underestimate outlier payment as a
percentage of total OPPS spending in
prior rules. Total OPPS expenditures
have been revised downward, and we
have accordingly revised our outlier
payment estimates. We further note that
the CY 2005 outlier payment estimate
included in the CY 2007 OPPS/ASC
final rule with comment period (71 FR
68010) has not changed based on
revised spending estimates. However,
we previously stated that CY 2006
outlier payment was equal to 1.1
percent of OPPS expenditures for CY
2006 (72 FR 66685), but based on our
revised numbers, actual outlier
payments are equal to approximately 1.3
percent of CY 2006 OPPS expenditures.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41462), we estimated total
outlier payments as a percent of total CY
2007 OPPS payment, using available CY
2007 claims and the revised OPPS
expenditure estimate, to be
approximately 0.9 percent. For CY 2007,
the estimated outlier payment was set at
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1.0 percent of the total aggregated OPPS
payments. Having all CY 2007 claims,
we continue to observe outlier payments
of 0.9 percent of the total aggregated
OPPS payment. Therefore, for CY 2007
we paid approximately 0.1 percent less
than the CY 2007 outlier target of 1.0
percent of the total aggregated OPPS
payments.
As explained in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66685), we set our projected target
for aggregate outlier payments at 1.0
percent of the aggregate total payments
under the OPPS for CY 2008. The
outlier thresholds were set so that
estimated CY 2008 aggregate outlier
payments would equal 1.0 percent of
the aggregate total payments under the
OPPS. Using the same set of CY 2007
claims and CY 2008 payment rates, we
currently estimate that the outlier
payments for CY 2008 would be
approximately 0.73 percent of the total
CY 2008 OPPS payments. The
difference between 1.0 percent and 0.73
percent is reflected in the regulatory
impact analysis in section XXIII.B. of
this final rule with comment period. We
note that we provide estimated CY 2009
outlier payments for hospitals and
CMHCs with claims included in the
claims data that we used to model
impacts in the Hospital-Specific
Impacts—Provider-Specific Data file on
the CMS Web site at: https://
www.cms.hhs.gov/
HospitalOutpatientPPS/.
2. Proposed Outlier Calculation
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41462), we proposed to
continue our policy of estimating outlier
payments to be 1.0 percent of the
estimated aggregate total payments
under the OPPS for outlier payments in
CY 2009. We proposed that a portion of
that 1.0 percent, specifically 0.07
percent, would be allocated to CMHCs
for PHP outlier payments. This is the
amount of estimated outlier payments
that would result from the proposed
CMHC outlier threshold of 3.40 times
the CY 2009 PHP APC payment rates, as
a proportion of all payments dedicated
to outlier payments. For further
discussion of CMHC outlier payments,
we refer readers to section X.D. of this
final rule with comment period.
To ensure that the estimated CY 2009
aggregate outlier payments would equal
1.0 percent of estimated aggregate total
payments under the OPPS, we proposed
that the hospital outlier threshold be set
so that outlier payments would be
triggered when the cost of furnishing a
service or procedure by a hospital
exceeds 1.75 times the APC payment
amount and exceeds the APC payment
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rate plus an $1,800 fixed-dollar
threshold (73 FR 41462). This proposed
threshold reflected the methodology
discussed below in this section, as well
as the proposed APC recalibration for
CY 2009.
We calculated the fixed-dollar
threshold for the CY 2009 OPPS/ASC
proposed rule using largely the same
methodology as we did in CY 2008. For
purposes of estimating outlier payments
for the CY 2009 OPPS/ASC proposed
rule, we used the CCRs available in the
April 2008 update to the Outpatient
Provider Specific File (OPSF). The
OPSF contains provider specific data,
such as the most current CCR, which is
maintained by the Medicare contractors
and used by the OPPS PRICER to pay
claims. The claims that we use to model
each OPPS update lag by 2 years. For
the CY 2009 OPPS/ASC proposed rule,
we used CY 2007 claims to model the
CY 2009 OPPS. In order to estimate the
CY 2009 hospital outlier payments for
the CY 2009 OPPS/ASC proposed rule,
we inflated the charges on the CY 2007
claims using the same inflation factor of
1.1204 that we used to estimate the IPPS
fixed-dollar outlier threshold for the FY
2009 IPPS proposed rule. For 1 year, the
inflation factor we used was 1.0585. The
methodology for determining this
charge inflation factor was discussed in
the FY 2009 IPPS proposed rule (73 FR
23710 through 23711) and the FY 2009
IPPS final rule (73 FR 48763). As we
stated in the CY 2005 OPPS final rule
with comment period (69 FR 65845), we
believe that the use of this charge
inflation factor is appropriate for the
OPPS because, with the exception of the
routine service cost centers, hospitals
use the same cost centers to capture
costs and charges across inpatient and
outpatient services.
As noted in the CY 2007 OPPS/ASC
final rule with comment period (71 FR
68011), we are concerned that we may
systematically overestimate the OPPS
hospital outlier threshold if we did not
apply a CCR inflation adjustment factor.
Therefore, we proposed to apply the
same CCR inflation adjustment factor
that we proposed to apply for the FY
2009 IPPS outlier calculation to the
CCRs used to simulate the CY 2009
OPPS outlier payments that determined
the fixed-dollar threshold. Specifically,
for CY 2009, we proposed to apply an
adjustment of 0.9920 to the CCRs that
were in the April 2008 OPSF to trend
them forward from CY 2008 to CY 2009.
The methodology for calculating this
adjustment is discussed in the FY 2009
IPPS proposed rule (73 FR 23710
through 23711) and the FY 2009 IPPS
final rule (73 FR 48763).
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Therefore, to model hospital outliers
for the CY 2009 OPPS/ASC proposed
rule, we applied the overall CCRs from
the April 2008 OPSF file after
adjustment (using the proposed CCR
inflation adjustment factor of 0.9920 to
approximate CY 2009 CCRs) to charges
on CY 2007 claims that were adjusted
(using the proposed charge inflation
factor of 1.1204 to approximate CY 2009
charges). We simulated aggregated CY
2009 hospital outlier payments using
these costs for several different fixeddollar thresholds, holding the 1.75
multiple constant and assuming that
outlier payment would continue to be
made at 50 percent of the amount by
which the cost of furnishing the service
would exceed 1.75 times the APC
payment amount, until the total outlier
payments equaled 1.0 percent of
aggregated estimated total CY 2009
OPPS payments. We estimated that a
proposed fixed-dollar threshold of
$1,800, combined with the proposed
multiple threshold of 1.75 times the
APC payment rate, would allocate 1.0
percent of aggregated total OPPS
payments to outlier payments. We
proposed to continue to make an outlier
payment that equals 50 percent of the
amount by which the cost of furnishing
the service exceeds 1.75 times the APC
payment amount when both the 1.75
multiple threshold and the fixed-dollar
$1,800 threshold are met. For CMHCs, if
a CMHC’s cost for partial hospitalization
exceeds 3.40 times the payment rate for
APC 0172 (Level I Partial
Hospitalization (3 services)) or APC
0173 (Level II Partial Hospitalization (4
or more services)), the outlier payment
would be calculated as 50 percent of the
amount by which the cost exceeds 3.40
times the APC payment rate.
New section 1833(t)(17)(A) of the Act,
which applies to hospitals as defined
under section 1886(d)(1)(B) of the Act,
requires that hospitals that fail to report
data required for the quality measures
selected by the Secretary, in the form
and manner required by the Secretary
under 1833(t)(17)(B) of the Act, incur a
2.0 percentage point reduction to their
OPD fee schedule increase factor, that
is, the annual payment update factor.
The application of a reduced OPD fee
schedule increase factor results in
reduced national unadjusted payment
rates that will apply to certain
outpatient items and services performed
by hospitals that are required to report
outpatient quality data and that fail to
meet the HOP QDRP requirements. For
hospitals that fail to meet the HOP
QDRP requirements, we proposed that
the hospitals’ costs would be compared
to the reduced payments for purposes of
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outlier eligibility and payment
calculation (73 FR 41462 through
41463). We believe no changes in the
regulation text would be necessary to
implement this policy because using the
reduced payment for these outlier
eligibility and payment calculations is
contemplated in the current regulations
at § 419.43(d). This proposal conformed
to current practice under the IPPS in
this regard. Specifically, under the IPPS,
for purposes of determining the
hospital’s eligibility for outlier
payments, the hospital’s estimated
operating costs for a discharge are
compared to the outlier cost threshold
based on the hospital’s actual DRG
payment for the case. For more
information on the HOP QDRP, we refer
readers to section XVI. of this final rule
with comment period.
Comment: Several commenters
supported the increase in the fixeddollar threshold for CY 2009 in order to
maintain the target outlier spending
percentage of 1 percent of estimated
total OPPS payments. Other
commenters believed that the proposed
outlier fixed-dollar threshold was
inappropriate and should be reduced
because CMS has not spent all the funds
set aside for outlier payments in prior
years. One commenter suggested that
because the outlier pool has been greater
than the need in prior years, CMS
should either reduce the set-aside
amount and retain those dollars in the
OPPS ratesetting structure or lower the
fixed-dollar threshold so that there is a
zero-balance at the end of the year.
Another commenter suggested that
outlier payments potentially be
discontinued because certain
organizations had not received outlier
payments for some years. Several
commenters did not support the
proposed increase in the outlier
threshold because they believed that
consistent increases in the level of the
outlier threshold reduced their
hospitals’ ability to capture additional
reimbursement for high cost cases and
put downward pressure on their
hospitals’ Medicare revenues.
A few commenters suggested that the
fixed-dollar threshold remain at the CY
2008 level of $1,575. Some commenters
recommended that the threshold be
proportionally reduced based on the
percentage difference between target
and actual outlier spending. One
commenter suggested that because CMS
modeled only 0.8 percent of total
payments made in outlier payments for
CY 2008 in the impact table for the CY
2009 OPPS/ASC proposed rule (73 FR
41559), CMS should proportionally
lower the proposed threshold to $1,440.
Another commenter believed that the
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outlier pool should be increased to 2
percent of total OPPS payments, with
corresponding thresholds of 1.5 times
the APC payment amount and $1,175
based on their analysis on their
hospital’s costs and payments. Some
commenters asked CMS to increase the
OPPS outlier payment percentage from
50 percent to 80 percent to mirror
inpatient outlier payments. One
commenter requested that CMS increase
outlier reimbursement to help teaching
hospitals that provide complex
outpatient services and incur significant
costs. Another commenter suggested
that the additional packaging by CMS
would result in reduced outlier
payments.
Response: In CY 2009, we proposed
that outlier payments would be 1.0
percent of total estimated OPPS
payments for outlier payments. In
general, outlier payments are intended
to ensure beneficiary access to services
by having the Medicare program share
in the financial loss incurred by a
provider associated with individual,
extraordinarily expensive cases.
Because the OPPS makes separate
payment for many individual services,
there is less financial risk associated
with the OPPS payment than, for
example, with the DRG payment under
the IPPS. Although some commenters
suggested an increase to 2.0 percent of
total estimated payment, we continue to
believe that an outlier target payment
percentage of 1.0 is appropriate because
the OPPS largely pays hospitals a
separate payment for most major
services, which mitigates significant
financial risk for most encounters, even
complex ones. We acknowledge that
teaching hospitals provide complex
outpatient services and incur costs, but
they also receive separate OPPS
payment for most major services
provided in a single encounter. Further,
in a budget neutral system, increasing
the percent of total estimated payments
dedicated to outlier payments would
reduce individual APC prospective
payments.
Although the OPPS makes separate
payment for most major services, we
continue to believe that outlier
payments are an integral component of
the OPPS and that the small amount of
OPPS payments targeted to outliers
serve to mitigate the financial risk
associated with extremely costly and
complex services. In allocating only 1.0
percent of total estimated payments for
outlier payments, the OPPS does not
pay as much in total outlier payments
as certain other payment systems.
Instead, the OPPS concentrates a small
amount of funds on extreme cases. For
this reason, it is not unanticipated that
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some hospitals would not receive any
OPPS outlier payments in any given
year.
We believe that the estimated total CY
2009 outlier payments will meet the
target of 1.0 percent of total estimated
OPPS payments. Historically, OPPS
outlier payments have exceeded the
percentage of total estimated OPPS
payments dedicated to outlier
payments. Only for CY 2007 was actual
outlier spending less than the target
percentage of aggregate OPPS payments
in that year, and only by 0.1 percent. We
note that we estimated a larger
difference between modeled outlier
payment as a percentage of spending for
CY 2007 and the CY 2007 1.0 percent
outlay in the CY 2008 OPPS/ASC final
rule with comment period. Further, the
CY 2007 fixed-dollar threshold was
higher, $1,825, than the CY 2008
threshold of $1,575, potentially
increasing the likelihood that outlier
payments would meet the target
estimated spending percentage for CY
2008. Therefore, we are not convinced
that we will not meet the estimated 1.0
percent outlay in outlier payments in
CY 2008.
As discussed above in this section, we
modeled the proposed fixed dollar
threshold of $1,800 incorporating all
proposed CY 2009 OPPS payment
policies using CY 2007 claims, our best
available charge and cost inflation
assumptions, and CY 2008 CCRs.
Because our estimates account for
anticipated inflation in both charges and
costs, we generally expect our threshold
to increase each year. We would not
retain the threshold at $1,575 because
we believe this threshold would lead us
to pay more than 1.0 percent of total
estimated OPPS payment in outlier
payments for CY 2009. The proposed
fixed-dollar threshold also reflected any
proposed changes in packaging for CY
2009. Because packaging also is
considered in the cost estimation
portion of the outlier eligibility and
payment calculations, any proposed
increase in packaging policy would not
automatically lead to less outlier
payments as one commenter suggested.
This is because the costs of packaged
items are distributed among the items
and services eligible for outliers,
increasing the likelihood that those
eligible items and services would
receive outlier payments.
We believe that our proposed
methodology uses the best information
we have at this time to yield the most
accurate prospective fixed-dollar outlier
threshold for the CY 2009 OPPS. The
hospital multiple and fixed-dollar
outlier thresholds are important parts of
a prospective payment system and
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should be based on projected payments
using the latest available historical data,
without adjustments for prior year
actual expenditures. We do not adjust
the prospective threshold for prior year
differences in actual expenditure of
outlier payments.
We do not believe it would be
appropriate to increase the payment
percentage to 80 percent of the
difference between the APC payment
and the cost of the services in order to
align it with the IPPS outlier policy. In
a budget neutral system with a specified
amount dedicated to outlier payments,
the payment percentage and fixed-dollar
threshold are related. Raising the
payment percentage would require us to
significantly increase the fixed-dollar
threshold to ensure that the estimated
CY 2009 OPPS payments would not
exceed the amount dedicated to outlier
payments. The payment percentage also
reflects the general level of financial
risk. The 50 percent payment percentage
under the OPPS corresponds to the
lower financial risk presented by the
OPPS cases compared to the IPPS,
which largely makes a single payment
for a complete episode-of-care.
Comment: One commenter supported
the proposal to make brachytherapy
sources eligible for outlier payments.
Response: In the CY 2009 OPPS/ASC
proposed rule (73 FR 41502), we
proposed prospective payment based on
median costs for brachytherapy sources
and proposed to assign brachytherapy
sources to status indicator ‘‘U.’’
Subsequent to the issuance of the CY
2009 OPPS/ASC proposed rule,
Congress enacted Public Law 110–275,
which further extended the payment
period for brachytherapy sources based
on a hospital’s charges adjusted to cost
through CY 2009. In receiving payment
at charges adjusted to cost, the outlier
policy would no longer apply to
brachytherapy sources because outlier
eligibility and payment are calculated
based on the difference between APC
payment and estimated cost. Outlier
payments are designed to buffer losses
when hospital costs greatly exceed
prospective payments. When section
142 of Public Law 110–275 once again
continued payment for brachytherapy
sources at charges adjusted to cost for
CY 2009, we revisited § 419.43(f) of our
regulations. Under § 419.43(f) of the
regulations, we exclude certain items
and services from qualification for
outlier payments. We note that our
longstanding policy has been that an
item or service paid at charges adjusted
to cost by a hospital-specific CCR is
ineligible for outlier payments. This
amendment does not alter our
longstanding and consistent policy
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regarding the exclusion of drugs and
biologicals that are assigned to separate
APCs and items that are paid at charges
adjusted to cost by application of a
hospital-specific CCR. An item or
service paid at charges adjusted to cost
does not qualify for an outlier payment
because the outlier eligibility
calculation is based on the difference
between APC payment and cost, where
cost is estimated at charges adjusted to
cost. When the APC payment for items
is made at charges adjusted to cost,
there is no difference between the APC
payment and estimated cost and thus no
outlier payment can be triggered. We
believed it was administratively simpler
to amend § 419.43(f) to exclude in a
general manner items or services paid at
charges adjusted to cost by application
of a hospital-specific CCR from
eligibility for an outlier payment,
consistent with our historical policy,
rather than amending the regulations to
specifically cite each item or service
that is excluded from an outlier
payment because it is paid at charges
adjusted to costs, currently
brachytherapy sources and pass-through
devices. Consequently, we are making a
conforming technical amendment to
§ 419.43(f) to specify that items and
services paid at charges adjusted to cost
by application of a hospital-specific
CCR are excluded from qualification for
the payment adjustment under
paragraph (d)(1) of this section [419.43].
In addition, we note that the
estimated cost of pass-through devices
will continue to be used in outlier
payment and eligibility calculations as
specified in § 419.43(d)(1)(i)(B).
Specifically, this regulation text codifies
the statutory provision of
1833(t)(5)(A)(i)(II) of the Act which
requires that estimated payment for
transitional pass-through devices be
added to the APC payment amount for
the associated procedure when
determining outlier eligibility for the
associated surgical procedure. However,
we are making a technical correction to
§ 419.43(d)(1)(i)(B) to appropriately
reference § 419.66. While
§ 419.43(d)(1)(i)(B) discusses the use of
the pass-through payment in
determining outlier eligibility, it
currently incorrectly references
paragraph (e) which discusses budget
neutrality, instead of § 419.66 which
sets for the specific rules on passthrough payments for devices. Thus, we
are deleting the reference to the phrase
‘‘paragraph (e) of this section’’ and in its
place substituting the correct cite
‘‘§ 419.66.’’ Pass-through devices are
paid at charges adjusted to cost, and
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thus are not eligible to receive outlier
payments on their own.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal for the outlier
calculation, without modification, as
outlined below.
3. Final Outlier Calculation
For CY 2009, we are applying the
overall CCRs from the July 2008 OPSF
file with a CCR adjustment factor of
0.9920 to approximate CY 2009 CCRs to
charges on the final CY 2007 claims that
were adjusted to approximate CY 2009
charges (using the final charge inflation
factor of 1.1204). These are the same
CCR adjustment and charge inflation
factors that we used to set the IPPS
fixed-dollar threshold for FY 2009 (73
FR 48763). We simulated the estimated
aggregate CY 2009 outlier payments
using these costs for several different
fixed-dollar thresholds, holding the 1.75
multiple constant and assuming that
outlier payment would continue to be
made at 50 percent of the amount by
which the cost of furnishing the service
would exceed 1.75 times the APC
payment amount, until the estimated
total outlier payments equaled 1.0
percent of aggregated estimated total CY
2009 payments. We estimate that a
fixed-dollar threshold of $1,800,
combined with the multiple threshold
of 1.75 times the APC payment rate, will
allocate 1.0 percent of estimated
aggregated total CY 2009 OPPS
payments to outlier payments.
In summary, for CY 2009 we will
continue to make an outlier payment
that equals 50 percent of the amount by
which the cost of furnishing the service
exceeds 1.75 times the APC payment
amount when both the 1.75 multiple
threshold and the fixed-dollar $1,800
threshold are met. For CMHCs, if a
CMHC provider’s cost for partial
hospitalization exceeds 3.40 times the
APC payment rate, the outlier payment
is calculated as 50 percent of the
amount by which the cost exceeds 3.40
times the APC payment rate. We
estimate that this threshold will allocate
0.12 percent of outlier payments to
CMHCs for PHP outlier payments.
4. Outlier Reconciliation
As provided in section 1833(t)(5) of
the Act, and described in the CY 2001
OPPS final rule with comment period
(65 FR 18498), we initiated the use of
a provider-specific overall CCR to
estimate a hospital’s or CMHC’s costs
from billed charges on a claim to
determine whether a service’s cost was
significantly higher than the APC
payment to qualify for outlier payment.
Currently, these facility-specific overall
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CCRs are determined using the most
recent settled or tentatively settled cost
report for each facility. At the end of the
cost reporting period, the hospital or
CMHC submits a cost report to its
Medicare contractor, who then
calculates the overall CCR that is used
to determine prospective outlier
payments for the facility. We believe the
intent of the statute is that outlier
payments would be made only in
situations where the cost of a service
provided is extraordinarily high. For
example, under our existing outlier
methodology, a hospital’s billed current
charges may be significantly higher than
the charges included in the hospital’s
overall CCR that is used to calculate
outlier payments, while the hospital’s
costs are more similar to the costs
included in the overall CCR. In this
case, the hospital’s overall CCR used to
calculate outlier payments is not
representative of the hospital’s current
charge structure. The overall CCR
applied to the hospital’s billed charges
would estimate an inappropriately high
cost for the service, resulting in
inappropriately high outlier payments.
This is contrary to the goal of outlier
payments, which are intended to reduce
the hospital’s financial risk associated
with services that have especially high
costs. The reverse could be true as well,
if a hospital significantly lowered its
current billed charges in relationship to
its costs, which would result in
inappropriately low outlier payments.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41463), for CY 2009, we
proposed to address vulnerabilities in
the OPPS outlier payment system that
lead to differences between billed
charges and charges included in the
overall CCR used to estimate cost. Our
proposal would apply to all hospitals
and CMHCs paid under the OPPS. The
main vulnerability in the OPPS outlier
payment system is the time lag between
the CCRs that are based on the latest
settled cost report and current charges
that creates the potential for hospitals
and CMHCs to set their own charges to
exploit the delay in calculating new
CCRs. A facility can increase its outlier
payments during this time lag by
increasing its charges significantly in
relation to its cost increases. The time
lag may lead to inappropriately high
CCRs relative to billed charges that
overestimate cost, and as a result,
greater outlier payments. Therefore, we
proposed to take steps to ensure that
outlier payments appropriately account
for financial risk when providing an
extraordinarily costly and complex
service, while only being made for
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services that legitimately qualify for the
additional payment.
We believe that some CMHCs may
have historically increased and
decreased their charges in response to
Medicare outlier payment policies. The
HHS Office of the Inspector General
(OIG) has published several reports that
found that CMHCs took advantage of
vulnerabilities in the outpatient outlier
payment methodology by increasing
their billed charges after their CCRs
were established to garner greater
outlier payments (DHHS OIG June 2007,
A–07–06–0459, page 2). We discuss the
OIG’s most recent report and
accompanying recommendations in
section XIV.C. of this final rule with
comment period. We similarly noted in
the CY 2004 OPPS final rule with
comment period (68 FR 63470) that
some CMHCs manipulated their charges
in order to inappropriately receive
outlier payments.
To address these vulnerabilities in the
area of the OPPS outlier payment
methodology, we proposed to update
our regulations to codify two existing
longstanding OPPS policies related to
CCRs, as discussed in further detail
below in this section. In addition to
codifying two longstanding policies
related to CCRs, we also proposed a new
provision giving CMS the ability to
specify an alternative CCR and allowing
hospitals to request a new CCR based on
substantial evidence. Finally, we
proposed to incorporate outlier policies
comparable to those that have been
included in several Medicare
prospective payment systems, in
particular the IPPS (68 FR 34494).
Specifically, we proposed to require
reconciliation of outlier payments in
certain circumstances. We stated our
belief that these proposed changes
would address most of the current
vulnerabilities present in the OPPS
outlier payment system.
First, we proposed to update the
regulations to codify two existing outlier
policies (73 FR 41463). These policies
are currently stated in Pub 100–04,
Chapter 4, section 10.11.1 of the
Internet-Only Manual, as updated via
Transmittal 1445, Change Request 5946,
dated February 8, 2008. To be consistent
with our manual instructions, for CY
2009, we proposed to revise 42 CFR
419.43 to add two new paragraphs
(d)(5)(ii) and (d)(5)(iii). Specifically, we
proposed to add new paragraph (d)(5)(ii)
to incorporate rules governing the
overall ancillary CCR applied to
processed claims and new paragraph
(d)(5)(iii) to incorporate existing policy
governing when a statewide average
CCR may be used instead of an overall
ancillary CCR. We note that use of a
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statewide average CCR in the specified
cases is to ensure that the most
appropriate CCR possible is used for
outlier payment calculations. For
purposes of this discussion and OPPS
payment policy in general, we treat
‘‘overall CCR’’ and ‘‘overall ancillary
CCR’’ as synonymous terms that refer to
the overall CCR that is calculated based
on cost report data, which for hospitals,
pertains to a specific set of ancillary cost
centers.
We proposed new § 419.43(d)(5)(ii) to
specify use of the hospital’s or CMHC’s
most recently updated overall CCR for
purposes of calculating outlier
payments. Our ability to identify true
outlier cases depends on the accuracy of
the CCRs. To the extent some facilities
may be motivated to maximize outlier
payments by taking advantage of the
time lag in updating the CCRs, the
payment system remains vulnerable to
overpayments to individual hospitals or
CMHCs. This proposed provision
specified that the overall CCR applied at
the time a claim is processed is based
on either the most recently settled or
tentatively settled cost report,
whichever is from the latest cost
reporting period. We also proposed new
§ 419.43(d)(5)(iii) to describe several
circumstances in which a Medicare
contractor may substitute a statewide
average CCR for a hospital’s or CMHC’s
CCR. In the CY 2007 OPPS/ASC final
rule with comment period (71 FR
68006), we finalized this policy but
inadvertently did not update our
regulations. We refer readers to section
II.D. of this final rule with comment
period for a more detailed discussion of
statewide average CCRs. In summary,
Medicare contractors can use a
statewide CCR for new hospitals or
CMHCs that have not accepted
assignment of the existing provider
agreement and who have not yet
submitted a cost report; for hospitals or
CMHCs whose Medicare contractor is
unable to obtain accurate data with
which to calculate the overall ancillary
CCR; and for facilities whose actual CCR
is more than 3 standard deviations
above the geometric mean of other
overall CCRs. For CY 2009, we estimate
this upper threshold to be 1.3. While
this existing policy minimizes the use of
CCRs that are significantly above the
mean for cost estimation, facilities with
CCRs that fall significantly below the
mean would continue to have their
actual CCRs utilized, instead of the
statewide default CCR. We also
proposed to reevaluate the upper
threshold and propose a new upper
threshold, if appropriate, through
rulemaking each year.
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These improvements would
somewhat mitigate, but would not fully
eliminate, a hospital’s or CMHC’s ability
to significantly increase its charges in
relation to its cost increases each year,
thereby receiving significant outlier
payments because of the inflated CCR.
Therefore, we also proposed two new
policies to more fully address the
vulnerabilities described above.
Specifically, we proposed new
§ 419.43(d)(5)(i) that stated that for
hospital outpatient services performed
on or after January 1, 2009, CMS may
specify an alternative CCR or the facility
may request an alternative CCR under
certain circumstances. The alternative
CCR in either case may be either higher
or lower than the otherwise applicable
CCR. In addition, we proposed to allow
a facility to request that its CCR be
prospectively adjusted if the facility
presents substantial evidence that the
overall CCR that is currently used to
calculate outlier payments is inaccurate.
Such an alternative CCR may be
appropriate if a facility’s charges have
increased at an excessive rate, relative to
the rate of increase among other
hospitals or CMHCs. CMS would have
the authority to direct the Medicare
contractor to calculate a CCR from the
cost report that accounts for the
increased charges. As explained in
greater detail below in this section, we
also proposed new § 419.43(d)(5)(iv),
now (d)(6), to allow Medicare
contractors the administrative discretion
to reconcile hospital or CMHC cost
reports under certain circumstances.
We also proposed to implement a
reconciliation process similar to that
implemented by the IPPS in FY 2003
(68 FR 34494). This proposed policy
would subject certain outlier payments
to reconciliation when a hospital or
CMHC cost report is settled. While the
existing policies described above in this
section partially address the
vulnerabilities in the OPPS outlier
payment system, the proposed
reconciliation process would more fully
ensure accurate outlier payments for
those facilities whose CCRs fluctuate
significantly, relative to the CCRs of
other facilities. We proposed that this
reconciliation process would only apply
to those services provided on or after
January 1, 2009 (73 FR 41464). We
considered proposing that this
reconciliation process would become
effective beginning with services
provided during the hospital’s first cost
reporting period beginning in CY 2009
but believed effectuating this policy
based upon date of service could be less
burdensome for hospitals. We
specifically solicited public comment
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related to the effective date for the
reconciliation process that would be
most administratively feasible for
hospitals and CMHCs. We noted this
reconciliation process would be done on
a limited basis in order to ease the
administrative burden on Medicare
contractors, as well as to focus on those
facilities that appear to have improperly
manipulated their charges to receive
excessive outlier payments. We
proposed to set reconciliation
thresholds in the manual, reevaluate
them annually, and modify them as
necessary. Following current IPPS
outlier policy, these thresholds would
include a measure of acceptable percent
change in a hospital’s or CMHC’s CCR
and an amount of outlier payment
involved. We further proposed that
when the cost report is settled,
reconciliation of outlier payments
would be based on the overall CCR
calculated based on the ratio of costs
and charges computed from the cost
report at the time the cost report
coinciding with the service dates is
settled. Reconciling these outlier
payments would ensure that the outlier
payments made are appropriate and that
final outlier payments would reflect the
most accurate cost data. We did not
propose to apply reconciliation to
services and items not otherwise subject
to outlier payments, including items
and services paid at charges adjusted to
cost (73 FR 41464).
This reconciliation process would
require recalculating outlier payments
for individual claims. We understand
that the aggregate change in a facility’s
outlier payments cannot be determined
because changes in the CCR would
affect the eligibility and amount of
outlier payment. For example, if a CCR
declined, some services may no longer
qualify for any outlier payments while
other services may qualify for lower
outlier payments. Therefore, the only
way to accurately determine the net
effect of a decrease in an overall CCR on
a facility’s total outlier payments is to
assess the impact on a claim-by-claim
basis. At this time, CMS is developing
a method for reexamining claims to
calculate the change in total outlier
payments for a cost reporting period
using a revised CCR.
Similar to the IPPS, we also proposed
to adjust the amount of final outlier
payments determined during
reconciliation for the time value of
money (73 FR 41464). A second
vulnerability remaining after
reconciliation is related to the same
issue of the ability of hospitals and
CMHCs to manipulate the system by
significantly increasing charges in the
year the service is performed, and
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obtaining excessive outlier payments as
a result. Even though under the
proposal the excess money would be
refunded at the time of reconciliation,
the facility would have access to excess
payments from the Medicare Trust Fund
on a short-term basis. In cases of
underpayment, the facility would not
have had access to appropriate outlier
payment for that time period.
Accordingly, we believed it would be
necessary to adjust the amount of the
final outlier payment to reflect the time
value of the funds for that time period.
Therefore, we proposed to add section
§ 419.43(d)(6) to provide that when the
cost report is settled, outlier payments
would be subject to an adjustment to
account for the value of the money for
the time period in which the money was
inappropriately held by the hospital or
CMHC (73 FR 41464 through 41465).
This would also apply where outlier
payments were underpaid. In those
cases, the adjustment would result in
additional payments to hospitals or
CMHCs. Any adjustment would be
made based on a widely available index
to be established in advance by the
Secretary, and would be applied from
the midpoint of the cost reporting
period to the date of reconciliation (or
when additional payments are issued, in
the case of underpayments). This
adjustment to reflect the time value of
a facility’s outlier payments would
ensure that the outlier payment
finalized at the time its cost report is
settled appropriately reflected the
hospital’s or CMHC’s approximate
marginal costs in excess of the APC
payments for services, taking into
consideration the applicable outlier
thresholds.
Despite the fact that each individual
facility’s outlier payments may be
subject to adjustment when the cost
report is settled, we noted our
continued belief that the hospital
multiple and fixed-dollar outlier
thresholds should be based on projected
payments using the latest available
historical data, without retroactive
adjustments, to ensure that actual
outlier payments are equal to the target
spending percentage of total anticipated
hospital outpatient spending. The
proposed reconciliation process and
ability to change overall CCRs would be
intended only to adjust actual outlier
payments so that they most closely
reflected true costs rather than
artificially inflated costs. These
adjustments would be made irrespective
of whether total outlier spending targets
were met or not.
In the CY 2009 OPP/ASC proposed
rule (73 FR 41465), we did not propose
to make any changes to the method that
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we use to calculate outlier thresholds
for CY 2009. The multiple and fixeddollar outlier thresholds are an
important aspect of the prospective
nature of the OPPS and key to their
importance is their predictability and
stability for the prospective payment
year. The outlier payment policy is
designed to alleviate any financial
disincentive hospitals may have to
providing any medically necessary care
their patients may require, even to those
patients who are very sick and would be
likely more costly to treat. Preset and
publicized OPPS outlier thresholds
allow hospitals and CMHCs to
approximate their Medicare payment for
an individual patient while that patient
is still in the hospital. Even though we
proposed to make outlier payments
susceptible to a reconciliation based on
the facility’s actual CCRs during the
contemporaneous cost reporting period,
the facility should still be in a position
to make this approximation. Hospitals
and CMHCs have immediate access to
the information needed to determine
what their CCR will be for a specific
time period when their cost report is
settled. Even if the final CCR is likely to
be different from the ratio used initially
to process and pay the claim, hospitals
and CMHCs not only have the
information available to estimate their
CCRs, but they also have the ability to
control those CCRs, through the
structure and levels of their charges. If
we were to make retroactive
adjustments to hospital outlier
payments to ensure that we met total
OPPS outlier spending targets, we
would undermine the critical
predictability aspect of the prospective
nature of the OPPS. Making such an
across-the-board adjustment would lead
to either more or less outlier payments
for all hospitals that would, therefore,
be unable to immediately approximate
the payment they would receive for
especially costly services at the time
those services were provided. We
continue to believe that it would be
neither necessary nor appropriate to
make such an aggregate retroactive
adjustment.
Comment: Some commenters were
opposed to outlier reconciliation
because they believed that the concept
of reconciliation is contrary to the
nature of a prospective payment system.
One commenter asserted that the
proposed reconciliation process would
be administratively burdensome to
hospitals due to the volume of
outpatient encounters and number of
claims involved. Another commenter
believed that hospitals, which typically
increase charges at the beginning of
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each fiscal year, should not have to be
held to a prior period CCR for
settlement purposes. One commenter
suggested that the impact of the outlier
reconciliation be identified, and should
the impact grow too large, that it be
included in the development of the
outlier thresholds. Another commenter
sought alternatives to the reconciliation
process and suggested controlling
outlier payments through the percentage
of payments set aside for outlier
payments, as well as more timely
settlement of cost reports to avoid the
need for reconciliation. Several
commenters suggested waiting until the
newly revised cost reporting forms are
in place before implementing the outlier
reconciliation proposal in order to
assess changes to the CCRs and
potentially use more accurate CCRs for
outlier payment.
Many commenters recommended that
the effective date for implementation of
the outlier reconciliation policy be the
first cost reporting period in CY 2009.
Several commenters sought further
clarification regarding the expected
outlier reconciliation thresholds, as well
as the reasoning behind their
development. Some commenters
believed that the OPPS reconciliation
policy should implement the same
outlier reconciliation thresholds as the
IPPS, or should use them as a guide in
developing OPPS-specific thresholds. A
few commenters recommended that the
CCR fluctuation threshold should be the
same as in the IPPS because the same
data from the cost report would be used
in both cases. Many commenters
believed that the outlier reconciliation
policy should be applied on a limited
basis.
Response: According to commenters,
the concept of reconciliation is contrary
to the idea of a prospective payment
system. We believe it is contrary to the
concept of a prospective payment
system for hospitals to be able to
increase outlier payments by
manipulating their charges for the
current year. We believe that
reconciliation would help address this
vulnerability in outlier payment,
without affecting the overall prospective
nature of the OPPS. Any action
regarding reconciling the outlier
payments of an individual hospital
would not affect the predictability of the
system because we are not proposing to
make any adjustments to the
prospectively set outlier multiple and
fixed-dollar thresholds and payment
methodology. We will continue to use
the best data available to set the annual
OPPS outlier thresholds. Hospitals
would continue to be capable of
calculating any outlier payments they
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would receive, using information that is
readily available to them through their
accounting systems. While we are
finalizing the proposed outlier
reconciliation policy, as described
above, we are not making retroactive
adjustments to our outlier threshold to
meet a dedicated percentage of total
payments set aside for outlier payments.
This approach maintains the
prospective nature of the OPPS outlier
payment and will enable hospitals to
approximate their outlier payments and
potential eligibility for reconciliation.
In section II.A.1.c. of this final rule
with comment period, we indicate that
we are updating the Medicare hospital
cost report form and that we plan to
publish this form for public comment. It
is possible that the new cost report form
could lead to more accurate overall
CCRs. Although some commenters
suggested that we postpone the
implementation of the outlier
reconciliation policy until the revised
cost report form is available to capitalize
on this potential for improved accuracy,
we do not believe that minor
improvements in the accuracy of the
overall CCR, a gross measure, warrant
delaying outlier reconciliation. In order
to determine an effective date for the
policy that would minimize the
administrative burden of the outlier
reconciliation process, we specifically
solicited public comment regarding the
effective implementation date of this
policy. We have considered the
comments regarding the effective
implementation date of the outlier
reconciliation process and believe that
the first cost reporting period of CY
2009 would be the most appropriate
start date. Therefore, we expect that for
hospital outpatient services furnished
during the cost reporting periods
beginning on or after January 1, 2009,
that if the hospital qualifies for
reconciliation, the amount of outlier
payments will be recalculated using the
actual CCR computed from the relevant
cost report and claims data for each
service furnished during the cost
reporting period and that any difference
in aggregate outlier payment, adjusted
for the time value of money, will be
handled at cost report settlement.
While we recognize the burden
involved in potentially subjecting
hospitals to an outlier reconciliation
process, we believe that appropriate
outlier reconciliation thresholds will
ensure that the limited resources of
Medicare contractors are focused upon
those hospitals that appear to have
disproportionately benefited from the
time lag in updating their CCRs. We
intend to issue manual instructions in
the near future to assist Medicare
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contractors in implementing the outlier
reconciliation provision for CY 2009. In
those manual instructions, we will issue
thresholds for Medicare contractors to
use to determine when a hospital or
CMHC will qualify for reconciliation for
the first cost reporting period beginning
on or after January 1, 2009.
We recognize the commenters’
concerns regarding the reconciliation
thresholds that we would set to focus on
those hospitals whose charging
structures fluctuate significantly. In
considering reconciliation thresholds
for the OPPS, we have used the existing
IPPS thresholds as a guide in identifying
hospitals in which outlier reconciliation
would be appropriate. For cost reports
beginning in CY 2009, we are
considering instructing Medicare
contractors to conduct reconciliation for
hospitals and CMHCs whose actual
CCRs at the time of cost report
settlement are found to be plus or minus
10 percentage points from the CCR used
during the cost reporting period to make
outlier payments, and for hospitals that
have total OPPS outlier payments that
exceed $200,000. The change in CCR
threshold would be the same threshold
used under the IPPS. We are still
considering whether to adopt an outlier
payment threshold specifically for
CMHCs. The hospital outlier payment
threshold of $200,000 serves the same
purpose as the IPPS $500,000 threshold,
but is proportional to OPPS outlier
payments. We estimate that the
$200,000 threshold would identify
roughly the same number of hospitals as
the IPPS threshold of $500,000. We
believe that these thresholds would
appropriately identify hospitals
receiving outlier payments that are
substantially different from the ones
indicated by their actual costs and
charges, while ensuring limited
application of the outlier reconciliation
policy. Hospitals exceeding these
thresholds during their applicable cost
reporting periods would become subject
to reconciliation of their outlier
payments. These thresholds would be
reevaluated annually and, if necessary,
modified each year in order to ensure
that reconciliation is performed on a
limited basis and focused on those
hospitals that appear to have
disproportionately benefited from the
outlier payment vulnerabilities. As
under the IPPS, we also retain the
discretion to recommend other
hospitals’ cost reports for reconciliation.
As under the IPPS, we did not
propose to adjust the fixed-dollar
threshold or amount of total OPPS
payment set aside for outlier payments
for reconciliation activity. As noted
above in this section, the predictability
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of the fixed-dollar threshold is an
important component of a prospective
payment system. We would not adjust
the prospectively set threshold for the
amount of payment reconciled at cost
report settlement. Our outlier threshold
calculation assumes that CCRs
accurately estimate hospital costs based
on information available to us at the
time we set the prospective fixed-dollar
outlier threshold. For these reasons, we
are not making any assumptions about
the effects of reconciliation on the
outlier threshold calculation.
With regard to other suggested
alternatives to an outlier reconciliation
process, we note that more timely cost
report settlement would not address the
fundamental vulnerability in using a
prior period CCR to project cost in the
prospective payment year. While timely
cost report settlement is valuable,
significant differences might still exist
between the actual CCR and the one
used to estimate cost in the outlier
payment calculation. We also clarify
that hospitals would not be held to a
prior period CCR for settlement. The
reconciliation process will ensure that
CMS uses an actual year CCR for cost
report settlement when outlier
payments are significant and may not
have been accurate.
Comment: Some commenters
supported the proposal to substitute
CCRs based on the most recent cost
report or other alternate CCRs where
appropriate. Several commenters
recommended changes to the regulation
text that would more specifically
delineate the situations in which CMS
could specify an alternative CCR,
believing that the proposed regulation
text placed no limits on the
circumstances in which an alternative
CCR could be applied. Some
commenters requested that CMS
automatically notify a provider if its
CCR is three standard deviations below
the geometric mean and potentially
replace those CCRs with a statewide
CCR. They believed that this would
protect the Medicare program against
CCR manipulation and do more to
correct both ‘‘underpayments’’ and
‘‘overpayments’’ of outliers as they
occur.
Response: Although we recognize the
commenters’ concern regarding
situations in which CMS could direct
Medicare contractors to use an
alternative CCR, we believe we must
retain the flexibility to quickly respond
should we uncover excessive
discrepancies between anticipated
actual CCRs and the ones being used to
estimate costs for outlier payments. This
could entail observation of significant
increases in a hospital’s or CMHC’s
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charges over a short period of time,
potentially to garner greater outlier
payments, but also could occur if a
hospital accepted assignment in a
change of ownership and needed CMS
to quickly change the CCR being used
for payment in order to help the new
owners avoid reconciliation. We believe
that limiting the circumstances in which
CMS could specify an alternative CCR
would limit our ability to respond
quickly. We do not anticipate using that
authority frequently. It likely would be
isolated to situations where immediate
action would be necessary.
Some commenters requested that a
statewide CCR be used as a substitute in
situations where CCRs fall three
standard deviations below the geometric
mean, similar to the policy for
excessively high CCRs. We believe that
the CCR of hospitals who have CCRs
that fall below three standard deviations
below the geometric mean is an accurate
reflection of the relationship between
their costs and charges. Implementing a
statewide floor would provide an
incentive for hospitals to take advantage
of the policy by manipulating their
charging structures so that their
hospital-specific CCR would be replaced
by a statewide CCR. We have previous
experience under the IPPS outlier policy
with hospitals increasing their charges
significantly in order to lower their
CCRs, resulting in assignment of the
statewide average. This manipulation
would allow hospitals to reach a higher
estimation of cost than actually exists.
No similar incentive exists for hospitals
to increase their CCRS to the ceiling. In
the FY 2004 IPPS final rule (68 FR
34500), we removed the IPPS
requirement that hospitals with a CCR
below the floor be assigned the
statewide average and we have adopted
the same policy in manual instructions
for the OPPS, as noted above. For CY
2009, we estimate the upper threshold
at which we would substitute to the
statewide CCR for a hospital’s CCR to be
1.3.
Comment: One commenter supported
the time value of money adjustment
which would be included in situations
where outlier reconciliation applied.
Other commenters did not support the
time value of money adjustment because
of the recent experience under the IPPS.
The IPPS is still finalizing the technical
methodology for conducting accurate
reconciliation and the commenters did
not want to be penalized for holding
outlier overpayments while waiting for
reconciliation. One commenter argued
against the time value of money
adjustment because the commenter
believed there was insufficient
information about how the calculation
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would be conducted. A commenter
believed that interest should only be
accrued if a provider did not pay in a
timely manner the amount due to
Medicare after being issued a Notice of
Program Reimbursement at cost report
settlement.
Response: The time value of money
adjustment was proposed to address the
outlier payment vulnerability that
would remain even after a cost report
reconciliation policy was in place.
Outlier payments are uniquely
susceptible to manipulation because
hospitals set their own charging
structure and can change it during a cost
reporting period without the Medicare
contractor’s knowledge. By
manipulating its CCRs, a hospital could
inappropriately gain excess payments
from the Medicare Trust Fund on a
short-term basis. We believe that the
current IPPS situation, where hospitals
must wait to reconcile cost reports until
CMS can operationally refine the system
of IPPS outlier reconciliation, is unique
and that adjustment for the time value
of money makes sense for long-term
implementation. Furthermore, the
provision offers hospitals the same
interest adjustment should CMS owe
hospitals additional outlier payments.
We specify the time value of money
calculation in the Medicare Claims
Processing Manual, Pub 100–04,
Chapter 3, Section 20.1.2.7. For the
OPPS, we intend to employ the same
calculation, and we will use the same
index, which is the monthly rate of
return that the Medicare Trust Fund
earns.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, with
modification, for an OPPS outlier
reconciliation policy. We are
implementing the outlier reconciliation
policy for each hospital and CMHC for
services furnished during cost reporting
periods beginning in CY 2009, and we
are including an adjustment for the time
value of money. We have modified
§ 419.43(d)(6) to reflect this change to
the effective date. We also reorganized
the provisions of § 419.43(d)(5) and
§ 419.43(d)(6) to better separate the
concept of CCRs and outlier
reconciliation processes. In reviewing
our proposed regulation text for outlier
reconciliation, we noted that use of
‘‘Reconciliation’’ was not the
appropriate title for § 419.43(d)(5),
which included both CCRs and the
reconciliation process itself. We have
modified our regulation text to
separately identify the concepts of CCRs
and reconciliation and have labeled
§ 419.43(d)(5) as ‘‘Cost-to-Charge Ratios
for Calculating Charges Adjusted to
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Cost’’ and § 419.43(d)(6) as
‘‘Reconciliation.’’
G. Calculation of an Adjusted Medicare
Payment From the National Unadjusted
Medicare Payment
The basic methodology for
determining prospective payment rates
for HOPD services under the OPPS is set
forth in existing regulations at
§§ 419.31, 419.32, 419.43 and 419.44.
The payment rate for most services and
procedures for which payment is made
under the OPPS is the product of the
conversion factor calculated in
accordance with section II.B. of this
final rule with comment period and the
relative weight determined under
section II.A. of this final rule with
comment period. Therefore, the national
unadjusted payment rate for most APCs
contained in Addendum A to this final
rule with comment period and for most
HCPCS codes to which separate
payment under the OPPS has been
assigned in Addendum B to this final
rule with comment period was
calculated by multiplying the final CY
2009 scaled weight for the APC by the
final CY 2009 conversion factor. We
note that section 1833(t)(17)(A) of the
Act, which applies to hospitals as
defined under section 1886(d)(1)(B) of
the Act, requires that hospitals that fail
to report data required for the quality
measures selected by the Secretary, in
the form and manner required by the
Secretary under 1833(t)(17)(B) of the
Act, incur a 2.0 percentage point
reduction to their OPD fee schedule
increase factor, that is, the annual
payment update factor. The application
of a reduced OPD fee schedule increase
factor results in reduced national
unadjusted payment rates that will
apply to certain outpatient items and
services provided by hospitals that are
required to report outpatient quality
data and that fail to meet the Hospital
Outpatient Quality Data Reporting
Program (HOP QDRP) requirements. For
further discussion of the payment
reduction for hospitals that fail to meet
the requirements of the HOP QDRP, we
refer readers to section XVI.D. of this
final rule with comment period.
We demonstrate in the steps below
how to determine the APC payment that
will be made in a calendar year under
the OPPS to a hospital that fulfills the
HOP QDRP requirements and to a
hospital that fails to meet the HOP
QDRP requirements for a service that
has any of the following status indicator
assignments: ‘‘P,’’ ‘‘Q1,’’ ‘‘Q2,’’ ‘‘Q3,’’
‘‘R,’’ ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X’’ (as defined
in Addendum D1 to this final rule with
comment period), in a circumstance in
which the multiple procedure discount
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does not apply and the procedure is not
bilateral. We note that, as discussed in
section VII.B. of this final rule with
comment period, brachytherapy
sources, to which we proposed
assigning status indicator ‘‘U’’ for CY
2009, are required by section 142 of
Public Law 110–275 to be paid on the
basis of a hospital’s charges adjusted to
cost. Therefore, these items are not
subject to the annual OPPS payment
update factor and, therefore, will not be
subject to the CY 2009 payment
reduction for a hospital’s failure to meet
the HOP QDRP requirements.
Individual providers interested in
calculating the payment amount that
they specifically will receive for a
specific service from the national
unadjusted payment rates presented in
Addenda A and B to this final rule with
comment period should follow the
formulas presented in the following
steps. For purposes of the payment
calculations below, we refer to the
national unadjusted payment rate for
hospitals that meet the requirements of
the HOP QDRP as the ‘‘full’’ national
unadjusted payment rate. We refer to
the national unadjusted payment rate
for hospitals that fail to meet the
requirements of the HOP QDRP as the
‘‘reduced’’ national unadjusted payment
rate. The ‘‘reduced’’ national unadjusted
payment rate is calculated by
multiplying the reporting ratio of 0.981
times the ‘‘full’’ national unadjusted
payment rate. The national unadjusted
payment rate used in the calculations
below is either the ‘‘full’’ national
unadjusted payment rate or the
‘‘reduced’’ national unadjusted payment
rate, depending on whether the hospital
met its HOP QDRP requirements in
order to receive the full CY 2009 OPPS
increase factor.
Step 1. Calculate 60 percent (the
labor-related portion) of the national
unadjusted payment rate. Since the
initial implementation of the OPPS, we
have used 60 percent to represent our
estimate of that portion of costs
attributable, on average, to labor. We
refer readers to the April 7, 2000 OPPS
final rule with comment period (65 FR
18496 through 18497) for a detailed
discussion of how we derived this
percentage. We confirmed that this
labor-related share for hospital
outpatient services is still appropriate
during our regression analysis for the
payment adjustment for rural hospitals
in the CY 2006 OPPS final rule with
comment period (70 FR 68553).
The formula below is a mathematical
representation of Step 1 and identifies
the labor-related portion of a specific
payment rate for the specific service.
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x—Labor-related portion of the national
unadjusted payment rate
x = .60 * (national unadjusted payment
rate)
Step 2. Determine the wage index area
in which the hospital is located and
identify the wage index level that
applies to the specific hospital. The
wage index values assigned to each area
reflect the new geographic statistical
areas as a result of revised OMB
standards (urban and rural) to which
hospitals are assigned for FY 2009
under the IPPS, reclassifications
through the MGCRB, section
1886(d)(8)(B) ‘‘Lugar’’ hospitals, and
section 401 of Public Law 108–173. In
the CY 2009 OPPS/ASC proposed rule
(73 FR 41466), we noted that the
reclassifications of hospitals under
section 508 of Public Law 108–173 were
scheduled to expire on September 30,
2008 and would not be applicable to FY
2009 and, therefore, would not apply to
the CY 2009 OPPS. However, section
124 of Public Law 110–275 extended
these reclassifications and special
exception wage indices through
September 30, 2009. For further
discussion of the changes to the FY
2009 IPPS wage index, as applied to the
CY 2009 OPPS, we refer readers to
section II.C. of this final rule with
comment period. The wage index values
include the occupational mix
adjustment described in section II.C. of
this final rule with comment period that
was developed for the final FY 2009
IPPS payment rates published in the
Federal Register on August 19, 2008 (73
FR 48778) and finalized in a subsequent
document published in the Federal
Register on October 3, 2008 (73 FR
57888 through 58017).
Step 3. Adjust the wage index of
hospitals located in certain qualifying
counties that have a relatively high
percentage of hospital employees who
reside in the county, but who work in
a different county with a higher wage
index, in accordance with section 505 of
Public Law 108–173. Addendum L to
this final rule with comment period
contains the qualifying counties and the
final wage index increase developed for
the FY 2009 IPPS published in the FY
2009 IPPS final rule as Table 4J (73 FR
48883 through 48898) and finalized in
a subsequent document published in the
Federal Register on October 3, 2008 (73
FR 57988). This step is to be followed
only if the hospital has chosen not to
accept reclassification under Step 2
above.
Step 4. Multiply the applicable wage
index determined under Steps 2 and 3
by the amount determined under Step 1
that represents the labor-related portion
of the national unadjusted payment rate.
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The formula below is a mathematical
representation of Step 4 and adjusts the
labor-related portion of the national
payment rate for the specific service by
the wage index.
xa—Labor-related portion of the national
unadjusted payment rate (wage
adjusted)
xa = .60 * (national unadjusted payment
rate) * applicable wage index.
Step 5. Calculate 40 percent (the
nonlabor-related portion) of the national
unadjusted payment rate and add that
amount to the resulting product of Step
4. The result is the wage index adjusted
payment rate for the relevant wage
index area.
The formula below is a mathematical
representation of Step 5 and calculates
the remaining portion of the national
payment rate, the amount not
attributable to labor, and the adjusted
payment for the specific service.
y—Nonlabor-related portion of the
national unadjusted payment rate
y = .40 * (national unadjusted payment
rate)
Adjusted Medicare Payment = y + xa
Step 6. If a provider is a SCH, as
defined in the regulations at § 412.92, or
an EACH, which is considered to be a
SCH under section 1886(d)(5)(D)(iii)(III)
of the Act, and located in a rural area,
as defined in § 412.64(b), or is treated as
being located in a rural area under
§ 412.103, multiply the wage index
adjusted payment rate by 1.071 to
calculate the total payment.
The formula below is a mathematical
representation of Step 6 and applies the
rural adjustment for rural SCHs.
Adjusted Medicare Payment (SCH or
EACH) = Adjusted Medicare
Payment * 1.071
We have provided examples below of
the calculation of both the full and
reduced national unadjusted payment
rates that will apply to certain
outpatient items and services performed
by hospitals that meet and that fail to
meet the HOP QDRP requirements,
using the steps outlined above. For
purposes of this example, we will use a
provider that is located in Brooklyn,
New York that is assigned to CBSA
35644. This provider bills one service
that is assigned to APC 0019 (Level I
Excision/Biopsy). The CY 2009 full
national unadjusted payment rate for
APC 0019 is $295.69. The reduced
national unadjusted payment rate for a
hospital that fails to meet the HOP
QDRP requirements is $290.07. This
reduced rate is calculated by
multiplying the reporting ratio of 0.981
by the full unadjusted payment rate for
APC 0019.
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The FY 2009 wage index for a
provider located in CBSA 35644 in New
York is 1.2996. The labor portion of the
full national unadjusted payment is
$230.56 (.60 * $295.69 * 1.2996). The
labor portion of the reduced national
unadjusted payment is $226.18 (.60 *
$290.07 * 1.2996). The nonlabor portion
of the full national unadjusted payment
is $118.27 (.40 * $295.69). The nonlabor
portion of the reduced national
unadjusted payment is $116.02 (.40 *
$290.07). The sum of the labor and
nonlabor portions of the full national
adjusted payment is $348.83 ($230.56 +
$118.27). The sum of the reduced
national adjusted payment is $342.20
($226.18 + $116.02).
We did not receive any public
comments concerning our proposed
methodology for calculating an adjusted
payment from the national unadjusted
Medicare payment amount for CY 2009.
Therefore, we are finalizing our
proposed CY 2009 methodology,
without modification.
H. Beneficiary Copayments
1. Background
Section 1833(t)(3)(B) of the Act
requires the Secretary to set rules for
determining copayment amounts to be
paid by beneficiaries for covered OPD
services. Section 1833(t)(8)(C)(ii) of the
Act specifies that the Secretary must
reduce the national unadjusted
copayment amount for a covered OPD
service (or group of such services)
furnished in a year in a manner so that
the effective copayment rate
(determined on a national unadjusted
basis) for that service in the year does
not exceed a specified percentage. As
specified in section 1833(t)(8)(C)(ii)(V)
of the Act, for all services paid under
the OPPS in CY 2009, and in calendar
years thereafter, the percentage is 40
percent of the APC payment rate.
Section 1833(t)(3)(B)(ii) of the Act
provides that, for a covered OPD service
(or group of such services) furnished in
a year, the national unadjusted
copayment amount cannot be less than
20 percent of the OPD fee schedule
amount. Sections 1834(d)(2)(C)(ii) and
(d)(3)(C)(ii) of the Act further require
that the copayment for screening
flexible sigmoidoscopies and screening
colonoscopies be equal to 25 percent of
the payment amount. Since the
beginning of the OPPS, we have applied
the 25-percent copayment to screening
flexible sigmoidoscopies and screening
colonoscopies.
2. Copayment Policy
For CY 2009, we proposed to
determine copayment amounts for new
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and revised APCs using the same
methodology that we implemented for
CY 2004. (We refer readers to the
November 7, 2003 OPPS final rule with
comment period (68 FR 63458)). In
addition, we proposed to use the same
rounding methodology implemented in
CY 2008 in instances where the
application of our standard copayment
methodology would result in a
copayment amount that is less than 20
percent and cannot be rounded, under
standard rounding principles, to 20
percent. (We refer readers to the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66687).) The
national unadjusted copayment
amounts for services payable under the
OPPS that will be effective January 1,
2009, are shown in Addenda A and B
to this final rule with comment period.
As discussed in section XVI.D. of this
final rule with comment period, we are
finalizing our proposal for CY 2009 that
the Medicare beneficiary’s minimum
unadjusted copayment and national
unadjusted copayment for a service to
which a reduced national unadjusted
payment rate applies would equal the
product of the reporting ratio and the
national unadjusted copayment, or the
product of the reporting ratio and the
minimum unadjusted copayment,
respectively, for the service.
We did not receive any public
comments regarding this proposal.
Therefore, we are finalizing our CY 2009
proposal for determining APC
copayment amounts, without
modification.
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3. Calculation of an Adjusted
Copayment Amount for an APC Group
Individuals interested in calculating
the national copayment liability for a
Medicare beneficiary for a given service
provided by a hospital that met or failed
to meet its HOP QDRP requirements
should follow the formulas presented in
the following steps.
Step 1. Calculate the beneficiary
payment percentage for the APC by
dividing the APC’s national unadjusted
copayment by its payment rate. For
example, using APC 0019, $71.87 is
24.306 percent of the full national
unadjusted payment rate of $295.69.
The formula below is a mathematical
representation of Step 1 and calculates
national copayment as a percentage of
national payment for a given service.
b—Beneficiary payment percentage
b = National unadjusted copayment for
APC/national unadjusted payment
rate for APC
Step 2. Calculate the appropriate
wage-adjusted payment rate for the APC
for the provider in question, as
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indicated in section II.G. of this final
rule with comment period. Calculate the
rural adjustment for eligible providers
as indicated in section II.G. of this final
rule with comment period.
Step 3. Multiply the percentage
calculated in Step 1 by the payment rate
calculated in Step 2. The result is the
wage-adjusted copayment amount for
the APC.
The formula below is a mathematical
representation of Step 3 and applies the
beneficiary percentage to the adjusted
payment rate for a service calculated
under section II.G. of this final rule with
comment period, with and without the
rural adjustment, to calculate the
adjusted beneficiary copayment for a
given service.
Wage-adjusted copayment amount for
the APC = Adjusted Medicare
Payment * b
Wage-adjusted copayment amount for
the APC (SCH or EACH) =
(Adjusted Medicare Payment *
1.071) * b
Step 4. For a hospital that failed to
meet its HOP QDRP requirements,
multiply the copayment calculated in
Step 3 by the reporting ratio of 0.981.
The unadjusted copayments for
services payable under the OPPS that
will be effective January 1, 2009, are
shown in Addenda A and B to this final
rule with comment period. We note that
the national unadjusted payment rates
and copayment rates shown in Addenda
A and B to this final rule with comment
period reflect the full market basket
conversion factor increase, as discussed
in section XVI.D. of this final rule with
comment period.
III. OPPS Ambulatory Payment
Classification (APC) Group Policies
A. OPPS Treatment of New HCPCS and
CPT Codes
1. Treatment of New HCPCS Codes
Included in the April and July Quarterly
OPPS Updates for CY 2008
During the April and July quarters of
CY 2008, we created a total of 11 new
Level II HCPCS codes that were not
addressed in the CY 2008 OPPS/ASC
final rule with comment period that
updated the CY 2008 OPPS. For the
April quarter of CY 2008, we recognized
for separate payment a total of four new
Level II HCPCS codes, specifically
C9241 (Injection, doripenem, 10 mg);
Q4096 (Injection, von willebrand factor
complex, human, ristocetin cofactor (not
otherwise specified), per i.u.
VWF:RCO); Q4097 (Injection, immune
globulin (Privigen), intravenous, nonlyophilized (e.g., liquid), 500 mg); and
Q4098 (Injection, iron dextran, 50 mg).
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68601
For the July quarter of CY 2008, we
recognized a total of seven new Level II
HCPCS codes, specifically C9242
(Injection, fosaprepitant, 1 mg); C9356
(Tendon, porous matrix of cross-linked
collagen and glycosaminoglycan matrix
(TenoGlide Tendon Protector Sheet), per
square centimeter); C9357 (Dermal
substitute, granulated cross-linked
collagen and glycosaminoglycan matrix
(Flowable Wound Matrix), 1 cc); C9358
(Dermal substitute, native, nondenatured collagen (SurgiMend
Collagen Matrix), per 0.5 square
centimeters); G0398 (Home sleep study
test (HST) w/type II portable monitor,
unattended; minimum of 7 channels:
EEG, EOG, EMG, ECG/heart rate,
airflow, respiratory effort and oxygen
saturation); G0399 (Home sleep test
(HST) with type III portable monitor,
unattended; minimum of 4 channels: 2
respiratory movement/airflow, 1 ECG/
heart rate and 1 oxygen saturation); and
G0400 (Home sleep test (HST) with type
IV portable monitor, unattended;
minimum of 3 channels). We designated
the payment status of these codes and
added them either through the April
update (Transmittal 1487, Change
Request 5999, dated April 8, 2008) or
the July update (Transmittal 1536,
Change Request 6094, dated June 19,
2008) of the CY 2008 OPPS.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41467), we also solicited
public comment on the status
indicators, APC assignments, and
payment rates of these codes, which
were listed in Table 10 and Table 11 of
that proposed rule and now appear in
Tables 12 and 13, respectively, of this
final rule with comment period.
Because of the timing of the proposed
rule, the codes implemented through
the July 2008 OPPS update were not
included in Addendum B to the
proposed rule. We proposed to assign
these new HCPCS codes for CY 2009 to
APCs with the proposed payment rates
as displayed in Table 11 and
incorporate them into Addendum B to
this final rule with comment period for
CY 2009, which is consistent with our
annual OPPS update policy. The HCPCS
codes implemented through the April
2008 OPPS update and displayed in
Table 10 were included in Addendum B
to the proposed rule, where their
proposed payment rates also were
shown.
For CY 2009, the CMS HCPCS
Workgroup created permanent HCPCS Jcodes for four codes that were
implemented in April 2008 and one
code that was implemented in July
2008. Consistent with our general policy
of using permanent HCPCS codes, if
appropriate, rather than HCPCS C-codes
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or Q-codes for the reporting of drugs
under the OPPS in order to streamline
coding, we display the new HCPCS Jcodes in Tables 12 and 13 that replace
the HCPCS C-codes or Q-codes, effective
January 1, 2009. Specifically, J1267
(Injection, doripenem, 10 mg) replaces
C9241; J7186 (Injection, antihemophilic
factor viii/von willebrand factor
complex (human), per factor viii i.u.)
replaces Q4096; J1459 (Injection,
immune globulin (Privigen),
intravenous, non-lyophilized (e.g.,
liquid), 500 mg) replaces Q4097; J1750
(Injection, iron dextran, 50 mg) replaces
Q4098; and J1453 (Injection,
fosaprepitant, 1 mg) replaces C9242.
The HCPCS J-codes describe the same
drugs and the same dosages as the
HCPCS C-codes and Q-codes that will
be deleted, effective December 31, 2008.
We note that HCPCS C-codes and Qcodes are temporary national HCPCS
codes. To avoid duplication, temporary
national HCPCS codes, such as C, G, K,
and Q-codes, are generally deleted once
permanent national HCPCS codes are
created that describe the same item,
service, or procedure. Because HCPCS
codes J1267, J1453, and J1459 describe
the same drugs and the same dosages
that are currently designated by HCPCS
codes C9241, C9242, and Q4097,
respectively, we are continuing their
pass-through status in CY 2009, and are
assigning the HCPCS J-codes to the same
APCs and status indicators as their
predecessor HCPCS C-codes, as shown
in Tables 12 and 13. Specifically,
HCPCS code J1267 is assigned to the
same APC (9241) and status indicator
(‘‘G’’) as HCPCS code C9241, HCPCS
code J1453 is assigned to the same APC
(9242) and status indicator (‘‘G’’) as
HCPCS code C9242, and HCPCS code
J1459 is assigned to the same APC
(1214) and status indicator (‘‘G’’) as
HCPCS code Q4097.
In addition, new HCPCS code Q4114
(Allograft, Integra Flowable Wound
Matrix, injectable, 1 cc) for January 1,
2009 replaces HCPCS code C9357.
Because HCPCS code Q4114 describes
the same biological and dosage
descriptor as its predecessor HCPCS
code, HCPCS code Q4114 is assigned
the same status indicator as HCPCS
code C9357 (‘‘G’’) and continues its
pass-through status in CY 2009.
Except for the public comments that
we received concerning the three new
HCPCS G-codes for home sleep tests, we
did not receive any public comments
regarding the proposed APC and status
indicator assignments for any of the
other new HCPCS codes that were
implemented in either April 2008 or
July 2008. Therefore, for CY 2009, we
are adopting as final the designated
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APCs for the replacement HCPCS Jcodes, specifically J1267, J1453, J1459,
J1750, and J7186, as well as HCPCS
codes C9356, C9358, and Q4114, as
shown in Tables 12 and 13 below, and
in Addendum B to this final rule with
comment period.
Comment: One commenter did not
understand why the three home sleep
testing HCPCS G-codes, that is G0398,
G0399, and G0400, were recognized
under the OPPS when it was the
commenter’s understanding that HCPCS
G-codes are to be used only for
physician billing. The commenter also
requested clarification on the following
issues: (1) The intended method for
hospitals and independent diagnostic
testing facilities (IDTFs) to bill for
outpatient home sleep testing; (2)
whether CMS will pay hospitals and
IDTFs for home sleep testing that meets
the criteria for CPT code 95806; (3) the
relationship between CPT code 95806
(Sleep study, simultaneous recording of
ventilation, respiratory effort, ecg or
heart rate, and oxygen saturation,
unattended by a technologist) and the
new HCPCS G-codes, and how
hospitals, IDTFs and physicians might
properly code for a procedure that
fulfills both descriptions; and (4)
whether CMS will allow separate billing
for the technical and professional
components of this service by
physicians and facilities.
Response: HCPCS G-codes are not
limited to physician reporting. Since
implementation of the OPPS in August
2000, Medicare has recognized HCPCS
G-codes for reporting under the OPPS
for hospital outpatient services. HCPCS
G-codes are a subset of the Level II
HCPCS codes and describe temporary
procedures and services that are not
described by any CPT codes. Created by
CMS, this subset of codes is updated on
a quarterly basis and may be reported by
providers for any health insurers for
various sites of services. While the
codes may be used by any health
insurers, it is up to the individual
insurers to provide guidance on the
reporting of these codes.
CMS created three new HCPCS Gcodes, specifically G0398, G0399, and
G0400, that were implemented on
March 13, 2008, to describe the various
types of home sleep tests that Medicare
determined could be used to allow for
coverage of continuous positive airway
pressure (CPAP) therapy based upon a
diagnosis of obstructive sleep apnea
(OSA) according to a home sleep study.
CMS reconsidered its 2005 NCD
regarding CPAP therapy for OSA,
effective March 13, 2008, to allow for
coverage of CPAP therapy based on a
diagnosis of OSA from a home sleep
PO 00000
Frm 00102
Fmt 4701
Sfmt 4700
study. This NCD does not ensure
coverage of sleep testing, but rather
states when CPAP therapy is covered as
a result of clinical evaluation and a
positive sleep test.
The OPPS makes payment only to
hospitals for their facility services, not
to physicians or IDTFs. We proposed to
assign these new HCPCS G-codes to
APCs for payment under the OPPS
because we believe these diagnostic
services may be provided by HOPDs to
Medicare beneficiaries. Because these
new HCPCS G-codes specify home sleep
studies and CPT code 95806 only refers
to an unattended sleep study, hospitals
providing home sleep studies should
report the more specific HCPCS G-codes
under these circumstances, according to
the general coding principle that the
most specific code should be reported
for a service, unless CMS or Medicare
contractors have provided other
instructions.
Comment: One commenter expressed
concern regarding the proposed
payment rates for the three new HCPCS
G-codes for home sleep studies. The
commenter indicated that the proposed
payment rate of approximately $153 for
APC 0213 (Level I Extended EEG and
Sleep Studies) to which these HCPCS
codes were proposed for assignment is
inappropriate. The commenter further
stated that it appears that CMS’s
decision to use CPT code 95806 as the
benchmark in setting the payment rates
for these new HCPCS G-codes is flawed.
The commenter asserted that CPT code
95806 was created in 1998 and is
seldom reported and, therefore, does not
appropriately reflect the current costs of
providing home sleep testing. The
commenter requested that CMS take
into consideration the current cost of
portable monitors, staff time, and
administrative support associated with
home sleep testing in determining the
appropriate payment rate for these new
services. The commenter suggested that
the payment rate for HCPCS G-codes
G0398, G0399, and G0400 should be
about $550.
Response: Based on consultation with
our medical advisors and on our review
of the components of these services, we
believe that home sleep testing is most
appropriately assigned to APC 0213, as
proposed. In determining the payment
rates for HCPCS G-codes G0398, G0399,
and G0400, we took into consideration
the clinical and resource characteristics
associated with providing home sleep
testing. As has been our policy, we will
analyze the hospital resource costs for
home sleep testing in order to determine
in the future whether proposals of
alternative APC assignments may be
warranted once we have hospital claims
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data for these HCPCS G-codes. Since
these codes were implemented in July
2008, the CY 2010 OPPS/ASC
rulemaking cycle will be the first time
that we will have cost data for these
new HCPCS codes available for analysis.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
68603
modification, to assign new HCPCS
codes G0398, G0399, and G0400 to APC
0213, with a final CY 2009 APC median
cost of approximately $150.
TABLE 12—NEW HCPCS CODES IMPLEMENTED IN APRIL 2008
CY 2009
HCPCS code
CY 2008 HCPCS code
C9241 ..................................................
Q4096 ..................................................
J1267
J7186
Q4097 ..................................................
J1459
Q4098 ..................................................
J1750
Final CY 2009
status
indicator
CY 2009 long descriptor
Injection, doripenem, 10 mg ..............................................
Injection, antihemophilic factor viii/von willebrand factor
complex (human), per factor viii i.u.
Injection, immune globulin (Privigen), intravenous, nonlyophilized (e.g. liquid), 500 mg.
Injection, iron dextran, 50 mg ............................................
Final CY
2009
APC
G
K
9241
1213
G
1214
K
1237
TABLE 13—NEW HCPCS CODES IMPLEMENTED IN JULY 2008
CY 2009
HCPCS code
CY 2008 HCPCS code
C9242 ..................................................
C9356 ..................................................
J1453
C9356
C9357 ..................................................
C9358 ..................................................
Q4114
C9358
G0398 ..................................................
G0398
G0399 ..................................................
G0399
G0400 ..................................................
G0400
Injection, fosaprepitant, 1 mg ............................................
Tendon, porous matrix of cross-linked collagen and
glycosaminoglycan matrix (TenoGlide Tendon Protector Sheet), per square centimeter.
Allograft, Integra Flowable Wound Matrix, injectable, 1 cc
Dermal substitute, native, non-denatured collagen
(SurgiMend Collagen Matrix), per 0.5 square centimeters.
Home sleep study test (HST) with type II portable monitor, unattended; minimum of 7 channels: EEG, EOG,
EMG, ECG/heart rate, airflow, respiratory effort and
oxygen saturation.
Home sleep test (HST) with type III portable monitor, unattended; minimum of 4 channels: 2 respiratory movement/airflow, 1 ECG/heart rate and 1 oxygen saturation.
Home sleep test (HST) with type IV portable monitor, unattended; minimum of 3 channels.
II HCPCS codes, effective January 1,
2009, are listed in Addendum B to this
final rule with comment period and
As has been our practice in the past,
designated using comment indicator
we implement new Category I and III
‘‘NI.’’ We will respond to all comments
CPT codes and new Level II HCPCS
received concerning these codes in a
codes, which are released in the
summer through the fall of each year for subsequent final rule for the next
calendar year’s OPPS/ASC update.
annual updating, effective January 1, in
In addition, in the CY 2009 OPPS/
the final rule with comment period
ASC proposed rule (73 FR 41468), we
updating the OPPS for the following
proposed to continue our policy of the
calendar year. These codes are flagged
last 3 years of recognizing new mid-year
with comment indicator ‘‘NI’’ in
CPT codes, generally Category III CPT
Addendum B to the OPPS/ASC final
codes, that the AMA releases in January
rule with comment period to indicate
for implementation the following July
that we are assigning them an interim
through the OPPS quarterly update
payment status which is subject to
public comment. Specifically, the status process. Therefore, for CY 2009, we
proposed to include in Addendum B to
indicator, the APC assignment, or both,
for all such codes flagged with comment this final rule with comment period the
new Category III CPT codes released in
indicator ‘‘NI’’ are open to public
January 2008 for implementation on
comment in this final rule with
comment period. In the CY 2009 OPPS/ July 1, 2008 (through the OPPS
quarterly update process), and the new
ASC proposed rule (73 R 41468), we
Category III codes released in July 2008
proposed to continue this recognition
for implementation on January 1, 2009.
and process for CY 2009. New Category
I and III CPT codes, as well as new Level However, only those new Category III
dwashington3 on PRODPC61 with RULES2
2. Treatment of New Category I and III
CPT Codes and Level II HCPCS Codes
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Final CY 2009
status
indicator
CY 2009 long descriptor
Frm 00103
Fmt 4701
Sfmt 4700
Final CY
2009
APC
G
G
9242
9356
G
G
1251
9358
S
0213
S
0213
S
0213
CPT codes implemented effective
January 1, 2009, are flagged with
comment indicator ‘‘NI’’ in Addendum
B to this final rule with comment
period, to indicate that we have
assigned them an interim payment
status which is subject to public
comment. Category III CPT codes
implemented in July 2008, which
appeared in Table 12 of the CY 2009
OPPS/ASC proposed rule and now in
Table 14 below, were open to public
comment in the proposed rule, and we
are finalizing their CY 2009 status in
this final rule with comment period.
We did not receive any public
comments on the proposed CY 2009
assignment of status indicator ‘‘M’’ to
CPT codes 0188T (Remote real-time
interactive videoconferenced critical
care, evaluation and management of the
critically ill or critically injured patient;
first 30–74 minutes) and 0189T (Remote
real-time interactive videoconferenced
critical care, evaluation and
management of the critically ill or
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critically injured patient; each
additional 30 minutes) and on the
assignment of status indicator ‘‘T’’ to
CPT code 0190T (Placement of
intraocular radiation source applicator)
in APC 0237 (Level II Posterior Segment
Eye Procedures). Therefore we are
finalizing these proposed assignments
for CY 2009, without modification.
Comment: One commenter was
concerned with the proposed
assignment of new CPT code 0191T
(Insertion of anterior segment aqueous
drainage device, without extraocular
reservoir; internal approach) to APC
0234 (Level III Anterior Segment Eye
Procedures) and recommended that the
procedure be reassigned to APC 0673
(Level IV Anterior Segment Eye
Procedures). According to the
commenter, CPT code 0191T, which
became effective July 1, 2008, uses a
bypass device that routes fluid around
the diseased part of a patient’s aqueous
drainage apparatus. The commenter
indicated that there is significant
resource dissimilarity between CPT
code 0191T and other procedures
assigned to APC 0234. The commenter
argued that the procedure is more
similar in resources to procedures
assigned to APC 0673. The commenter
explained that other procedures
assigned to APC 0673 almost always use
either a permanently implanted device
or a permanent graft, while those
assigned to APC 0234 do not. The
commenter stated that CPT code 0191T
requires the use of a costly implantable
device, like other procedures assigned
to APC 0673. The commenter also
believed that the clinical characteristics
of procedures already assigned to APC
0673 are more similar to CPT code
0191T than those assigned to APC 0234
because APC 0673 includes only
procedures that treat glaucoma with
intraocular surgery using a device to
assist with aqueous outflow. According
to the commenter, CPT code 66180
(Aqueous shunt to extraocular reservoir
(e.g., Molteno, Schocket, DenverKrupin)), which has the largest number
of claims among procedures assigned to
APC 0673, describes aqueous bypass
surgery that serves the same purpose as
the procedure described by CPT code
0191T. Finally, the commenter
explained that the device used in CPT
code 0191T is currently being studied in
a FDA investigational device exemption
(IDE) clinical trial.
Response: We assigned new Category
III CPT code 0191T to APC 0234,
effective July 1, 2008, and announced
this assignment in the July 2008 OPPS
update (Transmittal 1536, Change
Request 6094, dated June 19, 2008). In
the CY 2009 OPPS/ASC proposed rule
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15:50 Nov 17, 2008
Jkt 217001
(73 FR 41469), we proposed to continue
this assignment for CY 2009 with a
proposed payment rate of approximately
$1,576. The commenter did not identify
a predecessor CPT code for this surgical
procedure, and there is limited clinical
experience with this surgical procedure
at this time. Nevertheless, based on our
understanding of the clinical and
resource characteristics of this surgical
procedure, we continue to believe it is
most appropriately assigned to APC
0234 in order to achieve the greatest
clinical and resource homogeneity
among the APC groups for anterior
segment eye procedures. Further, we
anticipate that the CY 2008 partial year
hospital claims data for CPT code 0191T
will first be available in CY 2009 for the
CY 2010 OPPS/ASC rulemaking cycle.
At that time we will review the
assignment of this CPT code for CY
2010.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to assign CPT code 0191T
to APC 0234, with a final CY 2009 APC
median cost of approximately $1,543.
Comment: Many commenters
requested that CPT code 0192T
(Insertion of anterior segment aqueous
drainage device, without extraocular
reservoir; external approach) be
reassigned to APC 0673 (Level IV
Anterior Segment Eye Procedures) from
APC 0234 (Level III Anterior Segment
Eye Procedures), where it was proposed
for CY 2009 assignment. Several
commenters reported that prior to July
1, 2008, when CPT code 0192T became
effective, most providers reported this
procedure with CPT code 66180
(Aqueous shunt to extraocular reservoir
(e.g., Molteno, Schocket, DenverKrupin)).
One commenter calculated a median
cost of $2,806 using 19 single procedure
OPPS claims for anterior segment eye
procedures from 13 hospitals that the
commenter believed represent services
that would now be reported with CPT
code 0192T. The commenter concluded
that the analysis supported the request
to assign CPT code 0192T to APC 0673,
which had a proposed rule median cost
of $2,631, while APC 0234 had a
proposed rule median cost of only
$1,573. The commenter pointed out that
17 of the 19 CY 2007 claims used for the
analysis were coded with CPT code
66180, which was proposed for
assignment to APC 0673 for CY 2009,
indicating that the procedure and device
costs of CPT code 0192T were reflected
in claims data for APC 0673. The
commenter estimated that about one
third of the CY 2007 claims for CPT
code 66180 represent procedures that
PO 00000
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Fmt 4701
Sfmt 4700
would now be reported with CPT code
0192T. Furthermore, the commenter
asserted that none of the procedures
currently assigned to APC 0234 includes
either a permanently implanted or high
cost disposable device, while
procedures assigned to APC 0673 utilize
such devices.
The commenter also believed that the
procedures assigned to APC 0673 are
more clinically similar to CPT code
0192T than those assigned to APC 0234.
The commenter noted that APC 0673
contains procedures, such as CPT code
66180, which primarily treat glaucoma
with intraocular surgery using a device
that assists with aqueous outflow. The
commenter believed that assignment of
CPT code 0192T to APC 0234 could
result in limited patient access to that
procedure.
Some commenters argued that
payment for the aqueous shunt device
should be paid separately from the
hospital payment for the surgical
procedure. Many commenters believed
that the procedure described by CPT
code 0192T is safer, more effective, and
has fewer complications than
trabeculectomy because the new
procedure does not excise tissue but
instead uses a shunt to bypass the
trabecular tissue.
Response: We assigned new Category
III CPT code 0192T to APC 0234
effective July 1, 2008, and announced
this assignment in the July 2008 OPPS
update (Transmittal 1536, Change
Request 6094, dated June 19, 2008). In
the CY 2009 OPPS/ASC proposed rule
(73 FR 41469), we proposed to continue
this APC assignment for new CPT code
0192T, with a proposed payment rate of
approximately $1,576 for CY 2009. We
agree with the commenters that new
CPT code 0192T has associated
implantable device costs that may not
be fully reflected in the costs of other
services assigned to APC 0234. It is our
established OPPS policy to package
payment for all implantable devices
without pass-through status into
payment for the associated surgical
procedures. Therefore, we will not
provide separate payment under the
OPPS for the aqueous shunt required for
CPT code 0192T. Moreover, CPT code
66180, which is assigned to APC 0673
for CY 2009, reportedly was often used
to bill Medicare prior to July 1, 2008, for
the procedure now described by CPT
code 0192T. Therefore, the costs of CPT
code 66180 from hospital claims data
may partially reflect the costs of CPT
code 0192T, as these two CPT codes are
clinically similar. CPT code 66180 has
a final CY 2009 median cost of
approximately $2,772 and APC 0673 has
a median cost of approximately $2,644.
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Therefore, we agree with the
commenters that APC 0673 is the most
appropriate APC assignment for CPT
code 0192T for CY 2009.
After consideration of the public
comments received, we are modifying
our CY 2009 proposal for payment of
CPT 0192T and reassigning it to APC
0673, with a final CY 2009 APC median
cost of approximately $2,644.
The final CY 2009 status indicators
and APC assignments of the Category III
68605
CPT codes implemented in July 2008
are included in Table 14, below, as well
as in Addendum B to this final rule with
comment period.
TABLE 14—CATEGORY III CPT CODES IMPLEMENTED IN JULY 2008
Final CY 2009
status
indicator
CY 2009
HCPCS code
CY 2009 long descriptor
0188T .....................
Remote real-time interactive videoconferenced critical care, evaluation and management of the critically ill or critically injured patient; first 30–74 minutes.
Remote real-time interactive videoconferenced critical care, evaluation and management of the critically ill or critically injured patient; each additional 30 minutes.
Placement of intraocular radiation source applicator .................................................
Insertion of anterior segment aqueous drainage device, without extraocular reservoir; internal approach.
Insertion of anterior segment aqueous drainage device, without extraocular reservoir; external approach.
0189T .....................
0190T .....................
0191T .....................
0192T .....................
B. OPPS Changes—Variations Within
APCs
dwashington3 on PRODPC61 with RULES2
1. Background
Section 1833(t)(2)(A) of the Act
requires the Secretary to develop a
classification system for covered
hospital outpatient services. Section
1833(t)(2)(B) of the Act provides that
this classification system may be
composed of groups of services, so that
services within each group are
comparable clinically and with respect
to the use of resources. In accordance
with these provisions, we developed a
grouping classification system, referred
to as APCs, as set forth in § 419.31 of the
regulations. We use Level I and Level II
HCPCS codes and descriptors to identify
and group the services within each APC.
The APCs are organized such that each
group is homogeneous both clinically
and in terms of resource use. Using this
classification system, we have
established distinct groups of similar
services, as well as medical visits. We
also have developed separate APC
groups for certain medical devices,
drugs, biologicals, therapeutic
radiopharmaceuticals, and
brachytherapy devices.
We have packaged into payment for
each procedure or service within an
APC group the costs associated with
those items or services that are directly
related to and supportive of performing
the main independent procedures or
furnishing the services. Therefore, we
do not make separate payment for these
packaged items or services. For
example, packaged items and services
include: (1) Use of an operating,
treatment, or procedure room; (2) use of
a recovery room; (3) observation
services; (4) anesthesia; (5) medical/
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surgical supplies; (6) pharmaceuticals
(other than those for which separate
payment may be allowed under the
provisions discussed in section V. of
this final rule with comment period); (7)
incidental services such as
venipuncture; and (8) guidance services,
image processing services,
intraoperative services, imaging
supervision and interpretation services,
diagnostic radiopharmaceuticals, and
contrast media. Further discussion of
packaged services is included in section
II.A.4. of this final rule with comment
period.
In CY 2008, we implemented
composite APCs to provide a single
payment for groups of services that are
typically performed together during a
single clinical encounter and that result
in the provision of a complete service.
Under current CY 2008 OPPS policy, we
provide composite APC payment for
certain extended assessment and
management services, low dose rate
(LDR) prostate brachytherapy, cardiac
electrophysiologic evaluation and
ablation, and mental health services. In
the CY 2009 OPPS/ASC proposed rule
(73 FR 41450), we also proposed a
composite APC payment methodology
for multiple imaging services for CY
2009. Further discussion of composite
APCs is included in section II.A.2.e. of
this final rule with comment period.
Under the OPPS, we generally pay for
hospital outpatient services on a rateper-service basis, where the service may
be reported with one or more HCPCS
codes. Payment varies according to the
APC group to which the independent
service or combination of services is
assigned. Each APC weight represents
the hospital median cost of the services
included in that APC relative to the
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Frm 00105
Fmt 4701
Sfmt 4700
Final CY
2009 APC
M
Not applicable.
M
Not applicable.
T
T
0237.
0234.
T
0673.
hospital median cost of the services
included in APC 0606 (Level 3 Hospital
Clinic Visits). The APC weights are
scaled to APC 0606 because it is the
middle level clinic visit APC (that is,
where the Level 3 clinic visit CPT code
of five levels of clinic visits is assigned),
and because middle level clinic visits
are among the most frequently furnished
services in the hospital outpatient
setting.
Section 1833(t)(9)(A) of the Act
requires the Secretary to review the
components of the OPPS not less than
annually and to revise the groups and
relative payment weights and make
other adjustments to take into account
changes in medical practice, changes in
technology, and the addition of new
services, new cost data, and other
relevant information and factors.
Section 1833(t)(9)(A) of the Act, as
amended by section 201(h) of the BBRA,
also requires the Secretary, beginning in
CY 2001, to consult with an outside
panel of experts to review the APC
groups and the relative payment weights
(the APC Panel recommendations for
specific services for the CY 2009 OPPS
and our responses to them are discussed
in the relevant specific sections
throughout this final rule with comment
period).
Finally, section 1833(t)(2) of the Act
provides that, subject to certain
exceptions, the items and services
within an APC group cannot be
considered comparable with respect to
the use of resources if the highest
median cost, or mean cost as elected by
the Secretary, for an item or service in
the group is more than 2 times greater
than the lowest median cost for an item
or service within the same group
(referred to as the ‘‘2 times rule’’). We
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use the median cost of the item or
service in implementing this provision.
The statute authorizes the Secretary to
make exceptions to the 2 times rule in
unusual cases, such as low-volume
items and services.
2. Application of the 2 Times Rule
In accordance with section 1833(t)(2)
of the Act and § 419.31 of the
regulations, we annually review the
items and services within an APC group
to determine, with respect to
comparability of the use of resources, if
the median cost of the highest cost item
or service within an APC group is more
than 2 times greater than the median of
the lowest cost item or service within
that same group (‘‘2 times rule’’). In the
CY 2009 OPPS/ASC proposed rule (73
FR 41469), we proposed to make
exceptions to this limit on the variation
of costs within each APC group in
unusual cases such as low-volume items
and services for CY 2009.
During the APC Panel’s March 2008
meeting, we presented median cost and
utilization data for services furnished
during the period of January 1, 2007,
through September 30, 2007, about
which we had concerns or about which
the public had raised concerns
regarding their APC assignments, status
indicator assignments, or payment rates.
The discussions of most service-specific
issues, the APC Panel
recommendations, if any, and our
proposals for CY 2009 are contained
mainly in sections III.C. and III.D. of this
final rule with comment period.
In addition to the assignment of
specific services to APCs that we
discussed with the APC Panel, we also
identified APCs with 2 times violations
that were not specifically discussed
with the APC Panel but for which we
proposed changes to their HCPCS codes’
APC assignments in Addendum B to the
CY 2009 OPPS/ASC proposed rule. In
these cases, to eliminate a 2 times
violation or to improve clinical and
resource homogeneity, we proposed to
reassign the codes to APCs that contain
services that are similar with regard to
both their clinical and resource
characteristics (73 FR 41470). In the CY
2009 OPP/ASC proposed rule (73 FR
41470), we also proposed to rename
existing APCs, discontinue existing
APCs, or create new clinical APCs to
complement proposed HCPCS code
reassignments for CY 2009. In many
cases, the proposed HCPCS code
reassignments and associated APC
reconfigurations for CY 2009 included
in the CY 2009 OPPS/ASC proposed
rule were related to changes in median
costs of services that were observed in
the CY 2007 claims data newly available
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for the CY 2009 ratesetting. We also
proposed changes to the status
indicators for some codes that were not
specifically and separately discussed in
the proposed rule. In these cases, we
proposed to change the status indicators
for some codes because we believed that
another status indicator would more
accurately describe their payment status
from an OPPS perspective based on the
policies that we proposed for CY 2009
or because we proposed new status
indicators to differentiate a related
group of services from other services
that previously shared the same status
indicator (73 FR 41470).
Addendum B to the CY 2009 OPPS/
ASC proposed rule identified with
comment indicator ‘‘CH’’ those HCPCS
codes for which we proposed a change
to the APC assignment or status
indicator as assigned in the April 2008
Addendum B update (via Transmittal
1487, Change Request 5999, dated April
8, 2008). HCPCS codes with proposed
CY 2009 changes in status indicator
assignments from ‘‘Q’’ to ‘‘Q1,’’ from
‘‘Q’’ to ‘‘Q2,’’ or from ‘‘Q’’ to ‘‘Q3’’ were
an exception to this identification
practice because they were not flagged
with comment indicator ‘‘CH’’ in
Addendum B to the CY 2009 OPPS/ASC
proposed rule. Because these proposed
changes in status indicators were
designed to facilitate policy
transparency and operational logic
rather than to reflect changes in OPPS
payment policy for these services, we
believed that identifying these HCPCS
codes with ‘‘CH’’ could be confusing to
the public.
We received several public comments
on our proposed separation of status
indicator ‘‘Q’’ into three distinct status
indicators, specifically ‘‘Q1,’’ ‘‘Q2,’’ or
‘‘Q3,’’ for purposes of policy
transparency and administrative ease.
This proposal, including the public
comments received and our response to
them, is discussed in section XIII.A. of
this final rule with comment period.
3. Exceptions to the 2 Times Rule
As discussed earlier, we may make
exceptions to the 2 times limit on the
variation of costs within each APC
group in unusual cases such as lowvolume items and services. Taking into
account the APC changes that we
proposed for CY 2009 based on the APC
Panel recommendations discussed
mainly in sections III.C. and III.D. of this
final rule with comment period, the
other proposed changes to status
indicators and APC assignments as
identified in Addendum B to the CY
2009 OPPS/ASC proposed rule, and the
use of CY 2007 claims data to calculate
the median costs of procedures
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Sfmt 4700
classified in the APCs, we reviewed all
the APCs to determine which APCs
would not satisfy the 2 times rule. We
used the following criteria to decide
whether to propose exceptions to the 2
times rule for affected APCs:
• Resource homogeneity
• Clinical homogeneity
• Hospital outpatient setting
• Frequency of service (volume)
• Opportunity for upcoding and code
fragments.
For a detailed discussion of these
criteria, we refer readers to the April 7,
2000 OPPS final rule with comment
period (65 FR 18457).
Table 13 of the CY 2009 OPPS/ASC
proposed rule listed 12 APCs that we
proposed to exempt from the 2 times
rule for CY 2009 based on the criteria
cited above. For cases in which a
recommendation by the APC Panel
appeared to result in or allow a
violation of the 2 times rule, we
generally accepted the APC Panel’s
recommendation because those
recommendations were based on
explicit consideration of resource use,
clinical homogeneity, hospital
specialization, and the quality of the CY
2007 claims data used to determine the
APC payment rates that we proposed for
CY 2009. The median costs for hospital
outpatient services for these and all
other APCs that were used in the
development of the CY 2009 OPPS/ASC
proposed rule and this final rule with
comment period can be found on the
CMS Web site at: https://
www.cms.hhs.gov/
HospitalOutpatientPPS/
01_overview.asp.
For the CY 2009 OPPS/ASC proposed
rule, we based the listed exceptions to
the 2 times rule on claims data from
January 1, 2007, through September 30,
2007. For this final rule with comment
period, we used claims data from
January 1, 2007, through December 1,
2007. Thus, after responding to all of the
public comments on the CY 2009 OPPS/
ASC proposed rule and making changes
to APC assignments based on those
comments, we analyzed the CY 2007
claims data used for this final rule with
comment period to identify the APCs
with 2 times rule violations.
Based on the final CY 2007 claims
data, we found that there were 14 APCs
with 2 times rule violations, an increase
of 2 APCs from the proposed rule. We
have not included in this count those
APCs where a 2 times violation is not
a relevant concept, such as APC 0375
(Ancillary Outpatient Service When
Patient Expires), with an APC median
cost set based on multiple procedure
claims, so that we have identified only
final APCs, including those with
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criteria-based median costs, such as
device-dependent APCs, with 2 times
violations. We applied the criteria as
described earlier to identify the APCs
that are exceptions to the 2 times rule
for CY 2009, and as noted below, have
identified the additional APCs that have
met the criteria for exception to the 2
times rule for this final rule with
comment period. These APC exceptions
are listed in Table 15 below.
Comment: One commenter supported
the continued exception of APC 0303
(Treatment Device Construction) to the
2 times rule for CY 2009. The
commenter agreed that, based on the CY
2007 claims data, CMS’ proposed
assignment of the following three CPT
codes to APC 0303 was appropriate:
77332 (Treatment devices, design and
construction; simple (simple block,
simple bolus)); 77333 (Treatment
devices, design and construction;
intermediate (multiple blocks, stents,
bite blocks, special bolus)); and 77334
(Treatment devices, design and
construction; complex (irregular blocks,
special shields, compensators, wedges,
molds or casts)). Noting that the 2 times
violation was not extreme, the
commenter believed that the proposed
exception was appropriate because the
services within APC 0303 are clinically
comparable.
68607
Response: We appreciate the
commenter’s support for our proposal.
After consideration of all of the public
comments received and our review of
the CY 2007 claims data used for this
final rule with comment period, we are
finalizing our proposal to exempt 12
APCs from the 2 times rule for CY 2009,
with modification. We are increasing
the list of APC exceptions from 12 to 14
APCs to also include APCs 0341 (Skin
Tests) and 0367 (Level I Pulmonary
Test) for CY 2009. Our final list of the
14 APC exceptions to the 2 times rule
for CY 2009 is displayed in Table 15
below.
TABLE 15—FINAL APC EXCEPTIONS TO THE 2 TIMES RULE FOR CY 2009
Final CY 2009 APC
0060
0080
0093
0105
0141
0245
0303
0330
0341
0367
0409
0426
0432
0604
CY 2009 APC title
.........................................................
.........................................................
.........................................................
.........................................................
.........................................................
.........................................................
.........................................................
.........................................................
.........................................................
.........................................................
.........................................................
.........................................................
.........................................................
.........................................................
Manipulation Therapy.
Diagnostic Cardiac Catheterization.
Vascular Reconstruction/Fistula Repair Without Device.
Repair/Revision/Removal of Pacemakers, AICDs, or Vascular Devices.
Level I Upper GI Procedures.
Level I Cataract Procedures Without IOL Insert.
Treatment Device Construction.
Dental Procedures.
Skin Tests.
Level I Pulmonary Test.
Red Blood Cell Tests.
Level II Strapping and Cast Application.
Health and Behavior Services.
Level 1 Hospital Clinic Visits.
services more appropriately and
consistently.
C. New Technology APCs
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1. Background
In the November 30, 2001, final rule
(66 FR 59903), we finalized changes to
the time period a service was eligible for
payment under a New Technology APC.
Beginning in CY 2002, we retain
services within New Technology APC
groups until we gather sufficient claims
data to enable us to assign the service
to a clinically appropriate APC. This
policy allows us to move a service from
a New Technology APC in less than 2
years if sufficient data are available. It
also allows us to retain a service in a
New Technology APC for more than 2
years if sufficient data upon which to
base a decision for reassignment have
not been collected.
We note that the cost bands for New
Technology APCs range from $0 to $50
in increments of $10, from $50 to $100
in increments of $50, from $100 through
$2,000 in increments of $100, and from
$2,000 through $10,000 in increments of
$500. These increments, which are in
two parallel sets of New Technology
APCs, one with status indicator ‘‘S’’ and
the other with status indicator ‘‘T,’’
allow us to price new technology
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2. Movement of Procedures From New
Technology APCs to Clinical APCs
As we explained in the November 30,
2001, final rule (66 FR 59897), we
generally keep a procedure in the New
Technology APC to which it is initially
assigned until we have collected
sufficient data to enable us to move the
procedure to a clinically appropriate
APC. However, in cases where we find
that our original New Technology APC
assignment was based on inaccurate or
inadequate information (although it was
the best information available at the
time), or where the New Technology
APCs are restructured, we may, based
on more recent resource utilization
information (including claims data) or
the availability of refined New
Technology APC cost bands, reassign
the procedure or service to a different
New Technology APC that most
appropriately reflects its cost.
Consistent with our current policy, in
the CY 2009 OPPS/ASC proposed rule
(73 FR 41471), we proposed to retain
services within New Technology APC
groups until we gather sufficient claims
data to enable us to assign the service
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to a clinically appropriate APC for CY
2009. The flexibility associated with
this policy allows us to move a service
from a New Technology APC in less
than 2 years if sufficient data are
available. It also allows us to retain a
service in a New Technology APC for
more than 2 years if sufficient hospital
claims data upon which to base a
decision for reassignment have not been
collected.
We did not receive any public
comments on this proposal. Therefore,
we are finalizing our CY 2009 proposal,
without modification, to retain services
within New Technology APCs until we
gather sufficient claims data to assign
the services to a clinically appropriate
APC. Thus, a service can be assigned to
a New Technology APC for more than
2 years if we have insufficient claims
data to reassign the service to a clinical
APC, or it could be reassigned to a
clinical APC in less than 2 years if we
have adequate claims data.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41471), we stated that we
believed we had sufficient claims data
to propose reassigning the following
three HCPCS codes, which we stated
represent services assigned to New
Technology APCs in CY 2008, to
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clinically appropriate APC for CY 2009:
C9725 (Placement of endorectal
intracavitary applicator for high
intensity brachytherapy), C9726
(Placement and removal (if performed)
of applicator into breast for radiation
therapy), and C9727 (Insertion of
implants into the soft palate; minimum
of three implants). These three
procedures have been assigned to their
New Technology APCs for at least 3
years, thereby providing us with data
from at least 2 years of hospital claims
upon which we based the proposed
reassignments for CY 2009. In addition,
as we indicated in the CY 2009 OPPS/
ASC proposed rule, we believe that
these three procedures are clinically
similar to other services currently paid
through clinical APCs under the OPPS
and for which we have substantial
claims data regarding hospital costs.
Therefore, in the CY 2009 OPPS/ASC
proposed rule , we proposed to reassign
these three procedures to clinically
appropriate APCs, utilizing their CY
2007 claims data to develop the clinical
APC median costs upon which
payments would be based for CY 2009.
As shown in Table 14 of the CY 2009
OPPS/ASC proposed rule, we proposed
to reassign HCPCS code C9725 from
New Technology APC 1507—Level VII
($500–$600) to APC 0164 (Level II
Urinary and Anal Procedures), with a
proposed payment rate of approximately
$145; to reassign HCPCS code 9726 from
New Technology APC 1508—Level VIII
($600–$700) to APC 0028 (Level I Breast
Surgery), with a proposed payment rate
of approximately $1,412; and to reassign
HCPCS code C9727 from New
Technology 1510–Level X ($800–$900)
to APC 0252 (Level III ENT Procedures),
with a proposed payment rate of
approximately $509.
Further, in the CY 2009 OPPS/ASC
proposed rule (73 FR 41471), we
proposed to delete HCPCS code C9723
(Dynamic infrared blood perfusion
imaging (diri)) that has been assigned to
New Technology APC 1502 (New
Technology—Level II ($50–$100)) since
it was implemented in April 2005.
Based on our claims data for the past 3
years, which have shown no utilization
for HCPCS code C9723, we proposed to
delete this HCPCS code on December
31, 2008.
Comment: Several commenters
disagreed with the proposed
reassignment of HCPCS code C9725 and
asserted that the CY 2007 claims data
included only two single claims for
HCPCS code C9725 and, therefore, these
data provided an insufficient basis for
reassigning this service from New
Technology APC 1507 to APC 0164,
which has a proposed payment rate of
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approximately $145. They argued that
the procedures in APC 0164 are not
clinically similar or comparable in cost
to HCPCS code C9725. The commenters
believed that the procedures included in
APC 0164 require less time and
physician skill than HCPCS code C9725
and that they do not require the use of
a temporary implanted device for
treatment delivery as does HCPCS code
C9725. The commenters recommended
that, for CY 2009, CMS retain HCPCS
code C9725 in its current New
Technology APC with a payment rate of
approximately $550 for at least 1 more
year, or reassign it to APC 0155 (Level
II Anal/Rectal Procedures), which has a
proposed payment rate of approximately
$804, because they believed that APC
0155 would be a more appropriate
assignment for HCPCS code 9725 based
on consideration of its clinical
characteristics and resource costs.
Response: We do not agree that that
we should continue to assign HCPCS
code C9725 to New Technology APC
1507, as explained below. HCPCS code
C9725 was assigned to New Technology
1507 with a payment rate of
approximately $550 when it was
implemented on October 1, 2005. At
this point, the service has been assigned
to a New Technology APC for over 3
years. We believe that reassigning this
service to a clinical APC is appropriate
for CY 2009, because this service is
clinically similar to other services
currently paid under the OPPS and
because it has resided in a New
Technology APC for over 3 years.
At the August 2008 APC Panel
meeting, a public comment letter on the
CY 2009 OPPS/ASC proposed rule was
discussed that requested that the APC
Panel recommend that CMS reassign
HCPCS code C9725 to APC 0155 (Level
II Anal/Rectal Procedures) rather than to
APC 0164, as proposed, on the basis of
its clinical similarity to other
procedures in APC 0155. The proposed
CY 2009 payment rate of APC 0155 is
approximately $804. The APC Panel did
not agree that HCPCS code C9725 is
comparable to the procedures in APC
0155, but the APC Panel recommended
that CMS reassign the HCPCS code
C9725 to an appropriate devicedependent APC based on median cost
data.
Further analysis of the latest CY 2007
claims data used for this final rule with
comment period revealed limited data
for HCPCS code C9725, with variable
costs over the past 3 years, leading us
to conclude that this service is rarely
performed on Medicare beneficiaries in
the HOPD. We do not agree with the
commenters’ recommendation to either
retain this procedure in New
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Technology APC 1507 for 1 more year
or to reassign it to clinical APC 0155 in
the Anal/Rectal Procedures series for CY
2009. Currently we do not have an
identified device-dependent APC under
the OPPS that would be an appropriate
assignment for HCPCS code C9725, and
there is no Level II HCPCS code that
describes the device that is inserted into
the body that would be reported with
the procedure. Therefore, we are not
adopting the APC Panel’s
recommendation to assign the service to
an appropriate device-dependent APC
for CY 2009.
However, after reexamining the
clinical characteristics of HCPC code
C9725, the limited claims data, and our
expectations regarding the cost of the
procedure, we reevaluated our proposed
assignment for HCPCS code C9725 and
believe that this service would be more
appropriately assigned to APC 0148
(Level I Anal/Rectal Procedures), based
on considerations of the service’s
clinical and resource characteristics.
Moreover, several commenters
recommended an APC assignment for
HCPCS code C9725 in this same clinical
series. APC 0148 has a final median cost
of approximately $378 for CY 2009, and
we believe this APC will ensure
appropriate payment for HCPCS code
C9725.
After consideration of the public
comments received and the APC Panel
recommendation, in this final rule with
comment period, we are modifying our
CY 2009 proposal and reassigning
HCPCS code C9725 to APC 0148
(instead of APC 0164), with a final CY
2009 APC median cost of approximately
$378 for CY 2009.
Comment: One commenter supported
the proposed reassignment of HCPCS
code C9726 from New Technology APC
1508 to APC 0028 for CY 2009, with a
proposed payment rate of approximately
$1,412.
Response: We appreciate the
commenter’s support.
After consideration of the public
comment received, we are finalizing our
CY 2009 proposal, without
modification, to reassign HCPCS code
C9726 to APC 0028, with a final CY
2009 APC median cost of approximately
$1,387.
We did not receive any public
comments on the proposed assignment
of HCPCS code C9727 to APC 0252 or
our proposal related to the deletion of
HCPCS code C9723. Therefore, we are
finalizing our CY 2009 proposals,
without modification, to reassign
HCPCS code C9727 to APC 0252, which
has a final CY 2009 APC median cost of
approximately $486 and to discontinue
HCPCS code C9723 on December 31,
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2008. Table 16, below, lists the final CY
2009 APC assignments and status
68609
indicators for HCPCS codes C9725,
C9726, and C9727.
TABLE 16—CY 2009 APC REASSIGNMENTS OF NEW TECHNOLOGY PROCEDURES TO CLINICAL APCS
CY 2009 HCPCS code
CY 2009 short descriptor
CY 2008
SI
C9725 .................................................
Placement of endorectal intracavitary applicator for high
intensity brachytherapy.
Placement and removal (if performed) of applicator into
breast for radiation therapy.
Insertion of implants into the soft palate; minimum of
three implants.
S
1507
T
0148
S
1508
T
0028
S
1510
T
0252
C9726 .................................................
C9727 .................................................
D. OPPS APC-Specific Policies
1. Apheresis and Stem Cell Processing
Services
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a. Low-Density Lipoprotein (LDL)
Apheresis (APC 0112)
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41798), we proposed to
continue our CY 2008 assignment of
CPT code 36516 (Therapeutic apheresis;
with extracorporeal selective adsorption
or selective filtration and plasma
reinfusion) to APC 0112 (Apheresis and
Stem Cell Procedures) with a proposed
payment rate of approximately $2,020.
The CY 2008 payment rate for this
service is approximately $1,949.
Comment: One commenter argued
that the CY 2007 claims data for CPT
code 36516 are skewed and would
result in a CY 2009 payment rate for
APC 0112 that is unacceptably low for
hospitals. The commenter stated that
LDL apheresis is the only procedure that
can be reported accurately using CPT
code 36516. According to the
commenter, far fewer hospitals have the
capability to perform this procedure
than hospitals that are billing CPT code
36516 on OPPS claims. Furthermore,
the commenter asserted that hospitals
systematically underreport costs for CPT
code 36516, resulting in a median cost
for CPT code 36516 that is undervalued
by an estimated $1,000, and a median
cost for APC 0112 that is undervalued
by an estimated $150 to $200. The
commenter recommended that CMS
initiate an investigation or provide
instruction on how to rectify the
misreporting of the procedure described
by CPT code 36516, and remove all
claims for CPT code 36516 from the
median calculation upon which the
payment rate for APC 0112 is based.
Response: We do not believe it is
necessary to alter our standard OPPS
ratesetting methodology to exclude
claims for CPT code 36516 from the
median cost calculation for APC 0112 in
order to ensure appropriate payment to
hospitals that will ensure access to care
in CY 2009. The payment rate for APC
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0112 has steadily increased since CY
2006, when the OPPS payment rate was
approximately $1,570. We also note that
procedures described by CPT code
36516 comprise only 11 percent of the
CY 2007 single claims for all services
that are used to calculate the median
cost of APC 0112. Furthermore,
according to the commenter’s analysis,
removing several hundred claims for
CPT code 36516 from the calculation of
the median cost of APC 0112 would
lead to only a small change of $150 to
$200 in the APC’s median cost.
We have no reason to believe that
hospitals are misreporting services with
CPT code 36516 and note that we do not
specify the methodologies that hospitals
must use to set charges for this, or any
other, procedure. The calculation of
OPPS payment weights that reflect the
relative resources required for HOPD
services is the foundation of the OPPS,
and we also see no reason why hospitals
would systemically underreport the
costs of the procedure described by CPT
code 36516.
We rely on hospitals to bill all HCPCS
codes accurately in accordance with
their code descriptors and CPT and
CMS instructions, as applicable, and to
report charges on claims and charges
and costs on their Medicare cost report
appropriately. In both the January 2005
OPPS quarterly update, Transmittal 423,
Change Request 3632, issued on January
6, 2005, and the January 2006 OPPS
quarterly update, Transmittal 804,
Change Request 4250, issued on January
3, 2006, we provided instructions to
hospitals on how to correctly report
items and services associated with the
procedure described by CPT code
36516. Specifically, we instructed
hospitals to bill supply charges either by
including them in the charge for CPT
code 36516 or by using an appropriate
supply revenue code when using CPT
code 36516 to report extracorporeal
selective absorption of selective
filtration and plasma reinfusion for
indications such as familial
hypercholesterolemia. We further
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CY 2008
APC
Final CY
2009 SI
Final CY
2009
emphasized that, in every case,
hospitals should report the codes that
most accurately describe the therapeutic
apheresis service that is being
furnished. We continue to expect
hospitals to report the services
described by CPT code 36516 accurately
as we have instructed, and see no
current basis for questioning the charges
hospitals report on their claims and on
their Medicare cost reports for this
service.
After consideration of the public
comment received, we are finalizing our
CY 2009 proposal, without
modification, to calculate the payment
rate for APC 0112 by applying our
standard OPPS ratesetting methodology
that relies on all single claims for all
procedures assigned to the APC. The
final CY 2009 median cost of APC 0112
is approximately $1,988.
b. Bone Marrow and Stem Cell
Processing Services (APC 0393)
For CY 2008, we discontinued
recognizing HCPCS code G0267 (Bone
marrow or peripheral stem cell harvest,
modification or treatment to eliminate
cell type(s)) for depletion services for
hematopoietic progenitor cells) for
payment under the OPPS and deleted
the HPCPCS code effective January 1,
2008 (72 FR 66821 through 66823).
Instead, we recognized the specific CPT
codes that describe these services,
which include: CPT codes 38210
(Transplant preparation of
hematopoietic progenitor cells; specific
cell depletion within harvest, T-cell
depletion); 38211 (Transplant
preparation of hematopoietic progenitor
cells; tumor cell depletion); 38212
(Transplant preparation of
hematopoietic progenitor cells; red
blood cell removal); 38213 (Transplant
preparation of hematopoietic progenitor
cells; platelet depletion); 38214
(Transplant preparation of
hematopoietic progenitor cells; plasma
(volume) depletion); and 38215
(Transplant preparation of
hematopoietic progenitor cells; cell
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concentration in plasma, mononuclear,
of buffy coat layer).
For CY 2008, we assigned CPT codes
38210 through 38215 to APC 0393 with
other red blood cell and plasma
handling and testing services and
renamed APC 0393 ‘‘Hematologic
Processing and Studies’’ so that the APC
title more accurately describes all the
services assigned to the APC. We
maintained a status indicator of ‘‘S’’ for
APC 0393. The data for the predecessor
code, HCPCS code G0267, was also
assigned to APC 0393. The CY 2008
payment for APC 0393 is approximately
$363, based on an APC median cost of
approximately $397, the same median
cost as HCPCS code G0267 in CY 2008.
As we stated in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66823), it is consistent with our general
practice under the OPPS to make
payment based on historical claims data
for the predecessor HCPCS code until
we have more specific hospital resource
data available to assess the specific CPT
codes for possible APC reassignment. In
the CY 2009 OPPS/ASC proposed rule,
we did not propose to change the APC
assignments for CPT codes 38210
through 38215 for CY 2009. The CY
2009 proposed payment for APC 0393
was approximately $398.
Comment: One commenter asserted
that CPT codes 38210 and 38211 were
inappropriately assigned to APC 0393
because the other services in APC 0393
are not related to stem cell purification
and transplantation and because the
supplies and clinical staff costs are
significantly more than the proposed
payment rate for these two services. The
commenter recommended that CMS
reassign these services to APC 0112
(Apheresis and Stem Cell Procedures),
reasoning that the codes for T-cell and
tumor cell depletion are more similar
clinically and in terms of costs to other
services assigned to APC 0112.
Response: As we stated in the CY
2008 OPS/ASC final rule with comment
period (72 FR 66823), we believe that
our assignment of CPT codes 38210
through 38215 to APC 0393 will pay
appropriately for these CPT codes while
we collect more specific data on their
individual resource costs. We continue
to believe that the two specific services
for T-cell or tumor cell depletion during
preparation of hematopoietic progenitor
cells for transplantation are more
clinically similar to those services in
APC 0393 than in APC 0112, which
contains procedures for extracorporeal
adsorption during therapeutic apheresis
that involves reinfusion of plasma into
the patient and bone marrow and stem
cell collection and transplantation,
rather than cell processing. We note that
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the final median cost for APC 0112 for
CY 2009, is approximately $1,988, while
the final median cost for APC 0393 is
approximately $391. There were no
claims submitted for CPT code 38210 in
CY 2008. In addition, there was one
claim for CPT code 38211 available for
ratesetting, with a median cost of about
$201. Further, there were 125 claims for
HCPCS code G0267 available for
ratesetting, with a final median cost of
$391. Based on these cost data, we
continue to believe that APC 0393 will
pay more appropriately for CPT codes
38210 and 38211 while we collect more
specific data on their individual
resource costs.
After consideration of the public
comment received, we are finalizing our
CY 2009 proposal, without
modification, to maintain CPT codes
38210 and 38211 in APC 0393, with a
final CY 2009 APC median cost of
approximately $391.
2. Genitourinary Procedures
a. Implant Injection for Vesicoureteral
Reflux (APC 0163)
Following publication of the CY 2008
OPPS/ASC final rule with comment
period, several members of the public
contacted us to express their concerns
regarding inadequate payment for CPT
code 52327 (Cystourethroscopy,
including ureteral catheterization, with
subureteric injection of implant
material). The CY 2008 OPPS payment
for this procedure, which is assigned to
APC 0162 (Level III Cystourethroscopy
and other Genitourinary Procedures), is
approximately $1,578. From the
perspective of these stakeholders, the
CY 2008 assignment of CPT code 52327
to APC 0162 provides inadequate
payment to cover the hospital’s cost for
the procedure, which they asserted
requires expensive implant material.
Specifically, they stated that the
currently available CPT and Level II
HCPCS codes lack the specificity
needed to properly account for the cost
of the ureteral implant, dextranomer/
hyaluronic acid, the only FDA approved
product for the procedure. In addition to
receiving several letters on this subject,
we also met with stakeholders about the
concerns of pediatric urologists
regarding decreased access to and
inadequate payment for performance of
this procedure.
At the March 2008 APC Panel
meeting, a presenter requested that the
APC Panel recommend reassignment of
CPT code 52327 from APC 0162 to APC
0385 (Level I Prosthetic Urological
Procedures). The presenter indicated
that while CPT code 52327 is clinically
similar to other procedures assigned to
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APC 0162, it is not similar in terms of
resource utilization. The presenter
stated that CPT code 52327 is the only
procedure assigned to APC 0162 that
uses a high cost implant, with a stated
cost of $1,045 per milliliter. The APC
Panel recommended that CMS consider
reassigning CPT code 52327 to a more
appropriate APC.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41477), we proposed to
reassign CPT code 52327 from APC
0162 to APC 0163 (Level IV
Cystourethroscopy and other
Genitourinary Procedures), with a
proposed payment rate of approximately
$2,392.
Comment: One commenter supported
the proposed reassignment of CPT code
52327 from APC 0162 to APC 0163.
However, the commenter expressed
concern that the proposed payment rate
for the service is still inadequate. The
commenter contended that until
hospitals are able to report the implant
material with a separate HCPCS code,
the procedure would continue to be
inadequately paid under APC 0163.
Another commenter also expressed
support for the proposed reassignment
of CPT code 52327 to APC 0163 from
APC 0162. However, the commenter
noted that the proposed increase in
payment was less than the cost of a
single vial of the implant material and
that it is not uncommon for more than
one vial to be used during a procedure.
The commenter argued that Medicare
claims data do not accurately reflect the
cost of the implant for several reasons,
specifically that the procedure is
primarily a pediatric procedure with
few Medicare claims and that there is no
unique HCPCS code to describe the
implant product.
Response: We appreciate the
commenters’ support for our proposal to
reassign CPT code 52327 from APC
0162 to APC 0163 for CY 2009. We
continue to believe that APC 0163 will
provide appropriate payment for this
surgical procedure, including the cost of
the ureteral implant material, in CY
2009. As we noted in the CY 2009
OPPS/ASC proposed rule (73 FR 41477),
a number of the procedures also
assigned to APC 0163 are clinically
similar to CPT code 52327, involving
the use of a cystoscope and the
implantation of devices.
There is a new Level II HCPCS code
for CY 2009, HCPCS code L8604
(Injectable bulking agent, dextranomer/
hyaluronic acid copolymer implant,
urinary tract, 1 ml), that describes an
implant that may be used in the
procedure reported with CPT code
52327. However, with the exception of
implantable devices that are subject to
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transitional pass-through payment for a
limited time period, under the OPPS,
regardless of the availability of HCPCS
codes specific to implantable devices,
Medicare makes payment for those
implantable devices through payment
for the associated surgical procedure.
According to our regulations at
§ 419.2(b), the OPPS establishes a
national payment rate that includes
operating and capital-related costs that
are directly related and integral to
performing a procedure or furnishing a
service on an outpatient basis including,
but not limited to, implantable
prosthetics, implantable durable
medical equipment, and medical and
surgical supplies. Therefore, HCPCS
code L8604 is assigned an interim CY
2009 status indicator of ‘‘N’’ in
Addendum B to this final rule with
comment period, to indicate that its
payment is unconditionally packaged in
all cases. We also note that, because
HCPCS code L8604 is a new code for CY
2009, it is assigned comment indicator
‘‘NI’’ in Addendum B to this final rule
with comment period, indicating that its
interim OPPS treatment is open to
public comment on this final rule with
comment period.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to reassign CPT code
52327 from APC 0162 to APC 0163,
with a final CY 2009 APC median cost
of approximately $2,316.
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b. Laparoscopic Ablation of Renal Mass
(APC 0132)
In the CY 2009 OPPS/ASC proposed
rule, we proposed to continue the
assignment of CPT code 50542
(Laparoscopy, surgical; ablation of renal
mass lesion(s)) to APC 0132 (Level III
Laparoscopy), with a proposed payment
rate of approximately $4,715. The CY
2008 payment rate for APC 0132 is
approximately $4,437.
Comment: Several commenters
disagreed with the proposed continued
assignment of CPT code 50542 to APC
0132. They indicated that the service
described by CPT code 50542 is not
similar, in terms of clinical
characteristics or resource costs, to the
other procedures in APC 0132. The
commenters further asserted that APC
0132 does not accurately reflect the
hospital costs required to perform the
procedure on an outpatient basis, which
may be performed by cryoablation or
radiofrequency ablation. They
recommended that CMS create a new
clinical APC in the laparoscopy series in
order to improve both the clinical and
resource homogeneity of the
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laparoscopy APCs and reassign CPT
code 50542 to this new clinical APC.
Response: CPT code 50542 was
implemented on January 1, 2003, and
from CYs 2003 through 2005, this
service was assigned to APC 0131 (Level
II Laparoscopy). As discussed in the CY
2006 OPPS final rule with comment
period (70 FR 68604), a CY 2006 OPPS
proposed rule commenter recommended
that we reassign CPT code 50542 from
APC 0131 to APC 0132 to adequately
pay for the cost of performing this
procedure. We examined our CY 2004
hospital outpatient claims used for CY
2006 ratesetting and concluded that a
reassignment to APC 0132 was
warranted. For CY 2009, our analysis of
the CY 2007 hospital outpatient claims
data used for CY 2009 ratesetting
revealed a HCPCS code-specific median
cost of approximately $8,225 for CPT
code 50542, which is substantially
higher than the APC median cost of
approximately $4,515 for APC 0132. We
also found, after further examination of
all of the procedures currently assigned
to APC 0132, that CPT code 47370
(Laparoscopy, surgical, ablation of one
or more liver tumor(s); radiofrequency)
that describes another laparoscopic
ablation procedure has a HCPCS codespecific median cost of approximately
$6,520, which is also significantly
higher than the median cost for APC
0132. While there are numerous
procedures assigned to APC 0132, most
are low volume and only 1 procedure
has significant volume consisting of 862
single claims, with a HCPCS codespecific median cost of approximately
$4,651, significantly lower than the
median costs of the 2 ablation
procedures. Based on these findings, we
believe that creation of a new clinical
APC, specifically APC 0174 (Level IV
Laparoscopy) with status indicator ‘‘T,’’
and the reassignment of both CPT codes
50542 and 47370 for laparoscopic
ablation procedures to this new APC,
are the most appropriate approaches to
ensuring clinical and resource
homogeneity within APC 0132 and new
APC 0174.
After consideration of the public
comments received, we are modifying
our CY 2009 proposed configuration of
APC 0132 by reassigning CPT codes
50542 and 47370 from APC 0132 to new
clinical APC 0174 for laparoscopic
procedures, which has a final CY 2009
APC median cost of approximately
$7,731. Reconfigured APC 0132 has a
final CY 2009 APC median cost of
approximately $4,515.
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c. Percutaneous Renal Cryoablation
(APC 0423)
In the CY 2009 OPPS/ASC proposed
rule, we proposed to continue to assign
CPT code 50593 (Ablation, renal
tumor(s), unilateral, percutaneous,
cryotherapy) to APC 0423 (Level II
Percutaneous Abdominal and Biliary
Procedures) for CY 2009, with a
proposed payment rate of approximately
$3,028. This CPT code was new in CY
2008; however, the same service was
previously described by CPT code
0135T (Ablation renal tumor(s),
unilateral, percutaneous, cryotherapy).
We note that in CY 2007, based upon
the APC Panel’s recommendation made
at its March 2006 meeting, we
reassigned CPT code 50593 (then CPT
code 0135T) from APC 0163 (Level IV
Cystourethroscopy and other
Genitourinary Procedures) to APC 0423,
with a payment rate of approximately
$2,297 in CY 2007. We expected
hospitals, when reporting CPT code
50593, to also report the device HCPCS
code, C2618 (Probe, cryoablation),
associated with the procedure.
Comment: Several commenters
disagreed with the proposed continued
APC assignment of CPT code 50593 to
APC 0423. The commenters believed
that the proposed payment rate for APC
0423 does not accurately reflect the
costs incurred by hospitals that perform
CPT code 50593, and recommended that
CMS assign this procedure to its own
APC and base payment for that APC on
the mean cost of CPT code 50593. They
also believed that the proposed
inadequate payment rate for CPT code
50593 is attributable to the use of claims
data that do not accurately capture the
full costs of CPT code 50593.
Response: Based on our review of the
procedures assigned to APC 0423, the
public comments received, and the CY
2006 recommendation of the APC Panel
regarding renal cryoablation, we believe
that we have appropriately assigned
CPT code 50593 to APC 0423 for CY
2009 based on clinical and resource
considerations. We continue to believe
that CPT code 50593 is appropriately
assigned to APC 0423 because it is
grouped with other procedures that
share similar clinical and resource
characteristics. Further examination of
the procedures assigned to APC 0423
revealed that the HCPCS code-specific
median costs of these services are all
similar, ranging from $2,875 to $3,959.
In regard to the commenters’ request
that CMS assign CPT code 50593 to its
own APC and provide payment based
on the mean cost of this procedure, it
has been our policy since the
implementation of the OPPS that the
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final APC relative weights and payment
rates are based on median hospital
costs, not mean costs, for the clinical
APC groups. The OPPS relies on the
relativity of costs for procedures as
reported by hospitals in establishing
payment rates, and we do not believe it
would be appropriate to utilize a
different payment methodology based
on mean cost for one APC, while the
payment rates for the other clinical
APCs would be based on median costs.
Mean and median costs are two
different statistical measures of central
tendency and, based on common
distributions, mean costs typically are
higher than median costs. Therefore, we
do not believe it would be appropriate
to use a combination of these measures
to establish the payment weights for
different clinical APCs under the OPPS.
Comment: Some commenters
requested that CMS designate CPT code
50593 as a device-dependent procedure.
They requested that CMS establish a
claims processing edit to ensure that the
device HCPCS code C2618 (Probe,
cryoablation), used during the
procedure, is reported on percutaneous
renal cryoablation claims to ensure
correctly coded claims for future
ratesetting that accurately reflect
hospitals’ costs for CPT code 50593.
Commenters indicated that the failure of
hospitals to report the device HCPCS Ccode for the cryoablation probe on
claims leads to an underestimation of
hospital costs for the procedure.
Response: We acknowledge the
concerns raised by the commenters
regarding hospitals’ failure to report the
device HCPCS code C2618 with the
procedure in many cases. We further
examined our CY 2007 claims data used
for this final rule with comment period
to determine the frequency of billing
CPT code 50593 with and without
HCPCS code C2618. Our analysis
revealed that the CY 2009 final rule
median cost for CPT code 50593 of
approximately $3,959, based on 118
single bills used for CY 2009 ratesetting,
falls within the range for those
procedures billed with and without the
device HCPCS code C2618. Specifically,
our data showed a median cost of
approximately $4,632 based on 48
single bills for procedures reported with
the device HCPCS code C2618 and a
median cost of about $2,924 based on 71
single bills for those procedures billed
without the device HCPCS C-code. (We
note that of the 119 single bills available
for CY 2009 ratesetting, we trimmed 1
claim with excessively high cost when
setting the CY 2009 final rule median.)
Even considering only those claims for
percutaneous renal cryoablation with
the device HCPCS code and higher
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median cost, the procedure would be
appropriately assigned to APC 0423
based on that cost. As a result of this
analysis, which showed that both claim
subsets could be appropriately mapped
to APC 0423 based on their costs, we
believe it continues to be appropriate to
use all single claims for CPT code 50593
for ratesetting and that the procedure is
appropriately assigned to APC 0423.
Further, we do not agree that we
should create a claims processing edit
for CPT code 50593 and HCPCS code
C2618 for the cryoablation probe, nor do
we believe that we should identify any
individual HCPCS codes as devicedependent HCPCS codes under the
OPPS for CY 2009. We create device
edits, when appropriate, for procedures
assigned to device-dependent APCs,
where those APCs have been
historically identified under the OPPS
as having very high device costs.
Because APC 0423 is not a devicedependent APC and the costs of
percutaneous renal cryoablation with
and without HCPCS code C2618 are
both within the range of costs for
procedures assigned to APC 0423, we
are not creating claims processing edits
for CY 2009. Furthermore, in the case of
APC 0423, we note that while all of the
procedures assigned to this APC require
the use of implantable devices, for many
of the procedures there are no Level II
HCPCS codes that describe all of the
technologies that may be used in the
procedures. Therefore, it would not be
possible for us to develop procedure-todevice edits for most of the CPT codes
assigned to the APC.
We remind hospitals that they must
report all of the HCPCS codes that
appropriately describe the items used to
provide services, regardless of whether
the HCPCS codes are packaged or paid
separately. If hospitals use more than
one probe in performing CPT code
50593, we expect hospitals to report this
information on the claim and adjust
their charges accordingly. Hospitals
should report the number of
cryoablation probes used to perform
CPT code 50593 as the units of HCPCS
code C2618 which describes these
devices, with their charges for the
probes. Since CY 2005, we have
required hospitals to report device
HCPCS codes for all devices used in
procedures if there are appropriate
HCPCS codes available. In this way, we
can be confident that hospitals have
included charges on their claims for
costly devices used in procedures when
they submit claims for those procedures.
After consideration of all the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to continue to assign CPT
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code 50593 to APC 0423, which has a
final CY 2009 APC median cost of
approximately $3,003.
d. Magnetic Resonance Guided Focused
Ultrasound (MRgFUS) Ablation of
Uterine Fibroids (APC 0067)
In the CY 2009 OPPS/ASC proposed
rule, we proposed to continue to assign
CPT codes 0071T (Focused ultrasound
ablation of uterine leiomyomata,
including MR guidance; total
leiomyomata volume less than 200 cc of
tissue) and 0072T (Focused ultrasound
ablation of uterine leiomyomata,
including MR guidance; total
leiomyomata volume greater or equal to
200 cc of tissue) to APC 0067 (Level III
Stereotactic Radiosurgery, MRgFUS, and
MEG), with a payment rate of
approximately $3,664. The CY 2008
payment rate for these services is
approximately $3,930. Further, at its
August 2008 meeting, the APC Panel
recommended that CMS maintain the
APC assignment for both procedures,
specifically CPT codes 0071T and
0072T, to APC 0067, similar to the
recommendation the APC Panel made
for these procedures at its March 2007
meeting.
Comment: Several commenters
commended CMS for its proposal to
assign the MRgFUS procedures,
specifically CPT codes 0071T and
0072T, to APC 0067 because of their
clinical similarity to other services also
assigned to that APC. However, the
commenters disagreed with the
proposed payment rate of $3,664 for
these procedures. They claimed that the
payment rate for the procedures
continues to be lower than the hospital
costs incurred to provide the services
and does not accurately reflect all of the
components required to perform the
MRgFUS procedures. They asserted that
the proposed payment rate does not
include payment for the treatment
planning required to perform the
procedure. The commenters
recommended that CMS reassign CPT
codes 0071T and 0072T to another APC
in the same clinical series, specifically
APC 0127 (Level IV Stereotactic
Radiosurgery, MRgFUS, and MEG), with
a proposed payment rate of
approximately $7,608, because
assignment to this APC would provide
more appropriate payment for the
hospital resources needed to perform
the procedures.
Response: We disagree that the
MRgFUS procedures are clinically
similar to the single multi-source cobaltbased stereotactic radiosurgery (SRS)
service that is currently assigned to APC
0127, and which we believe requires
significantly greater hospital resources.
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The SRS procedure is generally
performed on intracranial lesions, and
requires immobilization of the patient’s
head using a frame that is applied to the
skull. Several hundred converging
beams of gamma radiation are then
applied to the target lesion, requiring
their accurate placement to the fraction
of a millimeter. In contrast, during
MRgFUS, magnetic resonance imaging
guidance is utilized to confirm tissue
heating, while multiple sonications at
various points in the fibroid treatment
area are executed until the entire target
volume has been treated.
Our analysis of the latest CY 2007
hospital outpatient claims data indicates
that MRgFUS procedures are rarely
performed on Medicare beneficiaries. As
we stated in the CY 2006 OPPS final
rule with comment period (70 FR
68600) and in the CYs 2007 and 2008
OPPS/ASC final rules with comment
period (71 FR 68050 and 72 FR 66710,
respectively), because treatment of
uterine fibroids is most common among
women younger than 65 years of age, we
expect very limited Medicare claims for
these procedures. In fact, for claims
submitted from CYs 2005 through 2007,
our claims data showed that there were
only two claims for CPT code 0071T in
CY 2005, one claim in CY 2006, and
again only one claim in CY 2007. There
were no claims submitted for CPT code
0072T from CYs 2005 through 2007.
Therefore, we have no reliable
information from hospital claims
regarding the costs of MRgFUS
procedures. However, we continue to
believe that the clinical and expected
resource characteristics for these
procedures resemble the first or
complete session linear acceleratorbased SRS treatment delivery services
that also are assigned to APC 0067.
Further, in response to a public
comment letter that was presented at its
August 2008 meeting, the APC Panel
reiterated its March 2007
recommendation to maintain the current
placement of CPT codes 0071T and
0072T in APC 0067 for CY 2009. At that
meeting, a stakeholder reported that the
reason for requesting the reassignment
of the MRgFUS procedures from APC
0067 to APC 0127 is to set the standard
payment rate for other payers because
many of them base their payment rates
on Medicare rates. We remind hospitals
that the payment rates set for the
services, procedures, and items paid
under the OPPS are based mainly on
costs from hospitals’ claims, and are
established in accordance with the
payment policies of the OPPS to provide
appropriate payment for the care of
Medicare beneficiaries. Non-Medicare
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payers set their own payment rates
based on their payment policies.
After consideration of the public
comments received and the APC Panel
recommendations from its March 2007
and August 2008 meetings, we are
finalizing our CY 2009 proposal,
without modification, to continue to
assign CPT codes 0071T and 0072T to
APC 0067, with a final CY 2009 APC
median cost of approximately $3,718.
e. Prostatic Thermotherapy (APC 0429)
In the CY 2009 OPPS/ASC proposed
rule, we proposed to continue the
assignment of CPT codes 53850
(Transurethral destruction of prostate
tissue; by microwave thermotherapy)
and 53852 (Transurethral destruction of
prostate tissue; by radiofrequency
thermotherapy) to APC 0429 (Level V
Cystourethroscopy and other
Genitourinary Procedures) for CY 2009,
with a proposed payment rate of
approximately $3,016.
Comment: One commenter, who
stated that CPT codes 53850 and 53852
were assigned to APC 0163, urged CMS
to investigate whether these procedures
were correctly assigned to APC 0163 as
the commenter believed that APC 0429
would be a more appropriate
assignment for the procedures based on
clinical and resource considerations.
The commenter recommended that the
APC assignments of CPT codes 53850
and 53852 be discussed at the next APC
Panel meeting.
Response: As we stated in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66709), as part
of our annual review, we examine the
APC assignments for all items and
services under the OPPS for appropriate
placements in the context of our
proposed policies for the update year.
This review involves careful and
extensive analysis of our hospital
outpatient claims data, as well as input
from our medical advisors, the APC
Panel, and the public. As stated in the
CY 2008 OPPS/ASC final rule with
comment period (72 FR 66709), we
agreed with a commenter on the CY
2008 OPPS/ASC proposed rule that
reassignment of CPT codes 53850 and
53852 to APC 0429 with a CY 2008
median cost of approximately $2,844
would be appropriate, based on their
clinical and resource similarities with
other procedures to destroy prostate
tissue also residing in that APC. We
proposed to continue to assign these
two procedures to APC 0429 for CY
2009; therefore, our proposed
assignment already reflected the
commenter’s requested assignment.
Consequently, because CPT codes 53850
and 53852 are already assigned to APC
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68613
0429, we do not see the need to discuss
this issue at the next APC Panel
meeting.
After consideration of the public
comment received, we are finalizing our
CY 2009 proposal, without
modification, to continue to assign CPT
codes 53850 and 53852 to APC 0429,
with a final CY 2009 APC median cost
of approximately $2,958.
3. Nervous System Procedures
a. Magnetoencephalography (MEG)
(APC 0067)
APC 0067 (Level III Stereotactic
Radiosurgery, MRgFUS and MEG), with
a proposed CY 2009 payment rate of
approximately $3,664, contains five
HCPCS codes: CPT code 95965
(Magnetoencephalography, recording
and analysis; for spontaneous brain
magnetic activity (e.g., epileptic cerebral
cortex)); HCPCS code G0173 (Linear
accelerator-based stereotactic
radiosurgery, complete course of
therapy in one session); HCPCS code
G0399 (Image-guided robotic linear
accelerator-based stereotactic
radiosurgery, complete course of
therapy in one session or first session of
fractionated treatment); CPT code 0071T
(Focused ultrasound ablation of uterine
leiomyomata, including MR guidance;
total leiomyomata volume less than 200
cc of tissue); and CPT code 0072T
(Focused ultrasound ablation of uterine
leiomyomata, including MR guidance;
total leiomyomata volume greater or
equal to 200 cc of tissue). In March
2007, the APC Panel recommended that
CPT code 95965 be placed in APC 0067.
Given the clinical and resource
similarities among CPT code 95965 and
the other existing codes in APC 0067,
we agreed and reassigned CPT code
95965 to APC 0067, to which it was
assigned for the CY 2008 OPPS with a
payment rate of approximately $3,930.
At its August 2008 meeting, the APC
Panel recommended that CMS retain
CPT code 95965 in APC 0067 for CY
2009.
Comment: One commenter objected to
the proposed reduction in payment for
APC 0067, on the basis that it would
reduce, by approximately $300, the CY
2009 payment for the service reported
under CPT code 95965, compared to the
CY 2008 payment rate. The commenter
asked that CMS determine whether the
claims from the hospital in which the
commenter furnished services were
included in the set of single bills used
to calculate the proposed payment rate.
Response: Our final rule data show a
median cost for APC 0067 of
approximately $3,718 and a median cost
for CPT code 95965 of approximately
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$2,227. We agree with the APC Panel
that CPT code 95965 is clinically
compatible with the other services
assigned to APC 0067 and that the
median cost for CPT code 95965, while
somewhat lower than the median costs
of the other services also assigned to the
APC, is consistent with the CPT code’s
assignment to APC 0067. The process
we use to select the claims used in the
calculation of the OPPS rates is
discussed in section II. of this final rule
with comment period. We make the
claims we use for ratesetting available
for public examination and analysis
through the limited and identifiable
OPPS data sets so that the public may
review them if there are questions about
particular claims used to set the rates
under the OPPS. Information on these
files is available on the CMS Web site
at: https://www.cms.hhs.gov/
LimitedDataSets/06_HospitalOPPS.asp.
After consideration of the public
comment received, we are retaining the
assignment of CPT code 95965 to APC
0067 for CY 2009, as recommended by
the APC Panel, with a final CY 2009
APC median cost of approximately
$3,718.
b. Chemodenervation (APC 0204)
In the CY 2009 OPPS/ASC proposed
rule, we proposed to continue our
assignment of CPT code 64612
(Chemodenervation of muscle(s);
muscle(s) innervated by facial nerve
(e.g., for blepharospasm, hemifacial
spasm) to APC 0204 (Level I Nerve
Injections), with a proposed payment
rate of approximately $165. The CY
2008 payment rate for this service is
approximately $148. In addition, for CY
2009, we proposed to reassign CPT
codes 64613 (Chemodenervation of
muscle(s); neck muscle(s) (e.g., for
spasmodic torticollis, spasmodic
dysphonia)) and 64614
(Chemodenervation of muscle(s);
extremity(s) and/or trunk muscle(s)
(e.g., for dystonia, cerebral palsy,
multiple sclerosis)) from APC 0204 to
APC 0206 (Level II Nerve Injections),
with a proposed payment rate of
approximately $243.
Comment: Several commenters
requested that CMS reassign CPT code
64612 from APC 0204 to APC 0206, the
same APC to which CMS proposed to
assign CPT codes 64613 and 64614.
Commenters claimed that CPT code
64612 is clinically similar and
comparable in resource use to CPT
codes 64613 and 64614 and, therefore,
believed that CPT code 64612 should
also be assigned to APC 0206.
Response: CPT code 64612 has a
HCPCS code-specific median cost of
approximately $138, based on over
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5,000 single claims, and we proposed to
assign this service to APC 0204, which
has a final median cost of approximately
$161. We believe that APC 0204
appropriately reflects the hospital
resource characteristics of CPT code
64612 and provides appropriate
payment to hospitals for this service.
Further, we believe that other
procedures currently assigned to APC
0204 are similar to CPT code 64612 with
respect to their clinical characteristics.
In contrast, CPT code 64613 has a
HCPCS code-specific median cost of
approximately $197 based on
approximately 5,700 single claims.
Similarly, CPT code 64614 has a HCPCS
code-specific median cost of
approximately $217 based on over 5,700
single claims data. We proposed to
assign both of these services to APC
0206, which has a final APC median
cost of approximately $236. Our CY
2007 claims data used for this final rule
with comment period revealed that the
hospital resource costs for CPT codes
64613 and 64614 are significantly
greater than the hospital resource costs
of CPT code 64612. Therefore, we
believe the proposed assignment of CPT
code 64612 to APC 0204 is appropriate
for CY 2009, while CPT codes 64613
and 64614 are more appropriately
assigned to APC 0206.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to assign CPT code 64612
to APC 0204, with a final CY 2009 APC
median cost of approximately $161.
4. Ocular Procedures
a. Suprachordial Delivery of
Pharmacologic Agent (APC 0237)
In Addendum B to the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66997), we assigned CPT
code 0186T comment indicator ‘‘NI’’ to
indicate that it was a new code for CY
2008 with an interim payment status
subject to public comment following
publication of that rule. In that same
final rule with comment period, we also
made an interim assignment of CPT
code 0186T to APC 0236 (Level II
Posterior Segment Eye Procedures), with
a payment rate of approximately $1,161.
CPT code 0186T was released by the
AMA on July 1, 2007, and was
implemented on January 1, 2008. Under
the OPPS, we generally assign a new
Category III CPT code to an APC if we
believe that the procedure, if covered,
would be appropriate for separate
payment under the OPPS. A specific
assignment to a clinical APC where
HCPCS codes with comparable clinical
and resource characteristics also reside
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is based on a variety of types of
information including, but not limited
to: advice from our medical advisors,
information from specialty societies,
review of resource costs for related
services from historical hospital claims
data, consideration of the clinical
similarity of the service to existing
procedures, and review of any other
information available to us.
We did not receive any public
comments regarding the interim
assignment of CPT code 0186T to APC
0236 for CY 2008.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41472), we proposed to
reassign CPT code 0186T
(Suprachordial delivery of
pharmacologic agent (does not include
supply of medication)) to APC 0237
(Level II Posterior Segment Eye
Procedures), from APC 0236, which we
proposed to delete for CY 2009. As
stated earlier, this CPT code was
released by CPT on July 1, 2007, and
implemented on January 1, 2008;
therefore, we had no CY 2007 claims
data for this service upon which to base
our CY 2009 proposal.
We proposed to reassign CPT code
0186T to APC 0237, with a proposed CY
2009 payment rate of approximately
$1,449, based upon our review and
analysis of the clinical and resource
costs associated with CPT code 0186T.
We agreed with a presenter at the March
2008 APC Panel meeting that the most
appropriate CY 2009 APC assignment
for the procedure is APC 0237. The
presenter indicated that CPT code
0186T is analogous to CPT code 67027
(Implantation of intravitreal drug
delivery system (e.g., ganciclovir
implant), includes concomitant removal
of vitreous), which currently is assigned
to APC 0672 (Level IV Posterior
Segment Eye Procedures). Although the
presenter stated that both procedures
share similar clinical characteristics and
resource costs, the presenter believed
that CPT code 0186T would be most
appropriately assigned to APC 0237
based on the procedure’s estimated
hospital cost. The APC Panel noted that
because the CPT code is new and there
are no claims data for this procedure,
the APC Panel would not make a
specific CY 2009 APC assignment
recommendation to CMS at that time.
However, the APC Panel recommended
that CMS share with the APC Panel the
claims data for CPT code 0186T at the
first CY 2009 APC Panel meeting, and
that CMS reevaluate the assignment of
CPT code 0186T to APC 0236 on the
basis of those data.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41472), we accepted the
recommendation of the APC Panel and
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stated that we would provide the initial
OPPS claims data available for this CPT
code, based on CY 2008 claims data, for
the first CY 2009 APC Panel meeting.
These data will not be available until
the CY 2010 OPPS/ASC rulemaking
cycle.
Comment: One commenter agreed
with the proposed reassignment of CPT
code 0186T to APC 0237. The
commenter believed that the resource
costs of the procedure reported with
CPT code 0186T best matched those of
the other eye procedures also assigned
to APC 0237.
Response: We appreciate the
commenter’s support for our proposal.
We are finalizing our CY 2009
proposal, without modification, to
assign CPT code 0186T to APC 0237,
with a final CY 2009 APC median cost
of approximately $1,442. We are
accepting the APC Panel’s March 2008
recommendation, and we will provide
the initial OPPS claims data available
for this CPT code, based on CY 2008
claims data, for the first CY 2009 APC
Panel meeting.
dwashington3 on PRODPC61 with RULES2
b. Scanning Ophthalmic Imaging (APC
0230)
CPT code 0187T (Scanning
computerized ophthalmic diagnostic
imaging, anterior segment, with
interpretation and report, unilateral)
was released by the AMA on July 1,
2007, and implemented on January 1,
2008. In the CY 2008 OPPS/ASC final
rule with comment period (72 FR
66997), we assigned CPT code 0187T to
APC 0230 (Level I Eye Tests &
Treatments) with a payment rate of
approximately $38. We also assigned
this CPT code comment indicator ‘‘NI’’
in Addendum B to the CY 2008 OPPS/
ASC final rule with comment period to
indicate that it is a new code for CY
2008 with an interim payment status
subject to public comment following
publication of that rule. As has been our
longstanding policy, we do not respond
to public comments submitted on the
OPPS/ASC final rule with comment
period regarding these interim
assignments in the proposed OPPS/ASC
rule for the following calendar year.
However, we do review and take into
consideration these public comments
received during the development of the
proposed rule when we evaluate APC
assignments for the following year, and
we respond to them in the final rule for
that following calendar year.
In the CY 2009 OPPS/ASC proposed
rule, we proposed to continue the
assignment of CPT code 0187T to APC
0230, with a proposed payment rate of
approximately $42 for CY 2009.
VerDate Aug<31>2005
15:50 Nov 17, 2008
Jkt 217001
Comment: One commenter on the CY
2008 OPPS/ASC final rule with
comment period requested that CMS
reassign CPT code 0187T from APC
0230 to APC 0266 (Level II Diagnostic
and Screening Ultrasound), which is the
APC assigned to CPT code 76513
(Ophthalmic ultrasound, diagnostic;
anterior segment ultrasound, immersion
(water bath) b-scan or high resolution
biomicroscopy). The commenter
indicated that CPT code 76513 is very
similar to CPT code 0187T because both
procedures require imaging of the
anterior segment of the eye, use similar
resources, and utilize the same level of
technical expertise in performing the
procedures. However, the commenter
cited a difference between the two
procedures regarding how images are
acquired. Specifically, the commenter
explained that CPT code 0187T
generates images based on light,
whereas CPT code 76513 generates
images by ultrasound.
Response: Based on our review of the
clinical characteristics of the procedure
and its expected resource costs, we
continue to believe that APC 0230 is the
most appropriate assignment for CPT
code 0187T. We will reevaluate this
APC assignment for future OPPS
updates as additional information
becomes available to us. We expect
claims data for CPT code 0187T to be
first available for the CY 2010 OPPS/
ASC rulemaking cycle.
We did not receive any public
comments on our proposal to continue
to assign CPT code 0187T to APC 0230
for CY 2009. Therefore, we are finalizing
our CY 2009 proposal, without
modification, to assign CPT code 0187
to APC 0230, with a final CY 2009 APC
median cost of approximately $42.
5. Orthopedic Procedures
a. Closed Treatment of Fracture of
Finger/Toe/Trunk (APCs 0129, 0138,
and 0139)
We received a comment in response
to the CY 2008 OPPS/ASC proposed
rule on the variety of procedures
assigned to APC 0043 (Closed Treatment
Fracture Finger/Toe/Trunk). The
commenter did not agree with the
placement of various procedures in APC
0043 because many of the procedures
vary in resource costs. In particular, the
commenter asserted that the costs
associated with finger treatments, hip
dislocations, and spinal fractures vary
significantly, and further stated that the
costs of treating spinal fractures are
significantly greater than the costs
associated with finger or toe fractures.
The commenter also expressed concern
that grouping all of the approximately
PO 00000
Frm 00115
Fmt 4701
Sfmt 4700
68615
150 procedures in one clinical APC
violated the 2 times rule, and that
continuing to exempt APC 0043 from
the 2 times rule was not appropriate.
The commenter recommended that CMS
pay appropriately for these procedures,
and stated that this could be achieved
by dividing the procedures currently
assigned to APC 0043 into several APCs.
However, the commenter did not make
any specific recommendations regarding
alternative APC configurations. Because
APC 0043 contains so many different
fracture treatment procedures with low
volume, we were concerned that any
restructuring without the benefit of
public comment for CY 2008 could
result in a reconfiguration of APC 0043
that did not reflect improved clinical
and resource homogeneity. Therefore,
we did not reconfigure APC 0043 for CY
2008, and we finalized a payment rate
for APC 0043 of approximately $113.
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66723), we
stated that we agreed with the
commenter that grouping all of the
closed fracture treatment procedures in
one APC may not accurately distinguish
the more expensive from the less
resource-intensive fracture treatment
procedures. We also explained that that
there were only 13 procedures with the
frequency necessary to assess the APC’s
alignment with the 2 times rule. The
other procedures were all very low
volume and, therefore, not significant
procedures for purposes of evaluating
the APC with respect to the 2 times rule.
We noted that APC 0043 had been
exempted from the 2 times rule for the
past 7 years under the OPPS, and we
had not previously received public
comments regarding the structure of this
APC. We also stated that we would
bring this APC issue to the attention of
the APC Panel at its March 2008
meeting, and we specifically invited
public recommendations on potential
alternative APC configurations for the
services assigned to APC 0043 for
consideration for the CY 2009 OPPS
rulemaking cycle. We did not receive
any public comments on this APC issue
in response to the CY 2008 OPPS/ASC
final rule with comment period.
Based on the updated CY 2007
hospital outpatient claims data available
for the March 2008 APC Panel meeting,
we presented a possible reconfiguration
of APC 0043 for the APC Panel’s
consideration that would delete APC
0043 and replace it with three new
APCs, configured based on the hospital
resource data from the CY 2007 claims
data, as well as the clinical
characteristics of the procedures
currently assigned to APC 0043. The
APC Panel recommended that CMS
E:\FR\FM\18NOR2.SGM
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Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations
We further stated in the CY 2009
OPPS/ASC proposed rule (73 FR 41473)
that while all three proposed APCs
contained many procedures that were
very low in volume, this reconfiguration
reflected an attempt to realign the
procedures previously assigned to APC
0043 into more homogeneous APC
groups based on their clinical
characteristics and resource costs.
Therefore, in the CY 2009 OPPS/ASC
proposed rule, we proposed to
reconfigure APC 0043 by deleting APC
0043 and reassigning the HCPCS codes
previously assigned to APC 0043 to
proposed new APCs 0129, 0138, and
0139.
Comment: Several commenters
commended CMS for reconfiguring APC
0043 into the proposed three new APCs
0129, 0138, and 0139.
Response: We appreciate the
commenters’ support for our proposal.
For this final rule with comment
period, we analyzed our CY 2007 claims
data used for CY 2009 OPPS ratesetting,
and determined that the final median
costs for proposed new APCs 0129,
0138, and 0139 are relatively similar to
those for the CY 2009 OPPS/ASC
adopt this approach, and we accepted
the APC Panel’s recommendation for CY
2009. Therefore, in the CY 2009 OPPS/
ASC proposed rule (73 FR 41472), we
proposed three new APCs to replace
APC 0043, with proposed configurations
as displayed in Table 15 of the proposed
rule for CY 2009.
Based on these configurations,
proposed new APC 0129 (Level I Closed
Treatment Fracture Finger/Toe/Trunk)
had a proposed APC median cost of
approximately $104, with the HCPCS
code-specific median costs of the
significant procedures ranging from
approximately $74 to $124. Proposed
new APC 0138 (Level II Closed
Treatment Fracture Finger/Toe/Trunk)
had a proposed APC median cost of
approximately $397, with one
significant procedure with a HCPCS
code-specific median cost of
approximately $399. Proposed new APC
0139 (Level III Closed Treatment
Fracture Finger/Toe/Trunk) had a
proposed APC median cost of
approximately $1,340, with one
significant volume HCPCS code whose
median cost was approximately $1,574.
proposed rule. Specifically, APC 0129
has a final APC median cost of
approximately $103, with the HCPCS
code-specific median costs of the
significant procedures ranging from
approximately $68 to $123, compared to
a proposed APC median cost of
approximately $104. APC 0138 has a
final APC median cost of approximately
$397, with one significant procedure
with a HCPCS code-specific median cost
of approximately $396, compared to a
proposed APC median cost of
approximately $397. Finally, APC 0139
has a final APC median cost of about
$1,283, with one significant volume
HCPCS code whose median cost is
approximately $1,393, compared to a
proposed APC median cost of
approximately $1,340.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to delete APC 0043 and
reassign the HCPCS codes previously
assigned to APC 0043 to new APCs
0129, 0138, and 0139, with final CY
2009 APC median costs of
approximately $103, $397, and $1,283,
respectively.
TABLE 17—FINAL APCS FOR CLOSED TREATMENT FRACTURE OF FINGER/TOE/TRUNK
Final
CY 2009
SI
dwashington3 on PRODPC61 with RULES2
CY 2009 HCPCS code
21800
21820
22305
23500
23540
23570
23600
23620
23650
23675
23929
24500
24505
24530
24560
24565
24576
24600
24640
24650
24670
24675
24999
25500
25530
25535
25560
25600
25622
25630
25650
25660
25675
25680
25999
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
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......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
VerDate Aug<31>2005
15:50 Nov 17, 2008
Jkt 217001
CY 2009 short descriptor
Final CY 2009
approximate
APC median
cost
Final CY
2009
APC
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
Treatment of rib fracture ........................................................
Treat sternum fracture ............................................................
Treat spine process fracture ..................................................
Treat clavicle fracture .............................................................
Treat clavicle dislocation ........................................................
Treat shoulder blade fx ..........................................................
Treat humerus fracture ...........................................................
Treat humerus fracture ...........................................................
Treat shoulder dislocation ......................................................
Treat dislocation/fracture ........................................................
Shoulder surgery procedure ...................................................
Treat humerus fracture ...........................................................
Treat humerus fracture ...........................................................
Treat humerus fracture ...........................................................
Treat humerus fracture ...........................................................
Treat humerus fracture ...........................................................
Treat humerus fracture ...........................................................
Treat elbow dislocation ..........................................................
Treat elbow dislocation ..........................................................
Treat radius fracture ...............................................................
Treat ulnar fracture .................................................................
Treat ulnar fracture .................................................................
Upper arm/elbow surgery .......................................................
Treat fracture of radius ...........................................................
Treat fracture of ulna ..............................................................
Treat fracture of ulna ..............................................................
Treat fracture radius & ulna ...................................................
Treat fracture radius/ulna .......................................................
Treat wrist bone fracture ........................................................
Treat wrist bone fracture ........................................................
Treat wrist bone fracture ........................................................
Treat wrist dislocation ............................................................
Treat wrist dislocation ............................................................
Treat wrist fracture .................................................................
Forearm or wrist surgery ........................................................
$103
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
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........................
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........................
0129
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E:\FR\FM\18NOR2.SGM
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Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations
68617
TABLE 17—FINAL APCS FOR CLOSED TREATMENT FRACTURE OF FINGER/TOE/TRUNK—Continued
Final
CY 2009
SI
dwashington3 on PRODPC61 with RULES2
CY 2009 HCPCS code
26600
26605
26641
26670
26700
26705
26720
26725
26740
26742
26750
26755
26770
26989
27193
27200
27220
27230
27250
27256
27265
27267
27299
27501
27503
27508
27516
27517
27520
27530
27538
27550
27560
27599
27750
27760
27767
27768
27780
27786
27788
27808
27816
27824
27830
27899
28400
28430
28435
28450
28455
28470
28475
28490
28495
28510
28515
28530
28540
28600
28605
28630
28660
28899
20660
22310
23520
23525
23545
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
......................................................
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......................................................
VerDate Aug<31>2005
15:50 Nov 17, 2008
Jkt 217001
CY 2009 short descriptor
Final CY 2009
approximate
APC median
cost
Final CY
2009
APC
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
Treat metacarpal fracture .......................................................
Treat metacarpal fracture .......................................................
Treat thumb dislocation ..........................................................
Treat hand dislocation ............................................................
Treat knuckle dislocation ........................................................
Treat knuckle dislocation ........................................................
Treat finger fracture, each ......................................................
Treat finger fracture, each ......................................................
Treat finger fracture, each ......................................................
Treat finger fracture, each ......................................................
Treat finger fracture, each ......................................................
Treat finger fracture, each ......................................................
Treat finger dislocation ...........................................................
Hand/finger surgery ................................................................
Treat pelvic ring fracture ........................................................
Treat tail bone fracture ...........................................................
Treat hip socket fracture ........................................................
Treat thigh fracture .................................................................
Treat hip dislocation ...............................................................
Treat hip dislocation ...............................................................
Treat hip dislocation ...............................................................
Cltx thigh fx ............................................................................
Pelvis/hip joint surgery ...........................................................
Treatment of thigh fracture .....................................................
Treatment of thigh fracture .....................................................
Treatment of thigh fracture .....................................................
Treat thigh fx growth plate .....................................................
Treat thigh fx growth plate .....................................................
Treat kneecap fracture ...........................................................
Treat knee fracture .................................................................
Treat knee fracture(s) .............................................................
Treat knee dislocation ............................................................
Treat kneecap dislocation ......................................................
Leg surgery procedure ...........................................................
Treatment of tibia fracture ......................................................
Cltx medial ankle fx ................................................................
Cltx post ankle fx ....................................................................
Cltx post ankle fx w/mnpj .......................................................
Treatment of fibula fracture ....................................................
Treatment of ankle fracture ....................................................
Treatment of ankle fracture ....................................................
Treatment of ankle fracture ....................................................
Treatment of ankle fracture ....................................................
Treat lower leg fracture ..........................................................
Treat lower leg dislocation .....................................................
Leg/ankle surgery procedure .................................................
Treatment of heel fracture ......................................................
Treatment of ankle fracture ....................................................
Treatment of ankle fracture ....................................................
Treat midfoot fracture, each ...................................................
Treat midfoot fracture, each ...................................................
Treat metatarsal fracture ........................................................
Treat metatarsal fracture ........................................................
Treat big toe fracture ..............................................................
Treat big toe fracture ..............................................................
Treatment of toe fracture .......................................................
Treatment of toe fracture .......................................................
Treat sesamoid bone fracture ................................................
Treat foot dislocation ..............................................................
Treat foot dislocation ..............................................................
Treat foot dislocation ..............................................................
Treat toe dislocation ...............................................................
Treat toe dislocation ...............................................................
Foot/toes surgery procedure ..................................................
Apply, rem fixation device ......................................................
Treat spine fracture ................................................................
Treat clavicle dislocation ........................................................
Treat clavicle dislocation ........................................................
Treat clavicle dislocation ........................................................
........................
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$397
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0138
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68618
Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations
TABLE 17—FINAL APCS FOR CLOSED TREATMENT FRACTURE OF FINGER/TOE/TRUNK—Continued
Final
CY 2009
SI
CY 2009 HCPCS code
23575
23665
24535
24577
24655
25505
25520
25565
25605
25624
25635
26340
26645
26675
27238
27246
27500
27510
27810
27818
27840
28570
22315
23505
23605
23625
24620
25259
25690
26607
26706
27502
27532
27752
27762
27781
27825
27831
28405
28575
CY 2009 short descriptor
Final CY 2009
approximate
APC median
cost
Final CY
2009
APC
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
T
Treat shoulder blade fx ..........................................................
Treat dislocation/fracture ........................................................
Treat humerus fracture ...........................................................
Treat humerus fracture ...........................................................
Treat radius fracture ...............................................................
Treat fracture of radius ...........................................................
Treat fracture of radius ...........................................................
Treat fracture radius & ulna ...................................................
Treat fracture radius/ulna .......................................................
Treat wrist bone fracture ........................................................
Treat wrist bone fracture ........................................................
Manipulate finger w/anesth ....................................................
Treat thumb fracture ...............................................................
Treat hand dislocation ............................................................
Treat thigh fracture .................................................................
Treat thigh fracture .................................................................
Treatment of thigh fracture .....................................................
Treatment of thigh fracture .....................................................
Treatment of ankle fracture ....................................................
Treatment of ankle fracture ....................................................
Treat ankle dislocation ...........................................................
Treat foot dislocation ..............................................................
Treat spine fracture ................................................................
Treat clavicle fracture .............................................................
Treat humerus fracture ...........................................................
Treat humerus fracture ...........................................................
Treat elbow fracture ...............................................................
Manipulate wrist w/anesthes ..................................................
Treat wrist dislocation ............................................................
Treat metacarpal fracture .......................................................
Pin knuckle dislocation ...........................................................
Treatment of thigh fracture .....................................................
Treat knee fracture .................................................................
Treatment of tibia fracture ......................................................
Cltx med ankle fx w/mnpj .......................................................
Treatment of fibula fracture ....................................................
Treat lower leg fracture ..........................................................
Treat lower leg dislocation .....................................................
Treatment of heel fracture ......................................................
Treat foot dislocation ..............................................................
........................
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........................
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........................
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........................
........................
........................
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........................
$1,283
........................
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dwashington3 on PRODPC61 with RULES2
b. Arthroscopic and Other Orthopedic
Procedures (APCs 0041 and 0042)
For CY 2009, we proposed the
following two primary APCs for
arthroscopic procedures: (1) APC 0041
(Level I Arthroscopy), comprised of 44
procedures with a proposed CY 2009
payment rate of approximately $1,933;
and (2) APC 0042 (Level II
Arthroscopy), comprised of 30
procedures with a proposed payment
rate of approximately $3,233. The CY
2008 payment rates for APCs 0041 and
0042, with the same APC configurations
as proposed for CY 2009, are
approximately $1,833 and $2,911,
respectively.
Comment: The commenters stated
that the proposed configurations of
arthroscopic procedures assigned to
APCs 0041 and 0042 fail to
appropriately recognize the distinct
clinical and resource features of the
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wide range of arthroscopic procedures
now being provided to Medicare
beneficiaries. Furthermore, they
believed that there are services
proposed for assignment to APC 0042
that are not arthroscopies and should be
reassigned to APC 0052 (Level IV
Musculoskeletal Procedure Except Hand
and Foot). The commenters indicated
that, as proposed, CMS data include a
significant number of procedures in
which the payment would be less than
the median cost of the procedure. They
believed that this problem was
compounded by the reduced payments
made for the procedures in ASCs. The
commenters argued that the low level of
payment for these APCs would result in
barriers to high quality of care in the
ASC setting. Specifically, the
commenters requested that CMS
reassign CPT codes 27412 (Autologous
chondrocyte implantation, knee) and
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27415 (Osteochondral allograft, knee,
open) to APC 0052 because these are not
arthroscopic procedures. They believed
that these two procedures were
clinically similar to procedures in APC
0052 and that their median costs were
more similar to the median costs for
other services in APC 0052.
The commenters further requested
that CMS create 11 new arthroscopy
APCs to ensure that the services within
the arthroscopy APCs are clinically
homogenous and contain only those
procedures that are similar in terms of
resource utilization. Specifically, the
commenters requested that CMS
restructure the arthroscopy APCs to
reflect the following clinical categories:
Diagnostic arthroscopies, lower
extremity versus upper extremity
arthroscopies without implants, and
lower extremity versus upper extremity
arthroscopies with implants. The
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commenters believed that these clinical
distinctions parallel the distinctions
CMS has created for other classes of
procedures, including other orthopedic
procedures, and would more accurately
and equitably reflect the clinical
characteristics and resource utilization
of the services provided. The
commenters further asked that CMS
consider the new APCs with implants to
be device-dependent APCs so that they
may be considered to be deviceintensive for ASC ratesetting purposes
in order to ‘‘pass through’’ the cost of
the implants in the ASC payment.
Response: As a result of the concerns
raised by the commenters, we reviewed
the clinical characteristics and HCPCS
code-specific median costs from the CY
2007 claims data for all procedures we
proposed to assign to APCs 0041, 0042,
and 0052 for CY 2009. Based on our
findings from this review, we agree with
the commenters that the procedures
reported by CPT codes 27412 and 27415
are not arthroscopic procedures, that
they are more clinically similar to the
procedures in APC 0052, and that their
median costs are better aligned with the
median costs for services assigned to
APC 0052. Therefore, we are reassigning
CPT codes 27412 and 27415 to APC
0052 for CY 2009.
While we appreciate the commenters’
suggestion that we create 11 new APCs
for arthroscopic procedures, we believe
that existing clinical APCs 0041 and
0042 sufficiently account for the
different clinical and resource
characteristics of these procedures. To
reduce the size of the APC payment
groups and establish new APC payment
groups to pay more precisely would be
inconsistent with our overall strategy to
encourage hospitals to use resources
more efficiently by increasing the size of
the payment bundles. Moreover, many
of the services that are assigned to APCs
0041 and 0042 are low volume services,
with even fewer single claims available
for ratesetting. Including low volume
services in APCs with clinically similar
higher volume services and similar
median costs generates more stability in
the payment rates that are set for these
low volume services.
We also considered whether it would
be appropriate to create two new APCs
as requested by the commenters to
isolate the arthroscopic procedures that
the commenters indicate require
implants. Our review of the CPT code
definitions for the services that
commenters would define as requiring
implants and our understanding of the
resources required to perform the
procedures indicate that, for most of
these procedures, implanted devices are
not always required to perform the
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service and that in a number of cases,
the ‘‘implant’’ is actually a supply or
graft rather than an implantable device
that would contribute to the APC’s
estimated device cost. Therefore, we do
not believe that there is justification to
create new APCs for these procedures or
to designate them as device-dependent
APCs. We refer readers to section
XV.E.1.c. of this final rule with
comment period for an explanation of
the methodology used to calculate the
payment rates for device-intensive
procedures under the revised ASC
payment system.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposed configuration of
APCs 0041 and 0042, with the
modification that we are reassigning
CPT codes 27412 and 27415 from APC
0042 to APC 0052. The final CY 2009
APC median costs of APCs 0041, 0042,
and 0052 are approximately $1,899,
$3,178, and $5,592, respectively.
c. Surgical Wrist Procedures (APCs 0053
and 0054)
For CY 2009, we proposed to retain
the CY 2008 configuration of the HCPCS
codes in APCs 0053 (Level I Hand
Musculoskeletal Procedures) and 0054
(Level II Hand Musculoskeletal
Procedures), with proposed payment
rates of approximately $1,116 and
$1,851, respectively. The CY 2008
payment rates for APCs 0053 and 0054,
with the same APC configurations as
proposed for CY 2009, are
approximately $1,049 and $1,676,
respectively.
Comment: One commenter asked that
CMS reassign a number of CPT codes for
surgical wrist procedures to alternative
APCs, where they would reside with
similar wrist procedures. They
requested the following moves: (1) CPT
code 25111 (Excision of ganglion, wrist
(dorsal or volar); primary) from APC
0053 to APC 0049 (Level I
Musculoskeletal Procedures Except
Hand and Foot); (2) CPT code 25112
(Excision of ganglion, wrist (dorsal or
volar); recurrent) from APC 0053 to APC
0049; (3) CPT code 25210 (Carpectomy;
one bone) from APC 0054 to APC 0050
(Level II Musculoskeletal Procedures
Except Hand and Foot); (4) CPT code
25215 (Carpectomy; all bones of
proximal row) from APC 0054 to APC
0050; (5) CPT code 25394 (Osteoplasty,
carpal bone, shortening) from APC 0053
to APC 0051 (Level III Musculoskeletal
Procedures Except Hand and Foot); (6)
CPT code 25430 (Insertion of vascular
pedicle into carpal bone (eg, Hori
procedure)) from APC 0054 to APC
00051; (7) CPT code 25431 (Repair of
nonunion of carpal bone (excluding
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68619
carpal scaphoid (navicular))(includes
obtaining graft and necessary fixation),
each bone) from APC 0054 to APC 0051;
and (8) CPT code 25820 (Arthrodesis,
wrist; limited, without bone graft (eg,
intercarpal or radiocarpal) from APC
0053 to APC 0052 (Level IV
Musculoskeletal Procedures Except
Hand and Foot). The commenter
believed that these wrist procedures
typically have the same costs of
personnel, supplies, and implants as the
procedures assigned to the APCs in
which the commenter recommended
placement. Moreover, the commenter
also suggested that the wrist procedures
are more clinically similar to other
surgical procedures already assigned to
the APCs in which the commenter
recommended placement.
Response: We agree with most of the
commenter’s recommendations and are
reassigning the CPT codes to the
recommended APCs for CY 2009 to
improve clinical and resource
homogeneity, with one exception. We
do not agree that CPT code 25820 is
most appropriately assigned to APC
0052. We have 123 total CY 2007 claims
for this procedure, with 30 claims
available for ratesetting. The median
cost of the procedure is approximately
$4,029, which falls between the median
costs of APCs 0051 and 0052, Levels III
and IV Musculoskeletal Procedures
Except Hand and Foot, with APC
median costs of approximately $2,929
and $5,592, respectively. Other wrist
arthrodesis procedures are currently
assigned to both APCs 0051 and 0052
under the OPPS, and we note that the
procedure described by CPT code 25820
is a limited procedure without a bone
graft, in comparison with other
complete arthrodesis procedures that
may utilize a graft. Therefore, based on
clinical and resource considerations, we
believe CPT code 25820 is most
appropriately reassigned to APC 0051
for CY 2009.
After consideration of the public
comments received, we are modifying
our CY 2009 proposed configurations
for APCs 0049, 0050, 0051, 0053, and
0054. Specifically, we are reassigning
CPT codes 25111 and 25112 to APC
0049; we are reassigning CPT codes
25210 and 25215 to APC 0050; and we
are reassigning CPT codes 25394, 25430,
and 25431 to APC 0051 for CY 2009. We
also are finalizing our CY 2009 proposal
to reassign CPT code 25820 from APC
0053 to APC 0051 for the CY 2009
OPPS. The final CY 2009 median costs
of APCs 0049, 0050, and 0051 are
approximately $1,406, $1,929, and
$2,929, respectively.
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d. Intercarpal or Carpometacarpal
Arthroplasty (APC 0047)
In the CY 2009 OPPS/ASC proposed
rule, we proposed to continue to assign
CPT code 25447 (Arthroplasty,
interposition, intercarpal or
carpometacarpal joints) to APC 0047
(Arthroplasty without Prosthesis) for CY
2009, with a proposed payment rate of
approximately $2,488. The CY 2008
payment rate for this procedure is
approximately $2,287.
At the August 2008 APC Panel
meeting, a presenter requested that the
APC Panel recommend to CMS that CPT
code 25447 be reassigned to APC 0048
(Level I Arthroplasty or Implantation
with Prosthesis), because a costly
implantable spacer device may be used
when a hospital provides CPT code
25447. The presenter argued that the
proposed payment rate of approximately
$3,473 for APC 0048 would provide
more appropriate payment for the
procedure, and that the procedure
clinically resembled other procedures
also assigned to APC 0048. The APC
Panel recommended that CMS maintain
the assignment of CPT code 25447 in
APC 0047 for CY 2009.
The procedure described by APC code
25447 does not always utilize an
implantable device. We note that the
median cost of CPT code 25447 is
approximately $2,445 based on over 850
single claims, very close to the median
cost of APC 0047 of approximately
$2,443 and much lower than the median
cost of APC 0048 of approximately
$3,433. Therefore, we are adopting the
APC Panel’s recommendation for CY
2009.
We did not receive any public
comments regarding our proposal.
Therefore, we are finalizing our CY 2009
proposal, without modification, to
assign CPT code 25447 to APC 0047,
with a final CY 2009 APC median cost
of approximately $2,443.
dwashington3 on PRODPC61 with RULES2
e. Insertion of Posterior Spinous Process
Distraction Device (APC 0052)
In the CY 2009 OPPS/ASC proposed
rule, we proposed to reassign CPT codes
0171T (Insertion of posterior spinous
process distraction device (including
necessary removal of bone or ligament
for insertion and imaging guidance),
lumbar, single level) and 0172T
(Insertion of posterior spinous process
distraction device (including necessary
removal of bone or ligament for
insertion and imaging guidance),
lumbar, each additional level) from APC
0050 (Level II Musculoskeletal
Procedures Except Hand and Foot) to
APC 0052 (Level IV Musculoskeletal
Procedures Except Hand and Foot), with
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a proposed payment rate of
approximately $5,615. The CY 2008
payment rate for APC 0050 is
approximately $1,859. For CY 2007 and
CY 2008, the device HCPCS code C1821
(Interspinous process distraction device
(implantable)), used with CPT codes
0171T and 0172T, was assigned passthrough payment status and, therefore,
was paid separately at charges adjusted
to cost. As we discuss in section IV.A.
of this final rule with comment period,
the period of pass-through payment for
HCPCS code C1821 expires after
December 31, 2008. According to our
usual methodology, the costs of devices
no longer eligible for pass-through
payments are packaged into the costs of
the procedures with which the devices
are reported in the claims data used to
set the payment rates for those
procedures.
Comment: One commenter asserted
that the proposed reassignment of CPT
codes 0171T and 0172T to APC 0052
was not appropriate for a number of
reasons. The commenter stated that the
proposed median costs of CPT codes
0171T and 0172T of approximately
$8,080 and $11,114, respectively, were
substantially higher than the proposed
median cost of APC 0052 of
approximately $5,606. The commenter
indicated that the median cost for the
device HCPCS code C1821 that is
always required for the procedures was
$6,483, higher than the median cost of
the APC to which the procedures were
proposed for assignment. The
commenter believed that the assignment
of the procedures to APC 0052 would
result in significant underpayment to
hospitals and possibly limit patient
access to this technology. The
commenter also claimed that the
assignment of CPT codes 0171T and
0172T to APC 0052 would violate the 2
times rule. The commenter
recommended either the assignment of
CPT codes 0171T and 0172T to a newly
created clinical APC, or the
reassignment of CPT codes 0171T and
0172T to APC 0425 (Level II
Arthroplasty or Implantation with
Prosthesis), based on clinical and
resource homogeneity and devicedependent status. The commenter
pointed out that the proposed rule
median cost of APC 0425 of
approximately $7,905 was similar to the
proposed rule median costs of CPT
codes 0171T and 0172T. Finally, the
commenter recommended that CMS add
interspinous process distraction device
procedures described by CPT 0171T and
0172T to the device-to-procedure and
procedure-to-device claims processing
edits to ensure that future claims are
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Fmt 4701
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correctly coded, leading to more
accurate and appropriate payment
policies for the technology.
Response. We continue to believe that
APC 0052 is an appropriate APC
assignment for CPT codes 0171T and
0172T based on consideration of the
procedures’ clinical and resource
characteristics. The CY 2007 claims data
for C1821 used for this final rule with
comment period show that the
interspinous process distraction device
that is used with CPT codes 0171T and
0172T has a line-item median cost of
approximately $4,374, whereas the
median cost of APC 0052 is significantly
higher, at approximately $5,592.
The HCPCS code-specific final
median costs of CPT codes 0171T and
0172T are approximately $7,748 and
$10,431, respectively. However, we note
that because CPT code 0172T is a CPT
add-on code for an additional level that
should always be reported in
conjunction with CPT code 0171T, the
5 single claims (out of 576 total claims)
upon which the median cost of CPT
code 0172T is based are likely
incorrectly coded claims and, therefore,
the median cost does not provide a valid
estimate of the hospital resources
required to perform CPT code 0172T.
The median cost of CPT code 0171T of
approximately $7,748 is the highest cost
of the significant procedures (frequency
of greater than 1,000 single claims or
frequency of greater than 99 and more
than 2 percent of the single claims in
the APC) assigned to APC 0052, while
the lowest cost significant procedure
has a median cost of approximately
$4,336. Therefore, the configuration of
APC 0052 does not violate the 2 times
rule. We continue to believe that, based
on resource considerations, APC 0052
would provide appropriate payment for
CPT codes 0171T and 0172T in CY
2009.
Moreover, we note that there are
several other spinal procedures that
require the use of implantable devices
that are also assigned to APC 0052, such
as the percutaneous kyphoplasty
procedures described by CPT code
22523 (Percutaneous vertebral
augmentation, including cavity creation
(fracture reduction and bone biopsy
included when performed) using
mechanical device, one vertebral body,
unilateral or bilateral cannulation (e.g.,
kyphoplasty); thoracic) and CPT code
22524 (Percutaneous vertebral
augmentation, including cavity creation
(fracture reduction and bone biopsy
included when performed) using
mechanical device, one vertebral body,
unilateral or bilateral cannulation (e.g.,
kyphoplasty); lumbar). Therefore, we
believe that CPT codes 0171T and 0172
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share sufficient clinical similarity with
other surgical procedures assigned to
APC 0052 to justify their reassignment
to APC 0052 for CY 2009.
Regarding the commenter’s request
that we implement device edits for
interspinous process distraction device
procedures, we note that we typically
do not implement procedure-to-device
edits where there are not device HCPCS
codes for all possible devices that could
be used to perform a procedure that
always requires a device, and the APC
is not designated as a device-dependent
APC. APC 0052 is not a devicedependent APC because a number of the
procedures assigned to the APC do not
require the use of implantable devices.
Furthermore, in some cases there may
not be HCPCS codes that describe all
devices that may be used to perform the
procedures in APC 0052. We recognize
the additional burden claims processing
edits, particularly for the device-toprocedure edits, pose for hospitals, and
as a result we try to limit edits only to
those device and procedure
combinations for which we believe costs
have not been correctly captured on
hospital claims. Hospitals had every
incentive to report and charge for
interspinous process distraction devices
described by HCPCS code C1821 due to
their separately payable pass-through
status in CY 2007, and we have no
reason to believe hospitals have not
been reporting the associated
implantation procedure codes along
with HCPCS code C1821. Accordingly,
we believe that the packaged costs of
interspinous process distraction devices
are appropriately reflected in the
median costs of their associated
implantation procedures, and that
device-to-procedure edits would pose
an unnecessary burden on hospitals.
After consideration of the public
comment received, we are finalizing our
proposed CY 2009 assignment, without
modification, of CPT codes 0171T and
0172T to APC 0052, with a final CY
2009 APC median cost of approximately
$5,592.
6. Radiation Therapy Services
dwashington3 on PRODPC61 with RULES2
a. Proton Beam Therapy (APCs 0664 and
0667)
For CY 2009, we proposed to pay for
the following four CPT codes for proton
beam therapy: 77520 (Proton treatment
delivery; simple, without
compensation); 77522 (Proton treatment
delivery; simple, with compensation);
77523 (Proton treatment delivery;
intermediate); and 77525 (Proton
treatment delivery; complex). We
proposed to continue to assign the
simple proton beam therapy procedures
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(CPT codes 77520 and 77522) to APC
0664 (Level I Proton Beam Radiation
Therapy), with a proposed payment rate
of approximately $925, and the
intermediate and complex proton beam
therapy procedures (CPT codes 77523
and 77525, respectively) to APC 0667
(Level II Proton Beam Radiation
Therapy), with a proposed payment rate
of approximately $1,105. The CY 2008
payment rates for these APCs are
approximately $817 and $977,
respectively.
Comment: Several commenters
supported the proposed OPPS payment
rates for APCs 0664 and 0667. They
indicated that proton beam therapy has
numerous advantages to patients and
that the proposed OPPS payment rates
would pay appropriately for these
services.
Response: As we proposed, we are
basing the final rule payment rates for
proton beam therapy and all other
services paid under the OPPS on the
median costs we calculated using the
most current claims and cost report data
that are available to us. Therefore, for
CY 2009, we are setting the payment
rate for proton beam therapy based on
median costs of approximately $688 for
APC 0664 and approximately $822 for
APC 0667. These median costs result in
modest declines in the final CY 2009
payment rates for proton beam therapy
compared to the CY 2008 payment rates,
rather than the modest increases that
were proposed.
We explored our claims and cost
report data to determine the reason for
the change in the median costs between
the proposed rule and final rule data.
We found that there were two providers
that billed Medicare in CY 2007 for
these services. At the time we calculated
the proposed rule median costs and
payment rates, we used the most current
claims and cost reports submitted by
these hospitals. When we examined the
final rule data for these hospitals, we
found that both providers had submitted
new cost reports subsequent to the
development of the proposed rule data.
The CCR from the new cost report for
the provider supplying the majority of
service volume in both APCs declined
by more than 25 percent compared to
the CCR calculated from the cost report
used to determine the proposed rule
costs for that provider. Therefore, the
charges and costs from this provider
significantly influenced the median
costs for these APCs. In summary, the
estimated costs of proton beam therapy
services decreased because the most
current CCRs, which declined compared
to the CCRs used to calculate the
proposed rule costs, were applied to
charges that remained consistent from
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68621
the proposed rule to the final rule
claims. Our examination of the claims
and cost report data showed no
characteristics that would cause us to
believe that the estimated costs for this
final rule with comment period are
inappropriate for the services furnished.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to pay for proton beam
therapy through APCs 0664 and 0667,
with payment rates based upon the most
current claims and cost report data for
these services. The final CY 2009 APC
median costs of APCs 0664 and 0667 are
approximately $688 and $822,
respectively.
b. Implantation of Interstitial Devices
(APC 0310)
In the CY 2009 OPPS/ASC proposed
rule, we proposed to reassign CPT code
55876 (Placement of interstitial
device(s) for radiation therapy guidance
(e.g., fiducial markers, dosimeter),
prostate (via needle, any approach),
single or multiple) to APC 0310 (Level
III Therapeutic Radiation Treatment
Preparation) with a proposed payment
rate of approximately $901, based on
our review of CY 2007 claims data for
the service and consideration of the
service’s clinical characteristics. For CY
2008, CPT code 55876 is assigned to
APC 0156 (Level III Urinary and Anal
Procedures), with a payment rate of
approximately $194.
Comment: One commenter supported
the proposed reassignment of CPT code
55876 to APC 0310, with the proposed
increase in payment for the service.
Response: We appreciate the
commenter’s support and are finalizing,
without modification, our CY 2009
proposal to reassign CPT code 55876 to
APC 0310, with a final CY 2009 APC
median cost of approximately $873.
c. Stereotactic Radiosurgery (SRS)
Treatment Delivery Services (APCs
0065, 0066, and 0067)
In the CY 2009 OPPS/ASC proposed
rule, we proposed to continue to assign
SRS CPT codes 77372 (Radiation
treatment delivery, stereotactic
radiosurgery (SRS) (complete course of
treatment of cerebral lesion(s) consisting
of 1 session); linear accelerator based)
and 77373 (Stereotactic body radiation
therapy, treatment delivery, per fraction
to 1 or more lesions, including image
guidance, entire course not to exceed 5
fractions) status indicator ‘‘B’’ under the
OPPS, to indicate that these CPT codes
are not payable under the OPPS.
Alternatively, we proposed to continue
to recognize for separate payment the
HCPCS G-codes that describe SRS
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treatment delivery services. Specifically,
we proposed the following: to assign
HCPCS code G0173 (Linear accelerator
based stereotactic radiosurgery,
complete course of therapy in one
session) to APC 0067 (Level III
Stereotactic Radiosurgery, MRgFUS, and
MEG), with a proposed payment rate of
approximately $3,664; to assign HCPCS
code G0251 (Linear accelerator-based
stereotactic radiosurgery, delivery
including collimator changes and
custom plugging, fractionated treatment,
all lesions, per session, maximum five
sessions per course of treatment) to APC
0065 (Level I Stereotactic Radiosurgery,
MRgFUS, and MEG ), with a proposed
payment rate of approximately $995; to
assign HCPCS code G0339 (Imageguided robotic linear accelerator-based
stereotactic radiosurgery, complete
course of therapy in one session or first
session of fractionated treatment) to
APC 0067, with a proposed payment
rate of approximately $3,664; and to
assign HCPCS code G0340 (Imageguided robotic linear accelerator-based
stereotactic radiosurgery, delivery
including collimator changes and
custom plugging, fractionated treatment,
all lesions, per session, second through
fifth sessions, maximum five sessions
per course of treatment) to APC 0066
(Level II Stereotactic Radiosurgery,
MRgFUS, and MEG), with a proposed
payment rate of approximately $2,654.
Comment: Several commenters urged
CMS to recognize CPT codes 77372 and
77373 under the OPPS rather than
continuing to use the Level II HCPCS Gcodes for SRS treatment delivery
services. One commenter requested that
CMS recognize the CPT codes to
facilitate claims processing by nonMedicare payers who do not accept
temporary HCPCS codes in their claims
processing systems. Another commenter
suggested that CMS recognize the SRS
treatment delivery CPT codes for
separate payment under the OPPS, and
provide payment through one clinical
APC. The commenter argued that this
change would reduce the number of
APCs for SRS treatment delivery
services and provide more clarity to
hospitals.
Response: As we explained in both
the CY 2007 OPPS/ASC final rule with
comment period (71 FR 68025–68026)
and the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66734
through 66737), we decided to recognize
the Level II HCPCS codes, specifically
HCPCS codes G0251 and G0340,
because they are more specific in their
descriptors than the CPT codes for SRS
treatment delivery services. In the CY
2004 OPPS final rule with comment
period (68 FR 63431) and in the CY
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2008 OPPS/ASC final rule with
comment period (72 FR 66735), we also
explained the basis for creating the
Level II HCPCS codes. We continue to
believe that the Level II HCPCS codes
are more specific in their descriptors
and more accurately reflect the SRS
treatment delivery services provided in
the hospital outpatient setting than the
CPT codes for SRS treatment delivery
services.
Analysis of the CY 2007 claims data
used for this final rule with comment
period indicate that the HCPCS codespecific median cost is approximately
$931 for HCPCS code G0251;
approximately $2,522 for HCPCS code
G0340; approximately $3,523 for HCPCS
code G0173; and approximately $3,718
for HCPCS code G0339. Because the CY
2009 median costs of HCPCS codes
G0173, G0251, G0339, and G0340 vary
significantly, we do not believe it would
be appropriate to provide OPPS
payment through a single APC for these
SRS treatment delivery services in CY
2009. Furthermore, we have no way of
crosswalking hospital costs for the
HCPCS G-codes to the expected costs for
the SRS CPT codes that would ensure
continued accurate payment for SRS
treatment delivery services under the
OPPS if we were to recognize the CPT
codes. Depending on the individual
clinical case, the SRS treatment delivery
services described by a single CPT code
could be reported by one of several of
the HCPCS G-codes and, similarly, the
SRS treatment delivery services
currently described by a single HCPCS
G-code could be reported by one of
several CPT codes.
Hospitals have told us that many
other payers recognize Level II HCPCS
codes for payment, although each payer
may set its own reporting guidelines.
With respect to the identification of
HCPCS codes for services under the
OPPS, we recognize those codes that
lead to the most appropriate payment
for services under the OPPS, using CPT
codes whenever we believe their
recognition leads to accurate payment.
Otherwise, we may determine that Level
II HCPCS codes should be used for
reporting OPPS services, as is the case
for SRS services.
Comment: Some commenters
expressed concern about the difference
in the proposed payment rate of
approximately $995 for HCPCS code
G0251 and that of approximately $2,654
for HCPCS code G0340. The
commenters found no clinical
justification for the differential payment
for these services. They believed that
one technology should not be favored
over another when both technologies
provide similar radiation dose
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distribution and clinical outcomes. The
commenters recommended that CMS
recognize CPT codes 77372 and 77373
rather than use HCPCS codes G0251 and
G0340, and set the payment rate to be
the same for both CPT codes. Another
commenter requested that CMS
continue to recognize the four HCPCS
G-codes for SRS treatment delivery
services and finalize their proposed
assignments to their respective clinical
APCs for CY 2009.
Response: As we have stated
previously, we believe that HCPCS
codes G0251 and G0340 are more
specific in their descriptors for SRS
treatment delivery services than CPT
codes 77372 and 77373, and therefore,
we will continue to recognize the Level
II HCPCS codes for SRS treatment
delivery services under the OPPS.
Based on our review of the CY 2007
claims data used for this final rule with
comment period, we found that the
costs of HCPCS codes G0251 and G0340
differ significantly. Specifically, our CY
2007 claims data showed 10,022 single
claims for HCPCS G0340, with a HCPCS
code-specific median cost of
approximately $2,522, whereas the
median cost for HCPCS code G0251
based on 3,132 single claims is only
approximately $931. Our CY 2007
claims data used for this final rule with
comment period do not support a single
payment for both services as suggested
by some commenters, and as a result,
we find no justification for setting the
same payment rate for the CPT codes
that would describe some of the services
currently reported with HCPCS codes
G025 and G0340.
Moreover, we note that there are two
additional Level II HCPCS codes for SRS
treatment delivery services that are
recognized for payment under the
OPPS, specifically HCPCS codes G0173
and G0339, that describe services that
could be reported under CPT code
77372 or 77373. These HCPCS G-codes
also have median costs of approximately
$3,523 and $3,718, respectively,
significantly different from the median
costs of HCPCS codes G0251 and G0340
and, therefore, we proposed to assign
HCPCS codes G0173 and G0339 to a
third clinical APC, that is APC 0067. We
continue to believe that all four HCPCS
G-codes for SRS treatment delivery
services are most appropriately assigned
to the three APCs in the Stereotactic
Radiosurgery, MRgFUS, and MEG
clinical series, where they are paid
based on APC median costs that are
consistent with their HCPCS codespecific median costs that reflect
required hospital resources.
After consideration of the public
comments received, we are finalizing
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our CY 2009 proposal, without
modification, to continue to recognize
Level II HCPCS codes G0251 and G0340,
instead of CPT codes 77372 and 77373,
for the reporting of SRS treatment
delivery services under the OPPS in CY
2009. For CY 2009, HCPCS code G0251
is assigned to APC 0065 with a final
APC median cost of approximately
$931, and HCPCS code G0340 is
assigned to APC 0066 with a final APC
median cost of approximately $2,522.
We also are finalizing our CY 2009
proposal to continue to recognize
HCPCS codes G0173 and G0339,
assigned to APC 0067 with a final
median cost of approximately $3,718,
for certain SRS services reported in
accordance with the codes descriptors
of these two HCPCS G-codes.
In addition, for CY 2009, the CPT
Editorial Panel decided to delete CPT
code 61793 (Stereotactic radiosurgery
(particle beam, gamma ray or linear
accelerator), one or more sessions) on
December 31, 2008, and replace it with
several new CPT codes, specifically CPT
codes 61796, 61797, 61798, 61799,
61800, 63620, and 63621, effective
January 1, 2009. Similar to its
predecessor code, all of the replacement
codes have been assigned status
68623
indicator ‘‘B’’ on an interim basis under
the OPPS because we are continuing to
recognize the HCPCS G-codes for SRS
treatment delivery services under the
OPPS in CY 2009. In accordance with
our established policy for the treatment
of new CPT codes under the OPPS, we
also have assigned these replacement
codes comment indicator ‘‘NI’’ in
Addendum B to this final rule with
comment period to indicate that these
new CPT codes are open to public
comment in this final rule with
comment period. The replacement
codes for CPT code 61793 are displayed
in Table 18 below.
TABLE 18—REPLACEMENT CODES FOR CPT CODE 61793 EFFECTIVE JANUARY 1, 2009
CY 2009 HCPCS code
CY 2009 long descriptor
CY 2009
interim SI
61796 ...........................................................
Stereotactic radiosurgery (particle beam, gamma ray, or linear accelerator); 1 simple
cranial lesion.
Stereotactic radiosurgery (particle beam, gamma ray or linear accelerator); each additional cranial lesion, simple.
Stereotactic radiosurgery (particle beam, gamma ray or linear accelerator); 1 complex
cranial lesion.
Stereotactic radiosurgery (particle beam, gamma ray or linear accelerator); each additional cranial lesion, complex.
Application of stereotactic headframe for stereotactic radiosurgery .................................
Stereotactic radiosurgery (particle beam, gamma ray, or linear accelerator); 1 spinal lesion.
Stereotactic radiosurgery (particle beam, gamma ray or linear accelerator); each additional spinal lesion.
B
61797 ...........................................................
61798 ...........................................................
61799 ...........................................................
61800 ...........................................................
63620 ...........................................................
63621 ...........................................................
7. Other Procedures and Services
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a. Negative Pressure Wound Therapy
(APC 0013)
In the CY 2009 OPPS/ASC proposed
rule, we proposed to assign CPT codes
97605 (Negative pressure wound
therapy (e.g., vacuum assisted drainage
collection), including topical
application(s), wound assessment, and
instruction(s) for ongoing care, per
session; total wound(s) surface area less
than or equal to 50 square centimeters)
and 97606 (Negative pressure wound
therapy (e.g., vacuum assisted drainage
collection), including topical
application(s), wound assessment, and
instruction(s) for ongoing care, per
session; total wound(s) surface area
greater than 50 square centimeters) to
APC 0013 (Level II Debridement and
Destruction) for CY 2009, with a
proposed payment rate of approximately
$55. For CY 2008, CPT code 97605 is
also assigned to APC 0013, with a
payment rate of approximately $51, but
CPT code 97606 is assigned to APC
0015 (Level III Debridement and
Destruction), with a payment rate of
approximately $93. We proposed to
reassign CPT code 97606 from APC
0015 to APC 0013 for CY 2009 because
its median cost of $75, based on the CY
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2007 proposed rule claims data,
indicated that the resource costs
associated with this procedure were
more similar to the resource costs of the
procedures assigned to APC 0013 than
the procedures assigned to APC 0015.
Comment: One commenter requested
that CMS maintain the CY 2008
payment rates for CPT codes 97605 and
97606 in CY 2009 and noted that
negative pressure wound therapy often
requires greater time and resources than
reflected in the proposed payment rate
for CPT code 97606. The commenter
claimed that these codes are used to
report negative pressure wound therapy
for increasingly more complicated
wounds. The commenter also requested
that CMS refer both codes to the CPT
Wound Care Workgroup for
development of new code descriptors.
Response: As a result of the concerns
raised by the commenter, we reviewed
the clinical characteristics and HCPCS
code-specific median costs from our CY
2007 claims data for all procedures we
proposed to assign to APCs 0013 and
0015 for CY 2009. Based on the resource
costs associated with these codes, as
reported by hospitals, we continue to
believe that APC 0013 is the most
appropriate assignment for CPT codes
97605 and 97606. The median costs of
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B
B
B
B
B
B
these two services are approximately
$64 and $74, respectively, based on
thousands of single claims available for
ratesetting. These median costs fall well
within the range of median costs of the
other significant procedures also
assigned to APC 0013, ranging from
approximately $40 to $78. In contrast,
the median cost of APC 0015 is
significantly higher, at approximately
$98, than the median costs of the
negative pressure wound therapy
services.
To the extent that, in the future,
hospitals use these CPT codes to report
more resource intensive services than
are currently reflected in claims data,
we would expect to see higher costs
reported by hospitals in the future. We
would reevaluate whether a different
APC assignment was appropriate at that
time. We currently do not have concerns
based on historical patterns of hospital
reporting and hospital costs about the
CPT codes reported by hospitals for
payment of negative pressure wound
care services under the OPPS. We note
that any interested party may refer CPT
codes to the CPT Editorial Panel for
reassessment.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
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modification, to assign CPT codes 97605
and 97606 to APC 0013, with a final CY
2009 APC median cost of approximately
$53.
b. Endovenous Ablation (APCs 0091 and
0092)
In the CY 2009 OPPS/ASC proposed
rule, we proposed to continue to assign
CPT code 36475 (Endovenous ablation
therapy of incompetent vein, extremity,
inclusive of all imaging guidance and
monitoring, percutaneous,
radiofrequency; first vein treated) to
APC 0091 (Level II Vascular Ligation)
and to continue to assign CPT code
36478 (Endovenous ablation therapy of
incompetent vein, extremity, inclusive
of all imaging guidance and monitoring,
percutaneous, laser; first vein treated) to
APC 0092 (Level I Vascular Ligation),
with proposed payment rates of
approximately $2,833 and $1,781,
respectively. The CY 2008 payment rate
for APC 0091 is approximately $2,714,
and the CY 2008 payment rate for APC
0092 is approximately $1,646.
Comment: One commenter expressed
concern about decreases in the OPPS
payment for outpatient medical
procedures, specifically for CPT codes
36475 and 36478, while the costs of
supplies and malpractice insurance and
the costs of care for the uninsured have
increased.
Response: We review, on an annual
basis, the APC assignments and relative
payment weights for services and items
paid under the OPPS. Based on our
findings, we propose to revise the APC
assignments to account for the following
factors: Changes in medical practice;
changes in technology; addition of new
services; new cost data; advice and
recommendations from the APC Panel;
and other relevant information. The
OPPS is a budget neutral payment
system, with payment for most
individual services determined by the
relative costs of the required hospital
resources as determined from historical
hospital costs for these services. For CY
2009, we estimate that providers overall
will receive a 3.9 percent increase in
aggregate payment under the OPPS, as
discussed in more detail in section
XXIII.B. of this final rule with comment
period. We note that we proposed to
increase the CY 2009 payment rates for
CPT codes 36475 and 36478 by
approximately 5 percent, 2 percentage
points more than the proposed annual
CY 2009 market basket update factor of
3 percent for the OPPS, based on the
relative costs that hospitals have
reported to us for these OPPS services.
Based on our latest CY 2007 claims
data, we believe that CPT code 36475,
with a final HCPCS code-specific
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median cost of approximately $2,404, is
appropriately assigned to APC 0091,
with a final APC median cost of
approximately $2,828. Similarly, we
believe that CPT code 36478, with a
final HCPCS code-specific median cost
of approximately $1,853, is
appropriately assigned to APC 0092,
with a final APC median cost of
approximately $1,767. Both of these
procedures are clinically similar to
other procedures also assigned to their
respective APCs, and they are similar in
terms of hospital resources to the other
procedures assigned to their respective
APCs, as reflected in their median costs.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to continue assignment of
CPT code 36475 to APC 0091, with a
final CY 2009 APC median cost of
approximately $2,828, and CPT code
36478 to APC 0092, with a final CY
2009 APC median cost of approximately
$1,767.
c. Unlisted Antigen Skin Testing (APC
0341)
CPT code 86486 (Skin test; unlisted
antigen, each) is a new CPT code for CY
2008. Therefore, in accordance with our
established policy for the treatment of
new CPT codes under the OPPS, in
Addendum B to the CY 2008 OPPS/ASC
final rule with comment period, we
assigned CPT code 86486 an interim
status indicator of ‘‘A’’ (Services
furnished to a hospital outpatient that
are paid under a few schedule or
payment system other than OPPS). In
that final rule with comment period, we
also assigned CPT code 86468 comment
indicator ‘‘NI’’ to indicate that its OPPS
treatment as a new code was open to
public comment in that rule. As stated
earlier in section III.D.4.b. of this final
rule with comment period and in
accordance with our longstanding
policy, we do not respond to public
comments submitted on the OPPS/ASC
final rule with comment period with
respect to these interim assignments in
the proposed OPPS/ASC rule for the
following calendar year. However, we
do review and take into consideration
these public comments received during
the development of the proposed rule
when we evaluate APC assignments for
the following year, and we respond to
them in the final rule for that following
calendar year.
In the CY 2009 OPPS/ASC proposed
rule, we proposed to assign CPT code
86486 to APC 0341 (Skin Tests) with a
status indicator of ‘‘X’’ and a proposed
payment rate of approximately $6.
Comment: One commenter on the CY
2008 OPPS/ASC final rule with
comment period questioned CMS’s CY
2008 interim status indicator
assignment of ‘‘A’’ to CPT code 86486,
when all of the other CPT codes within
the same clinical series were assigned
status indicator ‘‘X’’ and paid separately
under APC 0341. The commenter
requested that CMS review the interim
status indicator assignment for CPT
code 86486 and analyze the code’s
similarity to other skin tests that are
assigned to APC 0341.
Response: After reviewing the
concerns raised by the commenter and
the clinical and resources characteristics
of CPT code 86486, we agree with the
commenter that the service should be
assigned to APC 0341 with a status
indicator of ‘‘X,’’ and we made this
proposal for CY 2009.
We did not receive any public
comments regarding our CY 2009
proposal. Therefore, we are finalizing
our CY 2009 proposal, without
modification, to assign CPT code 86486
to APC 0341, with a final CY 2009 APC
median cost of approximately $5.
d. Home International Normalized Ratio
(INR) Monitoring (APC 0607)
In the CY 2009 OPPS/ASC proposed
rule, we proposed to continue to assign
HCPCS code G0248 (Demonstration,
prior to initial use, of home INR
monitoring for patient with either
mechanical heart valve(s), chronic atrial
fibrillation, or venous thromboembolism
who meets Medicare coverage criteria,
under the direction of a physician;
includes: face-to-face demonstration of
use and care of the INR monitor,
obtaining at least one blood sample,
provision of instructions for reporting
home INR test results, and
documentation of patient ability to
perform testing prior to its use) and
HCPCS code G0249 ((Provision of test
materials and equipment for home INR
monitoring of patient with either
mechanical heart valve(s), chronic atrial
fibrillation, or venous thromboembolism
who meets Medicare coverage criteria;
includes provision of materials for use
in the home and reporting of test results
to physician; not occurring more
frequently than once a week) to APC
0607 (Level 4 Hospital Clinic Visits) for
CY 2009, with a proposed payment rate
of approximately $106. The CY 2008
payment rate for APC 0607 is
approximately $104.
Comment: One commenter stated that
it was reasonable for CMS to maintain
assignment of these two CPT codes to
APC 0607 for CY 2009. The commenter
stated that this assignment continues to
be reasonable insofar as the services are
clinically homogeneous and the
proposed payment rate, although likely
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lower than the hospital costs incurred in
providing these services, appears to be
sufficient to allow continued monitoring
of utilization and access for at least
another year. While stating that
utilization of home INR monitoring
remains very low among Medicare
beneficiaries, especially in the hospital
outpatient anticoagulation clinic setting,
the commenter encouraged CMS to
continue to monitor these codes to
ensure proper APC assignment, as
coverage for these services was recently
expanded beyond patients with
mechanical heart valves to include
Medicare patients with chronic atrial
fibrillation or venous thromboembolism.
Response: We appreciate the
commenter’s support for our proposal.
We agree that a much more substantial
population of Medicare beneficiaries
who undergo anticoagulation therapy
may now be eligible for these services
due to the recent expansion in Medicare
coverage for the services reported by
HCPCS codes G0248 and G0249. On an
annual basis, we review the APC
assignments and relative payment
weights for services and items paid
under the OPPS. Based on our findings,
we may propose to revise the APC
assignments to appropriately account
for changes in medical practice or
hospital costs, among other factors. We
will continue to assess the most current
claims data for HCPCS codes G0248 and
G0249 for our future annual OPPS
updates.
After consideration of the public
comment received, we are finalizing our
CY 2009 proposal, without
modification, to continue the
assignment of CPT codes G0248 and
G0249 to APC 0607, with a final CY
2009 APC median cost of approximately
$111.
e. Mental Health Services (APCs 0322,
0323, 0324, and 0325)
APC 0323 (Extended Individual
Psychotherapy) had a 2 times rule
violation for CYs 2007 and 2008, and
was exempted from the 2 times rule
during those years. APC 0323 would
continue to have a 2 times rule violation
68625
in CY 2009 if its configuration is not
adjusted. In the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66739), we agreed to review APC 0323
at the next APC Panel meeting and seek
the APC Panel’s guidance in
reconfiguring this APC for CY 2009.
It was brought to our attention that a
few CPT codes describe psychotherapy
services that could be appropriately
provided and reported as part of a
partial hospitalization program, but
would not otherwise be appropriately
reported by a HOPD for those
psychotherapy services. Specifically,
the category heading in the 2008 CPT
book specifies that the CPT codes listed
in Table 16 of the CY 2009 OPPS/ASC
proposed rule are to be reported for
services provided in an ‘‘inpatient
hospital, partial hospital, or residential
care facility.’’ (Table 16 is reprinted
below in this final rule with comment
period as Table 19.) These CPT codes
have been assigned to APCs 0322 (Brief
Individual Psychotherapy) and 0323
since the implementation of the OPPS.
TABLE 19—INPATIENT HOSPITAL, PARTIAL HOSPITAL, OR RESIDENTIAL CARE FACILITY PSYCHOTHERAPY CODES
CY 2009 HCPCS code
CY 2009 long descriptor
90816 ..............................................
Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital,
partial hospital or residential care setting, approximately 20 to 30 minutes face-to-face with the patient;
Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital,
partial hospital or residential care setting, approximately 20 to 30 minutes face-to-face with the patient;
with medical evaluation and management services.
Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital,
partial hospital or residential care setting, approximately 45 to 50 minutes face-to-face with the patient;
Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital,
partial hospital or residential care setting, approximately 45 to 50 minutes face-to-face with the patient;
with medical evaluation and management.
Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital,
partial hospital or residential care setting, approximately 75 to 80 minutes face-to-face with the patient;
Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital,
partial hospital or residential care setting, approximately 75 to 80 minutes face-to-face with the patient;
with medical evaluation and management services.
Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other
mechanisms of non-verbal communication, in an inpatient hospital, partial hospital or residential care
setting, approximately 20 to 30 minutes face-to-face with the patient;
Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other
mechanisms of non-verbal communication, in an inpatient hospital, partial hospital or residential care
setting, approximately 20 to 30 minutes face-to-face with the patient; with medical evaluation and management services.
Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other
mechanisms of non-verbal communication, in an inpatient hospital, partial hospital or residential care
setting, approximately 45 to 50 minutes face-to-face with the patient;
Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other
mechanisms of non-verbal communication, in an inpatient hospital, partial hospital or residential care
setting, approximately 45 to 50 minutes face-to-face with the patient; with medical evaluation and management services.
Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other
mechanisms of non-verbal communication, in an inpatient hospital, partial hospital or residential care
setting, approximately 75 to 80 minutes face-to-face with the patient;
Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other
mechanisms of non-verbal communication, in an inpatient hospital, partial hospital or residential care
setting, approximately 75 to 80 minutes face-to-face with the patient; with medical evaluation and management services.
90817 ..............................................
90818 ..............................................
90819 ..............................................
90821 ..............................................
90822 ..............................................
90823 ..............................................
90824 ..............................................
90826 ..............................................
90827 ..............................................
90828 ..............................................
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90829 ..............................................
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The 2008 CPT book also includes a
parallel set of CPT codes whose category
heading in the CPT book specifies that
these codes are to be reported for
services provided in the office or other
outpatient facilities. These CPT codes
were listed in Table 17 of the CY 2009
OPPS/ASC proposed rule, which is
reprinted below as Table 20. These CPT
codes also have been assigned to APCs
0322 and 0323 since the
implementation of the OPPS.
TABLE 20—OFFICE OR OTHER OUTPATIENT FACILITY PSYCHOTHERAPY CODES
CY 2009 HCPCS code
CY 2009 long descriptor
90804 ..............................................
Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient
facility, approximately 20 to 30 minutes face-to-face with the patient;
Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient
facility, approximately 20 to 30 minutes face-to-face with the patient; with medical evaluation and management services.
Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient
facility, approximately 45 to 50 minutes face-to-face with the patient;
Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient
facility, approximately 45 to 50 minutes face-to-face with the patient; with medical evaluation and management.
Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient
facility, approximately 75 to 80 minutes face-to-face with the patient;
Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient
facility, approximately 75 to 80 minutes face-to-face with the patient; with medical evaluation and management services.
Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other
mechanisms of non-verbal communication, in an office or outpatient facility, approximately 20 to 30 minutes face-to-face with the patient;
Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other
mechanisms of non-verbal communication, in an office or outpatient facility, approximately 20 to 30 minutes face-to-face with the patient; with medical evaluation and management services.
Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other
mechanisms of non-verbal communication, in an office or outpatient facility, approximately 45 to 50 minutes face-to-face with the patient;
Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other
mechanisms of non-verbal communication, in an office or outpatient facility, approximately 45 to 50 minutes face-to-face with the patient; with medical evaluation and management services.
Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other
mechanisms of non-verbal communication, in an office or outpatient facility, approximately 75 to 80 minutes face-to-face with the patient;
Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other
mechanisms of non-verbal communication, in an office or outpatient facility, approximately 75 to 80 minutes face-to-face with the patient; with medical evaluation and management services.
90805 ..............................................
90806 ..............................................
90807 ..............................................
90808 ..............................................
90809 ..............................................
90810 ..............................................
90811 ..............................................
90812 ..............................................
90813 ..............................................
90814 ..............................................
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90815 ..............................................
Our CY 2007 claims data for the CY
2009 OPPS/ASC proposed rule
(excluding all claims for partial
hospitalization services) included
approximately 10,000 OPPS claims for
CPT codes 90816 through 90829,
compared with approximately 500,000
claims for CPT codes 90804 through
90815. We were unclear as to what
HOPD services these claims for CPT
codes 90816 through 90829 represented
and believed that these may be
miscoded claims. We did not believe
that CPT codes 90816 through 90829
could be appropriately reported for
hospital outpatient services that are not
part of a partial hospitalization program.
Therefore, in the CY 2009 OPPS/ASC
proposed rule (73 FR 41476), we
proposed to assign status indicator ‘‘P’’
to CPT codes 90816 through 90829 for
CY 2009, indicating that these services
may be billed appropriately and paid
under the OPPS only when they are part
of a partial hospitalization program.
Partial hospitalization services are not
included in our ratesetting process for
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nonpartial hospitalization OPPS
services. Under this proposal, hospitals
would continue to report CPT codes
90804 through 90815 for individual
psychotherapy services provided in the
HOPD that are not part of partial
hospitalization services, consistent with
CPT instructions.
For the CY 2009 OPPS/ASC proposed
rule, we recalculated the median costs
for APCs 0322 and 0323, after assigning
status indicator ‘‘P’’ to CPT codes 90816
through 90829 (73 FR 41477). We stated
in the CY 2009 OPPS/ASC proposed
rule (73 FR 41477) that, as partial
hospitalization services only, the claims
data for these codes would only be
considered for ratesetting with respect
to partial hospitalization services paid
through the two proposed CY 2009
partial hospitalization APCs,
specifically APC 0172 (Level I Partial
Hospitalization (3 services)) and APC
0173 (Level II Partial Hospitalization (4
or more services)), and that no historical
hospital claims data would continue to
map to APCs 0322 and 0323. We refer
readers to section X.B. of this final rule
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with comment period for a complete
discussion of the proposed CY 2009
partial hospitalization payment policy.
The CY 2009 proposed median costs for
APCs 0322 and 0323 were
approximately $88 and $108,
respectively. This proposed new
configuration for APC 0323 eliminated
the longstanding 2 times violation for
this APC, although the median cost
remained approximately the same as it
was for CYs 2007 and 2008.
During its March 2008 APC Panel
meeting, the APC Panel recommended
that CMS restructure APC 0323 as
described above, and that a similar
restructuring be considered for APC
0322. In the CY 2009 OPPS/ASC
proposed rule (73 FR 41477), we stated
that we were adopting the APC Panel’s
recommendation and, therefore, we
proposed to assign status indicator ‘‘P’’
to CPT codes 90816 through 90829 for
CY 2009.
Comment: Several commenters
requested that CMS not assign status
indicator ‘‘P’’ to CPT codes 90804
through 90815, indicating that these
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services are often billed by HOPDs
outside of a partial hospitalization
program.
Response: We believe that
commenters may have misunderstood
our proposal. For CY 2009, we proposed
to assign status indicator ‘‘Q3’’ rather
than ‘‘P’’ to CPT codes 90804 through
90815. We proposed to assign status
indicator ‘‘P’’ to CPT codes 90816
through 90829, in order that payment
for CPT codes 90816 through 90829
would only be made through payment
for a partial hospitalization program. We
agree with the commenters that CPT
codes 90804 through 90815 may be
appropriately billed by HOPDs outside
of a partial hospitalization program, as
reflected in our CY 2009 proposal.
Hospitals would continue to receive
payment for CPT codes 90804 through
90815 when billed by an HOPD.
We believe that commenters may have
been confused about the proposal to
assign status indicator ‘‘Q3’’ to CPT
codes 90804 through 90815 for CY 2009.
As discussed in detail in section
II.A.2.e.(4) of this final rule with
comment period, for CY 2009 we
proposed to change the status indicator
to ‘‘Q3’’ (Codes that May be Paid
Through a Composite APC), for the
HCPCS codes that describe the specified
mental health services to which APC
0034 (Mental Health Services
Composite) applies. These codes are
conditionally packaged when the sum of
the payment rates for the single code
APCs to which they are assigned
exceeds the per diem payment rate for
partial hospitalization. We proposed to
apply this status indicator policy to the
HCPCS codes that are assigned to
composite APC 0034 in Addendum M to
the proposed rule. We refer readers to
section XIII.A. of this final rule with
comment period for a complete
discussion of status indicators and our
status indicator changes for CY 2009.
Comment: Several commenters
expressed concern that the payment rate
for APC 0325 (Group Psychotherapy) as
proposed for CY 2009 reflected a
decrease of 21.62 percent from CY 2006
to CY 2009. One commenter was
concerned that the payment rate would
be insufficient to cover its costs for
providing mental health services,
especially in a geographic area
designated as a Mental Health Provider
Shortage Area. Another commenter
asked whether the proposed APC
payment rates for APCs 0322, 0323,
0324 (Family Psychotherapy), and 0325
were properly set based upon
substantiated data.
Response: Unlike APCs 0322 and
0323, we did not specifically discuss
APCs 0324 and 0325 in the CY 2009
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OPPS/ASC proposed rule because we
did not propose any significant changes
to these APCs. Instead, we proposed to
calculate payment rates for these APCs
following our standard OPPS ratesetting
methodology.
As one commenter noted, the
payment rate for APC 0325 declined by
17 percent between CYs 2006 and 2007
and then declined an additional 5
percent from CY 2007 to CY 2008. The
CY 2009 proposed payment rate for APC
0325 of approximately $63 represents an
additional decrease of 1 percent from
CY 2008. However, based upon the
updated CY 2007 final rule claims data,
the CY 2009 payment rate for APC 0325
is $65, very similar to the CY 2008
payment rate of approximately $63. As
noted in the CY 2008 OPPS/ASC final
rule with comment period (72 FR
66739), we cannot speculate as to why
the median cost of group psychotherapy
services decreased significantly between
CY 2006 and CY 2008.
We note that we have robust claims
data for the CPT codes that map to APC
0325. Specifically, we were able to use
more than 99 percent of the
approximately 1.5 million claims
submitted by hospitals to report group
psychotherapy services. We set the
payment rates for the APCs containing
psychotherapy services using our
standard OPPS methodology based on
relative costs from hospital outpatient
claims. We have no reason to believe
that our claims data, as reported by
hospitals, do not accurately reflect the
hospital costs of group psychotherapy
services. It would appear that the
relative cost of providing these mental
health services in comparison with
other HOPD services has decreased in
recent years.
Therefore, for CY 2009, we are
finalizing our CY 2009 proposed
configurations for APC 0322, 0323,
0324, and 0325, without modification.
In doing so, we are adopting the APC
Panel recommendation to assign status
indicator ‘‘P’’ to CPT codes 90816
through 90829. The final CY 2009
median costs of APCs 0322, 0323, 0324,
and 0325 are approximately $85, $105,
$161, and $63, respectively.
f. Trauma Response Associated With
Hospital Critical Care Services (APC
0618)
In the CY 2007 OPPS/ASC final rule
with comment period (71 FR 68133
through 68134), we discussed the
creation of HCPCS code G0390 (Trauma
response team activation associated
with hospital critical care service),
which became effective January 1, 2007.
HCPCS code G0390 is reported by
hospitals when providing critical care
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services in association with trauma
response team activation. HCPCS code
G0390 has been assigned to APC 0618
(Trauma Response with Critical Care)
since CY 2007, with payment rates of
approximately $495 and $330 for CYs
2007 and 2008, respectively. The
creation of HCPCS code G0390 enables
us to pay differentially for critical care
when trauma response team activation
is associated with critical care services
and when there is no trauma response
team activation. We instructed hospitals
to continue to report CPT codes 99291
(Critical care, evaluation and
management of the critically ill or
critically injured patient; first 30–74
minutes) and 99292 (Critical care,
evaluation and management of the
critically ill or critically injured patient;
each additional 30 minutes (List
separately in addition to code for
primary service)) for critical care
services when they also report HCPCS
code G0390.
For CYs 2007 and 2008, we calculated
the median cost for APC 0617 (Critical
Care) to which CPT code 99291 is
assigned using the subset of single
claims for CPT code 99291 that did not
include charges under revenue code
068x, the trauma revenue code, reported
on the same day. We established the
median cost for APC 0618 by calculating
the difference in median costs between
the two subsets of single claims for CPT
code 99291 representing the reporting of
critical care services with and without
revenue code 068x charges reported on
the same day. For a complete
description of the history of the policy
and development of the payment
methodology for these services, we refer
readers to the CY 2007 OPPS/ASC final
rule with comment period (71 FR 68133
through 68134). We provided billing
guidance in CY 2006 in Transmittal
1139, Change Request 5438, issued on
December 22, 2006, specifically
clarifying when it would be appropriate
to report HCPCS code G0390. The I/OCE
logic only accepts HCPCS code G0390
when it is reported with revenue code
068x and CPT code 99291 on the same
claim and on the same date of service.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41471), we proposed a
median cost for APC 0617 of
approximately $488 and a median cost
for APC 0618 of approximately $989 for
CY 2009. For the CY 2009 OPPS
ratesetting, we used claims data from
CY 2007 that also included claims for
HCPCS code G0390, as CY 2007 is the
initial year that we established OPPS
payment for HCPCS code G0390. We
proposed to use the line-item median
cost for HCPCS code G0390 in the CY
2007 claims to set the median cost for
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APC 0618, as HCPCS code G0390 is the
only code assigned to that APC. As
discussed in section II.A.1.b. of this
final rule with comment period, we
proposed to add HCPCS code G0390 to
the CY 2009 bypass list to isolate the
line-item cost for HCPCS code G0390
and ensure that the critical care claims
for CPT code 99291 that are reported
with HCPCS code G0390 are available to
set the medians for APC 0617 and
composite APC 8003. The costs of
packaged revenue code charges and
HCPCS codes for services with status
indicator ‘‘N’’ on a claim with HCPCS
code G0390 would be associated with
CPT code 99291 for ratesetting, if the
claim for CPT code 99291 is a single or
‘‘pseudo’’ single bill.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41472), we proposed to
calculate the median cost for APC 0617
using our standard methodology that
excludes those single claims for critical
care services that are eligible for
payment through the Level II extended
assessment and management composite
APC, that is APC 8003, as described in
section II.A.2.e.(1) of this final rule with
comment period for CY 2009. As
indicated in the CY 2009 OPPS/ASC
proposed rule (73 FR 41472), we believe
that these proposed refinements in
median cost calculations would result
in more accurate cost estimates and
payments for APCs 0617 and 0618 for
CY 2009.
Comment: One commenter supported
the proposed payment increase for
HCPCS code G0390 from $330 in CY
2008 to $991 in CY 2009. Several
commenters requested that CMS allow
hospitals to report HCPCS code G0390
with CPT code 99285 (Emergency
department visit for the evaluation and
management of a patient (Level 5)), in
addition to CPT code 99291 (and CPT
code 99292, when appropriate), and
stated that when less than 30 minutes of
critical care are provided to a patient,
the hospital may not bill CPT code
99291 and must bill another appropriate
visit code instead, often CPT code
99285.
Response: We appreciate the
commenter’s support for the proposed
CY 2009 payment for HCPCS code
G0390. As noted by commenters, when
less than 30 minutes of critical care are
provided, hospitals may not bill CPT
code 99291, according to CPT
instructions, and may instead bill an
appropriate visit code. We understand
that hospitals may be reporting CPT
code 99285 most often when less than
30 minutes of critical care are provided.
However, we continue to believe that
the 068x series revenue codes used to
report a trauma response are most often
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reported with CPT code 99291, rather
than other visit codes, and are most
appropriately paid separately only
under the circumstances that a Medicare
beneficiary receives a significant period
of critical care in the HOPD.
If less than 30 minutes of critical care
are provided, the payment for trauma
response is packaged into payment for
the visit code or other services provided
to the patient. We note that the cost of
trauma response will generally be
reflected in the median cost for the visit
code or other HCPCS code as a function
of the frequency of the reporting of
trauma response charges with the
particular separately payable HCPCS
code. Consistent with the principles of
a prospective payment system, OPPS
payment may be more or less than the
estimated costs of providing a service or
package of services for a particular
patient, but with the exception of outlier
cases, is adequate to ensure access to
appropriate care. Hospitals that bill a
visit code or other services, as well as
a charge for trauma response, may be
eligible for outlier payment, if their
costs meet the outlier threshold.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to pay separately for
HCPCS code G0390 when billed with
CPT code 99291, and to provide
payment for HCPCS code G0390
through APC 0618, with a final CY 2009
APC median cost of approximately
$914. We are also finalizing, without
modification, our CY 2009 proposal to
calculate the median cost for HCPCS
code G0390 using our standard
methodology that excludes those single
claims for critical care services that are
eligible for payment through the Level
II extended assessment and management
composite APC 8003.
IV. OPPS Payment for Devices
A. Pass-Through Payments for Devices
1. Expiration of Transitional PassThrough Payments for Certain Devices
a. Background
Section 1833(t)(6)(B)(iii) of the Act
requires that, under the OPPS, a
category of devices be eligible for
transitional pass-through payments for
at least 2, but not more than 3, years.
This period begins with the first date on
which transitional pass-through
payments are eligible for any medical
device that is described by the category.
We may establish a new device category
for pass-through payment in any
quarter. Under our established policy,
we base the expiration dates for the
category codes on the date on which a
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category was first eligible for passthrough payment. We propose and
finalize the dates for expiration of passthrough payments for device categories
as part of the OPPS annual update.
Two currently eligible categories,
HCPCS code C1821 (Interspinous
process distraction device
(implantable)) and HCPCS code L8690
(Auditory osseointegrated device,
includes all internal and external
components), were established for passthrough payment as of January 1, 2007.
These two device categories will be
eligible for pass-through payment for 2
years through December 31, 2008. In the
CY 2008 OPPS/ASC final rule with
comment period (72 FR 66751), we
finalized our policy to expire these two
categories from pass-through device
payment after December 31, 2008.
We also have an established policy to
package the costs of the devices no
longer eligible for pass-through
payments into the costs of the
procedures with which the devices are
reported in the claims data used to set
the payment rates (67 FR 66763).
Brachytherapy sources, which are now
separately paid in accordance with
section 1833(t)(2)(H) of the Act, are an
exception to this established policy.
b. Final Policy
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41477), we stated that we
are implementing the final decisions
that we discussed in the CY 2008 OPPS/
ASC final rule with comment period
that finalize the expiration date of passthrough status for device categories
described by HCPCS codes C1821 and
L8690. We did not receive any public
comments on our statement of these
decisions on expiration of the HCPCS
codes L8690 and C1821 categories.
Responses to public comments
regarding the proposed CY 2009 APC
assignments for surgical procedures
associated with HCPCS codes L8690
and C1821 and into which payment for
these devices is packaged for CY 2009,
are included in sections II.A.2.d.(1) and
III.D.5.e. of this final rule with comment
period, respectively. Therefore, as of
January 1, 2009, we will discontinue
pass-through payment for HCPCS device
category codes C1821 and L8690. In
accordance with our established policy,
we will package the costs of the devices
assigned to these two device categories
into the costs of the procedures with
which the devices were billed in CY
2007, the year of hospital claims data
used for this CY 2009 OPPS update.
We currently have no established
device categories eligible for passthrough payment that are continuing
into CY 2009. We continue to evaluate
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applications for pass-through payment
of medical devices on an ongoing basis.
We may establish a new device category
in any quarter, and we will advise the
public of our decision to establish a new
device category in a subsequent quarter
in CY 2009 through the transmittal that
implements the OPPS update for the
applicable quarter. We would then
propose an expiration date for such new
categories in future OPPS annual
updates.
2. Provisions for Reducing Transitional
Pass-Through Payments To Offset Costs
Packaged Into APC Groups
a. Background
We have an established policy to
estimate the portion of each APC
payment rate that could reasonably be
attributed to the cost of the associated
devices that are eligible for pass-through
payments (66 FR 59904). We deduct
from the pass-through payments for
identified device categories eligible for
pass-through payments an amount that
reflects the portion of the APC payment
amount that we determine is associated
with the cost of the device, defined as
the APC offset amount, as required by
section 1833(t)(6)(D)(ii) of the Act. We
have consistently employed an
established methodology to estimate the
portion of each APC payment rate that
could reasonably be attributed to the
cost of an associated device eligible for
pass-through payment, using claims
data from the period used for the most
recent recalibration of the APC rates (72
FR 66751 through 66752). We establish
and update the applicable APC offset
amounts for eligible pass-through device
categories through the transmittals that
implement the quarterly OPPS updates.
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b. Final Policy
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41478), we proposed to
continue our established policies for
calculating and setting the APC offset
amounts for each device category
eligible for pass-through payment. We
also proposed to continue to review
each new device category on a case-bycase basis, to determine whether device
costs associated with the new category
are already packaged into the existing
APC structure. If device costs packaged
into the existing APC structure are
associated with the new category, we
would deduct the APC offset amount
from the pass-through payment for the
device category.
We did not receive any public
comments regarding these proposals.
Therefore, for CY 2009, we are
continuing our established policies for
calculating and setting the APC offset
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amounts for each device category
eligible for pass-through payment, and
for reviewing each new device category
on a case-by-case basis, to determine
whether device costs associated with
the new category are packaged into the
existing APC structure.
We note that we will also publish on
the CMS Web site at https://
www.cms.hhs.gov/
HospitalOutpatientPPS/01_overview.asp
a list of all procedural APCs with the CY
2009 portions of the APC payment
amounts that we determine are
associated with the cost of devices.
These portions will be used as the APC
offset amounts, and, in accordance with
our established practice, they will be
used in order to evaluate whether the
cost of a device in an application for a
new device category for pass-through
payment is not insignificant in relation
to the APC payment amount for the
service related to the category of
devices, as specified in our regulations
at § 419.66(d).
B. Adjustment to OPPS Payment for No
Cost/Full Credit and Partial Credit
Devices
1. Background
In recent years, there have been
several field actions on and recalls of
medical devices as a result of
implantable device failures. In many of
these cases, the manufacturers have
offered devices without cost to the
hospital or with credit for the device
being replaced if the patient required a
more expensive device. In order to
ensure that payment rates for
procedures involving devices reflect
only the full costs of those devices, our
standard ratesetting methodology for
device-dependent APCs uses only
claims that contain the correct device
code for the procedure, do not contain
token charges, and do contain the ‘‘FB’’
modifier signifying that the device was
furnished without cost or with a full
credit.
To ensure equitable payment when
the hospital receives a device without
cost or with full credit, in CY 2007 we
implemented a policy to reduce the
payment for specified device-dependent
APCs by the estimated portion of the
APC payment attributable to device
costs (that is, the device offset) when the
hospital receives a specified device at
no cost or with full credit (71 FR 68071
through 68077). Hospitals are instructed
to report no cost/full credit cases using
the ‘‘FB’’ modifier on the line with the
procedure code in which the no cost/
full credit device is used. In cases in
which the device is furnished without
cost or with full credit, the hospital is
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68629
to report a token device charge of less
than $1.01. In cases in which the device
being inserted is an upgrade (either of
the same type of device or to a different
type of device) with a full credit for the
device being replaced, the hospital is to
report as the device charge the
difference between its usual charge for
the device being implanted and its usual
charge for the device for which it
received full credit. In CY 2008, we
expanded this payment adjustment
policy to include cases in which
hospitals receive partial credit of 50
percent or more of the cost of a specified
device. Hospitals are instructed to
append the ‘‘FC’’ modifier to the
procedure code that reports the service
provided to furnish the device when
they receive a partial credit of 50
percent or more of the cost of the new
device. In CY 2008, OPPS payment for
the implantation procedure is reduced
by 100 percent of the device offset for
no cost/full credit cases when both a
specified device code is present on the
claim and the procedure code maps to
a specified APC. Payment for the
implantation procedure is reduced by
50 percent of the device offset for partial
credit cases when both a specified
device code is present on the claim and
the procedure code maps to a specified
APC. Beneficiary copayment is based on
the reduced payment amount when
either the ‘‘FB’’ or ‘‘FC’’ modifier is
billed and the procedure and device
codes appear on the lists of procedures
and devices to which this policy
applies. We refer readers to the CY 2008
OPPS/ASC final rule with comment
period for more background information
on the ‘‘FB’’ and ‘‘FC’’ payment
adjustment policy (72 FR 66743 through
66749).
2. APCs and Devices Subject to the
Adjustment Policy
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41478 through 41480), for
CY 2009 we proposed to continue the
policy of reducing OPPS payment for
specified APCs by 100 percent of the
device offset amount when a hospital
furnishes a specified device without
cost or with a full credit and by 50
percent of the device offset amount
when the hospital receives partial credit
in the amount of 50 percent or more of
the cost for the specified device.
Because the APC payments for the
related services are specifically
constructed to ensure that the full cost
of the device is included in the
payment, we continue to believe that it
is appropriate to reduce the APC
payment in cases in which the hospital
receives a device without cost, with full
credit, or with partial credit, in order to
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provide equitable payment in these
cases. (We refer readers to section
II.A.2.d.(1) of this final rule with
comment period for a description of our
standard ratesetting methodology for
device-dependent APCs.) Moreover, the
payment for these devices comprises a
large part of the APC payment on which
the beneficiary copayment is based, and
we continue to believe it is equitable
that the beneficiary cost sharing reflect
the reduced costs in these cases.
We also proposed to continue using
the three criteria established in the CY
2007 OPPS/ASC final rule with
comment period for determining the
APCs to which this policy applies (71
FR 68072 through 68077). Specifically,
(1) all procedures assigned to the
selected APCs must involve implantable
devices that would be reported if device
insertion procedures were performed,
(2) the required devices must be
surgically inserted or implanted devices
that remain in the patient’s body after
the conclusion of the procedures (at
least temporarily), and (3) the device
offset amount must be significant,
which for purposes of this policy is
defined as exceeding 40 percent of the
APC cost. We proposed to continue to
restrict the devices to which the APC
payment adjustment would apply to a
specific set of costly devices to ensure
that the adjustment would not be
triggered by the implantation of an
inexpensive device whose cost would
not constitute a significant proportion of
the total payment rate for an APC. We
continue to believe that these criteria
are appropriate because free devices and
credits are likely to be associated with
particular cases only when the device
must be reported on the claim and is of
a type that is implanted and remains in
the body when the beneficiary leaves
the hospital. We believe that the
reduction in payment is appropriate
only when the cost of the device is a
significant part of the total cost of the
APC into which the device cost is
packaged, and that the 40-percent
threshold is a reasonable definition of a
significant cost.
As indicated in the CY 2009 OPPS/
ASC proposed rule (73 FR 41479), we
examined the offset amounts calculated
from the CY 2009 proposed rule data
and the clinical characteristics of APCs
to determine whether the APCs to
which the no cost/full credit and partial
credit device adjustment policy applies
in CY 2008 continue to meet the criteria
for CY 2009, and to determine whether
other APCs to which the policy does not
apply in CY 2008 would meet the
criteria for CY 2009. Table 18 of the CY
2009 OPPS/ASC proposed rule listed
the proposed APCs to which the
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payment reduction policy for no cost/
full credit and partial credit devices
would apply in CY 2009 and displayed
the proposed payment reduction
percentages for both no cost/full credit
and partial credit circumstances. Table
19 of the CY 2009 OPPS/ASC proposed
rule listed the proposed devices to
which this policy would apply in CY
2009. As reflected in the tables, we
proposed to add APC 0425 (Level II
Arthroplasty or Implantation with
Prosthesis) and APC 0648 (Level IV
Breast Surgery) and their associated
devices that would not otherwise be on
the device list for CY 2009 because the
device offset percentages for these two
APCs were above the 40-percent
threshold based on the CY 2007 claims
data available for the proposed rule. We
also proposed to remove APC 0106
(Insertion/Replacement of Pacemaker
Leads and/or Electrodes) and device
HCPCS codes associated only with
procedures assigned to this APC
because the proposed device offset
percentage for this APC was less than 40
percent. We stated in the CY 2009
OPPS/ASC proposed rule (73 FR 41479)
that we would update the lists of APCs
and devices to which the no cost/full
credit and partial credit device
adjustment policy would apply in CY
2009 based on the final CY 2007 claims
data available for this final rule with
comment period.
Comment: One commenter supported
the continuation of the current policy.
Another commenter acknowledged an
understanding of the rationale for the no
cost/full credit and partial credit
payment reduction policy, but
expressed concerns regarding the
policy’s application in cases of device
upgrades. According to the commenter,
when a device is replaced, the old
model is often no longer available and
an upgrade is required. In such
circumstances, the commenter asserted
that the full cost of the replaced device
is credited, but the replacement device
is more expensive. The commenter
objected to CMS’ application of the full
device offset amount in these cases, and
suggested CMS develop a process that
takes into account and pays for the
excess cost of the replacement device.
The commenter also noted that, in
instances of partial credits for
replacement devices, hospitals often do
not know if they are receiving a partial
credit until the manufacturer has
inspected the device. According to the
commenter, hospitals must then
resubmit the claim after the partial
refund is received. The commenter
believed that this process requires
manual intervention that is costly for
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hospitals because many material
management systems are interfaced with
billing systems and do not routinely
match returns to specific patients. The
commenter urged CMS to take into
account the additional costs incurred by
the hospital to track these replacement
devices and the additional staff effort
required to resubmit claims when the
manufacturer provides partial credit for
replacement devices.
Response: We do not agree with the
commenter that we need to modify the
no cost/full credit and partial credit
device adjustment policy to account for
the cost of more expensive replacement
devices when manufacturers provide
device upgrades. We continue to believe
making the full APC payment would
result in significant overpayment
because, as described above, we use
only those claims that reflect the full
costs of devices in ratesetting for devicedependent APCs. In cases where a
hospital incurs a cost for a device
upgrade, the difference between the cost
of the replacement device and the full
credit the hospital receives for the
device being replaced would likely be
much less than the full cost of the
device that is included in the devicedependent APC payment rate. To
provide the full APC payment in these
cases would favor a device upgrade,
rather than replacement with a
comparable device, in warranty or recall
cases where the surgical procedure to
replace the device is only medically
necessary because of the original
defective device, for which the
manufacturer bears responsibility.
Moreover, we also are concerned that a
new policy to apply a smaller APC
payment percentage reduction in an
upgrade case, if we were eventually able
to estimate such a percentage from
sufficient claims data, could also favor
device upgrades, rather than
replacement with a comparable device
in those situations for which the
upgrade is only being provided because
the old model failed (and for which the
manufacturer provides a full credit) but
is no longer available for use in the
replacement procedure. We recognize
that, in some cases, the estimated device
cost, and, therefore, the amount of the
payment reduction, will be more or less
than the cost a hospital would otherwise
incur for a no cost/full credit device.
However, because averaging is inherent
in a prospective payment system, we do
not believe this is inappropriate.
Therefore, we continue to believe that
the full device offset reduction should
be made when hospitals receive full
credit for the cost of a replaced device
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against the cost of a more expensive
replacement device.
Also, as stated in the CY 2007 OPPS/
ASC final rule with comment period (71
FR 68076), we do not believe it is
necessary to reduce the amount of no
cost/full credit and partial credit device
adjustments to account for
administrative costs because we believe
that these costs are part of the payment
that remains for the services furnished.
We remind hospitals that, as outlined in
the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66747), they
have two options to report that they
received a partial credit of 50 percent or
more of the cost of a replacement
device: (1) Submit the claims
immediately without the ‘‘FC’’ modifier
signifying partial credit for a
replacement device and submit a claim
adjustment with the ‘‘FC’’ modifier at a
later date once the credit determination
is made; or (2) hold the claim until a
determination is made on the level of
credit.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to continue the
established no cost/full credit and
partial credit device adjustment policy.
For CY 2009, OPPS payments for
implantation procedures to which the
‘‘FB’’ modifier is appended are reduced
by 100 percent of the device offset for
no cost/full credit cases when both a
device code listed in Table 22, below, is
present on the claim and the procedure
code maps to an APC listed in Table 21
below. OPPS payments for implantation
procedures to which the ‘‘FC’’ modifier
is appended are reduced by 50 percent
of the device offset when both a device
code listed in Table 22 is present on the
claim and the procedure code maps to
an APC listed in Table 21. Beneficiary
copayment is based on the reduced
payment amount when either the ‘‘FB’’
68631
or ‘‘FC’’ modifier is billed and the
procedure and device codes appear on
the lists of procedures and devices to
which this policy applies.
In addition, we are adding, as
proposed, APC 0425 (Level II
Arthroplasty or Implantation with
Prosthesis) and APC 0648 (Level IV
Breast Surgery) and their associated
devices to the lists of APCs and devices
to which this policy applies, as shown
in Tables 21 and 22, respectively,
because the device offset percentages for
these two APCs are above the 40-percent
threshold. We are not implementing our
proposal to remove APC 0106
(Insertion/Replacement of Pacemaker
Leads and/or Electrodes) and device
HCPCS codes associated with this APC
from these lists because the device offset
percentage for this APC is now above 40
percent based on updated CY 2007
claims data and the most recent cost
report data available for this final rule
with comment period.
TABLE 21—APCS TO WHICH THE NO COST/FULL CREDIT AND PARTIAL CREDIT DEVICE ADJUSTMENT POLICY APPLIES
Final CY 2009
device offset
percentage for
no cost/full
credit case
Final CY 2009 APC
Final CY
2009 SI
CY 2009 APC title
0039 .....................................................
0040 .....................................................
0061 .....................................................
S
S
S
0089 .....................................................
T
0090 .....................................................
0106 .....................................................
T
T
0107 .....................................................
0108 .....................................................
T
T
0222 .....................................................
0225 .....................................................
S
S
0227
0259
0315
0385
0386
0418
0425
0648
0654
.....................................................
.....................................................
.....................................................
.....................................................
.....................................................
.....................................................
.....................................................
.....................................................
.....................................................
T
T
S
S
S
T
T
T
T
0655 .....................................................
T
0680 .....................................................
0681 .....................................................
S
T
Final CY 2009
device offset
percentage for
partial credit
case
84
57
62
42
29
31
72
36
74
43
37
21
89
89
45
44
85
62
42
31
82
84
88
59
69
71
59
46
77
41
42
44
29
34
36
29
23
38
76
38
71
71
36
35
Level I Implantation of Neurostimulator .............................
Percutaneous Implantation of Neurostimulator Electrodes
Laminectomy, Laparoscopy, or Incision for Implantation
of Neurostimulator Electrodes.
Insertion/Replacement of Permanent Pacemaker and
Electrodes.
Insertion/Replacement of Pacemaker Pulse Generator ....
Insertion/Replacement of Pacemaker Leads and/or Electrodes.
Insertion of Cardioverter-Defibrillator .................................
Insertion/Replacement/Repair of Cardioverter-Defibrillator
Leads.
Level II Implantation of Neurostimulator ............................
Implantation of Neurostimulator Electrodes, Cranial
Nerve.
Implantation of Drug Infusion Device ................................
Level VII ENT Procedures .................................................
Level III Implantation of Neurostimulator ...........................
Level I Prosthetic Urological Procedures ..........................
Level II Prosthetic Urological Procedures .........................
Insertion of Left Ventricular Pacing Elect ..........................
Level II Arthroplasty or Implantation with Prosthesis ........
Level IV Breast Surgery ....................................................
Insertion/Replacement of a permanent dual chamber
pacemaker.
Insertion/Replacement/Conversion of a permanent dual
chamber pacemaker.
Insertion of Patient Activated Event Recorders ................
Knee Arthroplasty ..............................................................
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TABLE 22—DEVICES TO WHICH THE NO COST/FULL CREDIT AND PARTIAL CREDIT DEVICE ADJUSTMENT POLICY APPLIES
CY 2009 device HCPCS code
C1721
C1722
C1728
C1764
C1767
CY 2009 short descriptor
..............................................
..............................................
..............................................
..............................................
..............................................
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AICD, dual chamber.
AICD, single chamber.
Cath, brachytx seed adm.
Event recorder, cardiac.
Generator, neurostim, imp.
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TABLE 22—DEVICES TO WHICH THE NO COST/FULL CREDIT AND PARTIAL CREDIT DEVICE ADJUSTMENT POLICY
APPLIES—Continued
CY 2009 device HCPCS code
C1771
C1772
C1776
C1777
C1778
C1779
C1785
C1786
C1789
C1813
C1815
C1820
C1881
C1882
C1891
C1895
C1896
C1897
C1898
C1899
C1900
C2619
C2620
C2621
C2622
C2626
C2631
L8600
L8614
L8685
L8686
L8687
L8688
L8690
CY 2009 short descriptor
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
Rep dev, urinary, w/sling.
Infusion pump, programmable.
Joint device (implantable).
Lead, AICD, endo single coil.
Lead, neurostimulator.
Lead, pmkr, transvenous VDD.
Pmkr, dual, rate-resp.
Pmkr, single, rate-resp.
Prosthesis, breast, imp.
Prosthesis, penile, inflatab.
Pros, urinary sph, imp.
Generator, neuro rechg bat sys.
Dialysis access system.
AICD, other than sing/dual.
Infusion pump, non-prog, perm.
Lead, AICD, endo dual coil.
Lead, AICD, non sing/dual.
Lead, neurostim, test kit.
Lead, pmkr, other than trans.
Lead, pmkr/AICD combination.
Lead coronary venous.
Pmkr, dual, non rate-resp.
Pmkr, single, non rate-resp.
Pmkr, other than sing/dual.
Prosthesis, penile, non-inf.
Infusion pump, non-prog, temp.
Rep dev, urinary, w/o sling.
Implant breast silicone/eq.
Cochlear device/system.
Implt nrostm pls gen sng rec.
Implt nrostm pls gen sng non.
Implt nrostm pls gen dua rec.
Implt nrostm pls gen dua non.
Aud osseo dev, int/ext comp.
V. OPPS Payment Changes for Drugs,
Biologicals, and Radiopharmaceuticals
A. OPPS Transitional Pass-Through
Payment for Additional Costs of Drugs,
Biologicals, and Radiopharmaceuticals
dwashington3 on PRODPC61 with RULES2
1. Background
Section 1833(t)(6) of the Act provides
for temporary additional payments or
‘‘transitional pass-through payments’’
for certain drugs and biological agents.
As originally enacted by the Medicare,
Medicaid, and SCHIP Balanced Budget
Refinement Act (BBRA) of 1999 (Pub. L.
106–113), this provision requires the
Secretary to make additional payments
to hospitals for current orphan drugs, as
designated under section 526 of the
Federal Food, Drug, and Cosmetic Act
(Pub. L. 107–186); current drugs and
biological agents and brachytherapy
sources used for the treatment of cancer;
and current radiopharmaceutical drugs
and biological products. For those drugs
and biological agents referred to as
‘‘current,’’ the transitional pass-through
payment began on the first date the
hospital OPPS was implemented (before
enactment of the Medicare, Medicaid,
and SCHIP Benefits Improvement and
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Protection Act (BIPA) of 2000 (Pub. L.
106–554), on December 21, 2000).
Transitional pass-through payments
also are provided for certain ‘‘new’’
drugs and biological agents that were
not being paid for as an HOPD service
as of December 31, 1996, and whose
cost is ‘‘not insignificant’’ in relation to
the OPPS payments for the procedures
or services associated with the new drug
or biological. For pass-through payment
purposes, radiopharmaceuticals are
included as ‘‘drugs.’’ Under the statute,
transitional pass-through payments can
be made for at least 2 years but not more
than 3 years. CY 2009 pass-through
drugs and biologicals and their APCs are
assigned status indicator ‘‘G’’ as
indicated in Addenda A and B to this
final rule with comment period.
Section 1833(t)(6)(D)(i) of the Act
specifies that the pass-through payment
amount, in the case of a drug or
biological, is the amount by which the
amount determined under section
1842(o) of the Act (or, if the drug or
biological is covered under a
competitive acquisition contract under
section 1847B of the Act, an amount
determined by the Secretary to be equal
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to the average price for the drug or
biological for all competitive acquisition
areas and year established under such
section as calculated and adjusted by
the Secretary) for the drug or biological
exceeds the portion of the otherwise
applicable Medicare OPD fee schedule
that the Secretary determines is
associated with the drug or biological.
This methodology for determining the
pass-through payment amount is set
forth in § 419.64 of the regulations,
which specifies that the pass-through
payment equals the amount determined
under section 1842(o) of the Act minus
the portion of the APC payment that
CMS determines is associated with the
drug or biological. Section 1847A of the
Act, as added by section 303(c) of Public
Law 108–173, establishes the use of the
average sales price (ASP) methodology
as the basis for payment for drugs and
biologicals described in section
1842(o)(1)(C) of the Act that are
furnished on or after January 1, 2005.
The ASP methodology, as applied under
the OPPS, uses several sources of data
as a basis for payment, including the
ASP, wholesale acquisition cost (WAC),
and average wholesale price (AWP). In
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this final rule with comment period, the
term ‘‘ASP methodology’’ and ‘‘ASPbased’’ are inclusive of all data sources
and methodologies described therein.
Additional information on the ASP
methodology can be found on the CMS
Web site at: https://www.cms.hhs.gov/
McrPartBDrugAvgSalesPrice/01_
overview.asp#TopOfPage.
As noted above, section
1833(t)(6)(D)(i) of the Act also states that
if a drug or biological is covered under
a competitive acquisition contract under
section 1847B of the Act, the payment
rate is equal to the average price for the
drug or biological for all competitive
acquisition areas and the year
established as calculated and adjusted
by the Secretary. Section 1847B of the
Act, as added by section 303(d) of
Public Law 108–173, establishes the
payment methodology for Medicare Part
B drugs and biologicals under the
competitive acquisition program (CAP).
The Part B drug CAP was implemented
on July 1, 2006, and includes
approximately 190 of the most common
Part B drugs provided in the physician’s
office setting. We note that the Part B
drug CAP program has been postponed
for CY 2009 (Medicare Learning
Network (MLN) Matters Special Edition
0833, available via the Web site: https://
www.medicare.gov). Therefore, there
will be no effective Part B drug CAP rate
for pass-through drugs and biologicals
as of January 1, 2009. As is our standard
process, we have used the Part B drug
CAP rates for July 2008 to determine the
packaging status for drugs with expiring
pass-through status. However, effective
January 1, 2009, we will use the amount
determined under section 1842(o) of the
Act for payment purposes for drugs and
biologicals with pass-through status. If
the Part B drug CAP program is
reinstituted sometime during CY 2009,
we will again use the Part B drug CAP
rate for pass-through drugs and
biologicals if they are a part of the Part
B drug CAP program. Otherwise, we
will continue to use the rate that would
be paid in the physician’s office setting
for drugs and biologicals with passthrough status. The list of drugs and
biologicals covered under the Part B
drug CAP through December 31, 2008,
their associated payment rates, and the
Part B drug CAP pricing methodology
can be found on the CMS Web site at:
https://www.cms.hhs.gov/
CompetitiveAcquisforBios.
For CYs 2005, 2006, and 2007, we
estimated the OPPS pass-through
payment amount for drugs and
biologicals to be zero based on our
interpretation that the ‘‘otherwise
applicable Medicare OPD fee schedule’’
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15:50 Nov 17, 2008
Jkt 217001
amount was equivalent to the amount to
be paid for pass-through drugs and
biologicals under section 1842(o) of the
Act (or section 1847B of the Act, if the
drug or biological is covered under a
competitive acquisition contract). We
concluded for those years that the
resulting difference between these two
rates would be zero. For CY 2008, we
estimated the OPPS pass-through
payment amount for drugs and
biologicals to be $6.6 million. Our OPPS
pass-through payment estimate for
drugs and biologicals in CY 2009 is
$23.3 million, which is discussed in
section VI.B. of this final rule with
comment period.
The pass-through application and
review process for drugs and biologicals
is explained on the CMS Web site at:
https://www.cms.hhs.gov/
HospitalOutpatientPPS/
04_passthrough_payment.asp.
2. Drugs and Biologicals With Expiring
Pass-Through Status in CY 2008
Section 1833(t)(6)(C)(i) of the Act
specifies that the duration of
transitional pass-through payments for
drugs and biologicals must be no less
than 2 years and no longer than 3 years.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41481), we proposed that
the pass-through status of 15 drugs and
biologicals would expire on December
31, 2008, as listed in Table 20 of the
proposed rule. It is standard OPPS
practice to delete temporary C-codes if
an alternate permanent HCPCS code
becomes available for purposes of OPPS
billing and payment. Based on our
review of the new CY 2009 HCPCS
codes available at the time of this final
rule with comment period, as noted in
Table 23 below, there are no new
permanent HCPCS codes that will be
implemented in CY 2009 to replace
HCPCS C-codes that were used in CY
2008 for drugs and biologicals with
pass-through status.
In addition, HCPCS code J7348
(Dermal (substitute) tissue of nonhuman
origin, with or without other
bioengineered or processed elements,
without metabolically active elements
(Tissuemend), per square centimeter),
which was proposed for expiring passthrough status on December 31, 2009,
has been deleted by the CMS HCPCS
Workgroup, effective January 1, 2009.
We have determined that the product(s)
described by this HCPCS code are
appropriately reported with HCPCS
code Q4109 (Skin substitute,
Tissuemend, per square centimeter),
effective January 1, 2009. Furthermore,
another HCPCS code J7349 (Dermal
(substitute) tissue of nonhuman origin,
with or without other bioengineered or
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68633
processed elements, without
metabolically active elements
(Primatrix), per square centimeter),
which was proposed for expiring passthrough status on December 31, 2008,
also has been deleted, effective January
1, 2009, and product(s) described by
this HCPCS code are appropriately
reported with HCPCS code Q4110 (Skin
substitute, Primatrix, per square
centimeter).
As we discussed in the proposed rule,
our standard methodology for providing
payment for drugs and biologicals with
expiring pass-through status in an
upcoming calendar year is to determine
the product’s estimated per day cost and
compare it with the OPPS drug
packaging threshold for that calendar
year (which was proposed at $60 for CY
2009). If the estimated per day cost is
less than or equal to the applicable
OPPS drug packaging threshold, we
package payment for the drug or
biological into the payment for the
associated procedure in the upcoming
calendar year. If the estimated per day
cost is greater than the OPPS drug
packaging threshold, we provide
separate payment at the applicable
relative ASP-based payment amount
(which was proposed at ASP+4 percent
for CY 2009). For drugs and biologicals
that are currently covered under the
CAP, we proposed to use the payment
rates calculated under that program that
were in effect as of April 1, 2008, for
purposes of packaging decisions and for
Addenda A and B to the proposed rule.
As we proposed, we are updating these
payment rates based on the CAP rates as
of July 1, 2008, for packaging decisions
and as of October 1, 2008, for purposes
of Addenda A and B to this CY 2009
OPPS/ASC final rule with comment
period, as these are the most updated
data available at the time these
decisions are made.
Three of the products with proposed
expiring pass-through status for CY
2009 are biologicals that are solely
surgically implanted according to their
Food and Drug Administrationapproved indications. As discussed in
the proposed rule, these products are
described by HCPCS codes C9352
(Microporous collagen implantable tube
(Neuragen Nerve Guide), per centimeter
length); C9353 (Microporous collagen
implantable slit tube (NeuraWrap Nerve
Protector), per centimeter length); and
J7348 (Dermal (substitute) tissue of
nonhuman origin, with or without other
bioengineered or processed elements,
without metabolically active elements
(Tissuemend), per square centimeter).
We note that, as discussed above, the
CMS HCPCS Workgroup has deleted
HCPCS code J7348, effective January 1,
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Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations
2009, and we have determined that the
product(s) described by this HCPCS
code are appropriately reported with
HCPCS code Q4109, effective January 1,
2009.
We proposed to package payment for
those implantable biologicals that have
expiring pass-through status in CY 2009
into payment for the associated surgical
procedure. We indicated our belief that
the three products described above with
expiring pass-through status for CY
2009 differ from other biologicals paid
under the OPPS in that they specifically
function as surgically implanted
devices. Both implantable devices under
the OPPS and these three biologicals
with expiring pass-through status are
always surgically inserted or implanted
(including through a surgical incision or
a natural orifice). Furthermore, in some
cases, these implantable biologicals can
substitute for implantable nonbiologic
devices (such as for synthetic nerve
conduits or synthetic mesh used in
tendon repair).
To date, for other nonpass-through
biologicals paid under the OPPS that
may sometimes be used as implantable
devices, we have instructed hospitals,
via Transmittal 1336, Change Request
5718, dated September 14, 2007, to not
separately bill for the HCPCS codes for
the products when using these items as
implantable devices (including as a
scaffold or an alternative to human or
nonhuman connective tissue or mesh
used in a graft) during surgical
procedures. In such cases, we consider
payment for the biological used as an
implantable device in a specific clinical
case to be included in payment for the
surgical procedure.
As we established in the CY 2003
OPPS final rule with comment period
(67 FR 66763), when the pass-through
payment period for an implantable
device ends, it is standard OPPS policy
to package payment for the implantable
device into payment for its associated
surgical procedure. We consider
nonpass-through implantable devices to
be integral and supportive items and
services for which packaged payment is
most appropriate. According to our
regulations at § 419.2(b), as a
prospective payment system, the OPPS
establishes a national payment rate that
includes operating and capital-related
costs that are directly related and
integral to performing a procedure or
furnishing a service on an outpatient
basis including, but not limited to,
implantable prosthetics, implantable
durable medical equipment, and
medical and surgical supplies.
Therefore, when the period of
nonbiologic device pass-through
payment ends, we package the costs of
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the devices no longer eligible for passthrough payment into the costs of the
procedures with which the devices were
reported in the claims data used to set
the payment rates for the upcoming
calendar year. As described in the CY
2009 OPPS/ASC proposed rule (73 FR
41481), we believed that this policy to
package payment for implantable
devices that are integral to the
performance of separately paid
procedures should also apply to
payment for implantable biologicals
without pass-through status, when those
biologicals function as implantable
devices. As stated above, implantable
biologicals may be used in place of
other implantable nonbiologic devices
whose costs are already accounted for in
the associated procedural APC
payments for surgical procedures. If we
were to provide separate payment for
these implantable biologicals without
pass-through status, we would
potentially be providing duplicate
device payment, both through the
packaged nonbiologic device cost
included in the surgical procedure’s
payment and separate biological
payment. We indicated in the CY 2009
OPPS/ASC proposed rule (73 FR 41481)
that we saw no basis for treating
implantable biological and nonbiologic
devices without pass-through status
differently for OPPS payment purposes
because both are integral to and
supportive of the separately paid
surgical procedures in which either may
be used.
The methodology of calculating a
product’s estimated per day cost and
comparing it to the annual OPPS drug
packaging threshold has been used to
determine the packaging status of all
drugs and biologicals under the OPPS
(except for our exemption for 5HT3 antiemetics), including injectable products
paid for under the OPPS as biologicals
(such as intraarticular sodium
hyaluronate products). However,
because we believe that the three
products described above with expiring
pass-through status for CY 2009 differ
from other biologicals paid under the
OPPS in that they specifically function
as surgically implanted devices, we
proposed a policy to package payment
for any biological without pass-through
status that is surgically inserted or
implanted (through a surgical incision
or a natural orifice) into the payment for
the associated surgical procedure when
their pass-through status expires.
Comment: One commenter requested
that CMS not end pass-through status
for HCPCS codes C9352 and C9353
effective December 31, 2008. The
commenter pointed out that while these
two products were originally granted
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pass-through status on January 1, 2007
(and could therefore theoretically be
eligible for another year of pass-through
status under the OPPS), a coding change
in CY 2008 was the first opportunity for
these products to be differentiated on
hospital claims. Therefore, when
determining payment rates for CY 2009,
the commenter argued that CY 2007
claims data do not identify which
product was used on the claim and,
therefore, accurate payment cannot be
determined for these products for CY
2009.
In addition, the commenter stated that
there were very few claims for these
products in CY 2007. There were a total
of 11 CY 2007 claims for these products,
and only 3 were single or ‘‘pseudo’’
single claims used for ratesetting for the
associated procedures.
Response: HCPCS code C9350
(Microporous collagen tube of nonhuman origin, per centimeter length)
was first created effective January 1,
2007 and was assigned status indicator
‘‘G’’ (indicating pass-through status
applied). On January 1, 2008, HCPCS
code C9350 was split into HCPCS code
C9352 and HCPCS code C9353. The
products described in CY 2007 under
HCPCS code C9350 continued passthrough status under the HCPCS codes
C9352 and C9353 in CY 2008. As stated
above, pass-through status is required
for at least 2 but not more than 3 years.
We proposed to end pass-through status
for the products described by HCPCS
codes C9352 and C9353 because they
were first approved for pass-through
status on January 1, 2007 under HCPCS
code C9350 and, therefore, would meet
the timeframe required for pass-through
status on December 31, 2008. We do not
believe the finding that these products
were rarely used in the care of Medicare
beneficiaries in CY 2007, their first year
of pass-through payment, is sufficient
justification for providing a third year of
pass-through payment, as we have cost
data that allow us to package payment
for these implantable biologicals into
payment for the associated procedures
for CY 2009.
We note that, unlike our standard
methodology of calculating an estimated
per day cost for items that have expiring
pass-through status and comparing this
estimate to the applicable drug
packaging threshold, our proposal to
package nonpass-through biologicals
that are surgically inserted or implanted
(through a surgical incision or a natural
orifice) into the payment for the
associated surgical procedure is not
dependent on claims data to establish
an estimated per day cost for each
product. Rather, the packaging
determination is made as a result of the
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FDA-indicated implantable use of the
product. Therefore, we do not believe
that the coding change in CY 2008 and
the resulting lack of product-specific
claims data sufficiently warrant an
extension of pass-through status for the
products described by HCPCS codes
C9352 and C9353.
Comment: A few commenters
supported the proposed methodology to
package payment for drugs and
nonimplantable biologicals with
expiring pass-through status if their
estimated per day costs are less than or
equal to the drug packaging threshold
(proposed at $60 for CY 2009).
Furthermore, several commenters
supported CMS’ proposal to package
payment for implantable biologicals
without pass-through status into the
payment for the associated surgical
procedure. One commenter
recommended that CMS continue to
examine the APC weights of these
associated APCs to ensure they
sufficiently account for the costs of the
implantable biologicals. In addition, this
commenter recommended that CMS
consider developing separate APCs for
surgical procedures that use biological
and synthetic mesh from those
procedures that do not use any type of
mesh. The commenter argued that this
separation would ensure that the APCs
are similar in terms of clinical
characteristic and resource use.
One commenter requested an
exception to the proposed packaging
policy when the procedure including an
implantable biological is billed using an
unlisted surgical procedure code. In this
specific situation, the commenter
believed that the implantable biological
should be paid separately whether or
not it currently has pass-through status
if the estimated per day cost is over the
applicable drug packaging threshold.
Response: We proposed to package
payment for drugs and nonimplantable
biologicals with expiring pass-through
status in CY 2009 and with estimated
costs below the CY 2009 $60 drug
packaging threshold and to continue to
pay separately for these products if their
estimated costs exceeded the threshold,
consistent with our established policy
for the past several years. We appreciate
the commenters’ support for this
approach.
In addition, we do not believe there
is a need to develop separate APCs for
surgical procedures that use biological
and synthetic mesh, distinct from APCs
for those procedures that do not use
mesh. The APCs are groupings of
services that share clinical and resource
characteristics. The packaged costs of
implantable mesh devices are reflected
in the HCPCS code-specific median
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costs for the associated surgical
procedures; thus, while we believe that,
unless we find that APCs violate the 2
times rule or there is a concern
regarding their clinical or resource
homogeneity, we have no specific need
to assign procedures using mesh to
different APCs from procedures that do
not implant mesh products. Packaging
costs into a single aggregate payment for
a service, encounter, or episode-of-care
is a fundamental principle that
distinguishes a prospective payment
system from a fee schedule. In general,
packaging the costs of supportive items
and services into the payment for the
independent procedure or service with
which they are associated encourages
hospital efficiencies and also enables
hospitals to manage their resources with
maximum flexibility.
Finally, we understand that one
commenter was concerned that when
implantable biologicals are used in
procedures reported with unlisted
surgical procedure CPT codes, the
complete packaged payment for the
procedure and the biological may not
sufficiently cover the costs of the
biological. We disagree with the
commenter that implantable biologicals
should be paid separately when
provided with an unlisted surgical
procedure. We acknowledge that the
commenter’s concern is based partially
on our established policy to provide
payment for unlisted codes at the lowest
level clinical APC in an appropriate
clinical series. As we do for other OPPS
services, we package payment for
certain items and services when
provided with unlisted procedure
codes. We note that this methodology is
also followed when packaged
implantable nonbiologic devices are
provided with unlisted surgical
procedure codes. We expect that
stakeholders would continue to seek
specific HCPCS codes for new
procedures provided with any
frequency in the HOPD in order to allow
for more precise procedure-specific
payment under the OPPS. We remind
readers that the reporting of unlisted
codes is meant as a temporary measure
to allow payment for new and/or
uncommon services and, therefore, the
services described by unlisted codes
vary from year-to-year.
Comment: One commenter further
recommended that CMS treat biologicals
that are always surgically implanted or
inserted and are approved by the FDA
as devices rather than drugs for
purposes of pass-through payment. The
commenter noted that this would allow
all implantable devices, biological and
otherwise, to be subject to a single passthrough payment policy. The
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68635
commenter concluded that this policy
change would provide consistency in
billing these products as implanted
devices during both their pass-through
payment period, as well as after the
expiration of pass-through status.
Response: We appreciate the
commenter’s recommendation to treat
biologicals that are always surgically
implanted or inserted and are approved
by the FDA as devices for purposes of
pass-through payment under the OPPS.
We did not propose such a policy for CY
2009, but we will consider making such
a proposal for future rulemaking.
Comment: One commenter requested
special payment consideration for
HCPCS code J1473 (Injection,
idursulfase, 1mg) because this drug has
been granted orphan drug status by the
FDA. Specifically, the commenter
requested separate payment for this
drug.
Response: In the CY 2009 OPPS/ASC
proposed rule, we proposed to end the
pass-through status of HCPCS code
J1473 on December 31, 2008. As noted
above, for drugs and biologicals (other
than implantable only biologicals)
transitioning from pass-through status,
we determine the packaging status of
each drug or biological by comparing its
estimated per day cost to the annual
drug packaging threshold for the
applicable payment year. For CY 2009,
the per day cost estimate for HCPCS
code J1473 exceeds the $60 drug
packaging threshold finalized for CY
2009 in section V.B.2.b. of this final rule
with comment period and, therefore,
HCPCS code J1473 will be paid
separately for CY 2009.
After consideration of the public
comments received, for CY 2009, we are
finalizing our proposed policy, without
modification, to package payment for
any biological without pass-through
status that is surgically inserted or
implanted (through a surgical incision
or a natural orifice) into the payment for
the associated surgical procedure. As a
result of this final methodology, HCPCS
codes C9352, C9353, and J7348 are
packaged and assigned status indicator
‘‘N’’ in Addendum B to this final rule
with comment period. In addition, as
proposed, any new biologicals without
pass-through status that are surgically
inserted or implanted (through a
surgical incision or a natural orifice)
will be packaged beginning in CY 2009.
Moreover, for nonpass-through
biologicals that may sometimes be used
as implantable devices, we continue to
instruct hospitals to not bill separately
for the HCPCS codes for the products
when used as implantable devices. This
reporting ensures that the costs of these
products that may be, but are not
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always, used as implanted biologicals
are appropriately packaged into
payment for the associated implantation
procedures when the products are used
as implantable devices.
For drugs and nonimplantable
biologicals with expiring pass-through
status, as proposed we have determined
their final CY 2009 payment
methodology of packaged or separate
payment based on their estimated per
day costs, in comparison with the CY
2009 drug packaging threshold.
Finally, we are finalizing our CY 2009
proposal, without modification, to
expire pass-through status for the 15
drugs and biologicals listed in Table 20
of the proposed rule and listed below in
Table 23, effective December 31, 2008.
Packaged drugs and biologicals are
assigned status indicator ‘‘N’’ and drugs
and biologicals that continue to be
separately paid as nonpass-through
products are assigned status indicator
‘‘K.’’
TABLE 23—DRUGS AND BIOLOGICALS FOR WHICH PASS-THROUGH STATUS EXPIRES DECEMBER 31, 2008
CY 2008
HCPCS code
CY 2009
HCPCS code
CY 2009 short descriptor
Final
CY 2009 SI
Final
CY 2009 APC
C9352 ...........
C9353 ...........
J0129* ..........
J0348 ............
J0894* ..........
J1740* ..........
J1743 ............
J2248 ............
J2323* ..........
J2778* ..........
J3243 ............
J3473 ............
J7348 ............
J7349 ............
J9303 ............
C9352 ..........
C9353 ..........
J0129 ...........
J0348 ...........
J0894 ...........
J1740 ...........
J1743 ...........
J2248 ...........
J2323 ...........
J2778 ...........
J3243 ...........
J3473 ...........
Q4109 ..........
Q4110 ..........
J9303 ...........
Neuragen nerve guide, per cm ..........................................................................
Neurawrap nerve protector, cm .........................................................................
Abatacept injection .............................................................................................
Injection, anidulafungin, 1mg .............................................................................
Decitabine injection ............................................................................................
Ibandronate sodium injection .............................................................................
Idursulfase injection ............................................................................................
Micafungin sodium injection ...............................................................................
Natalizumab injection .........................................................................................
Ranibizumab injection ........................................................................................
Tigecycline injection ...........................................................................................
Hyaluronidase recombinant ................................................................................
Tissuemend skin sub .........................................................................................
Primatrix skin sub ...............................................................................................
Panitumumab injection .......................................................................................
N
N
K
K
K
K
K
K
K
K
K
K
N
K
K
........................
........................
9230
0760
9231
9229
9232
9227
9126
9233
9228
0806
........................
1248
9235
* Indicates that the drug was paid at a rate determined by the Part B drug CAP methodology (prior to January 1, 2009) while identified as
pass-through under the OPPS.
dwashington3 on PRODPC61 with RULES2
3. Drugs, Biologicals, and
Radiopharmaceuticals With New or
Continuing Pass-Through Status in CY
2009
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41482), we proposed to
continue pass-through status in CY 2009
for 16 drugs and biologicals. These
items, which were approved for passthrough status between April 1, 2007
and July 1, 2008, were listed in Table 21
of the proposed rule. The APCs and
HCPCS codes for the proposed drugs
and biologicals that were listed in Table
21 were assigned status indicator ‘‘G’’ in
Addenda A and B to the proposed rule.
Section 1833(t)(6)(D)(i) of the Act sets
the amount of pass-through payment for
pass-through drugs and biologicals (the
pass-through payment amount) as the
difference between the amount
authorized under section 1842(o) of the
Act (or, if the drug or biological is
covered under a CAP under section
1847B of the Act, an amount determined
by the Secretary equal to the average
price for the drug or biological for all
competitive acquisition areas and year
established under such section as
calculated and adjusted by the
Secretary) and the portion of the
otherwise applicable fee schedule
amount that the Secretary determines is
associated with the drug or biological.
We stated in the proposed rule that,
given our CY 2009 proposal to provide
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payment for nonpass-through separately
payable drugs and biologicals at ASP+4
percent as described further in section
V.B.3. of the proposed rule, we believed
it would be consistent with the statute
to provide payment for drugs and
biologicals with pass-through status that
are not part of the Part B drug CAP at
a rate of ASP+6 percent, the amount
authorized under section 1842(o) of the
Act, rather than ASP+4 percent that
would be the otherwise applicable fee
schedule portion associated with the
drug or biological. The difference
between ASP+4 percent and ASP+6
percent, therefore, would be the CY
2009 pass-through payment amount for
these drugs and biologicals. Thus, for
CY 2009, we proposed to pay for passthrough drugs and biologicals that are
not part of the Part B drug CAP at
ASP+6 percent, equivalent to the rate
these drugs and biologicals would
receive in the physician’s office setting
in CY 2009. In addition, as we consider
radiopharmaceuticals to be drugs for
pass-through purposes, we proposed to
provide pass-through payment for
radiopharmaceuticals based on the ASP
methodology at a rate equivalent to the
payment rate for drugs and biologicals
in the physician’s office setting. We
proposed to collect ASP data from those
manufacturers that were able to report a
patient-specific dose based on the
HCPCS code descriptor (73 FR 41482).
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Section 1842(o) of the Act also states
that if a drug or biological is covered
under the CAP under section 1847B of
the Act, the payment rate is equal to the
average price for the drug or biological
for all competitive acquisition areas and
year established as calculated and
adjusted by the Secretary. For CY 2009,
we proposed to provide payment for
drugs and biologicals with pass-through
status that are offered under the Part B
drug CAP at a rate equal to the Part B
drug CAP rate. Therefore, considering
ASP+4 percent to be the otherwise
applicable fee schedule portion
associated with these drugs or
biologicals, the difference between the
Part B drug CAP rate and ASP+4 percent
would be the pass-through payment
amount for these drugs and biologicals.
In the proposed rule, HCPCS codes that
are offered under the CAP program as of
April 1, 2008, were identified in Table
21 of the proposed rule with an asterisk.
Comment: Several commenters
supported the continued pass-through
status in CY 2009 of specific drugs and
biologicals and urged CMS to finalize
the proposal for these items. One
commenter supported the proposed
methodology of providing payment for
drugs and biologicals at a rate equal to
the rate those drugs and biologicals
would receive under the Part B drug
CAP program or in the physician’s office
setting. The commenter stated that
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newer drugs with pass-through status
are often not part of discounting
programs for either physicians or
hospitals, and that payment parity for
this group of drugs provides for
continued access to these new therapies.
Another commenter disagreed with the
proposed payment methodology for
drugs, biologicals, and
radiopharmaceuticals that have passthrough status. The commenter noted
that linking pass-through drug payment
to the payment provided to physicians
creates a further payment disadvantage
for hospitals, as the commenter believed
that physicians may charge for
consulting services that assist in paying
for physicians’ costs of supplying drugs,
while hospitals do not have this same
opportunity.
Response: As discussed above, we are
directed by section 1833(t)(6)(D) of the
Act to provide payment for pass-through
drugs and biologicals at the difference
between the amount authorized under
section 1842(o) of the Act and the
portion of the otherwise applicable fee
schedule amount that the Secretary
determines is associated with the drug
or biological (or at the Part B Drug CAP
rate if the drug or biological is covered
under the Part B drug CAP). Therefore,
we are not able to adopt an alternative
payment methodology for pass-through
drugs and biologicals under the CY 2009
OPPS.
Comment: A few commenters
requested clarification of the criteria
that would be used to evaluate
radiopharmaceutical and contrast agent
applications for pass-through status. In
addition, some commenters requested
that CMS clarify that new contrast
agents are eligible to apply for passthrough status, even though they would
otherwise be packaged.
Response: We note that, as stated
above, for pass-through purposes we
consider radiopharmaceuticals and
contrast agents to be drugs and,
therefore, the same pass-through criteria
apply. Our criteria for reviewing passthrough drug and biologicals
applications are available on the CMS
Web site at: https://www.cms.hhs.gov/
HospitalOutpatientPPS/
04_passthrough_payment.asp.
Under the packaging methodology for
diagnostic radiopharmaceuticals and
contrast agents that we implemented in
CY 2008, new diagnostic
radiopharmaceuticals and new contrast
agents without pass-thorough status
would be packaged under the OPPS. As
we are continuing our packaging policy
for diagnostic radiopharmaceuticals and
contrast agents for CY 2009, we will
continue to package payment for all new
diagnostic radiopharmaceuticals and
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contrast agents that do not have passthrough status in CY 2009.
Comment: Several commenters
supported the proposal to provide
payment for pass-through diagnostic
and therapeutic radiopharmaceuticals
based on the ASP methodology. Other
commenters, while generally in favor of
using the ASP methodology for passthrough radiopharmaceutical payment
purposes, cautioned CMS that some
manufacturers do not have the ability to
provide a patient-specific ASP for their
product(s).
Response: We appreciate the
commenters’ support for the ASP
methodology to pay for
radiopharmaceuticals with pass-through
status. Currently, there are no
radiopharmaceuticals (diagnostic or
therapeutic) that would have passthrough status in CY 2009. For CY 2009,
we proposed to provide payment for
diagnostic and therapeutic
radiopharmaceuticals with pass-through
status based on the ASP methodology.
We proposed to collect ASP data from
those manufacturers who were able to
report a patient-specific dose based on
the HCPCS code descriptor (73 FR
41482).
Shortly after the issuance of our CY
2009 proposed rule, section 142 of
Public Law 110–275 (MIPPA) directed
that OPPS payments for therapeutic
radiopharmaceutical be made at
hospital charges adjusted to cost for CY
2009. The payment methodology
specified in Public Law 110–275 also
applies to any therapeutic
radiopharmaceutical with pass-through
status during CY 2009. Therefore, any
therapeutic radiopharmaceutical that is
granted pass-through status for CY 2009
will be paid based on hospital charges
adjusted to cost for CY 2009.
Consistent with OPPS payment for
separately payable drugs and biologicals
with HCPCS codes, in CY 2009, as
proposed, payment for diagnostic
radiopharmaceuticals that are granted
pass-through status will be based on the
ASP methodology. As stated above, for
purposes of pass-through payment, we
consider radiopharmaceuticals to be
drugs under the OPPS. Therefore, if a
diagnostic radiopharmaceutical receives
pass-through status during CY 2009, we
will follow the standard ASP
methodology to determine its passthrough payment rate under the OPPS.
We understand that not all
manufacturers are in a position to
submit patient-specific ASP data for
their diagnostic radiopharmaceuticals.
Therefore, if we do not have ASP data
submitted under the standard ASP
process to provide payment at ASP+6
percent, we will base the pass-through
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68637
payment on the product’s wholesale
acquisition cost (WAC). If WAC data are
also not available, we will provide
payment for the pass-through diagnostic
radiopharmaceutical at 95 percent of its
most recent average wholesale price
(AWP).
Comment: Some commenters
suggested that CMS provide a payment,
in addition to the relative ASP amount,
for pass-through radiopharmaceuticals
to account for nuclear medicine
handling and compounding costs.
Response: As stated above, we are
directed by section 142 of Public Law
110–275 to provide payment for
therapeutic radiopharmaceuticals with
pass-through status in CY 2009 at
charges adjusted to cost. Therefore,
additional payments are not within our
discretion for these therapeutic
radiopharmaceuticals. However, as we
stated in the CY 2007 OPPS/ASC final
rule with comment period (71 FR
68096), we believe that hospitals have
the ability to set charges for items
properly so that charges adjusted to cost
can appropriately account fully for the
acquisition and overhead costs of
radiopharmaceuticals.
We have routinely provided a single
payment for drugs, biologicals, and
radiopharmaceuticals under the OPPS
to account for acquisition cost and
pharmacy overhead costs, including
compounding costs. We continue to
believe that a single payment is
appropriate for diagnostic
radiopharmaceuticals with pass-through
status in CY 2009, and that the payment
rate of ASP+6 (or payment based on the
ASP methodology) is adequate to
provide payment for both the diagnostic
radiopharmaceutical acquisition cost
and any associated nuclear medicine
handling and compounding costs.
Comment: Some commenters noted
that a pass-through period of possibly
only 2 years discourages new product
development, especially for
radiopharmaceutical products. One
commenter recommended providing
pass-through payment for approved
radiopharmaceuticals for a full 3-year
time period to allow hospitals time to
incorporate new products into their
chargemasters and billing practices.
Response: As stated above, we
currently do not have any
radiopharmaceuticals, diagnostic or
therapeutic, that either have been
granted pass-through status or are under
consideration for pass-through status at
the time of this final rule with comment
period. We also note that the OPPS
pass-through provision provides for at
least 2 but not more than 3 years of
pass-through payment for drugs and
biologicals that are approved for pass-
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through payments. We provide an
annual opportunity through the annual
OPPS/ASC rulemaking cycle for public
comment on those drugs and biologicals
that are proposed for expiration of passthrough payment in the next calendar
year. We often receive comments related
to our proposed expiration of passthrough status for particular items, and
we expect to continue to receive these
comments regarding the proposed
expiration of pass-through status for
drugs and biologicals in the future. In
this manner, we would address specific
concerns about the pass-through period
for individual drugs and biologicals in
the future, including
radiopharmaceuticals.
After consideration of the public
comments received, we are finalizing
our proposed CY 2009 policy, with
modification as noted below, to provide
payment for pass-through drugs,
including diagnostic
radiopharmaceuticals, and biologicals
based on the ASP methodology. This
allows diagnostic radiopharmaceutical
manufacturers that are able to provide
ASP information through the
established methodology to be paid for
pass-through diagnostic
radiopharmaceuticals at ASP+6 percent,
the same rate as pass-through drugs and
biologicals are paid in the physician’s
office setting. In addition, we are
modifying our proposal to provide
payment for therapeutic
radiopharmaceuticals with pass-through
status based on the requirements of
section 142 of Public Law 110–275.
Therefore, therapeutic
radiopharmaceuticals with pass-through
status in CY 2009 will be paid at
hospital charges adjusted to cost, the
same payment methodology as other
therapeutic radiopharmaceuticals in CY
2009.
The drugs and biologicals that are
continuing pass-through status or have
been granted pass-through status as of
January 2009 for CY 2009 are displayed
in Table 24 below. In addition, we did
not receive any public comments on our
proposal to update pass-through
payment rates on a quarterly basis on
our Web site during CY 2009 if later
quarter ASP submissions (or more
recent WAC or AWP information, as
applicable) indicate that adjustments to
the payment rates for these pass-through
drugs and biologicals are necessary, and
we are finalizing this policy. Finally, if
a drug or biological that has been
granted pass-through status for CY 2009
becomes covered under the Part B drug
CAP if the program is reinstituted, we
will provide payment for Part B drugs
that are granted pass-through status and
are covered under the Part B drug CAP
at the Part B drug CAP rate. Appropriate
adjustments to the payment rates for
pass-through drugs and biologicals will
occur on a quarterly basis.
TABLE 24—DRUGS AND BIOLOGICALS WITH PASS-THROUGH STATUS IN CY 2009
CY 2008
HCPCS code
CY 2009
HCPCS code
CY 2009 short descriptor
Final
CY 2009 SI
C9238 ...........
C9239 ...........
C9240* ..........
C9241 ...........
C9242 ...........
C9243 ...........
C9244 ...........
C9354 ...........
C9355 ...........
C9356 ...........
C9357 ...........
C9358 ...........
C9359 ...........
J1300 ............
J1571 ............
J1573 ............
J3488* ..........
J9225* ..........
J9226 ............
J9261 ............
Q4097 ...........
J1953 ...........
J9330 ...........
J9207 ...........
J1267 ...........
J1453 ...........
J9033 ...........
J2785 ...........
C9354 ..........
C9355 ..........
C9356 ..........
Q4114 ..........
C9358 ..........
C9359 ..........
J1300 ...........
J1571 ...........
J1573 ...........
J3488 ...........
J9225 ...........
J9226 ...........
J9261 ...........
J1459 ...........
C9245 ..........
C9246 ..........
C9248 ..........
Levetiracetam injection .......................................................................................
Temsirolimus injection ........................................................................................
Ixabepilone injection ...........................................................................................
Doripenem injection ............................................................................................
Fosaprepitant injection .......................................................................................
Bendamustine injection ......................................................................................
Injection, regadenoson .......................................................................................
Veritas collagen matrix, cm2 ..............................................................................
Neuromatrix nerve cuff, cm ................................................................................
TendoGlide Tendon Prot, cm2 ...........................................................................
Integra flowable wound matri .............................................................................
SurgiMend, 0.5cm2 ............................................................................................
Implant, bone void filler ......................................................................................
Eculizumab injection ...........................................................................................
Hepagam b im injection .....................................................................................
Hepagam b intravenous, inj ...............................................................................
Reclast injection .................................................................................................
Vantas implant ....................................................................................................
Supprelin LA implant ..........................................................................................
Nelarabine injection ............................................................................................
Inj IVIG privigen 500 mg ....................................................................................
Injection, romiplostim ..........................................................................................
Inj, gadoxetate disodium ....................................................................................
Inj, clevidipine butyrate .......................................................................................
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
G
Final
CY 2009 APC
9238
1168
9240
9241
9242
9243
9244
9354
9355
9356
1251
9358
9359
9236
0946
1138
0951
1711
1142
0825
1214
9245
9246
9248
* Indicates that the drug was paid at a rate determined by the Part B drug CAP methodology (prior to January 1, 2009) while identified as
pass-through under the OPPS.
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4. Reduction of Transitional PassThrough Payments for Diagnostic
Radiopharmaceuticals To Offset Costs
Packaged Into APC Groups
Prior to CY 2008, certain diagnostic
radiopharmaceuticals were paid
separately under the OPPS if their mean
per day costs were greater than the
applicable year’s drug packaging
threshold. In CY 2008 (72 FR 66768), we
packaged payment for all nonpassthrough diagnostic
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radiopharmaceuticals as ancillary and
supportive items and services.
Specifically, we packaged payment for
all nonpass-through diagnostic
radiopharmaceuticals, including those
products that would not otherwise have
been packaged based solely on the CY
2008 drug packaging threshold, into
payment for their associated nuclear
medicine procedures. In the CY 2009
OPPS/ASC proposed rule (73 FR 41483),
we proposed to continue to package
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payment in CY 2009 for all nonpassthrough diagnostic
radiopharmaceuticals as discussed in
section V.B.2.c. of this final rule with
comment period.
As previously noted, for OPPS passthrough payment purposes,
radiopharmaceuticals are considered to
be ‘‘drugs.’’ As described above, section
1833(t)(6)(D)(i) of the Act specifies that
the transitional pass-through payment
amount for pass-through drugs and
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biologicals is the difference between the
amount paid under section 1842(o) or
the Part B drug CAP rate and the
otherwise applicable OPPS payment
amount. Furthermore, transitional passthrough payments for drugs, biologicals,
and radiopharmaceuticals under the
OPPS are made for a period of at least
2 but not more than 3 years. There are
currently no radiopharmaceuticals with
pass-through status under the OPPS. For
new pass-through radiopharmaceuticals
with no ASP information or CAP rate,
our proposed and final CY 2009
payment methodology is discussed in
section V.A.3. of this final rule with
comment period. According to our final
policy and consistent with our CY 2008
final policy (72 FR 66755), new passthrough diagnostic
radiopharmaceuticals will be paid at
ASP+6 percent, while those without
ASP information will be paid based on
WAC or, if WAC is not available, based
on 95 percent of the product’s most
recently published AWP.
As described in section IV.A.2.a. of
the proposed rule and this final rule
with comment period regarding passthrough device payment, we have
consistently employed an established
methodology to estimate the portion of
each APC payment rate that could
reasonably be attributed to the cost of an
associated device eligible for passthrough payment (the APC device offset
amount) to avoid duplicate payment for
the device portion of a procedure. This
calculation uses calendar year claims
data from the period used for the most
recent recalibration of the APC payment
rates (72 FR 66751 through 66752). We
evaluate new pass-through device
categories individually to determine if
there are device costs packaged into the
associated procedural APC payment rate
from predecessor devices that resemble
the new pass-through device category,
suggesting that a device offset amount
would be appropriate. On an ongoing
basis, through the quarterly transmittals
that implement the quarterly OPPS
updates, we establish the applicable
APC device offset amount, if any, in the
same quarter as the eligible passthrough device category is first
established. We update device offset
amounts annually for eligible passthrough device categories when we
recalibrate APC payment rates. We note
that we initially implemented the
device offset policy in CY 2001 only for
pacemakers and neurostimulators but
subsequently expanded the offset to
other pass-through devices with costs
from predecessor devices packaged into
the existing APC structure beginning in
CY 2002. Since April 2002, we have
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applied a uniform reduction, the APC
device offset amount for the associated
procedure, to payment for each of the
devices receiving transitional passthrough payments furnished on or after
April 1, 2002, and for which we have
determined that the pass-through device
resembles packaged predecessor
devices.
The law specifies two categories of
products that are eligible for transitional
pass-through payment, specifically
implantable devices and drugs and
biologicals. Historically, in calculating
the APC device offset amount that we
have used to evaluate whether a
candidate device category for passthrough status meets the cost
significance test, we have calculated an
amount that reflects the total packaged
device costs for all devices that are
included on the single bills mapping to
the specific APC. This APC device offset
amount is then also the amount by
which we would reduce the passthrough payment for a device if we
determine that the pass-through device
resembles packaged predecessor
devices.
In the case of drugs and biologicals,
we also have historically calculated a
single APC drug amount that reflects the
total packaged drug (including
radiopharmaceutical) costs for all drugs
and biologicals that are included on
claims mapping to a specific APC. This
is the amount that we have used to
evaluate whether a candidate drug or
biological for pass-through status meets
the cost significance test. However,
since CY 2008, we have had two major
policies for the packaged payment of
two categories of nonpass-through drugs
and biologicals, specifically those drugs
that are always packaged and those
drugs that may be packaged. The first
group of drugs and biologicals includes
diagnostic radiopharmaceuticals and
contrast agents, as well as implantable
biologicals beginning in CY 2009, which
we refer to as ‘‘policy-packaged’’ drugs.
The second group of drugs and
biologicals includes those drugs that are
subject to packaging based on their
estimated per day costs in relationship
to the annual OPPS drug packaging
threshold, which we refer to as
‘‘threshold-packaged’’ drugs. We are
clarifying that, for purposes of
determining whether a drug or
biological candidate for pass-through
status meets the cost significance test,
we use the appropriate ‘‘thresholdpackaged’’ drug amount or ‘‘policypackaged’’ drug amount to assess the
criteria, based on the group of drugs to
which the pass-through candidate drug
belongs. Similarly, for purposes of the
radiopharmaceutical offset policy, we
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68639
utilize the ‘‘policy-packaged’’ drug
amount to determine the appropriate
APC radiopharmaceutical offset. In the
case of APCs that contain nuclear
medicine procedures, we expect that
this ‘‘policy-packaged’’ drug amount
would consist almost entirely of the
costs of diagnostic
radiopharmaceuticals. It is this amount
by which we would both assess a
candidate pass-through diagnostic
radiopharmaceutical’s cost for purposes
of cost significance according to
§ 419.64(b)(2) and reduce the diagnostic
radiopharmaceutical pass-through
payment if we determine that the passthrough diagnostic radiopharmaceutical
resembles packaged predecessor
radiopharmaceuticals.
As we stated in the CY 2009 OPPS/
ASC proposed rule (73 FR 41483),
because of our proposed CY 2009
packaging policy for diagnostic
radiopharmaceuticals, we believe that a
payment offset policy, as discussed
previously for implantable devices, is
now appropriate for diagnostic
radiopharmaceuticals approved for
pass-through payment status. An APC
‘‘policy-packaged’’ offset amount would
allow us to avoid duplicate payment for
the diagnostic radiopharmaceutical
portion of a nuclear medicine procedure
by providing a diagnostic
radiopharmaceutical pass-through
payment that represents the difference
between the payment rate for the
diagnostic radiopharmaceutical and the
packaged predecessor drug costs
included in the procedural APC
payment for the nuclear medicine
procedure. In accordance with section
1833(t)(6)(D)(i) of the Act, the otherwise
applicable OPPS payment amount for
the diagnostic radiopharmaceutical
would roughly be the median cost of the
‘‘policy-packaged’’ drug costs for the
predecessor radiopharmaceuticals that
are packaged into the payment for the
nuclear medicine procedure. We
indicated in the proposed rule that this
APC ‘‘policy-packaged’’ drug offset
amount, similar to the longstanding
device offset policy for payment of
implantable devices with pass-through
status, would be calculated based on a
percentage of the APC payment for a
nuclear medicine procedure attributable
to the costs of ‘‘policy-packaged’’ drugs,
including diagnostic
radiopharmaceuticals, as reflected in the
most recent complete year of hospital
outpatient claims data.
Beginning in CY 2009, as we
proposed, we would review each new
pass-through diagnostic
radiopharmaceutical on a case-by-case
basis, to determine whether
radiopharmaceutical costs associated
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with predecessors of the new product
are packaged into the existing APC
structure for those nuclear medicine
procedures with which the new
radiopharmaceutical would be used.
This methodology is consistent with our
current policy for new device categories.
Because of the nature of diagnostic
radiopharmaceuticals and the small
number of nuclear medicine procedures
to which they are typically closely
linked, we believe that we would
usually find costs for predecessor
diagnostic radiopharmaceuticals
packaged into the existing APC payment
for the nuclear medicine procedures
associated with the new product. In
these cases, we would deduct the
uniform, applicable APC ‘‘policypackaged’’ drug offset amount for the
associated nuclear medicine procedure
from the pass-through payment for the
diagnostic radiopharmaceutical. As we
proposed, we would establish the
pertinent APC offset amounts for newly
eligible pass-through diagnostic
radiopharmaceuticals quarterly through
the transmittals that implement the
quarterly OPPS updates and update
these offset amounts annually, as
needed.
Not all CY 2007 OPPS claims for
nuclear medicine procedures include
radiolabeled products because
radiopharmaceutical claims processing
edits were implemented beginning in
CY 2008. These claims processing edits
require that a radiolabeled product be
included on all claims for nuclear
medicine procedures to ensure that we
capture the full costs of the packaged
diagnostic radiopharmaceuticals used
for the procedures in future ratesetting.
Because our most recent claims data at
the time of issuance of the proposed
rule did not yet reflect the results of
these edits, we proposed to use only
those claims that pass the
radiopharmaceutical edits to set rates
for nuclear medicine procedures in CY
2009, as discussed in section II.A.2.d.(5)
of this final rule with comment period.
We proposed to use the same claims to
calculate the APC ‘‘policy-packaged’’
drug offset amounts.
Comment: Some commenters
supported the proposed diagnostic
radiopharmaceutical offset policy
described in the CY 2009 OPPS/ASC
proposed rule. These commenters
supported CMS’ proposal to apply an
offset for pass-through diagnostic
radiopharmaceuticals as it would ensure
that duplicate payment would not be
made for diagnostic
radiopharmaceuticals by removing the
radiopharmaceutical payment amount
that is already packaged into the
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payment for the associated nuclear
medicine procedure.
Other commenters were concerned
that the pass-through payment amount
for diagnostic radiopharmaceuticals
would be significantly reduced if the
proposed offset policy is applied. Some
of these commenters believed that the
true costs of currently used diagnostic
radiopharmaceuticals are not included
in the payment for associated APCs
because of hospital billing practices,
and that using this unreliable hospital
claims information to establish an offset
amount would provide inadequate
payment for the pass-through diagnostic
radiopharmaceutical.
Some commenters suggested
calculating a diagnostic
radiopharmaceutical offset on a pernuclear medicine procedure basis. That
is, these commenters suggested that the
diagnostic radiopharmaceutical offset
should be calculated for individual CPT
codes, rather than for all procedures
assigned to an APC, in order to more
specifically identify the diagnostic
radiopharmaceutical costs attributable
to a specific procedure.
Many commenters asked for further
clarification regarding the calculation of
the offsets and requested that CMS make
the APC radiopharmaceutical offset
amounts for the year publicly available
for review by stakeholders.
Response: As we stated in the CY
2009 OPPS/ASC proposed rule (73 FR
41483), because of our proposed CY
2009 packaging policy for diagnostic
radiopharmaceuticals, we believe that a
payment offset policy is appropriate for
diagnostic radiopharmaceuticals
approved for pass-through payment. An
APC ‘‘policy-packaged’’ drug offset
amount applied to diagnostic
radiopharmaceuticals allows us to avoid
duplicate payment for the diagnostic
radiopharmaceutical portion of a
nuclear medicine procedure by
providing a diagnostic
radiopharmaceutical pass-through
payment that represents the difference
between the payment rate for the
diagnostic radiopharmaceutical and the
packaged radiopharmaceutical cost
included in the procedural APC
payment for the nuclear medicine
procedure. As noted above, we
distinguish between ‘‘policy-packaged’’
drugs and biologicals where a whole
category of drugs or biologicals is
packaged, regardless of an individual
product’s cost (such as diagnostic
radiopharmaceuticals, contrast agents,
and biologicals that are implantable
only), from those ‘‘threshold-packaged’’
drugs and biologicals that are packaged
because of the drug packaging
threshold, in order to provide a more
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accurate offset estimate for diagnostic
radiopharmaceutical pass-through
purposes.
We do not believe it would be
appropriate to calculate the offset
amount at the nuclear medicine
procedure-specific level because OPPS
payment for procedures is provided by
APCs that group procedures that share
clinical and resource similarities.
Therefore, similar to our pass-through
device offset policy, we will calculate
the offset amount for pass-through
diagnostic radiopharmaceuticals at the
level of APCs because the APC reflects
the OPPS payment for the specific
nuclear medicine procedure in which
the pass-through diagnostic
radiopharmaceutical is used.
The use of a pass-through offset
amount is consistent with our current
policy for new device categories.
Because of the nature of diagnostic
radiopharmaceuticals and the small
number of nuclear medicine procedures
to which they are typically closely
linked, contrary to the commenters’
concerns, we believe that we will
usually find costs for predecessor
diagnostic radiopharmaceuticals
packaged into the existing APC payment
for the nuclear medicine procedures
associated with the new product. As we
proposed, we will establish the
pertinent APC ‘‘policy-packaged’’ drug
amounts for newly eligible pass-through
diagnostic radiopharmaceuticals
quarterly through the transmittals that
implement the quarterly OPPS updates
and update these offset amounts
annually, as needed.
We will post annually on the CMS
Web site at: https://www.cms.hhs.gov/
HospitalOutpatientPPS/
01_overview.asp, a file that contains the
three offset amounts that will be used
for that year for purposes of evaluating
cost significance for candidate passthrough device categories and drugs and
biologicals, including diagnostic
radiopharmaceuticals, and establishing
any appropriate APC offset amounts.
Specifically, the file will provide, for
every OPPS clinical APC, the amounts
and percentages of APC payment
associated with packaged implantable
devices, ‘‘policy-packaged’’ drugs and
biologicals, and ‘‘threshold-packaged’’
drugs and biologicals.
Comment: Several commenters
recommended that CMS provide
extensive education for Medicare
contractors (fiscal intermediaries and A/
B MACs) on how the offset should be
applied and how payment should be
made for pass-through diagnostic
radiopharmaceuticals. One commenter
requested that CMS provide hospitalspecific education in order to prevent
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hospitals from charging beneficiaries for
any perceived difference in payment as
a result of the offset, especially in
situations where the beneficiary has
been given an Advance Beneficiary
Notice (ABN).
Response: Our standard process is to
release instructions in the January
quarterly transmittal related to the
updated OPPS policies finalized in the
annual final rule with comment period.
We will continue to provide
instructions to our Medicare contractors
on our policy changes in this manner,
including the offset policy for diagnostic
radiopharmaceuticals with pass-through
status included in this final rule with
comment period. Determination of offset
eligibility and payment is determined in
the OPPS PRICER, the pricing utility for
OPPS payment. Medicare contractors
have been successfully applying the
offset policy through implementation of
the OPPS PRICER for pass-through
implantable devices for many years, and
we do not expect that contractors will
have difficulty providing appropriate
payment for those pass-through
diagnostic radiopharmaceuticals for
which we have identified a drug offset
amount.
In addition, we remind readers that
packaged items and services are covered
and paid under the OPPS. Hospitals
may only provide an ABN when the
hospital expects that the service
provided to the beneficiary will not be
covered under any Medicare benefit
category. Although hospitals do not
receive separate payment from Medicare
for packaged items and supplies,
hospitals may not bill beneficiaries
separately for any packaged items and
supplies because those costs are
recognized and paid within the OPPS
payment rate for the associated
procedure or service. Transmittal A–01–
133, issued on November 20, 2001,
explains in greater detail the rules
regarding payment for packaged
services. We believe that the vast
majority of hospitals understand the
correct use of ABNs, and that situations
such as the one suggested the
commenter would be rare. For more
information on mandatory and
voluntary uses of ABNs, we refer
readers to the Medicare Claims
Processing Manual, Pub. 100–4, Chapter
30, Sections 50.3.1 and 50.3.2.
Comment: One commenter requested
that CMS not apply a pass-through
payment offset to pass-through contrast
agents unless proper notice was
provided and there was an opportunity
for public comment. The commenter
noted that the offset methodology would
likely be unnecessary for contrast
agents, as most contrast agents have per
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day cost estimates of under $60 and,
therefore, are not likely to pass the cost
significance test required for passthrough drug status.
Response: We believe the commenter
misunderstood our proposed offset
policy. We did not make a proposal to
apply a pass-through offset methodology
for contrast agents, and we are not
implementing an offset for pass-through
contrast agents for CY 2009.
After consideration of the public
comments received, we are finalizing
our proposal to apply an offset
methodology to diagnostic
radiopharmaceuticals that are granted
pass-through status for CY 2009 without
modification. Specifically, the APC
‘‘policy-packaged’’ drug offset fraction
for APCs containing nuclear medicine
procedures in CY 2009 is: 1 minus (the
cost from single procedure claims in the
APC that pass nuclear medicine
procedure-to-radiolabeled product edits
after removing the costs for ‘‘policypackaged’’ drugs and biologicals
divided by the cost from single
procedure claims in the APC that pass
the claims processing edits). To
determine the actual APC offset amount
for diagnostic radiopharmaceuticals
granted pass-through status in CY 2009,
we multiply the resulting fraction by the
CY 2009 APC payment amount for the
procedure with which the new
diagnostic radiopharmaceutical is used
and, accordingly, reduce the APC
payment associated with the transitional
pass-through diagnostic
radiopharmaceutical by this amount.
We will post annually on the CMS
Web site at: https://www.cms.hhs.gov/
HospitalOutpatientPPS/
01_overview.asp, a file that contains the
three offset amounts that will be used
for that year for purposes of evaluating
cost significance for candidate passthrough device categories and drugs and
biologicals, including diagnostic
radiopharmaceuticals, and establishing
any appropriate APC offset amounts.
Specifically, the file will provide, for
every OPPS clinical APC, the amounts
and percentages of APC payment
associated with packaged implantable
devices, ‘‘policy-packaged’’ drugs and
biologicals, and ‘‘threshold-packaged’’
drugs and biologicals.
Table 25 displays the APCs to which
nuclear medicine procedures are
assigned in CY 2009 and for which we
expect that an APC offset could be
applicable in the case of new diagnostic
radiopharmaceuticals with pass-through
status.
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68641
TABLE 25—APCS TO WHICH NUCLEAR
MEDICINE PROCEDURES ARE ASSIGNED FOR CY 2009
Final CY 2009
APC
CY 2009 APC title
0307 ...................
Myocardial Positron Emission Tomography (PET)
imaging.
Non-Myocardial Positron
Emission Tomography
(PET) imaging.
Level II Cardiac Imaging.
Level II Pulmonary Imaging.
Level I Non-imaging Nuclear Medicine.
Level I Endocrine Imaging.
Level II Endocrine Imaging.
Level II Non-imaging Nuclear Medicine.
Hematologic Processing &
Studies.
Hepatobiliary Imaging.
GI Tract Imaging.
Bone Imaging.
Vascular Imaging.
Level I Cardiac Imaging.
Hematopoietic Imaging.
Level I Pulmonary Imaging.
Level II Nervous System
Imaging.
Level I Nervous System
Imaging.
Renal and Genitourinary
Studies.
Level I Tumor/Infection
Imaging.
Level III Tumor/Infection
Imaging.
Level II Tumor/Infection
Imaging.
0308 ...................
0377 ...................
0378 ...................
0389 ...................
0390 ...................
0391 ...................
0392 ...................
0393 ...................
0394
0395
0396
0397
0398
0400
0401
...................
...................
...................
...................
...................
...................
...................
0402 ...................
0403 ...................
0404 ...................
0406 ...................
0408 ...................
0414 ...................
B. OPPS Payment for Drugs, Biologicals,
and Radiopharmaceuticals Without
Pass-Through Status
1. Background
Under the CY 2008 OPPS, we
currently pay for drugs, biologicals, and
radiopharmaceuticals that do not have
pass-through status in one of two ways:
Packaged payment into the payment for
the associated service; or separate
payment (individual APCs). We
explained in the April 7, 2000 OPPS
final rule with comment period (65 FR
18450) that we generally package the
cost of drugs and radiopharmaceuticals
into the APC payment rate for the
procedure or treatment with which the
products are usually furnished.
Hospitals do not receive separate
payment from Medicare for packaged
items and supplies, and hospitals may
not bill beneficiaries separately for any
packaged items and supplies whose
costs are recognized and paid within the
national OPPS payment rate for the
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associated procedure or service.
(Transmittal A–01–133, issued on
November 20, 2001, explains in greater
detail the rules regarding separate
payment for packaged services.)
Packaging costs into a single aggregate
payment for a service, procedure, or
episode-of-care is a fundamental
principle that distinguishes a
prospective payment system from a fee
schedule. In general, packaging the costs
of items and services into the payment
for the primary procedure or service
with which they are associated
encourages hospital efficiencies and
also enables hospitals to manage their
resources with maximum flexibility.
Section 1833(t)(16)(B) of the Act, as
added by section 621(a)(2) of Public
Law 108–173, sets the threshold for
establishing separate APCs for drugs
and biologicals at $50 per
administration for CYs 2005 and 2006.
Therefore, for CYs 2005 and 2006, we
paid separately for drugs, biologicals,
and radiopharmaceuticals whose per
day cost exceeded $50 and packaged the
costs of drugs, biologicals, and
radiopharmaceuticals whose per day
cost was equal to or less than $50 into
the procedures with which they were
billed. For CY 2007, the packaging
threshold for drugs, biologicals, and
radiopharmaceuticals that were not new
and did not have pass-through status
was established at $55. For CY 2008, the
packaging threshold for drugs,
biologicals, and radiopharmaceuticals
that are not new and do not have passthrough status was established at $60.
The methodology used to establish the
$55 threshold for CY 2007, the $60
threshold for CY 2008, and our
proposed and final approach for CY
2009 are discussed in more detail in
section V.B.2.b. of this final rule with
comment period.
In addition, since CY 2005, we have
provided an exemption to this
packaging determination for oral and
injectable 5HT3 anti-emetic products.
We discuss in section V.B.2. of this final
rule with comment period our proposed
and final CY 2009 payment policy for
these anti-emetic products.
2. Criteria for Packaging Payment for
Drugs, Biologicals and
Radiopharmaceuticals
dwashington3 on PRODPC61 with RULES2
a. Background
As indicated above, in accordance
with section 1833(t)(16)(B) of the Act,
the threshold for establishing separate
APCs for payment of drugs and
biologicals was set to $50 per
administration during CYs 2005 and
2006. In CY 2007, we used the fourth
quarter moving average Producer Price
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Index (PPI) levels for prescription
preparations to trend the $50 threshold
forward from the third quarter of CY
2005 (when the Public Law 108–173
mandated threshold became effective) to
the third quarter of CY 2007. We then
rounded the resulting dollar amount to
the nearest $5 increment in order to
determine the CY 2007 threshold
amount of $55. Using the same
methodology as that used in CY 2007
(which is discussed in more detail in
the CY 2007 OPPS/ASC final rule with
comment period (71 FR 68085 through
68086)), for CY 2008 we set the
packaging threshold for establishing
separate APCs for drugs and biologicals
at $60.
In addition, in CY 2008 we began
distinguishing between diagnostic and
therapeutic radiopharmaceuticals for
payment purposes under the OPPS. We
finalized a policy that identified
diagnostic radiopharmaceuticals as
those Level II HCPCS codes that include
the term ‘‘diagnostic’’ along with a
radiopharmaceutical in their long code
descriptors. Therapeutic
radiopharmaceuticals were identified as
those Level II HCPCS codes that have
the term ‘‘therapeutic’’ along with a
radiopharmaceutical in their long code
descriptors. We again noted that all
radiopharmaceutical products fall into
one category or the other; their use as
a diagnostic radiopharmaceutical or
therapeutic radiopharmaceutical is
mutually exclusive.
b. Drugs, Biologicals, and Therapeutic
Radiopharmaceuticals
Following the CY 2007 methodology
for CY 2009, we used updated fourth
quarter moving average PPI levels to
trend the $50 threshold forward from
the third quarter of CY 2005 to the third
quarter of CY 2009 and again rounded
the resulting dollar amount ($61.25) to
the nearest $5 increment, which yielded
a figure of $60. In performing this
calculation, we used the most up-to-date
forecasted, quarterly PPI estimates from
CMS’ Office of the Actuary (OACT). As
actual inflation for past quarters
replaced forecasted amounts, the PPI
estimates for prior quarters have been
revised (compared with those used in
the CY 2007 OPPS/ASC final rule with
comment period) and have been
incorporated into our calculation. Based
on the calculations described above, in
the proposed rule, we proposed a
packaging threshold for CY 2009 of $60.
During its March 2008 meeting, the APC
Panel made a recommendation
supporting CMS’ current methodology
of adjusting the threshold dollar amount
for packaging drugs and biologicals on
the basis of the PPI for prescription
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drugs. (For a more detailed discussion
of the OPPS drug packaging threshold
and the use of the PPI for prescription
drugs, we refer readers to the CY 2007
OPPS/ASC final rule with comment
period (71 FR 68085 through 68086).)
For the fourth year, we proposed to
continue exempting the oral and
injectable forms of 5HT3 anti-emetics
products from packaging, thereby
making separate payment for all of these
products. As we stated in the CY 2005
OPPS final rule with comment period
(69 FR 65779 through 65780), it is our
understanding that chemotherapy is
very difficult for many patients to
tolerate, as the side effects are often
debilitating. In order for Medicare
beneficiaries to achieve the maximum
therapeutic benefit from thermotherapy
and other therapies with side effects of
nausea and vomiting, anti-emetic use is
often an integral part of the treatment
regiment. In the proposed rule, we
stated our belief that we should
continue to ensure that Medicare
payment rules do not impede a
beneficiary’s access to the particular
anti-emetic that is most effective for him
or her, as determined by the beneficiary
and the treating physician.
Comment: Several commenters
supported CMS’ proposal to maintain
the packaging threshold at $60 for CY
2009. One commenter expressed
concern that annual increases may limit
patient access to drugs in the HOPD
setting.
A few commenters recommended a
variety of alternatives for CMS to
consider, including: (1) Eliminating the
drug packaging threshold and provide
separate payment for all drugs; (2)
permanently establishing the packaging
threshold at $60; or (3) not increasing
the drug packaging threshold for CY
2009. Some commenters believed that
eliminating the drug packaging
threshold would allow for parity in drug
payment between the HOPD setting and
the physician’s office setting and,
therefore, would provide transparency
for beneficiaries who are comparing the
costs of care between the two settings.
In addition, these commenters claimed
that eliminating the drug packaging
threshold would increases the accuracy
of hospital claims by providing an
incentive to hospitals to correctly code
for all drugs. Several commenters noted
that the current packaging threshold
discourages hospitals from using less
costly packaged drugs because these
drugs are not paid separately in the
HOPD setting. Other comments believed
that setting a permanent drug packaging
threshold would eliminate the potential
for incremental changes in the threshold
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that could adversely affect hospital
payment.
Response: As fully discussed in the
CY 2008 OPPS/ASC final rule with
comment period (72 FR 66757–66758),
we continue to believe that unpackaging
payment for all drugs, biologicals, and
radiopharmaceuticals is inconsistent
with the concept of a prospective
payment system and that such a change
could create an additional reporting
burden for hospitals. The OPPS and the
MPFS that applies to physician’s office
services are fundamentally different
payment systems with essential
differences in their payment policies
and structure. Specifically, the OPPS is
a prospective payment system, based on
the concept of payment for groups of
services that share clinical and resource
characteristics. Payment is made under
the OPPS according to prospectively
established payment rates that are
related to the relative costs of hospital
resources for services. The MPFS is a fee
schedule that generally provides
payment for each individual component
of a service. Consistent with the MPFS
approach, separate payment is made for
each drug provided in the physician’s
office, but the OPPS packages payment
for certain drugs into the associated
procedure payments for the APC group.
Because of the different payment
policies, differences in the degrees of
packaged payment and separate
payment between these two systems are
only to be expected. In general, we do
not believe that our packaging
methodology under the OPPS results in
limited beneficiary access to drug
administration services because
packaging is a fundamental component
of a prospective payment system that
accounts for the cost of certain items
and services in larger payment bundles,
recognizing that some clinical cases may
be more costly and others less costly but
that, on average, OPPS payment is
appropriate for the services provided.
We note that, in CYs 2005 and 2006,
the statutorily mandated drug packaging
threshold was set at $50, and we believe
that it is currently appropriate to
continue a modest drug packaging
threshold for the CY 2009 OPPS for the
reasons set forth below. As stated in the
CY 2007 OPPS/ASC final rule with
comment period (71 FR 68086), we
believe that packaging certain items is a
fundamental component of a
prospective payment system, that
packaging these items does not lead to
beneficiary access issues and does not
create a problematic site of service
differential, that the packaging
threshold is reasonable based on the
initial establishment in law of a $50
threshold for the CY 2005 OPPS, that
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updating the $50 threshold is consistent
with industry and government practices,
and that the PPI for prescription
preparations is an appropriate
mechanism to gauge Part B drug
inflation. Therefore, because of our
continued belief that packaging is a
fundamental component of a
prospective payment system that
contributes to important flexibility and
efficiency in the delivery of high quality
hospital outpatient services, we are not
adopting the commenters’
recommendations to pay separately for
all drugs, biologicals, and
radiopharmaceuticals for CY 2009 or to
eliminate or to freeze the packaging
threshold at $60.
For purposes of this final rule with
comment period, we again followed the
CY 2007 methodology for CY 2009 and
used updated fourth quarter moving
average PPI levels to trend the $50
threshold forward from the third quarter
of CY 2005 to the third quarter of CY
2009 and again rounded the resulting
dollar amount ($61.95) to the nearest $5
increment, which continued to yield a
figure of $60. In performing this
calculation, we used the most up-to-date
forecasted, quarterly PPI estimates from
CMS’ OACT.
After consideration of the public
comments received, we are accepting
the March 2008 APC Panel
recommendation to continue to use our
CY 2007 methodology of updating
annually the OPPS packaging threshold
for drugs and biologicals by the PPI for
prescription drugs, and we are finalizing
our CY 2009 proposed packaging
threshold of $60, without modification,
calculated according to the threshold
update methodology that we began
applying in CY 2007.
Comment: Several commenters
supported the proposal to continue to
exempt the oral and injectable forms of
5HT3 anti-emetic products that were
listed in Table 23 of the proposed rule
(reprinted as Table 26 below) from
packaging, thereby making separate
payment for all of the 5HT3 anti-emetic
products.
In addition, several commenters
requested that CMS apply the same
principle to other groups of drugs in
order to equalize payment
methodologies across drugs in the same
clinical group. One commenter
suggested that CMS institute a similar
policy for anticoagulant therapies
provided in the HOPD. This commenter
noted that there are several drug
treatments for deep vein thrombosis,
and that one drug treatment is paid
separately while others are packaged.
The commenter was concerned that
these different payment methodologies
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68643
provide hospitals an incentive to use the
separately paid drugs, although the
commenter noted that treatments are not
interchangeable and that benefits vary
by patient.
Another commenter suggested that
CMS expand the packaging threshold
exemption to antineoplastic agents and
other anticancer therapeutic agents. The
commenter believed that anticancer
agents, as a class, are not appropriate for
packaging because of the toxicity, side
effects, interactions with other drugs,
and level of patient specificity
associated with these therapies.
Therefore, the commenter requested that
CMS not apply the drug packaging
threshold for anticancer agents and
provide separate payment for all of
these products in CY 2009.
Response: We appreciate the support
for our proposal to continue exempting
the 5HT3 anti-emetic products from our
packaging determination. We note that
as we continue to explore the possibility
of additional encounter-based or
episode-based payment in future years,
and as we first discussed in the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66757), we may consider
additional options for packaging drug
payment in the future. We also note that
if we were to increase the OPPS drug
packaging threshold, we might no
longer need to make a special
exemption for these products because
all of the products might be packaged
under such an approach. Similarly, a
higher drug packaging threshold could
eliminate existing disparities in
payment methodologies for other drug
groups and provide similar methods of
payment across items in a group.
Nevertheless, while we may be
interested in alternative threshold
methodologies for future ratesetting
purposes, we realize that there are
existing situations where drugs in a
particular category vary in their
payment treatment under the OPPS,
with some drugs packaged and other
separately paid. We believe the
challenges associated with categorizing
drugs to assess them for difference in
their OPPS payment methodologies are
significant, and we are not convinced
that ensuring the same payment
treatment for all drugs in other drug
categories is essential at this time,
beyond the proposal we made for 5HT3
antiemetics. Therefore, we do not
believe that it would be appropriate at
this time to take any additional steps to
ensure that all drugs in a specific
category, including anticoagulants and
antineoplastic agents, are all separately
paid (or, alternatively, are all packaged),
as requested by some commenters.
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drug payments in the physician’s office
setting, effective April 1, 2008. For
items that did not have an ASP-based
payment rate, we used their mean unit
cost derived from the CY 2007 hospital
claims data to determine their proposed
per day cost. We proposed to package
items with a per day cost less than or
equal to $60 and proposed to identify
TABLE 26—ANTI-EMETICS EXEMPTED items with a per day cost greater than
FROM CY 2009 OPPS DRUG PACK- $60 as separately payable. Consistent
with our past practice, we crosswalked
AGING THRESHOLD
historical OPPS claims data from the CY
2007 HCPCS codes that were reported to
CY 2009
CY 2009 short descriptor
HCPCS code
the CY 2008 HCPCS codes that we
displayed in Addendum B to the
J1260 ........... Dolasetron mesylate.
proposed rule for payment in CY 2009.
J1626 ........... Granisetron hcl injection.
Our policy during previous cycles of
J2405 ........... Ondansetron hcl injection.
the OPPS has been to use updated ASP
J2469 ........... Palonosetron hcl.
and claims data to make final
Q0166 .......... Granisetron hcl 1 mg oral.
determinations of the packaging status
Q0179 .......... Ondansetron hcl 8 mg oral.
of drugs, biologicals, and
Q0180 .......... Dolasetron mesylate oral.
radiopharmaceuticals for the final rule
To determine their CY 2009 packaging with comment period. We note that it is
status for the proposed rule, we
also our policy to make an annual
calculated the per day cost of all drugs,
packaging determination only when we
biologicals, and therapeutic
develop the OPPS/ASC final rule for the
radiopharmaceuticals that had a HCPCS update year. As indicated in the
code in CY 2007 and were paid (via
proposed rule (73 FR 41485), only items
packaged or separate payment) under
that are identified as separately payable
the OPPS using claims data from
in this final rule with comment period
January 1, 2007, to December 31, 2007.
are subject to quarterly updates. For our
In order to calculate the per day costs
calculation of per day costs of drugs and
for drugs, biologicals, and therapeutic
biologicals in this CY 2009 OPPS/ASC
radiopharmaceuticals to determine their final rule with comment period, as we
packaging status in CY 2009, as we
proposed, we used ASP data from the
proposed, we used the methodology that first quarter of CY 2008, which is the
was described in detail in the CY 2006
basis for calculating payment rates for
OPPS proposed rule (70 FR 42723
drugs and biologicals in the physician’s
through 42724) and finalized in the CY
office setting using the ASP
2006 OPPS final rule with comment
methodology, effective July 1, 2008,
period (70 FR 68636 through 70 FR
along with updated hospital claims data
68638).
from CY 2007. As proposed, we note
To calculate the CY 2009 proposed
that we also used these data for budget
rule per day costs, we used an estimated neutrality estimates and impact analyses
payment rate for each drug and
for this CY 2009 OPPS/ASC final rule
biological of ASP+4 percent (which is
with comment period. As proposed,
the payment rate we proposed for
payment rates for separately payable
separately payable drugs and biologicals drugs and biologicals included in
in CY 2009, as discussed in more detail
Addenda A and B to this final rule with
in section V.B.3.b. of this final rule with comment period are based on ASP data
comment period). We used the
from the second quarter of CY 2008,
manufacturer submitted ASP data from
which are the basis for calculating
the fourth quarter of CY 2007 (data that
payment rates for drugs and biologicals
were used for payment purposes in the
in the physician’s office setting using
physician’s office setting, effective April the ASP methodology, effective October
1, 2008) to determine the proposed rule
1, 2008. Furthermore, as proposed, these
per day cost.
rates will be updated in the January
As is our standard methodology, for
2009 OPPS update, based on the most
CY 2009, we proposed to use payment
recent ASP data to be used for
rates based on the ASP data from the
physician’s office and OPPS payment as
fourth quarter of CY 2007 for budget
of January 1, 2009.
neutrality estimates, packaging
We note that we proposed to use
determinations, impact analyses, and
hospital claims data to establish the
completion of Addenda A and B to the
packaging status of therapeutic
proposed rule because these were the
radiopharmaceuticals in our CY 2009
most recent data available for use at the
OPPS/ASC proposed rule. As discussed
time of development of the proposed
previously, after issuance of the CY
rule. These data were also the basis for
2009 OPPS/ASC proposed rule, Public
dwashington3 on PRODPC61 with RULES2
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to again exempt the oral
and injectable forms of 5HT3 antiemetic
products listed in Table 26 below from
our drug packaging methodology for CY
2009.
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Law 110–275 was enacted and, as a
result, we are required to provide
payment for therapeutic
radiopharmaceuticals at charges
adjusted to cost for CY 2009. Therefore,
we are not using hospital claims data to
determine the packaging status of
therapeutic radiopharmaceuticals based
on their per day costs. Rather, all
therapeutic radiopharmaceuticals will
be paid separately in CY 2009 at
hospital charges adjusted to cost.
Consequently, the packaging status for
some drugs and biologicals in this CY
2009 OPPS/ASC final rule with
comment period using the updated data
is different from the same drug’s
packaging status determined based on
the data used for the proposed rule.
Under such circumstances, as we
proposed, we are applying the following
policies to these drugs and biologicals
whose relationship to the $60 threshold
changed based on the final updated
data:
• Drugs and biologicals that were
paid separately in CY 2008 and that
were proposed for separate payment in
CY 2009, and then have per day costs
equal to or less than $60, based on the
updated ASPs and hospital claims data
used for this CY 2009 final rule with
comment period, will continue to
receive separate payment in CY 2009.
• Drugs and biologicals that were
packaged in CY 2008 and that were
proposed for separate payment in CY
2009, and then have per day costs equal
to or less than $60, based on the
updated ASPs and hospital claims data
used for this CY 2009 final rule with
comment period, will remain packaged
in CY 2009.
• Drugs and biologicals for which we
proposed packaged payment in CY 2009
but then have per day costs greater than
$60, based on the updated ASPs and
hospital claims data used for this CY
2009 final rule with comment period,
will receive separate payment in CY
2009.
We note that HCPCS code J8510
(Busulfan; oral, 2 mg) was paid
separately in CY 2008 and was proposed
for separate payment in CY 2009, but
had a final per day cost of
approximately $57, which is less than
the $60 threshold, based on the updated
ASPs and hospital claims data used for
this CY 2009 final rule with comment
period. HCPCS code J8510 will continue
to receive separate payment in CY 2009
according to the established
methodology set forth above.
In addition, there were several drugs
and biologicals that we proposed to
package in the proposed rule and that
now have per day costs greater than $60
using updated ASPs and all of the
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hospital claims data from CY 2007 used
for this final rule with comment period.
In accordance with our established
policy for such cases, for CY 2009 we
will pay for these drugs and biologicals
separately. Table 27 lists the drugs and
biologicals that were proposed as
packaged, but that will be paid
separately in CY 2009. We note that for
CY 2009, the CMS HCPCS Workgroup
has established two new codes for the
products that were previously assigned
to HCPCS code J7341 (Dermal
(substitute) tissue of nonhuman origin,
with or without other bioengineered or
processed elements, with metabolically
active elements, per square centimeter)
in CY 2008. HCPCS code J7341 was
proposed to be packaged for CY 2009
but updated final rule data indicate a
per day cost of over the $60 drug
packaging threshold. As is our standard
methodology, we are establishing
separate payment for both of the new
CY 2009 HCPCS codes, Q4102 (Skin
substitute, Oasis wound matrix, per
square centimeter) and Q4103 (Skin
substitute, Oasis burn matrix, per square
centimeter), as their predecessor code
would have been separately payable in
CY 2009.
TABLE 27—DRUGS AND BIOLOGICALS
PROPOSED AS PACKAGED BUT WITH
FINAL PER DAY COSTS ABOVE $60,
FOR WHICH SEPARATE PAYMENT
WILL BE MADE IN CY 2009
CY 2009
HCPCS code
CY 2009 short descriptor
J0630 ...........
J1212 ...........
Calcitonin salmon injection.
Dimethyl sulfoxide 50% 50
ML.
Pentastarch 10% solution.
Pentobarbital sodium inj.
Sincalide injection.
Somatrem injection.
Inj streptokinase /250000 IU.
Urea injection.
Hyaluronidase recombinant.
Oasis wound matrix skin sub.
Oasis burn matrix skin sub.
Nabilone oral.
Plicamycin (mithramycin) inj.
Mitomycin 5 MG inj.
Mitomycin 20 MG inj.
Mitomycin 40 MG inj.
Valrubicin injection.
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J2513
J2515
J2805
J2940
J2995
J3350
J3473
Q4102
Q4103
J8650
J9270
J9280
J9290
J9291
J9357
...........
...........
...........
...........
...........
...........
...........
..........
..........
...........
...........
...........
...........
...........
...........
c. Payment for Diagnostic
Radiopharmaceuticals and Contrast
Agents
As established in the CY 2008 final
rule with comment period (72 FR 66766
through 66768), we began packaging
payment for all diagnostic
radiopharmaceuticals and contrast
agents into the payment for the
associated procedure, regardless of their
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per day costs. Packaging costs into a
single aggregate payment for a service,
encounter, or episode-of-care is a
fundamental principle that
distinguishes a prospective payment
system from a fee schedule. In general,
packaging the costs of items and
services into the payment for the
primary procedure or service with
which they are associated encourages
hospital efficiencies and also enables
hospitals to manage their resources with
maximum flexibility. Prior to CY 2008,
we noted that the proportion of drugs,
biologicals, and radiopharmaceuticals
that were separately paid under the
OPPS had increased in recent years, a
pattern that we also observed for
procedural services under the OPPS.
Our final CY 2008 policy that packaged
payment for all nonpass-through
diagnostic radiopharmaceuticals and
contrast agents, regardless of their per
day costs, contributed significantly to
expanding the size of the OPPS payment
bundles and is consistent with the
principles of a prospective payment
system.
During the March 2008 meeting of the
APC Panel, the APC Panel
recommended that CMS continue to
package payment for diagnostic
radiopharmaceuticals for CY 2009 and
present data at the first CY 2009 meeting
on the usage and frequency, geographic
distribution, and size and type of
hospitals performing studies using
radioisotopes in order to ensure that
access is preserved for Medicare
beneficiaries. We discuss our response
to these APC Panel recommendations
along with public comments we
received in response to our proposed
rule below.
Comment: Several commenters
disagreed with the proposal to
distinguish between diagnostic and
therapeutic radiopharmaceuticals for
payment purposes under the OPPS.
Some of these commenters noted that
CMS’ identification of HCPCS codes
A9542 (Indium In-111 ibritumomab
ituxetan, diagnostic, per study dose, up
to 5 millicuries) and A9544 (Iodine I–
131 tositumomab, diagnostic, per study
dose) as diagnostic
radiopharmaceuticals was inappropriate
because these radiopharmaceuticals
function as dosimetric
radiopharmaceuticals, and they have
higher than average costs associated
with their acquisition and significant
compounding costs as compared to
other nuclear medicine imaging agents.
A few commenters explained that these
are radiopharmaceutical products that
are used as part of a therapeutic regimen
and, therefore, should be considered
therapeutic for OPPS payment purposes.
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68645
Several commenters disagreed with
CMS’ statement that
radiopharmaceuticals are either
diagnostic or therapeutic, and that they
are mutually exclusive. These
commenters noted that some products
serve as ‘‘theranostics’’ and can be used
both as a diagnostic and a therapeutic
radiopharmaceutical.
Response: As discussed above, for the
CY 2008 OPPS/ASC final rule with
comment period and the CY 2009
OPPS/ASC proposed rule, we classified
each radiopharmaceutical into one of
two groups according to whether its
long descriptor contained the term
‘‘diagnostic’’ or ‘‘therapeutic.’’ HCPCS
codes A9542 and A9544 both contain
the term ‘‘diagnostic’’ in their long code
descriptors. Therefore, according to this
methodology, we continue to classify
them as diagnostic for the purposes of
OPPS payment. While we understand
that these items are provided in
conjunction with additional supplies,
imaging tests, and therapeutic
radiopharmaceuticals for patients
already diagnosed with cancer, we
continue to believe that the purpose of
administering the products described by
HCPCS codes A9542 and A9544 is
diagnostic in nature. As we first stated
in the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66641), we
continue to believe that HCPCS codes
A9542 and A9544 are diagnostic
radiopharmaceuticals. While they are
not used to diagnose disease, they are
used to determine whether future
therapeutic services would be beneficial
to the patient and to determine how to
proceed with therapy. While a group of
associated services may be considered a
therapeutic regimen by some
commenters, HCPCS codes A9542 and
A9544 are provided in conjunction with
a series of nuclear medicine imaging
scans. Many nuclear medicine studies
using diagnostic radiopharmaceuticals
are provided to patients who already
have an established diagnosis. We do
not consider HCPCS codes A9542 and
A9544 to be therapeutic because these
items are provided for the purpose of a
diagnostic imaging procedure, and are
used to identify the proper dose of the
therapeutic agent to be provided at a
later time.
Commenters who indicated that
‘‘theranostic’’ products can be used as
either diagnostic or therapeutic
radiopharmaceuticals failed to provide
specific product names or HCPCS codes
for these products. We have been unable
to identify any of the products that the
commenters were referring to, and we
note that all radiopharmaceuticals with
HCPCS codes currently have either
‘‘diagnostic’’ or ‘‘therapeutic’’ in their
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long code descriptors. We are aware
that, in some cases, a patient may
receive a therapeutic
radiopharmaceutical for treatment of
disease and the patient may not then
require further administration of a
diagnostic radiopharmaceutical for a
nuclear medicine study because the
patient’s body already contains
sufficient radioactivity. However, in this
case, we would consider the original
radiopharmaceutical to be a therapeutic
radiopharmaceutical because it was
administered to treat the patient’s
disease and not mainly for purposes of
the nuclear medicine study.
Comment: Several commenters
objected to CMS’ proposal to package
payment for all diagnostic
radiopharmaceuticals and contrast
agents in CY 2009. A number of
commenters stated that diagnostic
radiopharmaceuticals and contrast
agents with per day costs over the
proposed OPPS drug packaging
threshold are defined as specified
covered outpatient drugs (SCODs) and,
therefore, should be assigned separate
APC payments. In particular, the
commenters questioned CMS’ authority
to classify groups of drugs, such as
diagnostic radiopharmaceuticals and
contrast agents, and implement
packaging and payment policies that do
not reflect their status as SCODs. In
addition, the commenters objected to
the proposal to package payment for
diagnostic radiopharmaceuticals and
contrast agents because, as SCODs, the
commenters believed these products
were required by statute to be paid at
average acquisition cost. The
commenters explained that, when
several different diagnostic
radiopharmaceuticals or contrast agents
may be used for a particular procedure,
the costs of those diagnostic
radiopharmaceuticals or contrast agents
are averaged together and added to the
cost for the procedure in order to
determine the payment rate for the
associated procedural APC. Therefore,
the commenters argued that the amount
added to the procedure cost through
packaging, representing the cost of the
diagnostic radiopharmaceutical or
contrast agent, did not reflect the
average acquisition cost of any one
particular item but, rather, reflected the
average cost of whatever items may have
been used with that particular
procedure.
Response: As discussed in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66767) and in
the CY 2009 OPPS/ASC proposed rule
(73 FR 41486), we believe diagnostic
radiopharmaceuticals and contrast
agents are different from other SCODs
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for several reasons. We note that the
statutorily required OPPS drug
packaging threshold has expired, and
we continue to believe that diagnostic
radiopharmaceuticals and contrast
agents function effectively as supplies
that enable the provision of an
independent service, rather than serving
themselves as the therapeutic modality.
We packaged their payment in CY 2008
as ancillary and supportive services in
order to provide incentives for greater
efficiency and to provide hospitals with
additional flexibility in managing their
resources. We note that we currently
classify different groups of drugs for
specific payment purposes, as
evidenced by our policy regarding the
oral and injectable forms of the 5HT3
anti-emetics and our drug packaging
threshold.
Although our final CY 2008 policy
that we are continuing for CY 2009, as
discussed below, packages payment for
all diagnostic radiopharmaceuticals and
contrast agents into the payment for
their associated procedures, we will
continue to provide payment for these
items in CY 2009 based on a proxy for
average acquisition cost. We believe that
the line-item estimated cost for a
diagnostic radiopharmaceutical or
contrast agent in our claims data is a
reasonable approximation of average
acquisition and preparation and
handling costs for diagnostic
radiopharmaceuticals or contrast agents,
respectively, because, as we discussed
in the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66766), we
believe that hospitals have adapted to
the CY 2006 coding changes for
radiopharmaceuticals and responded to
our instructions to include charges for
radiopharmaceutical handling in their
charges for the radiopharmaceutical
products. Further, because the standard
OPPS packaging methodology packages
the total estimated cost for each
radiopharmaceutical or contrast agent
on each claim (including the full range
of costs observed on the claims) with
the cost of associated procedures for
ratesetting, this packaging approach is
consistent with considering the average
cost for radiopharmaceuticals or
contrast agents, rather than the median
cost.
We further note that these drugs,
biologicals, or radiopharmaceuticals for
which we have not established a
separate APC and, therefore, for which
payment would be packaged rather than
separately provided under the OPPS,
could be considered to not be SCODs.
Similarly, drugs and biologicals with
mean per day costs of less than $60 that
are packaged and for which a separate
APC has not been established also
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would not be SCODs. This reading is
consistent with our final payment
policy whereby we package payment for
diagnostic radiopharmaceuticals and
contrast agents and provide payment for
these products through payment for
their associated procedures.
Comment: Several commenters
recommended various methodologies
for CMS to consider in the development
of alternate payment mechanisms for
identifying associated costs and
providing separate payment for
diagnostic radiopharmaceuticals. Some
commenters supported the ASP
methodology for payment of nonpassthrough diagnostic
radiopharmaceuticals and noted that it
would be inconsistent for CMS to allow
payment for diagnostic
radiopharmaceuticals that have passthrough status based on the ASP
methodology, and then, after the
diagnostic radiopharmaceutical’s passthrough payment status has expired,
package the costs present on hospital
claims data. The commenters believed
that the ASP methodology would be
more reflective of actual diagnostic
radiopharmaceutical costs and would
not be subject to the billing
inconsistencies that are present in
hospital claims data. Therefore, the
commenters concluded that it would be
illogical to transition from an accurate
methodology to estimate hospital costs
(such as the ASP methodology) to a less
accurate methodology (based on
hospital claims data) once a product is
no longer eligible for pass-through
payment.
Some commenters were not
supportive of the ASP methodology
because they indicated that some
manufacturers would be unable to
report patient-specific doses based on
the HCPCS code descriptor. The
commenters recommended that CMS
establish a methodology that is similar
to the ASP methodology but that uses
alternative data sources (such as nuclear
pharmacies) that could be used to
calculate an ASP-like figure for all
radiopharmaceuticals.
Other commenters suggested that
CMS establish diagnostic
radiopharmaceutical and nuclear
medicine procedure composite APCs
that group specific diagnostic
radiopharmaceuticals with specific
nuclear medicine procedures. The
commenters stated that diagnostic
radiopharmaceuticals are not
interchangeable and carry high costs
because hospitals have little or no
flexibility in determining the diagnostic
radiopharmaceutical that they must
purchase because of product specificity
and patient needs, and therefore have
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little ability to achieve efficiency. The
commenters believed that payment
based on individualized combinations
of these items and services would
provide more accurate payment for the
diagnostic radiopharmaceutical
component of the service, and would
decrease the payment variation (both
overpayment and underpayment) for
nuclear medicine procedures performed
by hospitals that occurs under the
current packaging methodology.
Several commenters expressed an
interest in the establishment of a
composite APC for CPT codes 78802
(Radiopharmaceutical localization of
tumor or distribution of
radiopharmaceutical agent(s); whole
body, single day imaging) or 78804
(Radiopharmaceutical localization of
tumor or distribution of
radiopharmaceutical agent(s); whole
body, requiring two or more days
imaging) when billed with either
HCPCS code A9542 (Indium In-111
ibritumomab ituxetan, diagnostic, per
study dose, up to 5 millicuries) or
A9544 (Iodine I–131 tositumomab,
diagnostic, per study dose).
Response: We again note that there
are currently no radiopharmaceuticals
with pass-through status, nor do we
have any pass-through applications for
radiopharmaceuticals under review at
the time of this final rule with comment
period. While we understand that the
commenters’ request for the continued
use of ASP data for purposes of
packaging costs after a diagnostic
radiopharmaceutical’s pass-through
payment period has ended, based on
their belief that ASP data are more
accurate than hospital claims data, we
fully expect that hospitals have the
ability to identify and set charges for
any new diagnostic radiopharmaceutical
product accurately during its 2 to 3 year
pass-through time period while the
product has the potential of being paid
based on ASP. Packaging hospital costs
based on hospital claims data is how all
the costs of all packaged items are
factored into payment rates for
associated procedures under the OPPS.
We believe that the costs reported on
claims, as determined by hospitals, are
the most appropriate representation of
the costs of diagnostic
radiopharmaceuticals that should be
packaged into payment for the
associated nuclear medicine procedures.
We further note that some
commenters continued to report that not
all manufacturers would be able to
submit ASP data through the
established ASP reporting methodology.
Therefore, if we were to use ASP data
to package the costs of some diagnostic
radiopharmaceuticals, but use hospital
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claims data for others, our
methodologies for packaging the costs of
diagnostic radiopharmaceuticals into
their associated nuclear medicine
procedures would be inconsistent
among nuclear medicine procedures.
The foundation of a system of relative
weights is the relativity of the costs of
all services to one another, as derived
from a standardized system that uses
standardized inputs and a consistent
methodology. Adoption of a ratesetting
methodology for certain APCs
containing nuclear medicine procedures
that is different from the standard APC
ratesetting methodology would
undermine this relativity. For this
reason, we believe it would not be
appropriate to use external pricing
information in place of the costs derived
from the claims and Medicare cost
report data because we believe that to
do so would distort the relativity that is
so fundamental to the integrity of the
OPPS.
We recognize that
radiopharmaceuticals are specialized
products that have unique costs
associated with them. However, we
believe that the costs are reflected in the
charges that hospitals set for them and
in the Medicare cost report where the
full costs and charges associated with
the services are reported. Therefore, the
packaged costs of diagnostic
radiopharmaceuticals are calculated like
any other OPPS costs and packaged into
the cost of the nuclear medicine service
to which they are ancillary and
supportive. This methodology is the
basis for the payment of nuclear
medicine procedures in the same way
that other packaged costs contribute to
the payment rates for the services to
which they are an integral part.
We do not agree with the commenters
that it would be appropriate to create
composite APCs for combinations of
certain diagnostic radiopharmaceuticals
and nuclear medicine procedures. We
discuss our response to these public
comments in detail in section
II.A.2.d.(5) of this final rule with
comment period.
Comment: Some commenters believed
that packaging diagnostic
radiopharmaceuticals would undermine
the clinical and resource homogeneity
of the nuclear medicine APCs,
especially the cardiac imaging APCs,
resulting in 2 times violations.
Response: We agree that packaging
the costs of ancillary and supportive
services into the median cost of an
independent service can change the
median cost for that service and could
result in 2 times violations. However,
we disagree that we should refrain from
packaging payment for ancillary and
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supportive items into the payment for
the service in which they are used in
order to prevent the occurrence of 2
times violations. Instead, we believe
that we should reconfigure APCs when
necessary to resolve 2 times violations
where they occur. Because we have
traditionally paid for a service package
under the OPPS as represented by a
HCPCS code for the major procedure
that is assigned to an APC group for
payment, we assess the applicability of
the 2 times rule to services at the
HCPCS code level, not at a more specific
level based on the individual diagnostic
radiopharmaceuticals that may be
utilized in a service reported with a
single HCPCS code. If the use of a very
expensive diagnostic
radiopharmaceutical in a clinical
scenario causes a specific procedure to
be much more expensive for the
hospital than the APC payment, we
consider such a case to be the natural
consequence of a prospective payment
system that anticipates that some cases
will be more costly and others less
costly than the procedure payment. In
addition, very high cost cases could be
eligible for outlier payment. As we note
elsewhere in this final rule with
comment period, decisions about
packaging and bundling payment
involve a balance between ensuring
some separate payment for individual
services and establishing incentives for
efficiency through larger units of
payment. In the case of diagnostic
radiopharmaceuticals, these products
are part of the OPPS payment package
for the procedures in which they are
used.
Comment: A few commenters
requested that CMS specify the
methodology used to package diagnostic
radiopharmaceuticals and contrast
agents into their associated procedures.
Some of these commenters also
requested that CMS release data that
indicate that there is a direct
relationship between the cost of
diagnostic radiopharmaceuticals or
contrast agents and the resulting
increase in the associated procedural
APC payment rate. Other commenters
expressed disappointment that CMS
was not proposing any additional
payment for compounding and handling
costs for diagnostic
radiopharmaceuticals. The commenters
pointed out that compounding costs
were especially high for products
described by HCPCS codes A9542 and
A9544.
Response: To set the payment for
nuclear medicine procedures that
require a radiolabeled product (usually
a diagnostic radiopharmaceutical), we
selected claims that contained a
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radiolabeled product and used these
selected claims (rather than all claims
for these procedures) to set the median
costs for nuclear medicine procedures
so that we could ensure that the costs
of the radiopharmaceutical were
packaged into the median cost for the
procedure. This methodology is
discussed in detail in section II.A.2.d.(5)
of this final rule with comment period.
As we indicated in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66639), beginning on January 1,
2008, we implemented claims
processing edits for procedures that we
believe require a radiolabeled product,
and we return to the provider to correct
claims for nuclear medicine procedure
that do not include a radiolabeled
product. Therefore, for the CY 2010
OPPS our claims data should include a
radiolabeled product on all of the
nuclear medicine procedure claims. As
discussed below, we have not
implemented claims processing edits
that require the inclusion of contrast
agent HCPCS codes on claims for
studies provided with contrast but we
are interested in public comment on this
topic.
According to our usual OPPS
methodology, we package the costs of
packaged items and services into the
costs of the associated procedures on
single and ‘‘pseudo’’ claims for those
procedures. In the case of packaged
diagnostic radiopharmaceuticals and
contrast agents, in most cases packaging
would be into the costs of associated
nuclear medicine procedures and
radiological studies performed with
contrast, respectively. With respect to
the request for data for these services,
we make available a considerable
amount of data for public analysis each
year and, while we are not developing
and providing the detailed information
that commenters requested, we provide
the public use files of claims and a
detailed narrative description of our
data process that the public can use to
perform any desired analyses. In
addition, we believe that the
commenters must examine the data
themselves when developing their
comments on the OPPS/ASC proposed
rules. We note that several commenters
submitted detailed analyses of claims
for packaged services of particular
interest to them which we believe
demonstrates that commenters are
clearly able to perform meaningful
analyses using the public claims data
that we routinely make available.
With respect to the issue of payment
for compounding and handling of
radiopharmaceutical and contrast
agents, in particular the products
described by HCPCS codes A9542 and
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A9544, we believe that the costs derived
from the application of the most specific
CCR to the charges for these products
produce an estimated cost that includes
the costs of compounding and handling
of the products. We have instructed
hospitals to include the charge for
radiopharmaceutical handling and
compounding in their charge for the
radiopharmaceutical in the CY 2007
OPPS/ASC final rule with comment
period (71 FR 68096), and hospitals
have told us that they do so. Moreover,
the costs reported in the cost report are
for both the acquisition costs for the
products and the costs of compounding
and handling for both inexpensive and
expensive products. Therefore, we
believe that the estimated cost derived
by the application of the CCR to the
charge for the product results in an
estimated cost that includes both the
product acquisition cost and the
compounding and handling costs of the
product and that this is true regardless
of the cost of the product.
Comment: Some commenters
expressed frustration with the I/OCE
claims processing edits implemented in
CY 2008 for nuclear medicine
procedures that require a radiolabeled
product in order for the claim to process
to payment. The commenters reported
that it has been administratively
burdensome for hospitals to cope with
these edits and conform claims to these
requirements, and they noted that
patient access to nuclear medicine
procedures has been adversely affected.
Specifically, some commenters
observed that there are situations that
occur in the hospital outpatient setting
that are not accounted for in these edits.
For example, hospitals sometimes
provide a nuclear medicine imaging
service to a beneficiary who has been
given a radiopharmaceutical in another
location, such as in a physician’s office.
The commenters explained that, at this
time, there is no way for these
outpatient nuclear medicine procedure
claims to process to payment. The
commenters requested that CMS create
a modifier or Level II HCPCS code so
that hospitals could indicate that special
circumstances applied, and that a
radiolabeled product was not provided
in the HOPD setting, thereby allowing
payment for the nuclear medicine
service.
Other commenters requested that
CMS implement I/OCE edits for contrast
agents and imaging studies provided
with contrast, similar to the nuclear
medicine procedure-to-radiolabeled
product edits. The commenters believed
that requiring hospitals to specifically
report a contrast agent HCPCS code
when performing an imaging study with
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contrast would result in more accurate
claims data that fully reflected the costs
of contrast agents.
Finally, some commenters requested
that CMS only use claims with
diagnostic radiopharmaceuticals, or
contrast agents, when calculating
payment rates for the associated nuclear
medicine procedures or imaging
procedures, respectively.
Response: In order to ensure that we
capture appropriate diagnostic
radiopharmaceutical costs for future
ratesetting purposes once we began
packaging payment for all of these
products in CY 2008, we implemented
nuclear medicine procedure-toradiolabeled product claims processing
edits in the I/OCE, effective January
2008, that required a diagnostic
radiopharmaceutical to be present on
the same claim as a nuclear medicine
procedure for payment under the OPPS
to be made. These edits ensure that
hospitals submit correctly coded claims
that report the HCPCS codes for the
products and their charges that are
necessary for performance of nuclear
medicine procedures. We understand
that the implementation of I/OCE claims
processing edits may be challenging for
a short period of time while hospitals
become familiar with them, and while
the edits are revised based on
stakeholder feedback. However, we note
that we implemented nuclear medicine
procedure-to-radiolabeled product edits
at the request of stakeholders based on
concerns that hospitals were not always
including a diagnostic
radiopharmaceutical and its charge on
the claim when a nuclear medicine
procedure was provided. Stakeholders
voiced complaints that these omissions
led to inaccurate claims data for
diagnostic radiopharmaceuticals and,
once the OPPS began packaging
payment for all diagnostic
radiopharmaceuticals in CY 2008, there
was inadequate payment for nuclear
medicine procedures. We believe that
the majority of hospitals are now able to
submit claims that are able to pass these
I/OCE edits, and that we have made the
adjustments required to maintain the
integrity of the edits while working with
hospitals on special exceptions when a
diagnostic radiopharmaceutical may not
be provided with a nuclear medicine
study. We discuss the nuclear medicine
procedure-to-radiolabeled product edits
and the evolution of our edit policy in
greater detail in section II.A.2.d.(5) of
this final rule with comment period. We
implemented these edits because we
believe that it is important to make sure
that, when hospitals provide a packaged
diagnostic radiopharmaceutical, the
costs associated with the diagnostic
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radiopharmaceutical are appropriately
included on the same claim as the
corresponding procedure to ensure that
future ratesetting includes both the
diagnostic radiopharmaceutical and the
associated nuclear medicine procedure.
These edits are especially important as
payment for all diagnostic
radiopharmaceuticals are packaged into
the payment for the associated nuclear
medicine procedure. The edits help
ensure that hospitals are paid
appropriately for diagnostic
radiopharmaceutical costs, thus helping
to maintain adequate patient access to
nuclear medicine procedures.
We understand that some commenters
believe that contrast agents may benefit
from a similar set of I/OCE edits, and we
are specifically requesting public
comments on this topic in the final rule
with comment period. Given that many
contrast agents are low cost products
with limited pharmacy handling costs
and that advanced imaging studies are
very common HOPD services, we are
concerned that requiring the reporting
of a contrast agent HCPCS code on every
claim for an imaging study that specifies
‘‘with contrast’’ in its code descriptor
could be quite administratively
burdensome for hospitals. We are
interested in the public’s opinions on
whether the potential benefits in
capturing contrast agent costs that could
occur as a result of a requirement for
specific reporting of contrast agents on
claims accompanied by claims
processing edits to return incorrectly
coded claims to hospitals for correction
would outweigh the potential hospital
burden of reporting these products and
adjusting to a new set of claims
processing edits.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to continue to package
payment for all nonpass-through
diagnostic radiopharmaceuticals and
contrast agents, regardless of their per
day costs. In doing so, we are accepting
the APC Panel’s recommendation to
package payment for diagnostic
radiopharmaceuticals for CY 2009.
Given the inherent function of contrast
agents and diagnostic
radiopharmaceuticals as ancillary and
supportive to the performance of an
independent procedure, we continue to
view the packaging of payment for
contrast agents and diagnostic
radiopharmaceuticals as a logical
expansion of packaging for SCODs. In
addition, as we initially established in
the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66768), we are
finalizing our proposal to continue to
identify diagnostic
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radiopharmaceuticals specifically as
those Level II HCPCS codes that include
the term ‘‘diagnostic’’ along with a
radiopharmaceutical in their long code
descriptors, and therapeutic
radiopharmaceuticals as those Level II
HCPCS codes that include the term
‘‘therapeutic’’ along with a
radiopharmaceutical in their long code
descriptors.
During its March 2008 meeting, the
APC Panel also recommended that CMS
present data at the first CY 2009 APC
Panel meeting on usage and frequency,
geographic distribution, and size and
type of hospitals performing nuclear
medicine studies using radioisotopes in
order to ensure that access is preserved
for Medicare beneficiaries. We are
accepting this recommendation and will
present information to the APC Panel at
its first CY 2009 meeting when initial
claims data from CY 2008 will be
available.
For more information on how we set
CY 2009 payment rates for nuclear
medicine procedures in which
diagnostic radiopharmaceuticals are
used and echocardiography services
provided with and without contrast
agents, we refer readers to sections
II.A.2.d.(5) and (4), respectively, of this
final rule with comment period.
3. Payment for Drugs and Biologicals
Without Pass-Through Status That Are
Not Packaged
a. Payment for Specified Covered
Outpatient Drugs (SCODs)
Section 1833(t)(14) of the Act, as
added by section 621(a)(1) of Public
Law 108–173, requires special
classification of certain separately paid
radiopharmaceuticals, drugs, and
biologicals and mandates specific
payments for these items. Under section
1833(t)(14)(B)(i) of the Act, a ‘‘specified
covered outpatient drug’’ is a covered
outpatient drug, as defined in section
1927(k)(2) of the Act, for which a
separate APC has been established and
that either is a radiopharmaceutical
agent or is a drug or biological for which
payment was made on a pass-through
basis on or before December 31, 2002.
Under section 1833(t)(14)(B)(ii) of the
Act, certain drugs and biologicals are
designated as exceptions and are not
included in the definition of ‘‘specified
covered outpatient drugs,’’ known as
SCODs. These exceptions are—
• A drug or biological for which
payment is first made on or after
January 1, 2003, under the transitional
pass-through payment provision in
section 1833(t)(6) of the Act.
• A drug or biological for which a
temporary HCPCS code has not been
assigned.
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• During CYs 2004 and 2005, an
orphan drug (as designated by the
Secretary).
Section 1833(t)(14)(A)(iii) of the Act,
as added by section 621(a)(1) of Public
Law 108–173, requires that payment for
SCODs in CY 2006 and subsequent
years be equal to the average acquisition
cost for the drug for that year as
determined by the Secretary, subject to
any adjustment for overhead costs and
taking into account the hospital
acquisition cost survey data collected by
the Government Accountability Office
(GAO) in CYs 2004 and 2005. If hospital
acquisition cost data are not available,
the law requires that payment be equal
to payment rates established under the
methodology described in section
1842(o), section 1847A, or section
1847B of the Act, as calculated and
adjusted by the Secretary as necessary.
In the CY 2006 OPPS proposed rule
(70 FR 42728), we discussed the CY
2005 report by MedPAC regarding
pharmacy overhead costs in HOPDs and
summarized the findings of that study:
• Handling costs for drugs,
biologicals, and radiopharmaceuticals
administered in the HOPD are not
insignificant;
• Little information is available about
the magnitude of pharmacy overhead
costs;
• Hospitals set charges for drugs,
biologicals, and radiopharmaceuticals at
levels that reflected their respective
handling costs; and
• Hospitals vary considerably in their
likelihood of providing services which
utilize drugs, biologicals, or
radiopharmaceuticals with different
handling costs.
As a result of these findings, MedPAC
developed seven drug categories for
pharmacy and nuclear medicine
handling costs based on the estimated
level of hospital resources used to
prepare the products. Associated with
these categories were two
recommendations for accurate payment
of pharmacy overhead under the OPPS.
1. CMS should establish separate,
budget neutral payments to cover the
costs hospitals incur for handling
separately payable drugs, biologicals
and radiopharmaceuticals.
2. CMS should define a set of
handling fee APCs that group drugs,
biologicals, and radiopharmaceuticals
based on attributes of the products that
affect handling costs; CMS should
instruct hospitals to submit charges for
these APCs and base payment rates for
the handling fee APCs on submitted
charges reduced to costs.
In assigning drugs to the seven
categories, MedPAC considered
additional characteristics that contribute
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to differential pharmacy handling costs,
such as radioactivity, toxicity, mode of
administration, and the need for special
handling. While MedPAC was able to
include information on a variety of
drugs with many of these
characteristics, hospitals participating
in MedPAC’s research were not able to
provide sufficient cost information
regarding the handling of outpatient
radiopharmaceuticals for MedPAC to
make a recommendation about overhead
categories for these products.
In response to the MedPAC findings,
in the CY 2006 OPPS proposed rule (70
FR 42729), we discussed our belief that,
because of the varied handling resources
required to prepare different forms of
drugs, it would be impossible to
exclusively and appropriately assign a
drug to a certain overhead category that
would apply to all hospital outpatient
uses of the drug. Therefore, our CY 2006
OPPS proposal included a proposal to
establish three distinct Level II HCPCS
C-codes and three corresponding APCs
for drug handling categories to
differentiate overhead costs for drugs
and biologicals. We also proposed: (1)
To combine several overhead categories
recommended by MedPAC according to
Table 24 of the proposed rule; (2) to
establish three drug handling categories,
as we believed that larger groups would
minimize the number of drugs that may
fit into more than one category and
would lessen any undesirable payment
policy incentives to utilize particular
forms of drugs or specific preparation
methods; (3) to collect hospital charges
for these C-codes for 2 years; and (4) to
ultimately base payment for the
corresponding drug handling APCs on
CY 2006 claims data available for the
CY 2008 OPPS. Both the MedPAC
categories and the CY 2006 proposed
categories are identified in Table 28
below.
TABLE 28—DRUG OVERHEAD CATEGORY GROUPINGS DISCUSSED IN THE CY 2006 OPPS PROPOSED RULE
MedPAC drug
overhead category
Description
Category 1 .......................................
Category 2 .......................................
Category 3 .......................................
Orals (oral tablets, capsules, solutions) ................................................
Injection/Sterile Preparation (draw up a drug for administration) .........
Single IV Solution/Sterile Preparation (adding a drug or drugs to a
sterile IV solution) or Controlled Substances.
Compounded/Reconstituted IV Preparations (requiring calculations
performed correctly and then compounded correctly).
Specialty IV or Agents requiring special handling in order to preserve
their therapeutic value or Cytotoxic Agents, oral (chemotherapeutic,
teratogenic, or toxic) requiring personal protective equipment (PPE).
Cytotoxic Agents (chemotherapeutic, teratogenic, or toxic) in all formulations except oral requiring PPE.
Radiopharmaceutical: Basic and Complex Diagnostic Agents, PET
Agents, Therapeutic Agents, and Radioimmunoconjugates.
Category 4 .......................................
Category 5 .......................................
Category 6 .......................................
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Category 7 .......................................
In the CY 2006 OPPS final rule with
comment period (70 FR 68659 through
68665), we discussed the public
comments we received on our proposal
regarding pharmacy overhead. The
overwhelming majority of commenters
did not support our proposal and urged
us not to finalize this policy, as it would
be administratively burdensome for
hospitals. Therefore, we did not finalize
this proposal for CY 2006.
As we noted in the CY 2006 OPPS
final rule with comment period (70 FR
68640), findings from a MedPAC survey
of hospital charging practices indicated
that hospitals set charges for drugs,
biologicals, and radiopharmaceuticals
high enough to reflect their pharmacy
handling costs as well as their
acquisition costs. After considering all
of the public comments received, in the
CY 2006 OPPS final rule with comment
period (70 FR 68642), we established a
policy to provide a combined payment
rate of ASP+6 percent for both the
hospital’s drug and biological
acquisition costs and associated
pharmacy overhead costs, as this was
the equivalent average ASP-based
amount to the aggregate cost from CY
2004 hospital claims data for separately
payable drugs under the OPPS. We
acknowledged the limitations of this
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CMS proposed CY 2006 drug
overhead category
methodology, namely that pharmacy
overhead costs of specific drugs and
biologicals are not directly related to
their specific acquisition costs. We also
solicited additional comments on future
options for ways to identify and provide
an alternative payment methodology for
pharmacy overhead costs under the
OPPS.
In the CY 2007 OPPS/ASC final rule
with comment period (71 FR 68091), we
proposed and finalized a policy that
provided a single payment of ASP+6
percent for the hospital’s acquisition
cost for the drug or biological and all
associated pharmacy overhead and
handling costs. The ASP+6 percent rate
was higher than the equivalent average
ASP-based amount calculated from
claims of ASP+4 percent, but we
adopted this methodology for stability
while we continued to examine the
issue of the costs of pharmacy overhead
in the HOPD.
We continued to meet with interested
pharmacy stakeholders regarding the
various issues related to hospital
charging practices and how these
practices would affect our potential
proposals for payment of drugs and
pharmacy overhead under the OPPS.
Many comments from the hospital
industry reiterated that hospitals do not
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Category 1.
Category 2.
Category 2.
Category 2.
Category 3.
Category 3.
attach a specific pharmacy overhead
charge to a particular drug. In particular,
a more expensive drug with high
pharmacy overhead costs does not
commonly result in a sufficiently high
hospital charge for the drug to account
for all of the associated drug acquisition
and pharmacy overhead costs. We have
been told that hospitals frequently
allocate a relatively greater pharmacy
overhead charge to the single hospital
charge for less expensive drugs to
counterbalance the lesser charge for
pharmacy overhead for more expensive
drugs with high pharmacy overhead
costs.
Therefore, the pharmacy overhead
costs of one drug may be distributed
among charges for many drugs. This
practice of unequally distributing
pharmacy overhead charges among all
drugs provided by the hospital
pharmacy makes the single CCR for cost
center 5600 (Drugs Charged to Patients)
applied for OPPS cost estimation of
drugs through the revenue code-to-cost
center crosswalk result in less accurate
costs for individual drugs. The result is
that the charges and estimated costs for
less expensive drugs shoulder a higher
burden of pharmacy overhead costs as
compared to the charges and estimated
costs for more expensive drugs.
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Commenters have suggested that our
OPPS methodology of applying a single
CCR for the cost estimation of all drugs
unfairly reduces payment amounts for
separately payable expensive drugs, as
the actual CCR varies widely across
drugs. The concerns surrounding the
impact on payment accuracy of
differential hospital charging practices
for pharmacy overhead costs resemble
the concerns regarding charge
compression that have been raised for
expensive implantable devices over the
past several years of the OPPS (72 FR
66599 through 66602). In general,
differential hospital markup policies
related to the cost of an item lead to
overestimating the cost of inexpensive
items and underestimating the cost of
expensive items when a single CCR is
applied to charges on claims.
In the CY 2008 OPPS/ASC proposed
rule (72 FR 42735), in response to
ongoing discussions with interested
parties, we proposed to continue our
methodology of providing a combined
payment rate for drug and biological
acquisition and pharmacy overhead
costs. We also proposed to instruct
hospitals to remove the pharmacy
overhead charge for both packaged and
separately paid drugs and biologicals
from the charge for the drug or
biological and report the pharmacy
overhead charge on an uncoded revenue
code line on the claim. We believed that
this would provide us with an avenue
for collecting pharmacy handling cost
data specific to drugs in order to
package the overhead costs of these
items into the associated procedures,
most likely drug administration
services. We believed that this
methodology of reporting pharmacy
overhead costs on an uncoded revenue
center line would increase the accuracy
of pharmacy overhead payments for
drugs and biologicals as it would
package the overhead cost for similar
drugs into the commonly associated
separately payable services, for
example, by packaging the pharmacy
overhead cost for a chemotherapy drug
with the cost of the chemotherapy drug
administration service also included on
the claim.
Similar to the public response to our
CY 2006 pharmacy overhead proposal,
the overwhelming majority of
commenters did not support our CY
2008 proposal and urged us to not
finalize this policy (72 FR 66761). While
MedPAC supported the proposal for
improving the accuracy of drug payment
by incorporating variability in pharmacy
overhead costs, most other commenters
cited the increased hospital burden that
would be associated with manipulating
accounting systems and making manual
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calculations, along with concerns about
making these changes to their billing
operations while continuing to set
charges for particular services that were
the same for all payers. After hearing
concerns about the burden of
establishing a unique pharmacy
overhead charge for every drug, at its
September 2007 meeting, the APC Panel
recommended that hospitals not be
required to separately report charges for
pharmacy overhead and handling and
that payment for overhead be included
as part of drug payment. The APC Panel
also recommended that CMS continue
to evaluate alternative methods to
standardize the capture of pharmacy
overhead costs in a manner that is
simple to implement at the
organizational level (72 FR 66761).
Because of these concerns, we did not
finalize the proposal to instruct
hospitals to separately report pharmacy
overhead charges for CY 2008. Instead,
in the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66763), we
finalized a policy of providing payment
for separately payable drugs and
biologicals and their pharmacy
overhead at ASP+5 percent as a
transition from their CY 2007 payment
of ASP+6 percent to payment based on
the equivalent average ASP-based
payment rate calculated from hospital
claims, which was ASP+3 percent for
the CY 2008 OPPS/ASC final rule with
comment period. Hospitals continued to
include charges for pharmacy overhead
costs in the line-item charges for the
associated drugs reported on claims.
b. Payment Policy for CY 2009
The provision in section
1833(t)(14)(A)(iii) of the Act, as
described above, continues to be
applicable to determining payments for
SCODs for CY 2009. This provision
requires that, in CY 2009, payment for
SCODs be equal to the average
acquisition cost for the drug for that
year as determined by the Secretary,
subject to any adjustment for overhead
costs and taking into account the
hospital acquisition cost survey data
collected by the GAO in CYs 2004 and
2005. If hospital acquisition cost data
are not available, the law requires that
payment be equal to payment rates
established under the methodology
described in section 1842(o), section
1847A, or section 1847B of the Act, as
calculated and adjusted by the Secretary
as necessary. In addition, section
1833(t)(14)(E)(ii) authorizes the
Secretary to adjust APC weights for
SCODs to take into account the MedPAC
report relating to overhead and related
expenses, such as pharmacy services
and handling costs.
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During this past year, we have met
with a variety of stakeholders regarding
different proposals for collecting
pharmacy overhead cost information for
setting OPPS payment rates. One such
proposal was endorsed by several
stakeholders during the March 2008
APC Panel meeting. Presenters to the
APC Panel explained that CMS’
methodology of using a single CCR to
determine the acquisition and pharmacy
overhead cost for all drugs attributes a
greater relative share of pharmacy
overhead cost to the lower-priced
packaged drugs and a lower relative
share of pharmacy overhead cost to the
more expensive, separately payable
drugs. Because the OPPS packages
payment for drugs and biologicals with
an estimated per day cost of $60 or less
and estimates the equivalent average
ASP-based amount based only on the
costs of separately payable drugs, some
pharmacy overhead cost that should be
associated with separately payable
drugs is being packaged into payment
for the procedures that are performed
with lower cost packaged drugs.
This stakeholder proposal suggested
that CMS recalculate the equivalent
average ASP-based amount based on the
costs of packaged and separately
payable drugs with HCPCS codes, rather
than on our current methodology of
calculating an ASP-based amount solely
from claims data for separately payable
drugs. CMS would then use this
equivalent average ASP-based amount
(or the physician’s office payment rate
of ASP+6 percent) to represent the
acquisition and pharmacy overhead cost
of all packaged drugs and would
substitute this figure for the costs of
packaged drugs in ratesetting for their
associated procedures. The pool of
money under the budget neutral OPPS
that would result from this methodology
that would package lower drug costs
with associated procedures than our
current methodology could then be
distributed to OPPS payment in a
number of ways, such as increasing the
combined acquisition and overhead cost
payment for separately payable drugs to
a higher average ASP-based amount
and/or providing separate payment for
pharmacy overhead costs for either all
drugs or only separately payable drugs
based on a flat add-on rate or on tiers
of pharmacy service complexity. The
stakeholders presented APC median
cost estimates demonstrating that their
recommendation would significantly
impact drug payment rates but would
only change the majority of APC median
costs by less than 2 percent.
At its March 2008 meeting, the APC
Panel recommended that CMS work
with stakeholders to further develop
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recommendations on the validity of this
methodology and conduct an impact
analysis, with consideration for CY 2009
rulemaking. During the August 2008
meeting, the APC Panel recommended
that CMS continue to look at refining
the methodology for payment of
pharmacy overhead and handling costs,
and that CMS work with stakeholders to
find a feasible approach for payment of
drugs and pharmacy overhead. Further,
the APC Panel recommended that CMS
package the cost of all drugs that are not
separately paid at ASP+5 percent, use
the difference between these costs and
CMS’ costs derived from charges to
create a pool that funds payment for
pharmacy overhead services and pay
hospitals for pharmacy service costs
using this pool by making payments
based on some system of categorization
determined by CMS. In addition, the
APC Panel recommended that CMS take
into consideration the impact on
beneficiaries’ copayments.
Because CMS would redistribute
pharmacy overhead cost when modeling
payment rates for ratesetting, we
concluded for the proposed rule that the
suggested methodology would be
administratively simple for hospitals.
We stated our belief that that this
approach also would refine the existing
OPPS methodology for estimating
pharmacy overhead cost in a budget
neutral manner, without redistributing
money from the payment for nondrug
components of other services to
payment for drugs. However, in the
proposed rule, we also expressed our
belief that substituting an average ASPbased amount (or the physician’s office
payment rate of ASP+6 percent) on
claims for purposes of packaging drug
costs into associated procedures would
be a highly significant change to our
established methodology. It is our
longstanding policy to accept hospital
charge data as it is reported on claims,
in order to capture variability in
hospitals’ unique charges that is specific
to each hospital’s charging structure, as
well as other potential efficiencies. The
stakeholder recommendation would
eliminate the expected variability in
hospitals’ costs for drugs that are
packaged into their associated
procedures.
In the CY 2009 OPPS/ASC proposed
rule, we did not propose to adopt this
stakeholder methodology. We noted our
appreciation of this thoughtful approach
to OPPS payment for pharmacy
overhead costs, but we sought public
comment on several issues that needed
to be seriously considered before we
could potentially propose the adoption
of such a methodology, including, but
not limited to, its implications for how
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we would more generally estimate the
costs of items packaged into an
independent service. In addition to our
packaging of relatively inexpensive
drugs that are integral to separately
payable independent services, we
package payment under the OPPS for
the costs of a variety of other items and
services. In addition, it was not clear to
us what approach for redistributing
pharmacy overhead dollars would be
most accurate and operationally feasible
for CMS. Therefore, in the CY 2009
OPPS/ASC proposed rule, we
specifically invited public comment on
this potential approach for estimating
pharmacy overhead costs and
redistributing pharmacy overhead
payment under the OPPS.
Comment: Several commenters were
not supportive of the stakeholder
approach to payment for pharmacy
overhead costs. The commenters were
concerned about the potential
redistributive effects of the proposal and
the impact on beneficiaries of higher
copayments for separately payable
drugs.
However, the majority of commenters
expressed support for the stakeholder
recommendation to redistribute a
portion of pharmacy overhead costs
from payment for packaged drugs and
biologicals through payment for the
associated procedures to payment for
separately payable drugs and biologicals
in a budget neutral manner. In general,
the commenters believed that CMS’
concerns regarding the substitution of
ASP information on hospital claims to
replace the costs reported by hospitals
would have no other implications for
OPPS cost estimation because no other
item or service has a similar marketbased payment methodology (such as
ASP) for identifying hospital costs. The
commenters noted that CMS already
uses a non-standard methodology in
providing payment for drugs and
biologicals based on the ASP
methodology. The commenters viewed
the stakeholder proposal as a more
accurate application of the standard
CMS methodology. In addition, the
commenters believed that adoption of
the stakeholder approach to redistribute
pharmacy overhead costs more
accurately to separately payable drugs
would be necessary if CMS were to
continue to package payment for some
drugs and biologicals with per day costs
at or below the proposed CY 2009 drug
packaging threshold.
Further, many commenters stated that
the stakeholder recommendation for
payment of drugs and pharmacy
overhead costs would be
administratively simple for hospitals to
implement and would provide a more
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accurate payment solution for separately
payable drugs and biologicals. Some
commenters believed that implementing
this approach could be relatively
straightforward for CMS, and could
include a processing step in the I/OCE
that would add on the appropriate
standard pharmacy overhead payment
whenever a drug HCPCS code was
billed.
Finally, many commenters also
supported the redistribution of the
resulting pharmacy overhead payments
through three payment levels based on
the estimated pharmacy overhead
resource costs specific to each drug
HCPCS code. The commenters included
suggestions for drug assignments to
three tiers of pharmacy overhead
categories and suggested that these
additional payments could be
programmed into the I/OCE so that they
would require no additional
administrative changes by hospitals.
Many commenters concluded that the
recommended stakeholder approach
had been sufficiently reviewed by both
hospital stakeholders and CMS, and
they urged CMS to adopt this payment
methodology for CY 2009.
Response: As we stated in the CY
2009 OPPS/ASC proposed rule (73 FR
41489 through 41490), we appreciate
the creative approach to OPPS payment
for pharmacy overhead costs as
described above. We have continued to
review and discuss this stakeholder
recommendation in meetings with
interested stakeholders and during the
August 2008 APC Panel meeting. We
remain interested in further exploring
this approach that certain stakeholders
have developed as a solution to the
issue of uneven distribution of OPPS
payment for pharmacy overhead costs,
and we believe that such an approach,
or modifications of the recommended
approach, could potentially provide
more accurate OPPS payment for drugs
and biologicals in the future.
However, we do not believe that it
would be appropriate to adopt such a
payment approach for CY 2009 that is
so different from our proposal for
several reasons. First, as we noted in the
CY 2006 OPPS final rule with comment
period (70 FR 68640), findings from a
MedPAC survey of hospital charging
practices indicated that hospitals set
charges for drugs, biologicals, and
radiopharmaceuticals high enough to
reflect their pharmacy handling costs as
well as their acquisition costs.
Similarly, in the Medicare Claims
Processing Manual (Pub. 100–04,
Chapter 17, Section 90.2), we have
instructed hospitals to include both
acquisition costs and pharmacy
overhead or nuclear medicine handling
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costs in their line-item charges for
drugs, biologicals, and
radiopharmaceuticals. Beyond drugs
and biologicals, we expect that hospitals
consider costs when setting charges for
all hospital services. We believe that
hospitals have internal policies for
setting charges and are internally
consistent when setting charges,
although the manner in which charges
are set relative to cost likely varies by
hospital. Application of a hospitalspecific CCR to estimate costs for
purposes of OPPS ratesetting creates
cost estimates that are internally
consistent with the hospital’s charging
structure and retain the variability in
charges, and variability in cost by
association, experienced by each
hospital. We observe a wide range in
our estimates of costs for various drugs
and biologicals, suggesting that
hospitals have different estimated costs
for these items. In part, our longstanding
policy to accept hospital charge data as
they are reported by hospitals is an
attempt to appropriately capture the
variability in hospitals’ unique charges
that reflects real differences in cost and
other efficiencies at each hospital.
Further, for all services, external
estimates of cost created outside the
hospital’s billing and accounting
information would not be based on the
relative estimated costs for the hospital.
We also utilize hospital charge data as
reported by hospitals to avoid
inappropriately redistributing money
based on external estimates of costs
from widely different sources. The
stakeholder recommendation would
eliminate the expected variability in
hospitals’ costs for drugs that are
packaged into their associated
procedures and substitute a static,
external estimate of cost for one that
would otherwise be established by the
hospital’s internal billing and
accounting structure. While certain
stakeholders have demonstrated how
this approach would impact the median
costs for drug administration services,
the concept of substituting external cost
estimates for certain items or services in
the context of an otherwise internally
consistent relative cost structure has
importance for packaging costs in other
APCs.
Second, because we have not yet fully
analyzed a comprehensive drug
payment methodology that would
follow this general approach, nor have
we provided sufficient information on
the impacts of this proposal to the
public, we do not believe that adopting
this approach for CY 2009 would be
appropriate. Therefore, we are not
accepting the APC Panel’s August 2008
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recommendation to redistribute the
pharmacy overhead costs currently
associated with packaged drugs to a
pool that would pay for pharmacy
services, and pay for these pharmacy
services by making payments based on
a system of drug categorization
established by CMS. As we did not
propose a methodology like the
stakeholder’s model or the APC Panel’s
recommended approach, or a variation
of that model, for the CY 2009 OPPS, we
have not assessed the impact such a
change would have on payment for
other OPPS services, including those
services with significant packaged drug
costs, on payment to different classes of
hospitals, or on beneficiary copayments.
However, we are particularly interested
in further exploring this approach,
especially in light of the overwhelming
lack of public support for our proposal
to split the 5600 (Drugs Charged to
Patients) cost center on the Medicare
cost report into two new cost centers,
Drugs With High Overhead Cost
Charged To Patients and Drugs With
Low Overhead Cost Charged To
Patients, as discussed in more detail
below.
As we explained in the CY 2009
OPPS/ASC proposed rule, recently RTI
completed its evaluation of the OPPS
cost-based weight methodology in
general, and charge compression in
particular. Pharmacy stakeholders have
already noted that accurately estimating
pharmacy overhead cost is intimately
related to the CCR used to estimate costs
from claims’ charges. As discussed
above, hospitals have informed us that
they redistribute the cost of pharmacy
overhead from expensive to inexpensive
drugs when setting charges for drugs.
RTI determined that hospitals billing
a greater percent of drug charges under
revenue code 0636 (Drugs requiring
detail coding) out of all revenue codes
related to drugs had a significantly
higher CCR for cost center 5600 (Drugs
Charged to Patients). ‘‘These findings
are consistent with the a priori
expectation that providers tend to use
lower markup rates on these relatively
expensive items, as compared with
other items in their CCR group.’’ (RTI
report, ‘‘Refining Cost to Charge Ratios
for Calculating APC and MS–DRG
Relative Payment Weights,’’ July 2008).
RTI, in its March 2007 report, noted that
hospitals billing a greater percent of
drug charges under revenue code 0258
(IV solutions) out of all revenue codes
related to drugs had a significantly
lower CCR for cost center 5600. In the
short term, RTI recommended that CMS
adopt regression-adjusted CCRs under
the OPPS for drugs requiring detail
coding (reported under revenue code
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68653
0636) and for IV solutions (reported
under revenue code 0258) for purposes
of estimating median costs. To eliminate
the need for simulated CCRs in the
longer term, RTI recommended that
CMS create a new standard cost center
in the cost report for drugs requiring
detail coding (reported under revenue
code 0636) to mitigate charge
compression by acquiring more specific
CCRs (RTI report, ‘‘Refining Cost to
Charge Ratios for Calculating APC and
MS–DRG Relative Payment Weights,’’
July 2008).
As discussed further in section
II.A.1.c. of this CY 2009 OPPS/ASC final
rule with comment period and
consistent with our proposal for the FY
2009 IPPS, we did not propose to adopt
regression-based CCRs for cost
estimation in any area of the CY 2009
OPPS, including drugs requiring detail
coding and IV solutions. Instead, we
stated that we believed that RTI’s
empirical findings would appropriately
be addressed through concrete steps to
improve the quality of accounting
information used to estimate future
costs from drug charges. Cognizant of
public comments on past proposals, we
also stated that we believed that this
should be done in a manner that is fairly
simple for hospitals to implement.
For CY 2009, we proposed to continue
our policy of making a combined
payment for the acquisition and
pharmacy overhead costs of separately
payable drugs and biologicals at an
equivalent average ASP-based amount
calculated based on our standard
methodology of estimating drug costs
from claims. Using updated data, for the
CY 2009 proposed rule, after
determining the proposed CY 2009
packaging status of drugs and
biologicals, we estimated the aggregate
cost of all drugs and biologicals
(excluding therapeutic
radiopharmaceuticals for which no ASP
data were available) that would be
separately payable in CY 2009 based on
costs from hospital claims data and
calculated the equivalent average ASPbased payment rate that would equate to
the aggregate reported hospital cost. The
results of our analysis indicated that
setting the payment rates for drugs and
biologicals that would be separately
payable in CY 2009 based on hospital
costs would be equivalent to providing
payment, on average, at ASP+4 percent.
Therefore, we proposed to pay for
separately payable drugs and biologicals
under the CY 2009 OPPS at ASP+4
percent because we believed that this
was the best currently available proxy
for average hospital acquisition cost and
associated pharmacy overhead costs.
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Comment: Several commenters cited
methodological concerns about the
approach CMS used to calculate the
equivalent average ASP-based payment
amount for separately payable drugs and
biologicals.
Some commenters noted that the
statute requires drug cost surveys for
payment purposes for SCODs under the
OPPS, and the most recent survey
available is outdated as it was
performed in CY 2004 by the GAO. The
commenters stated that the statute
specifically required survey data as the
basis for hospital acquisition costs in
order to provide a more appropriate
payment methodology for drugs and
biologicals, instead of costs from claims
data. They concluded that, by not
performing a survey and by not paying
for drugs and biologicals at the
physician’s office rate, CMS was not in
compliance with the statute. The
commenters acknowledged that drug
cost surveys are difficult to perform.
However, they believed that either a
survey should be performed or payment
should be made at ASP+6 percent, in
accordance with the requirement of the
statute.
Commenters reiterated that hospitals
disproportionably mark up their charges
for low cost drugs and biologicals to
account for pharmacy overhead costs.
They indicated that while the aggregate
charges for inexpensive and expensive
drugs may include the total pharmacy
overhead costs of the hospital, the
charges for individual drugs and
biologicals do not represent the specific
acquisition and pharmacy overhead
costs of that particular drug or
biological. The commenters explained
that hospitals apply proportionately
smaller markups to higher cost items
and proportionately larger markups to
lower cost items. The commenters
believed that when CMS applies a single
CCR to adjust charges to costs for these
drugs and biologicals, charge
compression leads to misallocation of
the pharmacy overhead costs associated
with high and low cost drugs and
biologicals during ratesetting.
Commenters noted that by using only
separately payable drugs in the
calculation of the equivalent average
ASP-based amount, the pharmacy
overhead costs associated with these
separately payable drugs that are
disproportionately included in the
charges for packaged drugs are not
factored into the calculation, resulting
in an artificially low ASP add-on
percentage. The commenters suggested
using the costs of both packaged drugs
and separately payable drugs when
calculating the equivalent average ASPbased payment amount for separately
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payable drugs, as they argued that this
would provide a more accurate ASP
percentage payment for separately
payable drugs. As an alternative, the
commenters recommended that CMS
could eliminate the drug packaging
threshold and provide separate payment
for all Part B drugs under the OPPS.
Finally, the commenters noted that
CMS included, in the calculation of the
costs of separately payable drugs and
biologicals, OPPS claims from hospitals
that receive Federal discounts on drug
prices under the 340B program. The
commenters pointed out that hospital
participation in the 340B program had
grown substantially over the past few
years, and they believed that the costs
from these hospitals now constituted a
significant proportion of hospital drug
costs on CY 2007 OPPS claims. The
commenters stated that including 340B
hospital claims data when comparing
aggregate hospital costs based on claims
data to ASP rates contributed to an
artificially low equivalent average ASPbased payment rate because ASP data
specifically exclude drugs sales under
the 340B program.
Response: As discussed above, the
provision in section 1833(t)(14)(A)(iii)
of the Act continues to be applicable to
determining payments for SCODs for CY
2009. This provision requires that
payment for SCODs be equal to the
average acquisition cost for the drug for
that year as determined by the
Secretary, subject to any adjustment for
overhead costs and taking into account
the hospital acquisition cost survey data
collected by the GAO in CYs 2004 and
2005 or if hospital acquisition cost data
are not available, then the average price
for the drug in the year established
under section 1842(o), 1847A, or 1847B
of the Act, as the case may be, as
calculated and adjusted by the Secretary
as necessary for purposes of section
1833(t)(14)(iii)(II) of the Act. In the CY
2006 OPPS final rule, we compared
hospital drug cost data that were
available to us at the time, specifically:
(1) Data from the GAO survey; (2)
hospital claims data from CY 2004; and
(3) ASP information. In addition, we
discussed our methodology for
comparing these data that represented
different timeframes from 2004 to 2006.
As a result of our analysis comparing
these three sources, we concluded that,
on average, the costs from hospital
claims data representing SCODs were
roughly equivalent to payment ASP+6
percent. Therefore, we finalized a policy
that used our hospital claims data as a
proxy for average hospital acquisition
cost and provided payment for
separately payable drugs that do not
have pass-through status at ASP+6
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percent in CY 2006 (70 FR 68639
through 68642). The commenters are
correct that the statute allows for the use
of the methodology described in section
1842(o), section 1847A or section 1847B
of the Act, as calculated and adjusted by
the Secretary as necessary, but this is
only when hospital acquisition cost data
are not available. We believe that we
have established our hospital claims
data as an appropriate proxy for average
hospital acquisition costs, taking the
GAO survey information into account
for the base year. While we have not yet
performed hospital drug acquisition cost
surveys similar to the GAO survey, we
note that the statute only calls for
‘‘periodic’’ surveys, and we are
considering the possibility of such a
survey at some point in the future.
In addition, we understand that
because hospital charges for drugs are
adjusted to cost by a single CCR, but
hospitals continue to apply differential
markups to their charges for low and
high cost drugs and biologicals, the
result is an overestimation of costs for
less expensive drugs and an
underestimation of costs for more
expensive drugs. In order to more
accurately identify costs for drugs, we
proposed to split the current single drug
cost center into two standard cost
centers on the Medicare cost report. By
creating two standard cost centers (one
for Drugs With High Overhead Cost
Charged to Patients, the other for Drugs
With Low Overhead Cost Charged to
Patients), we believed that the resulting
CCRs would provide a more accurate
ASP-based estimate for those drugs that
are separately paid, as each individual
drug charge would be subject to a more
accurate CCR, depending on whether
the drug was classified by the hospital
as having high or low overhead costs.
We discuss this proposal, the public
comments we received, and our final
policy in detail below.
It has been our policy, since CY 2006,
to only use separately payable drugs in
the calculation of the equivalent average
ASP-based payment amount under the
OPPS. We do not include packaged
drugs and biologicals in this analysis
because cost data for these items are
already accounted for within the APC
ratesetting process through the median
cost calculation methodology discussed
in section II.A.2. of this final rule with
comment period. To include the costs of
packaged drugs in both our APC
ratesetting process (for associated
procedures present on the same claim)
and in our ratesetting process to
establish an equivalent average ASPbased payment amount for separately
payable drugs and biologicals would
give these data disproportionate
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emphasis in the OPPS system by
skewing our analyses, as the costs of
these packaged items would be, in
effect, counted twice. Accordingly, we
are not adopting the suggestion from
commenters that we include all
packaged and separately payable drugs
and biologicals when establishing an
equivalent average ASP-based rate to
provide payment for the hospital
acquisition and pharmacy handling
costs of drugs and biologicals. However,
we remind commenters that because the
costs of packaged drugs, including their
pharmacy overhead costs, are packaged
into the payments for the procedures in
which they are administered, the OPPS
provides payment for both the drugs
and the associated pharmacy overhead
costs through the applicable procedural
APC payments.
We also are not adopting the
alternative recommendation by some
commenters that we eliminate the drug
packaging threshold and pay separately
for all drugs and biologicals with
HCPCS codes. As we have stated
previously (71 FR 68085), we believe
that it is appropriate, at a minimum, to
continue a modest drug packaging
threshold under the OPPS. Packaging is
a fundamental component of a
prospective payment system that
contributes to important flexibility and
efficiency in the delivery of high quality
outpatient care.
We have had several meetings with
interested stakeholders over the past
year regarding the drug costs of
hospitals that participate in the Federal
340B program, and we are interested in
gathering more information on their
potential influence on our methodology
for calculating payment rates for
separately payable drugs. Specifically,
we are requesting comments on this
final rule with comment period that
address: (1) Whether all HOPDs from a
participating provider furnish drugs
purchased under the 340B pricing
program or only a subset of
departments; (2) whether all drugs are
available to participating hospitals
under the 340B program; (3) whether
hospital drugs provided to inpatients
are purchased by hospitals at 340B
program prices if the hospital is a
participating provider; (4) what
proportion of a participating hospital’s
total costs and charges for drugs reflect
drugs purchased through the 340B
program; (5) whether hospitals
participating in the 340B program
receive other manufacturer discounts
that impact their final drug cost; (6)
whether hospitals set different charges
for drugs purchased through the 340B
program than their charges for those
same drugs purchased outside the
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program; (7) the impact 340B drug
purchasing agreements have on OPPS
hospital claims data used to estimate
drug costs; (8) whether hospitals
participating in the 340B program
should be paid for drugs under the
OPPS at adjusted rates because they
have different average hospital
acquisition costs for drugs and
biologicals from nonparticipating
hospitals, (9) whether we should use the
equitable adjustment authority in
section 1833(t)(2)(E) of the Act to adjust
OPPS payments to hospitals for
separately payable drugs based on
hospitals’ participation in the 340B
program, so that drug payment for the
two classes of hospitals (340B
participating and 340B
nonparticipating) would reflect the
averge drug acquisition and pharmacy
overhead costs specific to each class of
hospital; and (10) any additional
information that would assist us in
understanding and considering this
issue for potential rulemaking in the
future.
As discussed above, in the CY 2009
OPPS/ASC proposed rule, we included
a proposal to break the single standard
cost center 5600 into two standard cost
centers, Drugs with High Overhead Cost
Charged to Patients and Drugs with Low
Overhead Cost Charged to Patients, to
reduce the reallocation of pharmacy
overhead cost from expensive to
inexpensive drugs and biologicals when
setting an equivalent average ASP-based
payment amount in the future. This
proposal is consistent with RTI’s
recommendation for creating a new cost
center whose CCR would be used to
adjust charges to costs for drugs
requiring detail coding. However, we
noted that while improved CCRs would
more accurately estimate the ASP-based
amount for combined drug and
pharmacy overhead payment, they
would not capture within HCPCS code
variability in pharmacy handling costs
resulting from different methods of drug
preparation used by hospitals. As
discussed above, we believe that
improved and more precise cost
reporting is the best way to improve the
accuracy of all cost-based payment
weights, including relative weights for
the IPPS MS–DRGs. Because both the
IPPS and the OPPS rely on cost-based
weights derived, in part, from data on
the Medicare hospital cost report form,
we indicated that public comment on
the proposed change to the cost report
to break the single standard cost center
5600 into two standard cost centers
should address any impact on both the
inpatient and outpatient payment
systems.
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68655
We stated in the proposed rule that
this proposal would not affect OPPS
cost estimation for
radiopharmaceuticals for several
reasons. First, we would not expect the
costs and charges for
radiopharmaceuticals to be assigned to
cost center 5600. Rather, cost center
4300 (Radioisotope) is more appropriate
for these items. Second, our claims data
demonstrated that some hospitals
continued to bill radiopharmaceuticals
under revenue code 0636, contrary to
UB–04 instructions (Official UB04 Data
Specifications Manual, AHA 2007, p.
127), specifically noting that
radiopharmaceuticals should be billed
under revenue codes 0343 (Diagnostic
Radiopharmaceuticals) and 0344
(Therapeutic Radiopharmaceuticals).
We believed that billing
radiopharmaceuticals under revenue
code 0636 could be a result of dated
CMS’ guidance regarding billing
radiopharmaceuticals under revenue
code 0636. On April 8, 2008, we deleted
this guidance from our Claims
Processing Manual through
administrative issuance (Transmittal
1487, Change Request 5999). Finally,
RTI did not observe evidence of
differential markup in cost center 4300
(for hospitals reporting the cost center)
for products reported under revenue
codes 0343 and 0344 (RTI report,
‘‘Refining Cost to Charge Ratios for
Calculating APC and MS–DRG Relative
Payment Weights,’’ July 2008).
In the CY 2009 OPPS/ASC proposed
rule, we discussed several ways we
could define the new cost centers for
purposes of hospital reporting. First, we
could adopt the assumptions behind
RTI’s empirical findings and require
that hospitals simply report the costs
and charges associated with revenue
code 0636 in the proposed new cost
center Drugs with High Overhead Cost
Charged to Patients. This approach
would require hospitals to report
charges and costs for all other drugs in
the proposed new cost center Drugs
with Low Overhead Cost Charged to
Patients. We believed this approach
would be administratively simple for
hospitals to implement because it would
easily align revenue code and cost
center relationships and would not
require hospitals to otherwise categorize
drugs or estimate a unique pharmacy
overhead cost for each drug.
Notwithstanding our requirement for
hospitals to report, consistent with CPT
and CMS instructions, all services
described by HCPCS codes provided in
an encounter, to the extent that
hospitals reported HCPCS codes for
drugs that are not packaged, this
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approach might isolate costs and
charges for drugs that are separately
paid under the OPPS for purposes of
more accurately estimating their costs.
While we believed that RTI’s findings
suggested an increase in the CCR for
adjustment of drug charges to costs
would result from isolating the costs
and charges for drugs billed under
revenue code 0636, one limitation of
this approach is that it would not fully
mitigate the disproportionate allocation
of pharmacy overhead cost reflected in
differential markup. Although clearly an
improvement in accuracy over current
cost estimation, it is likely that
significant variability in markup and
overhead cost for drugs currently billed
under revenue code 0636 would remain
in the new cost center CCR for Drugs
with High Overhead Cost Charged to
Patients.
Second, we could set a cost threshold
for drug acquisition and pharmacy
overhead cost for purposes of including
costs and charges for the drug in one of
the two proposed new cost centers. If
we were to implement this
methodology, we potentially could set
the threshold at the OPPS drug
packaging threshold, which was
proposed to be $60 for CY 2009. This
would clearly identify those drugs that
would be billed in each cost center
because all drug and biological HCPCS
codes would be assigned either
separately payable or packaged status
under the CY 2009 OPPS. However, we
believed that using the OPPS drug
packaging threshold could be too low,
and probably would not identify a cost
point that would maximize cost
differences between drugs with
relatively high pharmacy overhead cost
and drugs with relatively low pharmacy
overhead cost. This approach has the
benefit of considering cost, which
appears largely to determine the amount
of markup for pharmacy overhead costs
a hospital incorporates into drug
charges. Although some high cost drugs
may have low pharmacy overhead costs,
in general this alternative might do a
better job of improving cost estimates
for drugs with high pharmacy overhead
costs through the use of more specific
CCRs than the first alternative
discussed, a cost center that would
include all drugs currently billed under
revenue code 0636. On the other hand,
we were uncertain as to how we would
identify the most appropriate cost
threshold amount, or the manner and
frequency with which we would update
the threshold. More importantly, we
expressed concern that identifying the
unique acquisition and overhead cost
for each drug could impose a
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comparable administrative burden as
other prior proposals.
Third, as we discussed in the
proposed rule, we could also set a cost
threshold for pharmacy overhead
specifically to define high versus low
overhead cost for purposes of reporting
costs and charges for drugs in the two
new cost centers. This alternative would
require hospitals to identify the cost of
pharmacy overhead for every drug in
order to assign it to a cost center. This
approach would most accurately isolate
drugs with high and low overhead costs,
respectively. Therefore, the resulting
CCRs would better estimate the average
acquisition and overhead cost for these
drugs. On the other hand, as with the
second alternative, we were uncertain as
to how we would identify the most
appropriate pharmacy cost threshold
amount, or the manner and frequency
with which we would update the
threshold. Further, this approach could
also impose a significant hospital
administrative burden, comparable to
the burden identified by commenters
regarding other prior proposals.
A fourth approach discussed in the
proposed rule would be to instruct
hospitals to assign those drugs they
administer in the OPPS to the two
proposed new cost centers according to
the categories discussed in the CY 2006
final rule with comment period and
presented in Table 24 of the CY 2009
OPPS/ASC proposed rule. Under this
methodology, drugs falling in CMS
categories 1 and 2 would be billed
under revenue codes 025X or 063X
(other than 0636) and captured in the
cost report in the proposed new cost
center Drugs with Low Overhead Cost
Charged to Patients, while drugs falling
in CMS category 3 would be billed
under revenue code 0636 and reported
in the proposed new cost center Drugs
with High Overhead Cost Charged to
Patients. CMS would provide some
examples in the cost report instructions
of appropriate drugs for each category.
We indicated that we were aware that
some pharmacy stakeholders have
already categorized drug and biological
HCPCS codes into the three CMS
pharmacy overhead categories that were
proposed for CY 2006. Because
pharmacy overhead costs may vary
depending on the preparation of a
specific product at an individual
hospital and hospital accounting also
varies, the same drug could appear in a
different cost center across hospitals.
However, we indicated that we did not
believe it would be necessary for
hospitals to assign exactly the same
drugs to each of the two proposed new
cost centers, as long as hospitals’
assessment of the pharmacy overhead
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cost category is consistent with their
billing of these drugs under revenue
codes 063X (other than 0636) and 025X
or 0636 and the inclusion of these drugs
in the associated cost centers.
Prospectively, the OPPS cost estimation
methodology would use the CCR
calculated for the proposed new cost
center Drugs with High Overhead Cost
Charged to Patients to adjust drug
charges billed under revenue code 0636
to cost and the CCR calculated for the
proposed new cost center Drugs with
Low Overhead Cost Charged to Patients
to adjust drug charges billed under
revenue codes 025X and 063X (other
than 0636) to cost for determining drug
acquisition and pharmacy overhead
costs. We indicated in the proposed rule
that we believed this fourth approach
would best estimate a CCR for drugs
with high pharmacy overhead cost and
relatively low markup as reflected in
hospitals’ charges. Because the number
of drugs in pharmacy overhead category
three would be limited based on the
specific category description, this
approach should more accurately
address the limited markup for very
expensive drugs with high pharmacy
overhead costs, where charges do not
reflect the hospitals’ pharmacy overhead
costs for those drugs. We also believed
that hospitals would find this
alternative easier to implement than any
policy requiring hospitals to identify a
unique total acquisition and overhead
cost or a specific pharmacy overhead
cost for each drug for purposes of
assigning the drug’s costs and charges to
one of the two proposed new cost
centers. However, we realized that there
would still be some additional
administrative burden for hospitals that
had not yet determined the appropriate
pharmacy overhead category for each of
their drugs, and that they would need to
educate their billing staff, to modify
their chargemasters, and to adapt other
billing software.
In summary, we proposed to pay for
the combined average acquisition and
pharmacy overhead cost of separately
payable drugs and biologicals at ASP+4
percent based on the costs of separately
payable drugs calculated from claims
data under the CY 2009 OPPS. In
addition, we proposed to create two
new cost centers when we revise the
Medicare hospital cost report form,
specifically Drugs with High Overhead
Cost Charged to Patients and Drugs with
Low Overhead Cost Charged to Patients.
We indicated that we expected that
CCRs from these new cost centers would
be available in 2 to 3 years to refine
OPPS drug cost estimates by accounting
for differential hospital markup
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practices for drugs with high and low
pharmacy overhead costs. In the
proposed rule, we specifically invited
public comment on the policy and
operational benefits, challenges, and
concerns that might be associated with
these proposals, specifically as they
related to our proposed approach to
distinguishing between drugs and
biologicals for purposes of inclusion in
the two proposed new cost centers and
the other alternatives discussed above.
During its August 2008 meeting, the
APC Panel recommended that CMS not
implement the proposed change to the
cost center for drugs on the Medicare
cost report. In addition, the Panel
recommended that CMS continue to
provide payment for drugs at a rate of
no less than ASP+5 percent. We discuss
our response to these recommendations
along with our responses to public
comments below.
Comment: A few commenters
supported CMS’ proposal to split the
single standard cost center for drugs
(5600—Drugs Charged to Patients) into
two standard cost centers (Drugs With
High Overhead Cost Charged to Patients
and Drugs With Low Overhead Cost
Charged to Patients). Several of these
commenters, including MedPAC,
recommended splitting the single 5600
cost center into several cost centers, not
just the two presented in the OPPS
proposed rule. The commenters
believed that this would create even
more accurate CCRs for drug cost
estimates that could be used for future
ratesetting purposes.
However, the majority of commenters
did not support this proposal.
Commenters noted that, as in past
proposals made by CMS to more
specifically incorporate differential
hospital charging practices for
pharmacy overhead costs in ratesetting,
this proposal was administratively
burdensome for hospitals and was not
likely to result in reliable information
for future ratesetting purposes. The
commenters pointed to the differences
between the costs of drugs provided in
the HOPD, which include significant
personnel and specialized equipment
costs that would need to be allocated
between drugs assigned to the two
proposed cost centers, and the costs of
medical supplies, which principally
include the costs of the items
themselves. They cited these differences
as the main reason many commenters
opposed to the proposed drug cost
center split in turn supported the policy
finalized in the FY 2009 IPPS final rule
(73 FR 48453) to split the current single
cost center for Medical Supplies
Charged to Patients into two cost
centers, one for Medical Supplies
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Charged to Patients and another for
Implantable Devices Charged to
Patients, to account for charge
compression in the payment weights for
high cost medical devices under the
IPPS and the OPPS. While this latter
change was operationally feasible for
hospitals, many commenters believed
that the proposed changes to the cost
center for drugs were either
operationally impossible or would place
a significant administrative burden on
hospitals. In addition, the commenters
noted substantial problems with each of
options presented for classifying drugs
into one of the two proposed cost
centers. Finally, the commenters noted
that the associated requirement to begin
reporting HCPCS codes for inpatient
drugs was not possible for many
hospitals by January 1, 2009.
Some commenters also expressed
frustration that this proposal because it
was based in the hospital cost report,
would take several years to impact
OPPS payment rates for drugs. While
only a few commenters requested that
CMS implement immediate payment
changes, such as the regression-based
approach recommended by RTI, many
other commenters specifically rejected
RTI’s recommendation to apply a
regression-based approach to cost
estimation for drugs and biologicals.
Response: Once again, we appreciate
the commenters’ many suggestions on
ways to collect hospital pharmacy cost
data and the commenters’ concerns
regarding our proposal. As noted by the
overwhelming majority of commenters,
we understand that our CY 2009
proposal to change the standard cost
center for drugs could lead to increased
hospital burden. Our intent in making
this proposal was to address the issue of
differential hospital markup policies for
drugs that stakeholders believe result in
inaccurate hospital payment and not to
create hospital burden. We have made
numerous attempts over the past several
years to adopt methods for gathering
hospital information regarding
pharmacy overhead costs for possible
use in future OPPS ratesetting.
However, all of our prior proposals have
resulted in feedback citing increased
hospital burden and recommendations
that we not adopt any of the proposals.
We remain interested in finding
methodologies to further refine our
payment methodology for drugs and
biologicals under the OPPS. While we
continue to believe that more refined
and accurate hospital accounting data
are the preferred long-term solution to
mitigate charge compression in hospital
cost-based weights, based on the public
comments on this proposal and the
recommendation of the APC Panel, we
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68657
have decided not to finalize our
proposal to split the 5600 cost center
into two standard cost centers. We
remain interested in continuing our
dialogue with hospital stakeholders as
we continue to explore reasonable ways
to allocate pharmacy overhead costs to
low and high cost drugs and as we
further analyze the stakeholder
proposal, discussed above.
Comment: Some commenters agreed
with the APC Panel’s recommendation
to continue providing payment for
separately payable drugs at no less than
ASP+5 percent. However, the majority
of commenters recommended that CMS
provide payment for separately payable
drugs and biologicals at ASP+6 percent
for CY 2009. Some commenters noted
that payment at ASP+6 percent would
eliminate a site-of-service differential
that would otherwise exist between the
HOPD and physicians’ office settings if
HOPDs were paid at ASP+4 percent, as
proposed, while physicians’ offices
were paid at ASP+6 percent in CY 2009.
In addition, some commenters
expressed concern that hospitals may be
unable to purchase many drugs at
ASP+4 percent, and that this rate would
be insufficient for certain drugs when
considering both acquisition costs and
pharmacy overhead costs. The
commenters believed that the proposed
payment rate could lead to access
problems for Medicare beneficiaries.
Response: In analyzing updated
claims data for the CY 2009 final rule
with comment period, we again
performed the analysis described in the
CY 2009 proposed rule by comparing
the aggregate costs for separately
payable drugs and biologicals on claims
to the ASP-based payment rates,
weighting these HCPCS codes by their
OPPS volumes, and calculating an
equivalent average ASP-based payment
rate for drugs and biologicals provided
in HOPDs for CY 2009. We used
updated CY 2007 mean unit costs and
drug volumes and updated ASP data for
this final rule analysis to determine the
final packaging status for each drug. The
result of our final analysis using
updated hospital claims data for the full
CY 2007 year and updated CCRs is that
the equivalent average ASP-based
payment amount for separately payable
drugs and biologicals, including
pharmacy handling costs, is equal to
ASP+2 percent for CY 2009. Therefore,
according to our CY 2009 proposal for
payment of separately payable drugs
and biologicals which includes
pharmacy overhead payment, based on
separately payable drug costs from CY
2007 hospital claims, the OPPS payment
rate for separately payable drugs and
biologicals would be ASP+2 percent.
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We acknowledge that different
payment rates for drugs and biologicals
provided in the physician’s office and
HOPD settings are of concern to some
commenters. However, the OPPS, the
MPFS physician’s office payments for
services, and physician’s office
payments for Part B drugs are based on
very different payment methodologies.
In particular, the OPPS relies upon costs
from the most updated claims and
Medicare cost report data to develop
payment rates. On the other hand, the
MPFS pays for services based on
estimates of input costs and pays for
drugs and biologicals at ASP+6 percent,
as required by statute. Therefore, it is
not surprising to us that the estimated
costs of drug and biologicals and their
associated pharmacy overhead, like
many other OPPS services, could be
different in the HOPD than in the
physician’s office, resulting in different
payments in the two settings. We do not
believe that different payment rates for
drugs and biologicals in HOPD or
physicians’ office settings would create
beneficiary access problems for drug
administration services because we have
not seen problems with access in the
two settings for other types of services,
including diagnostic studies, surgical
procedures, and visits, which generally
have different payment rates under the
two payment systems (unless there is an
applicable externally applied statutory
cap to payment, such as the cap on
payment for imaging services provided
in the physician’s office based on the
OPPS rates).
As we stated in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66763), after a period of continuing
ASP+6 percent payment in CY 2007
while we gathered additional
information regarding pharmacy
overhead costs, we believe that it is
most appropriate at this point to
continue to pay for drugs and
biologicals and their associated
pharmacy overhead costs using an ASPbased system, but to determine the
relative ASP percent based on hospital
costs from claims rather than provide
payment at ASP+6 percent that would
be paid in the physician’s office or at
ASP+5 percent as recommended by the
APC Panel for CY 2009. We note that,
for CY 2008, we adopted a payment rate
of ASP+5 percent as a transition
between the CY 2007 OPPS payment
rate of ASP+6 and the claims-based CY
2008 final rule rate of ASP+3 percent.
We continue to believe that pharmacy
overhead and handling costs are
included by hospitals in their drug
charges and should be paid through the
drug payment and that a payment rate
reflecting costs from claims data is
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appropriate. However, we believe that a
transition to a refined claims-based
payment methodology continues to be
appropriate as well, while we further
explore the complex issues surrounding
hospital allocation of pharmacy
overhead costs to drug charges and
differential hospital drug costs based on
hospital participation in the 340B
program. Therefore, we will provide a
transitional payment rate of ASP+4
percent in CY 2009 for separately
payable drugs and biologicals, the same
payment rate that was proposed for CY
2009 based on hospital claims data
available for the CY 2009 OPPS/ASC
proposed rule. Moreover, we note that
payment at ASP+4 percent is consistent
with a 50/50 blend of the CY 2008
payment rate of ASP+5 percent and the
final CY 2009 equivalent average ASPbased payment amount of ASP+2
percent, as caclculated from CY 2007
claims data available for this final rule
with comment period. This is similar to
our CY 2008 transition methodology for
payment of separately payable drugs
and biologicals. While payment at
ASP+4 percent is slightly higher than
the equivalent average ASP-based
payment amount for all hospitals that
we calculated from hospital costs
according to the methodology we have
used since CY 2006, we believe that
another transitional payment year
appropriately allows for a gradual
change in hospital payment from the CY
2008 drug payment rate to a refined
claims-based payment methodology.
This CY 2009 transitional payment
should help to ensure continued access
to separately payable drugs and
biologicals in the HOPD, while also
providing us with another year to
explore the complex issues surrounding
hospital allocation of pharmacy
overhead costs to drug charges and
differential hospital drug costs based on
hospital participation in the 340B
program, in order to determine if a
refined methodology could improve
payment accuracy, while also ensuring
equitable payments. In summary, we
will provide another year of transitional
payment for CY 2009 at ASP+4 percent
for separately payable drugs and
biologicals and associated pharmacy
overhead costs. As a result, we are not
accepting the recommendation of the
APC Panel to continue to pay for
separately payable drugs and biologicals
at no less than ASP+5 percent for CY
2009.
As noted above, we will be further
exploring the impact of hospitals
participating in the 340B program on
hospital drug costs calculated from
OPPS claims during this CY 2009
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transitional year, where the separately
payable drug costs from OPPS claims
would have otherwise led us to pay all
hospitals at ASP+2 percent according to
our proposed methodology. Given
stakeholders’ comments about
increasing hospital participation in the
340B program and the significantly
reduced drug acquisition costs that may
result, we are considering various
approaches to improve the accuracy of
OPPS payment to all hospitals for the
acquisition and pharmacy overhead
costs of separately payable drugs,
including whether we should use the
equitable adjustment authority in
section 1833(t)(2)(E) of the Act to adjust
OPPS payments to hospitals for
separtately payable drugs based on
hospitals’ participation in the 340B
program, so that drug payment for the
two classes of hospitals (340B
participating and 340B
nonparticipating) would reflect the
average drug acquisition and pharmacy
overhead costs specific to each class of
hospital.
Comment: One commenter requested
that CMS create an HCPCS J-code for
tositumomab, currently provided under
a radioimmunotherapy regimen and
billed as part of HCPCS code G3001
(Administration and supply of
tositumomab, 450 mg). The commenter
argued that because tositumomab is
listed in compendia, is approved by the
FDA as part of the BEXXAR regimen,
and has its own National Drug Code
(NDC) number, it should be recognized
as a drug and, therefore, be paid as other
drugs are paid under the OPPS
methodology, instead of having a
payment rate determined by hospital
claims data. The commenter suggested
that a payment rate could be established
using the ASP methodology.
Response: We have consistently noted
that unlabeled tositumomab is not
approved as either a drug or a
radiopharmaceutical, but it is a supply
that is required as part of the
radioimmunotherapy treatment regimen
(November 27, 2007 OPPS/ASC final
rule with comment period for CY 2008
(72 FR 66765); November 10, 2005
OPPS final rule with comment period
for CY 2006 (70 FR 68654); November
7, 2003 OPPS final rule with comment
period for CY 2004 (68 FR 63443)). We
do not make separate payment for
supplies used in services provided
under the OPPS. Payments for necessary
supplies are packaged into payments for
the separately payable services provided
by the hospital. Specifically,
administration of unlabeled
tositumomab is a complete service that
qualifies for separate payment under its
own clinical APC. This complete service
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is currently described by HCPCS code
G3001. Therefore, we do not agree with
the commenter’s recommendation that
we should assign a separate HCPCS
code to the supply of unlabeled
tositumomab. Rather, we will continue
to make separate payment for the
administration of tositumomab, and
payment for the supply of unlabeled
tositumomab is packaged into the
administration payment.
After consideration of the public
comments received and the
recommendations of the APC Panel, we
are finalizing our proposal to provide
payment for nonpass-through drugs and
biologicals based on costs calculated
from hospital claims, with modification
to provide a 1-year transitional rate of
ASP+4 percent for CY 2009. Moreover,
we are not finalizing our proposal to
split the single standard drug cost center
into two cost centers. Instead, we will
continue to explore other potential
approaches to improving our drug cost
estimation to improve payment
accuracy for separately payable drugs
and biologicals. Furthermore, we did
not propose to adopt and, therefore, are
not implementing the use of regressionbased CCRs for cost estimation in any
area of the CY 2009 OPPS, including
drugs requiring detail coding and IV
solutions.
c. Payment for Blood Clotting Factors
For CY 2008, we are providing
payment for blood clotting factors under
the OPPS at ASP+5 percent, plus an
additional payment for the furnishing
fee that is also a part of the payment for
blood clotting factors furnished in
physicians’ offices under Medicare Part
B. The CY 2008 updated furnishing fee
increased by 4.0 percent to $0.158 per
unit.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41492), we proposed to pay
for blood clotting factors at ASP+4
percent, consistent with our proposed
payment policy for other nonpassthrough separately payable drugs and
biologicals, and to continue our policy
for payment of the furnishing fee using
an updated amount for CY 2009.
Because the furnishing fee update is
based on the percentage increase in the
Consumer Price Index (CPI) for medical
care for the 12-month period ending
with June of the previous year and the
Bureau of Labor Statistics releases the
applicable CPI data after the MPFS and
OPPS/ASC proposed rules were
published, we were not able to include
the actual updated furnishing fee in the
proposed rule. Therefore, in accordance
with our policy as finalized in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66765), we will
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announce the actual figure for the
percent change in the applicable CPI
and the updated furnishing fee
calculated based on that figure through
applicable program instructions and
posting on the CMS Web site at:
https://www.cms.hhs.gov/McrPartBDrug
AvgSalesPrice/.
Comment: Many commenters
supported the CY 2009 OPPS proposal
to continue to provide a furnishing fee
for blood clotting factors. Several
commenters requested that CMS
provide payment for blood clotting
factors at a rate of ASP+6 percent, in
addition to providing the furnishing fee.
Response: We see no compelling
reason to provide payment for blood
clotting factors under a different
methodology for OPPS purposes at this
time. We believe that the payment rate
of ASP+4 percent that we are finalizing
for payment of all separately payable
drugs and biologicals in CY 2009, and
the additional blood clotting factor
furnishing fee, are appropriate and will
not jeopardize access to these treatments
in the hospital outpatient setting.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to provide payment for
blood clotting factors under the same
methodology as other separately payable
drugs and biologicals under the OPPS
and to continue paying an updated
furnishing fee.
4. Payment for Therapeutic
Radiopharmaceuticals
a. Background
Section 303(h) of Public Law 108–173
exempted radiopharmaceuticals from
ASP pricing in the physician’s office
setting. Beginning in the CY 2005 OPPS
final rule with comment period, we
have exempted radiopharmaceutical
manufacturers from reporting ASP data
for payment purposes under the OPPS.
(For more information, we refer readers
to the CY 2005 OPPS final rule with
comment period (69 FR 65811) and the
CY 2006 OPPS final rule with comment
period (70 FR 68655).) Consequently,
we did not have ASP data for
radiopharmaceuticals for consideration
for previous years’ OPPS ratesetting. In
accordance with section
1833(t)(14)(B)(i)(I) of the Act, we have
classified radiopharmaceuticals under
the OPPS as SCODs. As such, we have
paid for radiopharmaceuticals at average
acquisition cost as determined by the
Secretary and subject to any adjustment
for overhead costs.
Radiopharmaceuticals also are subject to
the policies affecting all similarly
classified OPPS drugs and biologicals,
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such as pass-through payment for
diagnostic and therapeutic
radiopharmaceuticals and individual
packaging determinations for
therapeutic radiopharmaceuticals,
discussed earlier in this final rule with
comment period.
For CYs 2006 and 2007, we used
mean unit cost data from hospital
claims to determine each
radiopharmaceutical’s packaging status
and implemented a temporary policy to
pay for separately payable
radiopharmaceuticals based on the
hospital’s charge for each
radiopharmaceutical adjusted to cost
using the hospital’s overall CCR. In
addition, in the CY 2006 final rule with
comment period (70 FR 68654), we
instructed hospitals to include charges
for radiopharmaceutical handling in
their charges for the
radiopharmaceutical products so these
costs would be reflected in the CY 2008
ratesetting process. We note that this
continues to be our expectation, and we
believe that the charges for
radiopharmaceuticals in the CY 2007
claims data that we are using for this
final rule with comment period reflect
both the acquisition cost of the
radiopharmaceutical and its associated
overhead. The methodology of
providing separate payment based on
the individual hospital’s overall CCR for
CYs 2006 and 2007 was finalized as an
interim proxy for average acquisition
cost because of the unique
circumstances associated with
providing radiopharmaceutical products
to Medicare beneficiaries. The single
OPPS payment represented Medicare
payment for both the acquisition cost of
the radiopharmaceutical and its
associated handling costs.
During the CY 2006 and CY 2007
rulemaking processes, we encouraged
hospitals and radiopharmaceutical
stakeholders to assist us in developing
a viable long-term prospective payment
methodology for these products under
the OPPS. As reiterated in the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66766), we were pleased
to note that we had many discussions
with interested parties regarding the
availability and limitations of
radiopharmaceutical cost data.
In considering payment options for
therapeutic radiopharmaceuticals for CY
2008, we examined several alternatives
that we discussed in our CY 2008 OPPS/
ASC proposed rule (72 FR 42738
through 42739) and CY 2008 OPPS/ASC
final rule with comment period (72 FR
66769 through 66770). (We refer readers
to these rules for a full discussion of all
of the options that we considered.) After
considering the options and the public
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comments received, we finalized a CY
2008 methodology to provide a
prospective payment for therapeutic
radiopharmaceuticals (defined as those
Level II HCPCS codes that include the
term ‘‘therapeutic’’ along with a
radiopharmaceutical in their long code
descriptors) using mean costs derived
from the CY 2006 claims data, where the
costs are determined using our standard
methodology of applying hospitalspecific departmental CCRs to
radiopharmaceutical charges, defaulting
to hospital-specific overall CCRs only if
appropriate departmental CCRs are
unavailable (72 FR 66772). In addition,
we finalized a policy to package
payment for all diagnostic
radiopharmaceuticals (defined as Level
II HCPCS codes that include the term
‘‘diagnostic’’ along with a
radiopharmaceutical in their long code
descriptors) for CY 2008. As discussed
in the CY 2008 OPPS/ASC proposed
rule (72 FR 42739), we believed that
adopting prospective payment based on
historical hospital claims data was
appropriate because it served as our
most accurate available proxy for the
average hospital acquisition cost of
separately payable therapeutic
radiopharmaceuticals. In addition, we
noted that we have found that our
general prospective payment
methodology based on historical
hospital claims data results in more
consistent, predictable, and equitable
payment amounts across hospitals and
likely provides incentives to hospitals
for efficiently and economically
providing these outpatient services.
Prior to implementation of our
finalized CY 2008 methodology of
providing a prospective payment for
therapeutic radiopharmaceuticals,
section 106(b) of Public Law 110–173
was enacted on December 29, 2007, that
provided payment for therapeutic
radiopharmaceuticals based on
individual hospital charges adjusted to
cost. Therefore, hospitals continue to
receive payment for therapeutic
radiopharmaceuticals by applying the
hospital-specific overall CCR to each
hospital’s charge for a therapeutic
radiopharmaceutical from January 1,
2008 through June 30, 2008. As we
stated in the CY 2009 OPPS/ASC
proposed rule, thereafter, the OPPS
would provide payment for separately
payable therapeutic
radiopharmaceuticals on a prospective
basis, with payment rates based upon
mean costs from hospital claims data as
set forth in the CY 2008 OPPS/ASC final
rule with comment period, unless
otherwise required by law.
Following issuance of the CY 2009
OPPS/ASC proposed rule, section 142 of
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Public Law 110–275 amended section
1833(t)(16)(C) of the Act, as amended by
section 106(a) of Public Law 110–173, to
further extend the payment period for
therapeutic radiopharmaceuticals based
on hospitals’ charges adjusted to cost
through December 31, 2009. Therefore,
we have continued to pay hospitals for
therapeutic radiopharmaceuticals at
charges adjusted to cost through the
remainder of CY 2008.
b. Payment Policy
Since the start of the temporary costbased payment methodology for
radiopharmaceuticals in CY 2006, we
have met with several interested parties
on a number of occasions regarding
payment under the OPPS for
radiopharmaceuticals and have received
numerous different suggestions from
these stakeholders regarding payment
methodologies that we could employ for
future use under the OPPS.
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66771), we
solicited comments requesting
interested parties to provide information
related to if and how the existing ASP
methodology could be used to establish
payment for specific therapeutic
radiopharmaceuticals under the OPPS.
We received several responses to our
request for comments.
Similar to the recommendations we
received during the CY 2008 OPPS/ASC
proposed rule comment period (72 FR
66770), we received several suggestions
regarding the establishment of an OPPSspecific methodology for
radiopharmaceutical payment that
would be similar to the ASP
methodology, without following the
established ASP procedures referenced
at section 1847A of the Act and
implemented through rulemaking. Some
commenters recommended using
external data submitted by a variety of
sources other than manufacturers. Along
this line, the commenters suggested
gathering information from nuclear
pharmacies using methodologies with a
variety of names such as Nuclear
Pharmacy Calculated Invoiced Price
(Averaged) (CIP) and Calculated
Pharmacy Sales Price (CPSP). Other
commenters recommended that CMS
base payment for certain
radiopharmaceuticals on manufacturerreported ASP.
As noted in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66771), a ratesetting approach based on
external data would be administratively
burdensome for us because we would be
required to collect, process, and review
external information to ensure that the
information was valid, reliable, and
representative of a diverse group of
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hospitals and, therefore, could be used
to establish rates for all hospitals.
However, we specifically requested
additional comments regarding the use
of the existing ASP reporting structure
for therapeutic radiopharmaceuticals as
this established methodology is already
used for payment of other drugs
provided in the hospital outpatient
setting (72 FR 66771). While we
received several recommendations from
commenters on the CY 2008 OPPS/ASC
final rule with comment period
regarding payment of therapeutic
radiopharmaceuticals based on
estimated costs provided by
manufacturers or other parties, we
believe that the use of external data for
payment of therapeutic
radiopharmaceuticals should only be
adopted if those external data are
subject to the same well-established
regulatory framework as the ASP data
currently used for payment of separately
payable drugs and biologicals under the
OPPS. We have previously indicated
that nondevice external data used for
setting payment rates should be publicly
available and representative of a diverse
group of hospitals both by location and
type. In addition, nondevice external
data sources also would have to be
identified. We do not believe that
external therapeutic
radiopharmaceutical cost data
voluntarily provided outside of the
established ASP methodology, either by
manufacturers or nuclear pharmacies,
would generally satisfy these criteria
that are minimum standards for setting
OPPS payment rates.
As noted in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66770), at its September 2007 meeting,
the APC Panel recommended that CMS
create a composite APC for Bexxar or
related therapies and present it for the
APC Panel’s consideration at the next
APC Panel meeting. We accepted this
recommendation and modeled a
radioimmunotherapy (RIT) composite
APC for both Bexxar and Zevalin
therapies using our final rule CY 2008
claims database. We discussed this
analysis with the APC Panel at its
March 2008 meeting.
To perform this analysis for the APC
Panel, we first identified all claims that
had an occurrence of a case-defining
therapeutic radiopharmaceutical HCPCS
code used for a RIT treatment: A9545
(Iodine I–131 tositumomab, therapeutic,
per treatment dose) and A9543 (Yttrium
Y–90 ibritumomab tiuxetan,
therapeutic, per treatment dose, up to 40
millicuries). We then identified what we
considered to be the HCPCS codes for
services and products associated with
RIT, based on information from the
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manufacturers and suggestions from
CMS medical advisors and identified
associated claims (using beneficiary
health insurance claim (HIC) numbers)
to develop the total median cost for a
RIT composite APC.
We note that very few hospitals billed
all of the HCPCS codes for an individual
beneficiary that we expected to be
reported for a case of RIT treatment. We
used this ‘‘HIC-linked’’ file consisting of
all associated claims for each
beneficiary from one hospital that we
considered to be part of a single case of
RIT treatment to develop a composite
APC cost estimate for a course of RIT
treatment, where a case required: (1)
HCPCS code A9545 or A9543; (2) a
HCPCS code for either nonradiolabeled
tositumomab (G3001 (Administration or
supply of tositumomab, 450 mg)) or
rituximab (J9310 (Rituximab, 100 mg))
(which also would indicate the start of
a RIT case); (3) a HCPCS code for the
corresponding diagnostic
radiopharmaceutical (A9544 (Iodine I–
131 tositumomab, diagnostic, per study
dose) or A9542 (Indium In-111,
ibritumomab tiuxetan, diagnostic, per
study dose, up to 5 millicuries)); and (4)
at least one instance of a diagnostic
imaging service (CPT code 78804
(Radiopharmaceutical localization of
tumor or distribution of
radiopharmaceutical agent(s); whole
body, requiring two or more days
imaging)) prior to the administration of
the therapeutic radiopharmaceutical. In
addition, in order to further define the
case for an estimate of a composite APC
cost, we did not include the costs of
services occurring on dates before the
provision of the nonradiolabeled
tositumomab or rituximab or after the
administration of the therapeutic
radiopharmaceutical.
Other services we expected to be
reported for a case, such as CPT code
79403 (Radiopharmaceutical therapy,
radiolabeled monoclonal antibody by
intravenous infusion) and CPT code
77300 (Basic radiation dosimetry
calculation, central axis depth dose
calculation, TDF, NSD, gap calculation,
off axis factor, tissue inhomogeneity
factors, calculation of non-ionizing
radiation surface and depth dose, as
required during course of treatment,
only when prescribed by the treating
physician), were considered optional
and, although they were not required in
order to determine the RIT case, the
costs of these associated services were
included when we established the
median cost of the RIT composite APC.
We determined that the median cost
for the RIT composite APC, including
required and optional additional
services directly related to the RIT
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treatment, would be approximately
$19,000. This figure represents, at a
minimum, the estimated cost of the
nonradiolabeled tositumomab (or
rituximab), the diagnostic
radiopharmaceutical, the therapeutic
radiopharmaceutical, and the imaging,
based on costs from hospital claims
data.
Upon review of this study, the APC
Panel, at its March 2008 meeting,
recommended that CMS pursue a RIT
composite APC that uses existing claims
and stakeholder data to establish
appropriate payment rates for RIT
protocols. In addition, the APC Panel
recommended that CMS provide
specific guidance to hospitals on
appropriate billing for RIT under a
composite APC methodology. As we
discussed in the CY 2009 OPPS/ASC
proposed rule (73 FR 41495), we are not
accepting these recommendations of the
APC Panel. First, we do not believe it
would be appropriate to incorporate
external data into a composite APC
methodology, when composite APC
median costs for a comprehensive
service that the composite APC
describes are based upon reported
hospital costs on claims as described in
section II.A.2.e. of this final rule with
comment period. As we have hospital
costs from CY 2007 claims for the
services that would be paid through a
RIT composite APC, we would have no
reason to use external stakeholder data
instead of reported hospital costs for
ratesetting for such an APC. In addition,
as the APC Panel alluded to in its
second recommendation regarding
billing guidance to hospitals, our claims
analysis demonstrated that, according to
hospital claims data, apparently few
patients actually received all the
component services associated with RIT
treatment from a single hospital, or
many RIT treatments were incorrectly
reported by hospitals. A composite APC
payment provides more accurate
payment for a set of major services with
only limited variation from hospital to
hospital or from case to case and relies
on correctly coded claims for the
comprehensive service to develop the
composite cost, whereas RIT treatment
does not appear to have these
characteristics. Stakeholders have
confirmed that a proportion of patients
receiving a diagnostic
radiopharmaceutical and imaging in
preparation for RIT treatment do not go
on to receive the therapeutic
radiopharmaceutical for a variety of
specific clinical reasons. Furthermore,
the whole course of RIT treatment may
occur over a several week period, and
the challenges associated with
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68661
instructing hospitals to report
component services in a timely fashion
that would allow the I/OCE to
determine whether a composite
payment would be appropriate are
significant. Therefore, as we proposed,
we believe it would be premature to
make payment of a composite APC for
RIT treatment for CY 2009.
We received comments on the CY
2008 OPPS/ASC final rule with
comment period from certain
radiopharmaceutical manufacturers who
indicated that the standard ASP
methodology could be used for payment
of certain therapeutic
radiopharmaceutical products.
Specifically, these manufacturers
expressed interest in providing ASP for
their therapeutic radiopharmaceutical
products as a basis for payment under
the OPPS. We appreciate the
willingness of these manufacturers to
provide ASP data, but we recognize that
payment based on the ASP methodology
may not be possible for all therapeutic
radiopharmaceuticals if manufacturers
are unable or unwilling to voluntarily
submit ASP data. Therefore, in the CY
2009 OPPS/ASC proposed rule, we
proposed the following payment
methodology for therapeutic
radiopharmaceuticals under the CY
2009 OPPS. For therapeutic
radiopharmaceuticals where ASP
information is submitted through the
established ASP process by all
manufacturers of the specific
therapeutic radiopharmaceutical, we
proposed to provide payment for the
average acquisition and associated
handling costs of the therapeutic
radiopharmaceutical at the same relative
ASP-based amount (proposed at ASP+4
percent for CY 2009) that we would pay
for separately payable drugs and
biologicals in CY 2009 under the OPPS.
If sufficient ASP information is not
submitted or appropriately certified by
the manufacturer for a given calendar
year quarter, for that quarter we
proposed that the OPPS would provide
a prospective payment based on the
mean cost from hospital claims data as
displayed in Table 25 of the proposed
rule, as this was the methodology
finalized in the CY 2008 OPPS/ASC
final rule with comment period.
Further, we proposed to continue the
methodology, as discussed in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66772), of
eliminating claims from providers that
consistently (more than 2 times)
reported charges in the CY 2007 claims
data that were less than $100 when
converted to costs for HCPCS codes
A9543 and A9545 as part of the usual
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ratesetting process. We believed that
this would mitigate the effects of using
incorrectly coded claims from several
providers in our standard ratesetting
methodology which calculates the mean
costs for these two products from the
claims available for the update year.
Because we did not have ASP data for
therapeutic radiopharmaceuticals that
were used for payment in April 2008,
the proposed payment rates included in
Addenda A and B to the proposed rule
were based on mean costs from
historical hospital claims data available
for the proposed rule. Under our
proposal that would initially look to
ASP data to establish the payment rates
for separately payable therapeutic
radiopharmaceuticals, beginning in CY
2009, we proposed to update the
payment rates for therapeutic
radiopharmaceuticals quarterly as new
ASP data become available, just as we
would update the payment rates for
separately payable drugs and biologicals
under the OPPS.
We proposed to allow manufacturers
to submit ASP information for any
separately payable therapeutic
radiopharmaceutical for payment
purposes under the OPPS. However, we
did not propose to compel
manufacturers to submit ASP
information. The ASP data submitted
would need to be provided for a patientspecific dose, or patient-ready form, of
the therapeutic radiopharmaceutical in
order to properly calculate the ASP
amount for a given HCPCS code. In
addition, in those instances where there
is more than one manufacturer of a
particular therapeutic
radiopharmaceutical, we noted that all
manufacturers would need to submit
ASP information in order for payment to
be made on an ASP basis. In the
proposed rule, we specifically requested
public comment on the development of
a crosswalk, similar to the NDC/HCPCS
crosswalk for separately payable drugs
and biologicals posted on the CMS Web
site at: https://www.cms.hhs.gov/
McrPartBDrugAvgSalesPrice/01a_2008
aspfiles.asp, for use for therapeutic
radiopharmaceuticals. We believed that
the use of ASP information for OPPS
payment would provide an opportunity
to improve payment accuracy for these
products by applying an established
methodology that has already been
successfully implemented under the
OPPS for other separately payable drugs
and biologicals. As is the case with
other drugs and biologicals subject to
ASP reporting, in order for a therapeutic
radiopharmaceutical to receive payment
based on ASP beginning January 1,
2009, we would need to receive ASP
information from the manufacturer in
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October 2008 that would reflect
therapeutic radiopharmaceutical sales
in the third quarter of CY 2008 (July 1,
2008 through September 30, 2008). We
indicated that these data would not be
available for publication in this CY 2009
OPPS/ASC final rule with comment
period but would be included in the
January 2009 OPPS quarterly release
that would update the payment rates for
separately payable drugs, biologicals,
and therapeutic radiopharmaceuticals
based on the most recent ASP data,
consistent with our customary practice
over the past 3 years when we have
used the ASP methodology for payment
of separately payable drugs and
biologicals under the OPPS. In addition,
we indicated our need to receive
information from radiopharmaceutical
manufacturers that would allow us to
calculate a unit dose cost estimate based
on the applicable HCPCS code for the
therapeutic radiopharmaceutical.
We realize that not all therapeutic
radiopharmaceutical manufacturers may
be willing or able to submit ASP
information for a variety of reasons. We
proposed to provide payment at the ASP
rate if ASP information is available for
a given calendar year quarter or, if ASP
information is not available, we
proposed to provide payment based on
the most recent hospital mean unit cost
data that we have available. We believed
that both methodologies represented an
appropriate and adequate proxy for
average hospital acquisition cost and
associated handling costs for these
products. Therefore, if ASP information
for the appropriate period of sales
related to payment in any CY 2009
quarter was not available, we would rely
on the CY 2007 mean unit cost data
derived from hospital claims to set the
payment rates for therapeutic
radiopharmaceuticals. We noted that
this is not the usual OPPS process that
relies on alternative data sources, such
as WAC or AWP, when ASP information
is temporarily unavailable, prior to
defaulting to the mean unit cost from
hospital claims data. We proposed to
use this methodology specifically for
therapeutic radiopharmaceuticals
whereby we would immediately default
to the mean unit cost from hospital
claims if sufficient ASP data were not
available because we were not
proposing to require therapeutic
radiopharmaceutical manufacturers to
report ASP data at this time. We did not
believe that WAC or AWP would be an
appropriate proxy for OPPS payment for
average therapeutic
radiopharmaceutical acquisition cost
and associated handling costs when
manufacturers would not be required to
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submit ASP data and, therefore,
payment based on WAC or AWP could
continue for the full calendar year. We
remind readers that WAC or AWP
provide temporary payment rates for
drugs under the umbrella of the general
ASP methodology, and these are
typically used while we are awaiting
ASP information on actual sales prices
to be submitted by drug manufacturers.
We do not believe that it would be most
appropriate to provide payment through
WAC or AWP on a long-term basis for
radiopharmaceuticals sold by those
manufacturers that choose not to or
cannot submit ASP information.
Similar to the ASP process already in
place for drugs and biologicals, we
proposed to update ASP data for
therapeutic radiopharmaceuticals
through our quarterly process as
updates become available. In addition,
we proposed to assess the availability of
ASP data for therapeutic
radiopharmaceuticals quarterly, and if
ASP data became available midyear, we
would transition at the next available
quarter to ASP-based payment. For
example, if ASP data were not available
for the quarter beginning January 2009
(that is, ASP information reflective of
third quarter CY 2008 sales are not
submitted in October 2008), the next
opportunity to begin payment based on
ASP data for a therapeutic
radiopharmaceutical would be April
2009 if ASP data reflective of fourth
quarter CY 2008 sales were submitted in
January 2009.
Comment: Several commenters
supported CMS’ proposal to provide
payment for therapeutic
radiopharmaceuticals based on the ASP
methodology. While some commenters
acknowledged that ASP reporting may
not be possible for all therapeutic
radiopharmaceutical manufacturers,
several commenters noted their intent to
begin providing CMS with ASP data for
specific therapeutic
radiopharmaceuticals in CY 2009.
Finally, while many commenters
noted that Public Law 110–275 would
not allow the proposed ASP
methodology to be adopted for CY 2009,
many commenters urged CMS to
consider this methodology for CY 2010
and beyond.
Response: We appreciate the support
for our proposal to provide payment for
therapeutic radiopharmaceuticals based
on the ASP methodology for CY 2009.
However, as the commenters noted,
Public Law 110–275 has directed us to
provide payment for therapeutic
radiopharmaceuticals at hospital
charges adjusted to cost throughout CY
2009. Therefore, our CY 2009 payment
methodology for therapeutic
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radiopharmaceuticals will be made in
accordance with the statutory
requirements. However, we appreciate
the comments on the use of the ASP
methodology and will consider them as
we proceed with our CY 2010
ratesetting process.
After consideration of the public
comments received, and taking into
account the requirements of Public Law
110–275, we are finalizing a policy to
provide payment for all therapeutic
radiopharmaceuticals listed in Table 29
below at hospital charges adjusted to
cost for CY 2009. These therapeutic
radiopharmaceuticals are assigned
status indicator ‘‘H’’ in Addendum B to
68663
this final rule with comment period, as
discussed in section XIII.A. of this final
rule with comment period. As described
earlier, we are continuing to define
therapeutic radiopharmaceuticals as
those radiopharmaceuticals that contain
the word ‘‘therapeutic’’ in their long
HCPCS codes descriptors.
TABLE 29—CY 2009 THERAPEUTIC RADIOPHARMACEUTICALS PAID AT CHARGES ADJUSTED TO COST
CY 2009 HCPCS code
A9517
A9530
A9543
A9545
A9563
A9564
A9600
A9605
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
..................................................
I131 iodide cap, rx .........................................................................................
I131 iodide sol, rx ..........................................................................................
Y90 ibritumomab, rx ......................................................................................
I131 tositumomab, rx .....................................................................................
P32 Na phosphate .........................................................................................
P32 chromic phosphate .................................................................................
Sr89 strontium ...............................................................................................
Sm 153 lexidronm ..........................................................................................
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5. Payment for Nonpass-Through Drugs,
Biologicals, and Radiopharmaceuticals
With HCPCS Codes, but Without OPPS
Hospital Claims Data
Public Law 108–173 does not address
the OPPS payment in CY 2005 and after
for drugs, biologicals, and
radiopharmaceuticals that have assigned
HCPCS codes, but that do not have a
reference AWP or approval for payment
as pass-through drugs or biologicals.
Because there is no statutory provision
that dictated payment for such drugs
and biologicals in CY 2005, and because
we had no hospital claims data to use
in establishing a payment rate for them,
we investigated several payment options
for CY 2005 and discussed them in
detail in the CY 2005 OPPS final rule
with comment period (69 FR 65797
through 65799).
For CYs 2005 to 2007, we
implemented a policy to provide
separate payment for new drugs,
biologicals, and radiopharmaceuticals
with HCPCS codes, but which did not
have pass-through status, at a rate that
was equivalent to the payment they
received in the physician’s office
setting, established in accordance with
the ASP methodology. For CY 2008, we
finalized a policy to provide payment
for new drugs and biologicals with
HCPCS codes but which did not have
pass-through status and were without
OPPS hospital claims data, at ASP+5
percent, consistent with the final OPPS
payment methodology for other
separately payable drugs and
biologicals. In the CY 2009 OPPS/ASC
proposed rule (73 FR 41496), we
proposed to continue this methodology
for CY 2009. Therefore, for CY 2009, we
proposed to provide payment for new
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Final CY
2009 APC
CY 2009 short descriptor
Jkt 217001
drugs and biologicals with HCPCS
codes, but which do not have passthrough status and are without OPPS
hospital claims data, at ASP+4 percent,
consistent with the CY 2009 proposed
payment methodology for other
separately payable nonpass-through
drugs and biologicals. We believed that
this policy would ensure that new
nonpass-through drugs and biologicals
would be treated like other drugs and
biologicals under the OPPS, unless they
are granted pass-through status. Only if
they are pass-through drugs and
biologicals would they receive a
different payment for CY 2009,
generally equivalent to the payment
these drugs and biologicals would
receive in the physician’s office setting,
consistent with the requirements of the
statute. We proposed to continue
packaging payment for all new nonpassthrough diagnostic
radiopharmaceuticals in CY 2009.
In accordance with the ASP
methodology, in the absence of ASP
data, we proposed, for CY 2009, to
continue the policy we implemented
beginning in CY 2005 of using the WAC
for the product to establish the initial
payment rate for new nonpass-through
drugs and biologicals with HCPCS
codes, but which were without OPPS
claims data. However, we noted that if
the WAC was also unavailable, we
would make payment at 95 percent of
the product’s most recent AWP. We also
proposed to assign status indicator ‘‘K’’
to HCPCS codes for new drugs and
biologicals for which we had not
received a pass-through application. We
further noted that, with respect to new
items for which we did not have ASP
data, once their ASP data became
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1150
1643
1645
1675
1676
0701
0702
Final CY
2009 SI
H
H
H
H
H
H
H
H
available in later quarter submissions,
their payment rates under the OPPS
would be adjusted so that the rates
would be based on the ASP
methodology and set to the finalized
ASP-based amount (proposed for CY
2009 at ASP+4 percent) for items that
had not been granted pass-through
status. Furthermore, we proposed to
package payment for new HCPCS codes
that describe nonpass-through
biologicals that are only implantable, as
discussed further in section V.A.2. of
this final rule with comment period.
For CY 2009, we also proposed to
base payment for new therapeutic
radiopharmaceuticals with HCPCS
codes as of January 1, 2009, but which
did not have pass-through status, on the
WACs for these products if ASP data for
these therapeutic radiopharmaceuticals
were not available. If the WACs were
also unavailable, we proposed to make
payment for new therapeutic
radiopharmaceuticals at 95 percent of
their most recent AWPs because we
would not have mean costs from
hospital claims data upon which to base
payment. Analogous to new drugs and
biologicals, we proposed to assign status
indicator ‘‘K’’ to HCPCS codes for new
therapeutic radiopharmaceuticals for
which we had not received a passthrough application.
Consistent with other ASP-based
payments, for CY 2009, we proposed to
make any appropriate adjustments to
the payment amounts for new drugs and
biologicals in this CY 2009 OPPS/ASC
final rule with comment period and also
on a quarterly basis on our Web site
during CY 2009 if later quarter ASP
submissions (or more recent WACs or
AWPs) indicated that adjustments to the
payment rates for these drugs and
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biologicals were necessary. The
payment rates for new therapeutic
radiopharmaceuticals would also be
adjusted accordingly. We noted in the
proposed rule that the new CY 2009
HCPCS codes for drugs, biologicals, and
therapeutic radiopharmaceuticals were
not available at the time of development
of the proposed rule. We indicated that
they would be included in this CY 2009
OPPS/ASC final rule with comment
period where they are assigned
comment indicator ‘‘NI’’ to reflect that
their interim final OPPS treatment is
open to public comment in the CY 2009
OPPS/ASC final rule with comment
period.
We did not receive any public
comments specific to these CY 2009
proposals. Therefore, we are finalizing
these proposals, with the following
modification regarding payment for
nonpass-through therapeutic
radiopharmaceuticals. In accordance
with Public Law 110–275, OPPS
payment for nonpass-through
therapeutic radiopharmaceuticals is
made based on hospital charges
adjusted to cost for CY 2009.
There are several nonpass-through
drugs and biologicals that were payable
in CY 2007 and/or CY 2008 for which
we did not have any CY 2007 hospital
claims data available for the CY 2009
proposed rule. In order to determine the
packaging status of these items for CY
2009, we calculated an estimate of the
per day cost of each of these items by
multiplying the payment rate for each
product based on ASP+4 percent,
similar to other nonpass-through drugs
and biologicals paid separately under
the OPPS, by an estimated average
number of units of each product that
would typically be furnished to a
patient during one administration in the
hospital outpatient setting. We proposed
to package items for which we estimated
the per administration cost to be less
than or equal to $60, which is the
general packaging threshold that we
proposed for drugs, biologicals, and
therapeutic radiopharmaceuticals in CY
2009. We proposed to pay separately for
items with an estimated per
administration cost greater than $60
(with the exception of diagnostic
radiopharmaceuticals and contrast
agents which we proposed to continue
to package regardless of cost, as
discussed in more detail in section
V.B.2.c. of this final rule with comment
period) in CY 2009. We proposed that
the CY 2009 payment for separately
payable items without CY 2007 claims
data would be based on ASP+4 percent,
similar to payment for other separately
payable nonpass-through drugs and
biologicals under the OPPS. In
accordance with the ASP methodology
used in the physician’s office setting, in
the absence of ASP data, we proposed
to use the WAC for the product to
establish the initial payment rate.
However, we noted that if the WAC was
also unavailable, we would make
payment at 95 percent of the most
recent AWP available.
We did not receive any public
comments on this CY 2009 proposal.
Therefore, we are finalizing the
proposal, without modification.
Table 30 lists all of the nonpassthrough drugs and biologicals without
available CY 2007 claims data to which
these policies apply in CY 2009.
TABLE 30—DRUGS AND BIOLOGICALS WITHOUT CY 2007 CLAIMS DATA
CY 2008 HCPCS code
dwashington3 on PRODPC61 with RULES2
C9237 ................................
J0400 .................................
J2724 .................................
J3355 .................................
Q4096 ................................
CY 2009
HCPCS
code
J1930
J0400
J2724
J3355
J7186
.......
.......
.......
.......
.......
Lanreotide injection ....................................................
Aripiprazole injection ..................................................
Protein c concentrate .................................................
Urofollitropin, 75 iu .....................................................
Antihemophilic viii/VWF comp ...................................
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66776), we
began recognizing, for OPPS payment
purposes, multiple HCPCS codes
indicating different dosages for covered
Part B drugs. In general, prior to CY
2008, the OPPS recognized the lowest
available administrative dose of a drug
if multiple HCPCS codes existed for the
drug; for the remainder of the doses, the
HCPCS codes were assigned status
indicator ‘‘B’’ indicating that another
code existed for OPPS purposes. For
example, if drug X has 2 HCPCS codes,
1 for a 1 ml dose and a second for a 5
ml dose, prior to CY 2008, the OPPS
would have assigned a payable status
indicator to the 1 ml dose and status
indicator ‘‘B’’ to the 5 ml dose.
Hospitals were then responsible for
billing the appropriate number of units
for the 1 ml dose in order to receive
payment for the drug under the OPPS.
As these HCPCS codes were
previously unrecognized under the
OPPS prior to CY 2008, we do not have
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Estimated
average number
of units per
administration
CY 2009 short descriptor
claims data to determine their
appropriate packaging status for CY
2009. For the CY 2008 OPPS/ASC final
rule with comment period (72 FR
66775), we implemented a policy that
assigned the status indicator of the
previously recognized HCPCS code to
the associated newly recognized code(s).
For CY 2009, we proposed to continue
to use this methodology.
Table 31 below shows the previously
unrecognized HCPCS code, the previous
status indicator for the unrecognized
HCPCS code, the CY 2009 short
descriptor for the previously
unrecognized HCPCS code, the
associated recognized HCPCS code, and
the status indicator for the newly
recognized code. As noted in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66775), we
believed that this approach would be
the most appropriate and reasonable
way to implement this change in HCPCS
code recognition under the OPPS
without impacting payment. However,
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90
39
630
2
6825
Final CY
2009 SI
Final CY
2009 APC
K
N
K
K
K
9237
....................
1139
1741
1213
we noted that once claims data are
available for these previously
unrecognized HCPCS codes, we would
determine the packaging status and
resulting status indicator for each
HCPCS code according to the general
code-specific methodology for
determining a code’s packaging status
for a given update year. As we stated in
the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66775), we plan
to closely follow our claims data to
ensure that our annual packaging
determinations for the different HCPCS
codes describing the same drug do not
create inappropriate payment incentives
for hospitals to report certain HCPCS
codes instead of others.
Comment: One commenter requested
that we recognize HCPCS codes Q0165
(Prochlorperazine maleate, 10 mg, oral,
FDA approved prescription anti-emetic,
for use as a complete therapeutic
substitute for an IV anti-emetic at the
time of chemotherapy treatment, not to
exceed a 48-hour dosage regimen);
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Q0168 (Dronabinol, 5 mg, oral, FDA
approved prescription anti-emetic, for
use as a complete therapeutic substitute
for an IV anti-emetic at the time of
chemotherapy treatment, not to exceed
a 48-hour dosage regimen); Q0170
(Promethazine hydrochloride, 25 mg,
oral, FDA approved prescription antiemetic, for use as a complete
therapeutic substitute for an IV antiemetic at the time of chemotherapy
treatment, not to exceed a 48-hour
dosage regimen); Q0172
(Chlorpromazine hydrochloride, 25 mg,
oral, FDA approved prescription antiemetic, for use as a complete
therapeutic substitute for an IV antiemetic at the time of chemotherapy
treatment, not to exceed a 48-hour
dosage regimen); Q0176 (Perphenazine,
8 mg, oral, FDA approved prescription
anti-emetic, for use as a complete
therapeutic substitute for an IV antiemetic at the time of chemotherapy
treatment, not to exceed a 48-hour
dosage regimen); and Q0178
(Hydroxyzine pamoate, 50 mg, oral,
FDA approved prescription anti-emetic,
for use as a complete therapeutic
substitute for an IV anti-emetic at the
time of chemotherapy treatment, not to
exceed a 48-hour dosage regimen) that
currently have OPPS status indicators of
‘‘B,’’ but that have related HCPCS codes
for the same drugs with different
dosages and that are recognized for
payment under the OPPS.
Response: We appreciate the
commenter identifying these additional
HCPCS codes, and we agree that we
should recognize these HCPCS codes for
drugs that are payable under the OPPS
in order to allow hospital to report all
HCPCS codes for drugs. As we
concluded for the drug HCPCS codes
that that we newly recognized for CY
2008, we believe that recognizing all of
these HCPCS codes for payment under
the OPPS should not have a significant
effect on our payment methodology for
drugs. Stakeholders have told us that
this policy reduces the administrative
burden associated with hospitals’
reporting of only the HCPCS code with
the lowest increment in its code
descriptor for the OPPS. Wherever
possible and appropriate, we continue
to seek to reduce hospitals’
administrative burden in submitting
68665
claims for payment under the OPPS. In
determining the packaging status of
these HCPCS drug codes for CY 2009,
we are following the methodology we
implemented in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66725), and we have assigned them the
same status indicators as the associated
currently recognized HCPCS codes
under the OPPS.
We are recognizing these additional 6
HCPCS codes under the OPPS, effective
January 1, 2009. These codes are
included in Table 31 below and
identified with an (*) to denote that they
are newly recognized in CY 2009, while
the other HCPCS drug codes displayed
in the table were newly recognized in
CY 2008.
After consideration of the public
comment received, we are finalizing our
CY 2009 proposal to provide payment
for newly recognized HCPCS drug codes
for different doses of the same drugs on
the same basis as the previously
recognized HCPCS codes for those
drugs, with modification to apply this
policy to six additional HCPCS drug
codes.
TABLE 31—HCPCS CODES UNRECOGNIZED IN CY 2007 OR CY 2008, ASSOCIATED RECOGNIZED HCPCS CODES, AND
STATUS INDICATORS FOR CY 2009
Associated
HCPCS recognized in
CY 2007
dwashington3 on PRODPC61 with RULES2
CY 2009 HCPCS codes
previously unrecognized
CY 2007 SI
CY 2009 short descriptor
J1470 ..........................................
J1480 ..........................................
J1490 ..........................................
J1500 ..........................................
J1510 ..........................................
J1520 ..........................................
J1530 ..........................................
J1540 ..........................................
J1550 ..........................................
J1560 ..........................................
J8521 ..........................................
J9062 ..........................................
J9080 ..........................................
J9090 ..........................................
J9091 ..........................................
J9092 ..........................................
J9094 ..........................................
J9095 ..........................................
J9096 ..........................................
J9097 ..........................................
J9110 ..........................................
J9140 ..........................................
J9260 ..........................................
J9290 ..........................................
J9291 ..........................................
J9375 ..........................................
J9380 ..........................................
Q0165 * .......................................
Q0168 * .......................................
Q0170 * .......................................
Q0172 * .......................................
Q0176 * .......................................
B
B
B
B
B
B
B
B
B
B
B
B
B
B
B
B
B
B
B
B
B
B
B
B
B
B
B
B
B
B
B
B
Gamma globulin 2 CC inj ...............................................................
Gamma globulin 3 CC inj ...............................................................
Gamma globulin 4 CC inj ...............................................................
Gamma globulin 5 CC inj ...............................................................
Gamma globulin 6 CC inj ...............................................................
Gamma globulin 7 CC inj ...............................................................
Gamma globulin 8 CC inj ...............................................................
Gamma globulin 9 CC inj ...............................................................
Gamma globulin 10 CC inj .............................................................
Gamma globulin >10 CC inj ..........................................................
Capecitabine, oral, 500 mg ............................................................
Cisplatin 50 MG injection ...............................................................
Cyclophosphamide 200 MG inj ......................................................
Cyclophosphamide 500 MG inj ......................................................
Cyclophosphamide 1.0 grm inj ......................................................
Cyclophosphamide 2.0 grm inj ......................................................
Cyclophosphamide lyophilized .......................................................
Cyclophosphamide lyophilized .......................................................
Cyclophosphamide lyophilized .......................................................
Cyclophosphamide lyophilized .......................................................
Cytarabine hcl 500 MG inj .............................................................
Dacarbazine 200 MG inj ................................................................
Methotrexate sodium inj .................................................................
Mitomycin 20 MG inj ......................................................................
Mitomycin 40 MG inj ......................................................................
Vincristine sulfate 2 MG inj ............................................................
Vincristine sulfate 5 MG inj ............................................................
Prochlorperazine maleate 10 mg ...................................................
Dronabinol 5 mg oral .....................................................................
Promethazine HCl 25 mg oral .......................................................
Chlorpromazine HCl 25 mg oral ....................................................
Perphenazine 8 mg oral .................................................................
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E:\FR\FM\18NOR2.SGM
18NOR2
J1460
J1460
J1460
J1460
J1460
J1460
J1460
J1460
J1460
J1460
J8520
J9060
J9070
J9070
J9070
J9070
J9093
J9093
J9093
J9093
J9100
J9130
J9250
J9280
J9280
J9370
J9370
Q0164
Q0167
Q0169
Q0171
Q0175
Final CY
2009 SI for
newly
recognized
HCPCS
code
K
K
K
K
K
K
K
K
K
K
K
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
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TABLE 31—HCPCS CODES UNRECOGNIZED IN CY 2007 OR CY 2008, ASSOCIATED RECOGNIZED HCPCS CODES, AND
STATUS INDICATORS FOR CY 2009—Continued
Associated
HCPCS recognized in
CY 2007
CY 2009 HCPCS codes
previously unrecognized
CY 2007 SI
CY 2009 short descriptor
Q0178 * .......................................
B
Hydroxyzine pamoate 50 mg .........................................................
Q0177
Final CY
2009 SI for
newly
recognized
HCPCS
code
N
dwashington3 on PRODPC61 with RULES2
* Denotes newly recognized HCPCS code for the CY 2009 OPPS.
Finally, there were eight drugs and
biologicals, shown in Table 28 of the
proposed rule, that were payable in CY
2007 but for which we lacked CY 2007
claims data and any other data related
to the ASP methodology and, therefore,
we were unable to determine their per
day cost based on the ASP methodology.
As we were unable to determine the
packaging status and subsequent
payment rates, if applicable, for these
drugs and biologicals for CY 2009 based
on the ASP methodology and/or claims
data, we proposed to package payment
for these drugs and biologicals in CY
2009.
HCPCS code J0395 (Arbutamine HCl
injection) did not have any data for the
CY 2009 OPPS/ASC proposed rule.
However, as a result of updated data
used for this final rule with comment
period, we received hospital claims data
for this code and are, therefore, able to
make a packaging determination for the
drug for CY 2009. There was one claim
for CY 2007 for HCPCS code J0395, with
a per day cost estimate of approximately
$58. Therefore, because this amount is
below our final drug packaging
threshold for CY 2009, we are packaging
HCPCS code J0395.
We did not receive any public
comments on our proposal to package
payment for drugs that were payable in
CY 2007 but for which we lack CY 2007
claims data and for which we are unable
to determine the estimated per day cost
based on the ASP methodology.
Therefore, we are finalizing our CY 2009
proposal, with modification to exclude
HCPCS code J0395 from packaging
based on this rationale, to package
payment for the seven drugs and
biologicals listed in Table 32 below, due
to missing data essential to calculating
a per day cost. We are packaging
payment for HCPCS code J0395 on the
basis of an estimated per day cost of less
than the final CY 2009 OPPS drug
packaging threshold.
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TABLE 32—DRUGS AND BIOLOGICALS factor for the projected level of passWITHOUT INFORMATION ON PER DAY through spending in the following year.
For devices, developing an estimate of
COST AND THAT ARE PACKAGED IN
pass-through spending in CY 2009
CY 2009
CY 2009
HCPCS
code
CY 2009 short
descriptor
Final CY
2009 SI
90393 .....
90581 .....
J0350 .....
Vaccina ig, im .........
Anthrax vaccine, sc
Injection
anistreplase 30 u.
Intraocular
Fomivirsen na.
Totazoline hcl injection.
Nasal vaccine inhalation.
Thiethylperazine
maleate 10 mg.
N
N
N
J1452 .....
J2670 .....
J3530 .....
Q0174 ....
N
N
N
N
VI. Estimate of OPPS Transitional PassThrough Spending for Drugs,
Biologicals, Radiopharmaceuticals, and
Devices
A. Background
Section 1833(t)(6)(E) of the Act limits
the total projected amount of
transitional pass-through payments for
drugs, biologicals,
radiopharmaceuticals, and categories of
devices for a given year to an
‘‘applicable percentage’’ of total
program payments estimated to be made
under 1833(t) of the Act for all covered
services furnished for that year under
the hospital OPPS. For a year before CY
2004, the applicable percentage was 2.5
percent; for CY 2004 and subsequent
years, we specify the applicable
percentage up to 2.0 percent.
If we estimate before the beginning of
the calendar year that the total amount
of pass-through payments in that year
would exceed the applicable percentage,
section 1833(t)(6)(E)(iii) of the Act
requires a uniform reduction in the
amount of each of the transitional passthrough payments made in that year to
ensure that the limit is not exceeded.
We make an estimate of pass-through
spending to determine not only whether
payments exceed the applicable
percentage, but also to determine the
appropriate reduction to the conversion
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entails estimating spending for two
groups of items. The first group of items
consists of device categories that were
recently made eligible for pass-through
payment and that would continue to be
eligible for pass-through payment in CY
2009. The CY 2008 OPPS/ASC final rule
with comment period (72 FR 66778)
describes the methodology we have
used in previous years to develop the
pass-through spending estimate for
known device categories continuing into
the applicable update year. The second
group contains items that we know are
newly eligible, or project would be
newly eligible, for device pass-through
payment in the remaining quarters of
CY 2008 or beginning in CY 2009. The
sum of the CY 2009 pass-through
estimates for these two groups of device
categories would equal the total CY
2009 pass-through spending estimate for
device categories with pass-through
status.
For drugs and biologicals, section
1833(t)(6)(D)(i) of the Act establishes the
pass-through payment amount for drugs
and biologicals eligible for pass-through
payment as the amount by which the
amount authorized under section
1842(o) of the Act (or, if the drug or
biological is covered under a
competitive acquisition contract under
section 1847B of the Act, an amount
determined by the Secretary equal to the
average price for the drug or biological
for all competitive acquisition areas and
year established under such section as
calculated and adjusted by the
Secretary) exceeds the portion of the
otherwise applicable fee schedule
amount that the Secretary determines is
associated with the drug or biological.
Because we finalized a policy to pay for
nonpass-through separately payable
drugs and biologicals under the CY 2009
OPPS at ASP+4 percent, which
represents the otherwise applicable fee
schedule amount associated with a passthrough drug or biological, and because
we will pay for pass-through drugs and
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dwashington3 on PRODPC61 with RULES2
biologicals at ASP+6 percent or the Part
B drug CAP rate, if applicable, our
estimate of drug and biological passthrough payment for CY 2009 is not
zero. (We note that the Part B drug CAP
program has been postponed for CY
2009. We refer readers to the Medicare
Learning Network (MLN) Matters
Special Edition article SE0833.
Therefore, there will be no effective Part
B drug CAP rate for pass-through drugs
and biologicals as of January 1, 2009.)
Similar to estimates for devices, the first
group of drugs and biologicals requiring
a pass-through payment estimate
consists of those products that were
recently made eligible for pass-through
payment and that would continue to be
eligible for pass-through payment in CY
2009. The second group contains drugs
and biologicals that we know are newly
eligible, or project would be newly
eligible, beginning in CY 2009. The sum
of the CY 2009 pass-through estimates
for these two groups of drugs and
biologicals would equal the total CY
2009 pass-through spending estimate for
drugs and biologicals with pass-through
status.
B. Estimate of Pass-Through Spending
As we proposed, in this final rule
with comment period, we are finalizing
a policy of setting the applicable
percentage limit at 2.0 percent of the
total OPPS projected payments for CY
2009, consistent with our OPPS policy
from CYs 2004 through 2008.
As discussed in section IV.A. of this
final rule with comment period, there
are currently no known device
categories receiving pass-through
payment in CY 2008 that will continue
for payment during CY 2009. Therefore,
there are no device categories in the first
group (that is, device categories recently
made eligible for pass-through payment
and continuing into CY 2009), and we
estimated the pass-through spending to
be $0 for this group in the proposed
rule. For this final rule with comment
period, we continue to estimate $0 for
this group.
In estimating CY 2009 pass-through
spending for device categories in the
second group (that is, device categories
that we knew at the time of the
development of the proposed rule
would be newly eligible for passthrough payment in CY 2009 (of which
there were none), additional device
categories that we estimate could be
approved for pass-through status
subsequent to the development of the
proposed rule and before January 1,
2009, and contingent projections for
new categories in the second through
fourth quarters of CY 2009), we
proposed to use the general
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methodology described in the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66778), while also taking
into account recent OPPS experience in
approving new pass-through device
categories. We estimated the CY 2009
pass-through spending for this second
group to be $10 million in the proposed
rule, and that continues to be our
estimate for this final rule with
comment period.
Employing our established
methodology that the estimate of passthrough device spending in CY 2009
incorporates CY 2009 estimates of passthrough spending for known device
categories continuing in CY 2009, those
first effective January 1, 2009, and those
device categories projected to be
approved during subsequent quarters of
CYs 2008 and 2009, in the proposed
rule, we estimated the total passthrough spending for device categories
to be $10 million for CY 2009. This
estimate of $10 million remains our
estimate for this CY 2009 final rule with
comment period.
We did not receive any public
comments regarding our proposed
methodology for estimating transitional
pass-through spending for devices for
CY 2009. Therefore, we are adopting our
final estimate of $10 million for total
pass-through spending for device
categories for CY 2009.
To estimate CY 2009 pass-through
spending for drugs and biologicals in
the first group, specifically those drugs
and biologicals recently made eligible
for pass-through payment and
continuing into CY 2009, we proposed
to utilize the most recent Medicare
physician’s office data regarding their
utilization, information provided in the
respective pass-through applications,
historical hospital claims data,
pharmaceutical industry information,
and clinical information regarding those
drugs or biologicals, in order to project
the CY 2009 OPPS utilization of the
products. For the known drugs and
biologicals that would continue on passthrough status in CY 2009, we then
estimate the total pass-through payment
amount as the difference between
ASP+6 percent or the Part B drug CAP
rate, as applicable, and ASP+4 percent,
aggregated across the projected CY 2009
OPPS utilization of these products. If
payment for the drug or biological
would be packaged if the product were
not paid separately because of its passthrough status, we include in the passthrough estimate the full payment for
the drug or biological at ASP+6 percent.
Based on these analyses, our final
estimate of pass-through spending
attributable to the first group (that is, the
known drugs and biologicals continuing
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68667
with pass-through eligibility in CY
2009) described above is approximately
$16.3 million for CY 2009. This $16.3
million estimate of CY 2009 passthrough spending for the first group of
pass-through drugs and biologicals
reflects the current pass-through drugs
and biologicals that are continuing on
pass-through status into CY 2009, and
are displayed in Table 23 of this final
rule with comment period.
To estimate CY 2009 pass-through
spending for drugs and biologicals in
the second group (that is, drugs and
biologicals that we knew at the time of
development of the proposed rule
would be newly eligible for passthrough payment in CY 2009 (of which
there were none), additional drugs and
biologicals that we estimate could be
approved for pass-through status
subsequent to the development of the
proposed rule and before January 1,
2009, and projections for new drugs and
biologicals that could be initially
eligible for pass-through payment in the
second through fourth quarters of CY
2009), we used utilization estimates
from applicants, pharmaceutical
industry data, and clinical information
as the basis for pass-through spending
estimates for these drugs and biologicals
for CY 2009, while also considering the
most recent OPPS experience in
approving new pass-through drugs and
biologicals. Based on these analyses, we
estimate pass-through spending
attributable to this second group of
drugs and biologicals to be about $7.0
million for CY 2009.
In the CY 2005 OPPS final rule with
comment period (69 FR 65810), we
indicated that we would be accepting
pass-through applications for new
radiopharmaceuticals that are assigned a
HCPCS code on or after January 1, 2005.
(Prior to this date, radiopharmaceuticals
were not included in the category of
drugs paid under the OPPS, and,
therefore, were not eligible for passthrough status.) There were no
radiopharmaceuticals that were eligible
for pass-through payment at the time of
publication of the CY 2009 OPPS/ASC
proposed rule, and we have not received
any pass-through applications for
radiopharmaceuticals between the
publication of the proposed rule and
this final rule with comment period. As
noted in the CY 2009 OPPS/ASC
proposed rule (73 FR 41500), we also
have no historical data regarding
payment for new radiopharmaceuticals
with pass-through status under the
methodology that we specified for the
CY 2005 OPPS or the CY 2009
methodologies for diagnostic and
therapeutic radiopharmaceuticals that
we finalized, as discussed in section
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V.A.3. of this final rule with comment
period. However, we do not believe that
pass-through spending for new
radiopharmaceuticals in CY 2009 would
be significant enough to materially
affect our estimate of total pass-through
spending in CY 2009. Therefore, we did
not include radiopharmaceuticals in our
proposed estimate of pass-through
spending for CY 2009, and we have not
included them in our final estimate of
pass-through spending for CY 2009. We
discuss our final policy regarding
payment for all new diagnostic
radiopharmaceuticals without passthrough status in CY 2009 in section
V.B.2.c. of this final rule with comment
period.
We did not receive any public
comments regarding our proposed
methodology for estimating transitional
pass-through spending for drugs,
biologicals, and radiopharmaceuticals
for CY 2009. Therefore, we are adopting
our final estimate of $23.3 million for
total pass-through spending for drugs,
biologicals, and radiopharmaceuticals
for CY 2009.
In accordance with the
comprehensive methodology described
above in this section, we estimate that
total pass-through spending for the
device categories and the drugs and
biologicals that are continuing for passthrough payment into CY 2009 and
those device categories, drugs,
biologicals, and radiopharmaceuticals
that first become eligible for passthrough status during CY 2009 would
approximate $33.3 million, which
represents 0.11 percent of total OPPS
projected payments for CY 2009.
We estimate that pass-through
spending in CY 2009 would not amount
to 2.0 percent of total projected OPPS
CY 2009 program spending.
Accordingly, we are finalizing our
proposed methodology for estimating
CY 2009 OPPS pass-through spending
for drugs, biologicals,
radiopharmaceuticals, and device
categories. Our final pass-through
estimate for CY 2009 is $33.3 million.
VII. OPPS Payment for Brachytherapy
Sources
dwashington3 on PRODPC61 with RULES2
A. Background
Section 1833(t)(2)(H) of the Act, as
added by section 621(b)(2)(C) of Public
Law 108–173 (MMA), mandated the
creation of separate groups of covered
OPD services that classify
brachytherapy devices separately from
other services or groups of services. The
additional groups must reflect the
number, isotope, and radioactive
intensity of the devices of
brachytherapy furnished, including
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separate groups for palladium-103 and
iodine-125 devices.
Section 1833(t)(16)(C) of the Act, as
added by section 621(b)(1) of Public
Law 108–173, established payment for
devices of brachytherapy consisting of a
seed or seeds (or radioactive source)
based on a hospital’s charges for the
service, adjusted to cost. The period of
payment under this provision is for
brachytherapy sources furnished from
January 1, 2004, through December 31,
2006. Under section 1833(t)(16)(C) of
the Act, charges for the brachytherapy
devices may not be used in determining
any outlier payments under the OPPS
for that period of payment. Consistent
with our practice under the OPPS to
exclude items paid at cost from budget
neutrality consideration, these items
were excluded from budget neutrality
for that time period as well.
In our CY 2007 annual OPPS
rulemaking, we proposed and finalized
a policy of prospective payment based
on median costs for the 11
brachytherapy sources for which we had
claims data. We based the prospective
payment rates on median costs for each
source from our CY 2005 claims data (71
FR 68102 through 71 FR 68114).
Subsequent to publication of the CY
2007 OPPS/ASC final rule with
comment period, section 107(a) of the
MIEA–TRHCA (Pub. L. 109–432)
amended section 1833(t)(16)(C) of the
Act by extending the payment period for
brachytherapy sources based on a
hospital’s charges adjusted to cost for 1
additional year, through December 31,
2007. Therefore, we continued to pay
for brachytherapy sources based on
charges adjusted to cost for CY 2007.
Section 107(b)(1) of the MIEA–
TRHCA amended section 1833(t)(2)(H)
of the Act by adding a requirement for
the establishment of separate payment
groups for ‘‘stranded and non-stranded’’
brachytherapy devices beginning July 1,
2007. Section 107(b)(2) of the MIEA–
TRHCA authorized the Secretary to
implement this new requirement by
‘‘program instruction or otherwise.’’
This new requirement is in addition to
the requirement for separate payment
groups based on the number, isotope,
and radioactive intensity of
brachytherapy devices that was
previously established by section
1833(t)(2)(H) of the Act. We note that
commenters who responded to the CY
2007 OPPS/ASC proposed rule asserted
that stranded sources, which they
described as embedded into the
stranded suture material and separated
within the strand by material of an
absorbable nature at specified intervals,
had greater production costs than non-
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stranded sources (71 FR 68113 through
68114).
As a result of the statutory
requirement to create separate groups
for stranded and non-stranded sources
as of July 1, 2007, we established several
coding changes via transmittal, effective
July 1, 2007 (Transmittal 1259, dated
June 1, 2007). Based on public
comments received on the CY 2007
OPPS/ASC proposed rule and industry
input, we were aware of three sources
available in stranded and non-stranded
forms at that time: Iodine-125;
palladium-103; and cesium-131 (72 FR
42746). We created six new HCPCS
codes to differentiate the stranded and
non-stranded versions of iodine,
palladium, and cesium sources.
In Transmittal 1259, we indicated that
if we receive information that any of the
other sources now designated as nonstranded are marketed as a stranded
source, we would create a code for the
stranded source. We also established
two ‘‘Not Otherwise Specified’’ (NOS)
codes for billing stranded and nonstranded sources that are not yet known
to us and for which we do not have
source-specific codes, that is, C2698
(Brachytherapy source, stranded, not
otherwise specified, per source) for
stranded NOS sources, and C2699
(Brachytherapy source, non-stranded,
not otherwise specified, per source) for
non-stranded NOS sources.
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66783
through 66784), we again finalized
prospective payment for brachytherapy
sources, beginning in CY 2008, with
payment rates determined using the CY
2006 claims-based costs per source for
each brachytherapy source. Consistent
with our policy regarding APC
payments made on a prospective basis,
we finalized the policy in the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66686) to subject the cost
of brachytherapy sources to the outlier
provision of section 1833(t)(5) of the
Act, and to also subject brachytherapy
source payment weights to scaling for
purposes of budget neutrality.
Therefore, brachytherapy sources could
receive outlier payments if the costs of
furnishing brachytherapy sources met
the criteria for outlier payment. In
addition, as noted in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66683), implementation of
prospective payment for brachytherapy
sources would provide opportunities for
hospitals to receive additional payments
under certain circumstances through the
7.1 percent rural SCH adjustment.
After we finalized our proposal to pay
for brachytherapy sources in CY 2008
based on median costs, section 106(a) of
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the MMSEA (Pub. L. 110–173) extended
the charges-adjusted-to-cost payment
methodology for brachytherapy sources
for an additional 6 months, through
June 30, 2008.
Status indicator ‘‘H’’ (defined in the
CY 2008 OPPS/final rule with comment
period as ‘‘Pass-Through Device
Categories. Separate cost-based passthrough payment; not subject to
copayment.’’) was continued for claims
processing purposes for brachytherapy
source payment through June 30, 2008,
although a beneficiary copayment was
applied to payment for these sources.
We had finalized a policy in the CY
2008 OPPS/ASC final rule with
comment period to assign status
indicator ‘‘K’’ (defined as ‘‘NonpassThrough Drugs and Biologicals;
Therapeutic Radiopharmaceuticals;
Brachytherapy Sources; Blood and
Blood Products. Paid under OPPS;
separate APC payment.’’) to all
brachytherapy source APCs because the
sources would be paid based on
prospective payment. The definition of
status indicator ‘‘K’’ was initially
changed for CY 2007 to accommodate
prospective payment for brachytherapy
sources and this change was continued
for CY 2008 (72 FR 66785). However, we
never applied status indicator ‘‘K’’ to
brachytherapy sources for the first 6
months of CY 2008, due to the
requirements of the MMSEA.
For CY 2008, we also adopted the
policy we established in the CY 2007
OPPS/ASC final rule with comment
period (which was superseded by
section 107 of the MIEA–TRHCA)
regarding payment for new
brachytherapy sources for which we
have no claims data. We indicated we
would assign future new HCPCS codes
for new brachytherapy sources to their
own APCs, with prospective payment
rates set based on our consideration of
external data and other relevant
information regarding the expected
costs of the sources to hospitals (72 FR
66785). When section 106(a) of the
MMSEA extended the charges-adjustedto-cost payment methodology for
brachytherapy sources through June 30,
2008, this policy was not implemented
as of January 1, 2008. We stated in the
CY 2009 OPPS/ASC proposed rule (73
FR 41501) that we anticipated
implementing this policy as of July 1,
2008.
B. OPPS Payment Policy
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41500), we again proposed
prospective payment rates for
brachytherapy sources for CY 2009. We
proposed to use CY 2007 claims data for
setting the CY 2009 rates for
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brachytherapy sources, as we proposed
for most other items and services that
would be paid under the CY 2009 OPPS,
using our standard OPPS ratesetting
methodology. We proposed to pay for
brachytherapy sources at prospective
rates based on their source-specific
median costs as calculated from CY
2007 claims data available for CY 2009
ratesetting. The separately payable
brachytherapy source codes,
descriptors, APCs, approximate median
costs, and status indicators were
presented in Table 29 of the CY 2009
OPPS/ASC proposed rule.
We proposed to establish new status
indicator ‘‘U’’ (Brachytherapy Sources.
Paid under OPPS; separate APC
payment.) for brachytherapy sources as
of January 1, 2009. In the CY 2009
OPPS/ASC proposed rule, we noted that
status indicator ‘‘H’’ has been used for
the periods when brachytherapy sources
were paid based on the chargesadjusted-to-cost payment methodology,
while status indicator ‘‘K’’ was slated to
be used for brachytherapy source
payment as of July 1, 2008 through
December 31, 2008, in accordance with
the policy we finalized in the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66785). Status indicator
‘‘H’’ is also used for devices paid at
charges adjusted to cost during their
period of pass-through payment. While
the CY 2008 definition of status
indicator ‘‘K’’ currently encompasses
nonpass-through drugs and biologicals,
therapeutic radiopharmaceuticals,
brachytherapy sources, and blood and
blood products, brachytherapy sources
have never been actually assigned this
payment indicator because they have
not had a period of prospective payment
in CY 2008. However, assigning a status
indicator to several types of items and
services with potentially differing
payment policies has added
unnecessary complexity to our
operations. In addition, in CY 2009, we
are implementing section 1833(t)(17)(A)
of the Act that specifies payment to
hospitals based on a reduced conversion
factor when those hospitals fail to
submit timely hospital outpatient
quality data as required. Therefore, to
facilitate implementation of this
payment change and streamline
operations, we proposed to assign new
status indicator ‘‘U’’ to brachytherapy
source HCPCS codes beginning in CY
2009.
For CY 2009, we also proposed to
continue the policy we established in
the CY 2007 OPPS/ASC final rule with
comment period (which was superseded
by section 107 of the MIEA–TRHCA)
regarding payment for new
brachytherapy sources for which we
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68669
have no claims data. In accordance with
that policy, we would assign future new
HCPCS codes for new brachytherapy
sources to their own APCs, with
prospective payment rates set based on
our consideration of external data and
other relevant information regarding the
expected costs of the sources to
hospitals.
Subsequent to issuance of the CY
2009 OPPS/ASC proposed rule,
Congress enacted Public Law 110–275
(MIPPA) on July 15, 2008. Section 142
of Public Law 110–275 amended section
1833(t)(16)(C) of the Act as amended by
section 106(a) of the MMSEA to further
extend the payment period for
brachytherapy sources based on a
hospital’s charges adjusted to cost from
July 1, 2008, through December 31,
2009. Therefore, we have continued to
pay for brachytherapy sources at charges
adjusted to cost in CY 2008 from July 1
through December 31, and we have
maintained the assignment of status
indicator ‘‘H’’ to brachytherapy sources
for claims processing purposes.
Furthermore, we will continue to pay
for all separately payable brachytherapy
sources based on a hospital’s charges
adjusted to cost for CY 2009. Because
brachytherapy sources will be paid at
charges adjusted to cost, we will not
subject them to the outlier provision of
section 1833(t)(5) of the Act, or subject
brachytherapy source payment weights
to scaling for purposes of budget
neutrality. Moreover, during this CY
2009 period of payment at charges
adjusted to cost, brachytherapy sources
will not be eligible for the 7.1 percent
rural SCH adjustment (as discussed in
detail in section II.E. of this final rule
with comment period).
Comment: Several commenters
expressed support for the extension of
brachytherapy source payment based on
charges adjusted to cost through
December 31, 2009, as required by
Public Law 110–275. They cited
concerns regarding CMS’ brachytherapy
source claims data used in the CY 2009
proposal to set the prospective
brachytherapy source rates based on
median costs. Examples of the data
concerns presented by the commenters
include the following: difficulty in
establishing a prospective payment rate
for high dose rate (HDR) sources which
can be used for multiple patients; use of
only partial CY 2007 claims data for
stranded sources for the CY 2009 OPPS
payment; high variation in unit cost for
certain brachytherapy sources; costs
from few hospitals represented in
claims data for certain sources; and a
proposed rate for high activity
palladium-131 that was lower than low
activity palladium, inconsistent with
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the true costs of these sources as
reported by commenters. One
commenter did not support prospective
payment rates for brachytherapy sources
for which ASP data are not available. A
few commenters recommended
continuation of payment based on
charges adjusted to cost for CY 2010 and
beyond, adopted through regulation.
One commenter stated that the highly
variable claims data for yttrium-90
(C2616, Brachytherapy source, nonstranded, Yttrium-90, per source), a
source which is reported by only a small
number of providers, in combination
with possible charge compression for
this very high cost source, result in
variable and inaccurate claims data and,
therefore, an inadequate proposed
payment rate that would not pay
appropriately for the source cost to
permit access for Medicare
beneficiaries. The commenter asserted
generally that these factors result in
unpredictable and inequitable payment
rates for all such sources.
Response: We appreciate the detailed
public comments that describe data
characteristics and will take the issues
raised by the commenters into
consideration in future proposed
ratesetting for brachytherapy sources.
As noted previously in this section, for
CY 2009, section 142 of Public Law
110–275 (MIPPA) requires us to pay for
brachytherapy sources at charges
adjusted to costs. Therefore, we are not
considering any other payment
methodologies for CY 2009, and we are
not adopting our CY 2009 proposal. We
will make a proposal for the CY 2010
payment of brachytherapy sources in
the CY 2010 OPPS/ASC proposed rule,
consistent with our annual OPPS/ASC
update process.
Furthermore, for CY 2009, we are not
adopting the policy we established in
the CY 2008 OPPS/ASC final rule with
comment period of paying stranded and
non-stranded NOS codes for
brachytherapy sources, C2698 and
C2699, based on a rate equal to the
lowest stranded or non-stranded
prospective payment for such sources.
Also, we are not adopting the policy we
established in the CY 2007 OPPS/ASC
final rule with comment period
regarding payment for new
brachytherapy sources for which we
have no claims data. NOS codes C2698
and C2699 and newly established
specific source codes will be paid at
charges adjusted to cost through
December 31, 2009, consistent with
section 142 of Public Law 110–275.
In addition, we did not receive any
public comments regarding the
proposed policy to create new status
indicator ‘‘U’’ for brachytherapy source
payment. Therefore, we are finalizing
this proposal, without modification, for
CY 2009. As noted earlier in this
section, assigning a status indicator to
several types of items and services with
potentially differing payment policies
has added unnecessary complexity to
our operations. Status indicator ‘‘U’’
will be used only for brachytherapy
sources, regardless of their specific
payment methodology for any period of
time. The use of status indicator ‘‘U’’ is
expected to eliminate the complexity in
the payment of brachytherapy sources
caused by using status indicator ‘‘K’’ for
multiple types of items and services.
In summary, for CY 2009, we will
continue to pay for all brachytherapy
sources, assigned status indicator ‘‘U,’’
at charges adjusted to cost, consistent
with section 142 of Public Law 110–275,
by the overall hospital CCR on a claimspecific basis. All currently established
brachytherapy source HCPCS codes that
will be paid under the CY 2009 OPPS
are listed in Table 33 below, along with
their corresponding APCs and status
indicator assignments.
In our CY 2009 OPPS/ASC proposed
rule (73 FR 41503), we again invited
hospitals and other parties to submit
recommendations to us for new HCPCS
codes to describe new brachytherapy
sources consisting of a radioactive
isotope, including a detailed rationale to
support recommended new sources. We
indicated that we would continue to
add new brachytherapy source codes
and descriptors to our systems for
payment on a quarterly basis.
Comment: One commenter
recommended that CMS establish a new
HCPCS code specifically for high
activity cesium-131, with a descriptor of
‘‘Brachytherapy source, nonstranded,
high activity cesium-131, greater than
3.25 mCi, per source.’’
Response: Section 1833(t)(2)(H) of the
Act requires that we create separate
payment groups for brachytherapy
sources which reflect the number,
isotope, and radioactive intensity of
devices of brachytherapy furnished. We
have received a recommendation for
creation of a new HCPCS code and APC
group for a high activity cesium source,
and we are currently evaluating whether
to establish a new code for a high
activity cesium source. Currently, there
are two HCPCS codes recognized under
the OPPS that describe cesium
brachytherapy sources: C2642
(Brachytherapy source, stranded,
Cesium-131, per source) and C2643
(Brachytherapy source, non-stranded,
Cesium-131, per source). We will
continue our established process of
implementing new brachytherapy
source codes on a quarterly basis as
appropriate and providing necessary
instruction through quarterly program
transmittals.
Consistent with our general practice,
we will consider recommendations for
new brachytherapy sources during CY
2009, as discussed earlier in this
section.
TABLE 33—CURRENT SEPARATELY PAYABLE BRACHYTHERAPY SOURCES FOR CY 2009
Final CY
2009 APC
CY 2009 HCPCS code
CY 2009 long descriptor
A9527 ..................................................
C1716 ..................................................
C1717 ..................................................
Iodine I–125, sodium iodide solution, therapeutic, per millicurie ..................
Brachytherapy source, non-stranded, Gold-198, per source ........................
Brachytherapy source, non-stranded, High Dose Rate Iridium-192, per
source.
Brachytherapy source, non-stranded, Non-High Dose Rate Iridium-192,
per source.
Brachytherapy source, non-stranded, Yttrium-90, per source ......................
Brachytherapy source, non-stranded, High Activity, Iodine-125, greater
than 1.01 mCi (NIST), per source.
Brachytherapy source, non-stranded, High Activity, Palladium-103, greater
than 2.2 mCi (NIST), per source.
Brachytherapy linear source, non-stranded, Palladium-103, per 1MM .........
Brachytherapy source, stranded, Iodine-125, per source .............................
Brachytherapy source, non-stranded, Iodine-125, per source ......................
Brachytherapy source, stranded, Palladium-103, per source .......................
C1719 ..................................................
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C2616 ..................................................
C2634 ..................................................
C2635 ..................................................
C2636
C2638
C2639
C2640
..................................................
..................................................
..................................................
..................................................
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Final CY
2009 SI
2632
1716
1717
U
U
U
1719
U
2616
2634
U
U
2635
U
2636
2638
2639
2640
U
U
U
U
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68671
TABLE 33—CURRENT SEPARATELY PAYABLE BRACHYTHERAPY SOURCES FOR CY 2009—Continued
CY 2009 HCPCS code
C2641
C2642
C2643
C2698
C2699
..................................................
..................................................
..................................................
..................................................
..................................................
Brachytherapy
Brachytherapy
Brachytherapy
Brachytherapy
Brachytherapy
VIII. OPPS Payment for Drug
Administration Services
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A. Background
In CY 2005, in response to the
recommendations made by commenters
and the hospital industry, OPPS
transitioned to the use of CPT codes for
drug administration services. These CPT
codes allowed specific reporting of
services regarding the number of hours
for an infusion and provided
consistency in coding between Medicare
and other payers. (For a discussion
regarding coding and payment for drug
administration services prior to CY
2005, we refer readers to the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66787).)
While hospitals began adopting CPT
codes for outpatient drug administration
services in CY 2005, physicians paid
under the MPFS were using HCPCS Gcodes in CY 2005 to report office-based
drug administration services. These Gcodes were developed in anticipation of
substantial revisions to the drug
administration CPT codes by the CPT
Editorial Panel that were expected for
CY 2006.
In CY 2006, as anticipated, the CPT
Editorial Panel revised its coding
structure for drug administration
services, incorporating new concepts
such as initial, sequential, and
concurrent services into a structure that
previously distinguished services based
on type of administration
(chemotherapy/nonchemotherapy),
method of administration (injection/
infusion/push), and for infusion
services, first hour and additional hours.
For CY 2006, we implemented the CY
2006 drug administration CPT codes
that did not reflect the concepts of
initial, sequential, and concurrent
services under the OPPS, and we
created HCPCS C-codes that generally
paralleled the CY 2005 CPT codes for
reporting these other services.
For CY 2007, as a result of comments
on our proposed rule and feedback from
the hospital community and the APC
Panel, we implemented the full set of
CPT codes, including codes
incorporating the concepts of initial,
sequential, and concurrent. In addition,
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Final CY
2009 APC
CY 2009 long descriptor
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source,
source,
source,
source,
source,
non-stranded, Palladium-103, per source ................
stranded, Cesium-131, per source ...........................
non-stranded, Cesium-131, per source ...................
stranded, not otherwise specified, per source .........
non-stranded, not otherwise specified, per source ..
the CY 2007 update process offered us
the first opportunity to consider data
gathered from the use of CY 2005 CPT
codes for purposes of ratesetting. For CY
2007, we used CY 2005 claims data to
implement a six-level APC structure for
drug administration services. In CY
2008, we continued to use the full set
of CPT codes for drug administration
services and continued our assignment
of drug administration services to this
six-level APC structure.
B. Coding and Payment for Drug
Administration Services
As we noted in the CY 2009 OPPS/
ASC proposed rule (73 FR 41503), the
CY 2009 ratesetting process affords us
the first opportunity to examine hospital
claims data for the full set of CPT codes
that reflect the concepts of initial,
sequential, and concurrent services. We
performed our standard annual OPPS
review of the clinical and resource
characteristics of the drug
administration HCPCS codes assigned to
APCs 0436 (Level I Drug
Administration), 0437 (Level II Drug
Administration), 0438 (Level III Drug
Administration), 0439 (Level IV Drug
Administration), 0440 (Level V Drug
Administration), and 0441 (Level VI
Drug Administration) for CY 2008 based
on the CY 2007 claims data available for
the CY 2009 OPPS/ASC proposed rule.
Under the CY 2008 APC configurations
for drug administration services, we
observed several 2 times violations
among the 6 APCs. Therefore, we
proposed to reconfigure the drug
administration APCs for CY 2009 to
improve the clinical and resource
homogeneity of the APCs. (We refer
readers to sections III.B.2. and 3. of this
final rule with comment period for
further discussion of the 2 times rule.)
As a result of our hospital cost
analysis and detailed clinical review,
we proposed a five-level APC structure
for CY 2009 drug administration
services to more appropriately reflect
their resource utilization in APCs that
also group clinically similar services.
These APCs generally demonstrate the
clinically expected and actually
observed comparative relationships
between the median costs of different
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2642
2643
2698
2699
Final CY
2009 SI
U
U
U
U
U
types of drug administration services,
including initial and additional
services, chemotherapy and other
diagnostic, prophylactic, or therapeutic
services, injections and infusions, and
simple and complex methods of drug
administration. As indicated in the CY
2009 OPPS/ASC proposed rule (73 FR
41503), we do not believe that six drug
administration APCs continue to be
necessary to pay appropriately for drug
administration services based on the
significant clinical and resource
differences among services. Instead, we
believe that the proposed five-level APC
structure for CY 2009 is the more
appropriate structure based on hospital
claims data for the full range of CPT
drug administration codes. Our
proposed five-level APC structure was
originally included as Table 30 of the
CY 2009 OPPS/ASC proposed rule and
reprinted in replacement Table 30
included in a correction notice
published in the Federal Register (73
FR 46575) on August 11, 2008,
subsequent to the issuance of the CY
2009 OPPS/ASC proposed rule.
As noted in the CY 2009 OPPS/ASC
proposed rule (73 FR 41503), we
presented a potential four-level drug
administration APC structure to the
APC Panel during the March 2008 APC
Panel meeting. After reviewing the data,
the APC Panel recommended that CMS
not implement this configuration until
more data are available and that CMS
provide the APC Panel with a crosswalk
analysis of the data. We accepted the
APC Panel’s recommendation and,
therefore, did not propose to implement
a four-level APC structure for drug
administration services in CY 2009.
Comment: Several commenters
supported the continued use of the full
range of CPT drug administration codes
for billing purposes under the OPPS.
Conversely, one commenter requested
that CMS return to a coding system that
groups hydration services with
diagnostic, prophylactic and therapeutic
services for the first hour of infusion
and additional hours of infusions.
Response: We continue to believe that
the use of the full set of drug
administration CPT codes allows
hospitals to use one set of codes for all
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payers, minimizing the administrative
burden on hospitals. Hospitals have
described to us the challenges
associated with maintaining different
code sets for different payers, and we do
not currently see any reason to change
from the use of CPT codes for reporting
drug administration services under the
CY 2009 OPPS.
Our proposal to move from a six-level
APC structure to a five-level structure
does not affect hospital billing for drug
administration services. We proposed to
continue to allow hospitals to use the
entire set of drug administration CPT
codes for purposes of reporting these
services. APC reconfiguration is a
regular part of the annual OPPS update
in response to our assessment of the
most recent hospital claims data.
Although changes to the APC
assignments of HCPCS codes, including
the drug administration CPT codes,
affect hospital payment for services,
they do not require any coding changes
by hospitals.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to continue use of the full
range of CPT drug administration codes
for the CY 2009 OPPS.
Comment: Several commenters
supported the proposal to restructure
the drug administration APCs to a fivelevel APC structure. These commenters
expressed appreciation of the proposed
increase in payment for certain drug
administration services. Furthermore,
several commenters expressed
appreciation for the timely review and
proposed modifications in response to
new claims data and indicated their
belief that the proposed structure would
result in more accurate payment for
drug administration services under the
OPPS.
Some commenters objected to the
proposed five-level APC structure
because they believed that it would
place an additional burden on hospitals.
A few of these commenters asserted that
the data used to establish the proposed
five-level APC structure for drug
administration services as shown in the
CY 2009 OPPS/ASC proposed rule were
incomplete or inconsistent. These
commenters noted that hospitals had
difficulty understanding and properly
billing for drug administration services
using these codes the first year they
were introduced under the OPPS. The
commenters argued that the data used
for the CY 2009 OPPS/ASC final rule
with comment period may be suspect
because of widespread billing
confusion. From their perspective, this
confusion, compounded by CMS’s
failure to clarify the reporting of
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scenarios such as undocumented
infusion stop times and lack of a
universal list of drugs that are
considered biological response
modifiers, led to inconsistent reporting
of these drug administration codes
across hospitals. The commenters
suggested that CMS collect at least 1
additional year of claims data before
using this data to inform a restructuring
of the drug administration APCs, in
order to take into consideration the
hospital learning curve that would
result, ultimately, in accurate and stable
claims data.
In addition, some commenters noted
that the CY 2008 CPT hierarchy for
reporting drug administration codes
used in the facility setting (as included
in CPT instructions preceding the
Hydration, Therapeutic, Prophylactic,
and Diagnostic Injections and Infusions
section of CPT codes) was not in place
in CY 2007, and because CMS uses CY
2007 hospital claims data to calculate
the CY 2009 OPPS payment rates, this
hierarchy was not appropriately
reflected in the claims data. These
commenters were concerned that the
new CPT reporting hierarchy altered the
billing practices of hospitals
significantly so that CMS would
eventually see a difference in costs from
claims data and, therefore, a transition
to a five-level APC structure before
these CY 2008 data were available
would be premature.
Another commenter also stated that
the proposed APCs are inconsistent
with CPT coding and medical practice,
and that the CPT codes need to be
grouped in a way that represents better
clinical coherence. Finally, some
commenters were concerned that
payment for certain drug administration
services would decline under the
proposed five-level APC structure.
Response: We last reconfigured the
drug administration APCs for CY 2007
when we first had 1 year of claims data
reflecting the costs of predecessor drug
administration CPT codes. Therefore, in
parallel fashion we believe it was
appropriate to propose to reconfigure
the drug administration APCs for CY
2009 when we first have 1 year of
hospital claims data for the full range of
CPT codes. Our prior assignments of
newly recognized CPT codes without
historical costs from hospital claims
data were based only on estimates of
hospital resource costs, and our usual
practice is to closely examine the APC
assignments of all HCPCS codes once
we have actual claims data.
As we noted in the CY 2009 OPPS/
ASC proposed rule (73 FR 41503), the
CY 2009 ratesetting process afforded us
the first opportunity to examine hospital
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claims data for the full set of CPT codes
implemented in CY 2007 for the OPPS
that reflect the concepts of initial,
concurrent, and sequential services.
These CPT codes were first available to
hospitals in CY 2006; however, because
of hospital concerns regarding
incorporating these new concepts into
their systems, we chose at that time not
to implement these codes under the
OPPS. This provided hospitals with the
opportunity to implement these codes
for non-OPPS payers for CY 2006 and
gain experience in their reporting, while
retaining drug administration billing
codes that did not include the concepts
of initial, concurrent, and sequential
services for OPPS reporting and
payment. Therefore, we had no reason
to suspect that hospitals would suffer
from widespread billing confusion or
inconsistent reporting of these drug
administration codes across hospitals.
Based on comments we received to our
CY 2007 OPPS/ASC proposed rule, we
believed that hospitals were prepared to
fully implement these CPT drug
administration codes for the CY 2007
OPPS, complying fully with the
descriptors of the CPT codes. As stated
in the CY 2007 OPPS/ASC final rule
with comment period (71 FR 68116),
‘‘* * * commenters responding to our
CY 2007 proposed rule * * * noted that
the operational issues were no longer a
primary concern with drug
administration and coding, and they
had gained valuable experience over the
past year reporting these codes to nonMedicare payers.’’
As we first indicated in the CY 2009
OPPS/ASC proposed rule (73 FR 41503),
and as we are confirming in this final
rule with comment period, for most of
the drug administration services, we
have thousands of single bills available
for ratesetting from the claims submitted
by thousands of hospitals, increasing
our confidence in the accuracy and
stability of the claims data. In addition,
our bypass code methodology as
described in section II.A.1.b. of this
final rule with comment period, which
specifically incorporates packaged costs
into the costs of the initial drug
administration service and not into the
additional drug administration services
provided in the same hospital
encounter, ensures that the single
claims used for ratesetting represent a
large proportion of total hospital claims
for most drug administration services.
Therefore, the CY 2007 hospital claims
data essentially reflect the second year
of hospitals’ use of the CPT codes with
the concepts of initial, concurrent, and
sequential services. Although CY 2007
is only the first year of their use for
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OPPS purposes, hospitals had been
using these codes for other payers for a
full year before they were implemented
under the Medicare OPPS. As a result,
we have no reason to believe that our
data should not be used for ratesetting
purposes. In addition, we note that there
have been instances in the past for drug
administration services where the first
year of data was used to establish
payment rates once it was available,
such as for the additional hour infusion
codes. Furthermore, for the above
reasons we also believe it is unnecessary
to collect an additional year of data
before restructuring the drug
administration APCs.
While commenters correctly observed
that the drug administration hierarchy
for services performed in the facility
setting was not in place when hospitals
implemented the revised CPT codes in
CY 2007 and, therefore, is not reflected
in our claims data for CY 2009
ratesetting purposes, it is our belief that
the hierarchy detailed reporting
practices were already commonly being
used by the majority of hospitals. We do
not believe that the hierarchy
implemented in CY 2008 for drug
administration services substantially
changed hospital billing practices in
most cases. For these reasons, we
continue to believe that our hospital
claims data for drug administration
services provided in CY 2007 provide
an accurate representation of the costs
of these hospital services.
In addition, we believe that our APC
groupings are consistent with CPT
coding and medical practice because all
services assigned to the drug
administration APCs are drug
administration services. While the
specific resources used for different
drug administration procedures may
vary somewhat from CPT code to CPT
code, this variation is not sufficient to
warrant additional APCs for essentially
similar services.
We have performed our standard
review of the costs of drug
administration services based on
updated data for this final rule with
comment period, and we continue to
believe that a five-level structure for
drug administration services is
appropriate for CY 2009. Therefore, as a
result of this analysis and for the
reasons discussed above, we believe that
the proposed five-level drug
administration APC structure is the
most appropriate after examination of
the robust set of drug administration
claims available for CY 2009 ratesetting
because the proposed structure results
in payment groups with greater clinical
and resource homogeneity. In addition,
we do not believe that a crosswalk
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analysis of the cost data to the CY 2008
six-level APC structure is pertinent
because, for a number of the CPT codes,
our APC assignments prior to CY 2009
were based only on our estimates of the
expected procedure costs, and not based
on hospitals’ actual costs for services
reported according to the current CPT
code descriptors and guidelines.
Comment: A few commenters
expressed specific concern that
according to the CPT reporting
hierarchy implemented for facilities in
CY 2008, hospital claims data may not
accurately represent the resources
required when a hydration service is
actually provided as the first service,
especially when it is followed by a
service, such as an injection of a drug,
that would be reported as the initial
service according to the CPT hierarchy.
Response: During the development of
new drug administration codes
implemented by CPT in CY 2006, the
AMA, the creators and maintainers of
the Level I HCPCS codes (CPT codes),
determined that the required resources
and clinical characteristics of hydration
services and therapeutic, prophylactic,
and diagnostic drug administration
services were sufficiently distinct to
warrant different codes for the first hour
of infusion and additional hours of
infusion for these two types of services.
Further, the AMA implemented a
hierarchy for reporting drug
administration services in the facility
setting where chemotherapy services are
primary to therapeutic, prophylactic,
and diagnostic services, which are
primary to hydration services. In
addition, the hierarchy specifies that
infusions are considered primary to
pushes, which are considered primary
to injections. Just as the CPT codes are
under the authority of the AMA, so are
these instructions that preface the
affected CPT codes and, in general, we
adopt CPT instructions for reporting
services under the OPPS. As discussed
earlier, although reporting according to
the hierarchy will first be specifically
reflected in the CY 2008 OPPS claims
data available for the CY 2010 OPPS
update, we believe that the hierarchy
detailed reporting practices that were
already commonly being used by the
majority of hospitals. We do not believe
that the hierarchy implemented in CY
2008 for drug administration services
substantially changed hospital billing
practices in most cases, and we believe
that our final CY 2009 payment rates for
these services is appropriate for drug
administration CPT codes reported in
accordance with the specified hierarchy
for CY 2009.
Comment: One commenter requested
that CMS reconsider the proposed APC
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68673
assignment of CPT code 90765
(Intravenous infusion, for therapy,
prophylaxis, or diagnosis, initial, up to
one hour), and stated that the CPT code
median cost is substantially higher than
the median cost of the APC.
Response: For the CY 2009 OPPS/ASC
proposed rule, we proposed to assign
CPT code 90765 to APC 0439 (Level IV
Drug Administration). The proposed
code-specific median cost for this
service was approximately $127, and
the proposed median cost for APC 0439
was also approximately $127. According
to our standard practice, we reevaluate
proposed HCPCS code assignments
between the proposed and final rules
after updating our data, as discussed in
section II.A. of this final rule with
comment period. For this final rule with
comment period, the updated final
median cost of CPT code 90765 of
approximately $126 is the same as the
APC median cost of approximately
$126, and we believe that this is the
most appropriate APC assignment for
this drug administration code.
Comment: One commenter stated that,
under the proposed five-level APC
structure, a 2 times rule violation
appears in APC 0436 (Level I Drug
Administration). The commenter noted
that the proposed median cost for CPT
code 90779 (Unlisted therapeutic,
prophylactic or diagnostic intravenous
or intra-arterial injection or infusion)
was approximately $77, while the
proposed median cost for APC 0436 was
approximately $25. The commenter
suggested reassigning CPT code 90779
to APC 0438 (Level III Drug
Administration), with a proposed
median cost of approximately $74.
Response: As a matter of established
OPPS policy described in the CY 2005
OPPS final rule with comment period
(69 FR 65724 through 65725), we assign
all unlisted HCPCS codes, such as CPT
code 90779, to the lowest level APC
within the appropriate clinical series.
By definition, ‘‘unlisted’’ or ‘‘not
otherwise classified’’ codes do not
describe the services being performed,
and the services coded using ‘‘unlisted’’
codes vary over time as new CPT and
HCPCS codes are developed. Therefore,
it is impossible for any level of analysis
of past hospital data to result in
appropriate placement of the service for
the upcoming year in an APC in which
there is clinical integrity of the groups
and weights. Therefore, we continue to
believe that the appropriate default, in
the absence of a code that describes the
service being furnished, is placement in
the lowest level APC within the clinical
category in which the unlisted code
falls. The assignment of the unlisted
codes to the lowest level APC in the
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clinical category specified in the code
provides a reasonable means for interim
payment until such time as there is a
code that specifically describes what is
being paid. It encourages the creation of
codes where appropriate and mitigates
against overpayment of services that are
not clearly identified on the bill. Our
assignment of CPT code 90779 to APC
0436 is consistent with this policy. The
hospital cost data for unlisted HCPCS
codes, including CPT code 90779, are
not used for ratesetting and,
furthermore, the costs of unlisted
HCPCS codes are not subject to the 2
times rule. For additional information
on the 2 times rule, we refer readers to
sections III.B.2 and 3 of this final rule
with comment period.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to implement a five-level
APC structure for drug administration
services, with final assignment of all
HCPCS codes as proposed. Table 34
below displays the five finalized APC
groups for drug administration services
for CY 2009. We note that several of the
CY 2008 CPT codes for drug
administration services have been
renumbered for CY 2009. We provide
both the CY 2008 CPT codes and the CY
2009 CPT codes, along with the CY 2009
long code descriptors, in Table 34
below.
Comment: Several commenters
requested that CMS reconsider the
proposed packaged status of CPT code
90768 (Intravenous infusion, for
therapy, prophylaxis, or diagnosis;
concurrent infusion). The commenters
noted that the service described by this
code, for which hospital claims data are
first available in CY 2007, requires
additional facility resources. They
believed that because CMS now has
claims data upon which to set a specific
payment rate for the service, the OPPS
should pay separately for CPT code
90768 in CY 2009.
Response: We agree with commenters
that this code was first introduced in CY
2007 under the OPPS and that we have
cost data for this CPT code based on
historical hospital claims data.
However, we believe that this code
remains appropriate for packaging. As
we discussed in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66787 through 66788), in deciding
whether to package a service or pay for
it separately, we consider a variety of
factors, including whether the service is
normally provided separately or in
conjunction with other services; how
likely it is for the costs of the packaged
code to be appropriately mapped to the
separately payable codes with which it
was performed; and whether the
expected cost of the service is relatively
low. CPT code 90768, by definition, is
always provided in association with
other intravenous infusions, and we
continue to believe that it is most
appropriately packaged under the OPPS.
Furthermore, to reduce the size of the
APC payment groups and establish
separate payment for this currently
packaged ancillary and supportive
service would be inconsistent with our
overall strategy to encourage hospitals
to use resources more efficiently by
increasing the size of the OPPS payment
bundles.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal, without
modification, to package payment for
CPT code 90768 for CY 2009.
TABLE 34—CY 2009 DRUG ADMINISTRATION APCS
Final CY 2009
approximate
APC median
cost
CY 2008
HCPCS code
CY 2009
HCPCS code
0436 ..............
$24
90471
90471
90472
90472
90473
90473
90474
90474
90761
96361
90766
96366
90771
96371
90772
96372
90779
96379
95115
95115
95117
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Final CY 2009
APC
95117
95145
95145
95165
95165
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CY 2009 long descriptor
Immunization administration (includes percutaneous, intradermal, subcutaneous, or intramuscular injections); one vaccine (single or combination
vaccine/toxoid).
Immunization administration (includes percutaneous, intradermal, subcutaneous, or intramuscular injections); each additional vaccine (single or
combination vaccine/toxoid)(List separately in addition to code for primary
procedure).
Immunization administration by intranasal or oral route; one vaccine (single
or combination vaccine/toxoid).
Immunization administration by intranasal or oral route; each additional vaccine (single or combination vaccine/toxoid) (List separately in addition to
code for primary procedure).
Intravenous infusion, hydration; each additional hour (List separately in addition to code for primary procedure).
Intravenous infusion, for therapy, prophylaxis, or diagnosis (specify substance or drug); each additional hour (List separately in addition to code
for primary procedure).
Subcutaneous infusion for therapy or prophylaxis (specify substance or
drug); additional pump set-up with establishment of new subcutaneous infusion site(s) (List separately in addition to code for primary procedure).
Therapeutic, prophylactic or diagnostic injection (specify substance or drug);
subcutaneous or intramuscular.
Unlisted therapeutic, prophylactic, or diagnostic intravenous or intra-arterial
injection or infusion.
Professional services for allergen immunotherapy not including provision of
allergenic extracts; single injection.
Professional services for allergen immunotherapy not including provision of
allergenic extracts; two or more injections.
Professional services for the supervision of preparation and provision of
antigens for allergen immunotherapy (specify number of doses); single
stinging insect venom.
Professional services for the supervision of preparation and provision of
antigens for allergen immunotherapy; single or multiple antigens (specify
number of doses).
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68675
TABLE 34—CY 2009 DRUG ADMINISTRATION APCS—Continued
Final CY 2009
APC
Final CY 2009
approximate
APC median
cost
96373
96374
96375
95144
95144
95148
95148
96401
96401
96402
96402
96405
96415
96405
96415
90760
90769
96360
96369
95146
95146
95147
95147
96406
96411
96406
96411
96417
96417
96423
96423
90765
96365
95149
95149
96409
96409
96420
96522
96420
96522
96542
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96370
90775
96542
95990
95990
95991
95991
96413
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96549
96367
90774
0440 ..............
96549
90767
90773
0439 ..............
95170
90770
0438 ..............
CY 2009
HCPCS code
95170
0437 ..............
CY 2008
HCPCS code
96413
$35
$72
$126
$184
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CY 2009 long descriptor
Professional services for the supervision of preparation and provision of
antigens for allergen immunotherapy; whole body extract of biting insect
or other arthropod (specify number of doses).
Unlisted chemotherapy procedure.
Intravenous infusion, for therapy, prophylaxis, or diagnosis (specify substance or drug); additional sequential infusion, up to 1 hour (List separately in addition to code for primary procedure).
Subcutaneous infusion for therapy or prophylaxis (specify substance or
drug); each additional hour (List separately in addition to code for primary
procedure).
Therapeutic, prophylactic, or diagnostic injection (specify substance or
drug); intra-arterial.
Therapeutic, prophylactic, or diagnostic injection (specify substance or
drug); intravenous push, single or initial substance/drug.
Therapeutic, prophylactic, or diagnostic injection (specify substance or
drug); each additional sequential intravenous push of a new substance/
drug (List separately in addition to code for primary procedure).
Professional services for the supervision of preparation and provision of
antigens for allergen immunotherapy, single dose vial(s) (specify number
of vials).
Professional services for the supervision of preparation and provision of
antigens for allergen immunotherapy (specify number of doses); four single stinging insect venoms.
Chemotherapy administration, subcutaneous or intramuscular; non-hormonal
anti-neoplastic.
Chemotherapy administration, subcutaneous or intramuscular; hormonal
anti-neoplastic.
Chemotherapy administration; intralesional, up to and including 7 lesions.
Chemotherapy administration, intravenous infusion technique; each additional hour (List separately in addition to code for primary procedure).
Intravenous infusion, hydration; initial, 31 minutes to 1 hour.
Subcutaneous infusion for therapy or prophylaxis (specify substance or
drug); initial, up to one hour, including pump set-up and establishment of
subcutaneous infusion site(s).
Professional services for the supervision of preparation and provision of
antigens for allergen immunotherapy (specify number of doses); 2 single
stinging insect venoms.
Professional services for the supervision of preparation and provision of
antigens for allergen immunotherapy (specify number of doses); 3 single
stinging insect venoms.
Chemotherapy administration; intralesional, more than 7 lesions.
Chemotherapy administration; intravenous, push technique, each additional
substance/drug (List separately in addition to code for primary procedure).
Chemotherapy administration, intravenous infusion technique; each additional sequential infusion (different substance/drug), up to 1 hour (List
separately in addition to code for primary procedure).
Chemotherapy administration, intra-arterial; infusion technique, each additional hour (List separately in addition to code for primary procedure).
Intravenous infusion, for therapy, prophylaxis, or diagnosis (specify substance or drug); initial, up to 1 hour.
Professional services for the supervision of preparation and provision of
antigens for allergen immunotherapy (specify number of doses); 5 single
stinging insect venoms.
Chemotherapy administration; intravenous, push technique, single or initial
substance/drug.
Chemotherapy administration, intra-arterial; push technique.
Refilling and maintenance of implantable pump or reservoir for drug delivery, systemic (e.g., intravenous, intra-arterial).
Chemotherapy injection, subarachnoid or intraventricular via subcutaneous
reservoir, single or multiple agents.
Refilling and maintenance of implantable pump or reservoir for drug delivery, spinal (intrathecal, epidural) or brain (intraventricular).
Refilling and maintenance of implantable pump or reservoir for drug delivery, spinal (intrathecal, epidural) or brain (intraventricular); administered
by physician.
Chemotherapy administration, intravenous infusion technique; up to 1 hour,
single or initial substance/drug.
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TABLE 34—CY 2009 DRUG ADMINISTRATION APCS—Continued
Final CY 2009
approximate
APC median
cost
Final CY 2009
APC
CY 2008
HCPCS code
CY 2009
HCPCS code
96416
96416
96422
96425
96422
96425
96440
96440
96445
96445
96450
96450
96521
C8957
96521
C8957
IX. OPPS Payment for Hospital
Outpatient Visits
A. Background
Currently, hospitals report visit
HCPCS codes to describe three types of
OPPS services: clinic visits, emergency
department visits, and critical care
services. CPT indicates that office or
other outpatient visit codes are used to
report evaluation and management (E/
M) services provided in the physician’s
office or in an outpatient or other
ambulatory facility. For OPPS purposes,
we refer to these as clinic visit codes.
CPT also indicates that emergency
department visit codes are used to
report E/M services provided in the
emergency department, which is
defined as an ‘‘organized hospital-based
facility for the provision of unscheduled
episodic services to patients who
present for immediate medical
attention. The facility must be available
24 hours a day.’’ For OPPS purposes, we
refer to these as emergency department
visit codes that specifically apply to the
CY 2009 long descriptor
Chemotherapy administration, intravenous infusion technique; initiation of
prolonged chemotherapy infusion (more than 8 hours), requiring use of a
portable or implantable pump.
Chemotherapy administration, intra-arterial; infusion technique, up to 1 hour.
Chemotherapy administration, intra-arterial; infusion technique, initiation of
prolonged infusion (more than 8 hours), requiring the use of a portable or
implantable pump.
Chemotherapy administration into pleural cavity, requiring and including thoracentesis.
Chemotherapy administration into peritoneal cavity, requiring and including
peritoneocentesis.
Chemotherapy administration, into CNS (e.g., intrathecal), requiring and including spinal puncture.
Refilling and maintenance of portable pump.
Intravenous infusion for therapy/diagnosis; initiation of prolonged infusion
(more than eight hours), requiring use of portable or implantable pump.
reporting of visits to Type A emergency
departments. Furthermore, for CY 2007
we established five new Level II HCPCS
codes to report visits to Type B
emergency departments (defined as
dedicated emergency departments that
incur Emergency Medical Treatment
and Labor Act (EMTALA) of 1986 (Pub.
L. 99–272) obligations but that do not
meet the Type A emergency department
definition, as described in more detail
below). These new Level II HCPCS
codes were developed because there
were no CPT codes at that time that
fully described services provided in this
type of facility. CPT defines critical care
services to be reported with critical care
CPT codes as the ‘‘direct delivery by a
physician(s) of medical care for a
critically ill or critically injured
patient.’’ Under the OPPS, in
Transmittal 1139, Change Request 5438,
dated December 22, 2006, we stated that
the time that can be reported as critical
care is the time spent by a physician
and/or hospital staff engaged in active
face-to-face critical care of a critically ill
or critically injured patient. We also
established HCPCS code G0390 (Trauma
response team associated with hospital
critical care service) in CY 2007 for the
reporting of a trauma response in
association with critical care services.
We refer readers to section III.D.7.f. of
this final rule with comment period for
further discussion of payment for a
trauma response associated with
hospital critical care services.
Currently, CMS instructs hospitals to
report the CY 2008 CPT codes that
describe new and established clinic
visits, Type A emergency department
visits, and critical care services, and the
six Level II HCPCS codes to report Type
B emergency department visits and
trauma activation provided in
association with critical care services.
These codes are listed below in Table
35. As we stated in the proposed rule
(73 FR 41506), we are not changing the
visit HCPCS codes that hospitals report
for CY 2009.
TABLE 35—CY 2009 CPT E/M AND LEVEL II HCPCS CODES USED TO REPORT CLINIC AND EMERGENCY DEPARTMENT
VISITS AND CRITICAL CARE SERVICES
CY 2009
HCPCS code
CY 2009 descriptor
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Clinic Visit HCPCS Codes
99201
99202
99203
99204
99205
99211
99212
99213
99214
99215
................
................
................
................
................
................
................
................
................
................
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Office
Office
Office
Office
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or
or
or
or
or
or
or
or
or
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other
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other
other
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15:50 Nov 17, 2008
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outpatient
outpatient
outpatient
outpatient
outpatient
outpatient
outpatient
outpatient
outpatient
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visit
visit
visit
visit
visit
visit
visit
visit
visit
for
for
for
for
for
for
for
for
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for
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the
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Frm 00176
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and
and
and
and
and
and
and
and
management
management
management
management
management
management
management
management
management
management
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of
of
of
of
of
of
of
of
of
of
a new patient (Level 1).
a new patient (Level 2).
a new patient (Level 3).
a new patient (Level 4).
a new patient (Level 5).
an established patient (Level
an established patient (Level
an established patient (Level
an established patient (Level
an established patient (Level
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2).
3).
4).
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Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations
68677
TABLE 35—CY 2009 CPT E/M AND LEVEL II HCPCS CODES USED TO REPORT CLINIC AND EMERGENCY DEPARTMENT
VISITS AND CRITICAL CARE SERVICES—Continued
CY 2009
HCPCS code
CY 2009 descriptor
Emergency Department Visit HCPCS Codes
99281 ................
99282 ................
99283 ................
99284 ................
99285 ................
G0380 ...............
G0381 ...............
G0382 ...............
G0383 ...............
G0384 ...............
Emergency department visit for the evaluation
Emergency department visit for the evaluation
Emergency department visit for the evaluation
Emergency department visit for the evaluation
Emergency department visit for the evaluation
Type B emergency department visit (Level 1).
Type B emergency department visit (Level 2).
Type B emergency department visit (Level 3).
Type B emergency department visit (Level 4).
Type B emergency department visit (Level 5).
and
and
and
and
and
management
management
management
management
management
of
of
of
of
of
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patient
patient
patient
patient
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1).
2).
3).
4).
5).
Critical Care Services HCPCS Codes
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99291 ................
99292 ................
G0390 ...............
Critical care, evaluation and management of the critically ill or critically injured patient; first 30–74 minutes.
Critical care, evaluation and management of the critically ill or critically injured patient; each additional 30 minutes.
Trauma response associated with hospital critical care service.
The majority of CPT code descriptors
are applicable to both physician and
facility resources associated with
specific services. However, we have
acknowledged from the beginning of the
OPPS that we believe that CPT E/M
codes were defined to reflect the
activities of physicians and do not
necessarily fully describe the range and
mix of services provided by hospitals
during visits of clinic or emergency
department patients or critical care
encounters. While awaiting the
development of a national set of facilityspecific codes and guidelines, we have
advised hospitals that each hospital’s
internal guidelines that determine the
levels of clinic and emergency
department visits to be reported should
follow the intent of the CPT code
descriptors, in that the guidelines
should be designed to reasonably relate
the intensity of hospital resources to the
different levels of effort represented by
the codes.
During its March 2008 APC Panel
meeting, the APC Panel recommended
that CMS provide, for review by the
Visits and Observation Subcommittee at
the next CY 2008 APC Panel meeting:
(1) Frequency and median cost data on
new and established patient clinic visits
and Type A and Type B emergency
department visits; (2) data on CPT code
99291 (Critical care, evaluation and
management of the critically ill or
critically injured patient; first 30–74
minutes) and APC 617 (Critical Care);
and (3) frequency and median cost data
on the extended assessment and
management composite APCs (that is,
APCs 8002 and 8003). We adopted all
three of these recommendations and
provided frequency and cost data
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related to these services at the August
2008 APC Panel meeting. During its
August 2008 meeting, the APC Panel
requested, for review by the APC Panel
at the next CY 2009 APC Panel meeting,
an analysis of CY 2008 claims data for
clinic visits, Type A and Type B
emergency department visits, and
extended assessment and management
composite APCs. The APC Panel also
recommended that the work of the
Visits and Observation Subcommittee
continue. We are adopting these
recommendations.
The complete discussion related to
visits is provided below. A complete
discussion related to the extended
assessment and management composite
APCs can be found in section II.A.2.e.(1)
of this final rule with comment period.
B. Policies for Hospital Outpatient Visits
1. Clinic Visits: New and Established
Patient Visits
CPT defines an established patient as
‘‘one who has received professional
services from the physician or another
physician of the same specialty who
belongs to the same group practice,
within the past 3 years.’’ To apply this
definition to hospital clinic visits, we
stated in the April 7, 2000 OPPS final
rule with comment period (65 FR
18451), that the meanings of ‘‘new’’ and
‘‘established’’ pertain to whether or not
the patient already has a hospital
medical record number. If the patient
has a hospital medical record that was
created within the past 3 years, that
patient is considered an established
patient to the hospital. The same patient
could be ‘‘new’’ to the physician but an
‘‘established’’ patient to the hospital.
The opposite could be true if the
PO 00000
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physician has a longstanding
relationship with the patient, in which
case the patient would be an
‘‘established’’ patient with respect to the
physician and a ‘‘new’’ patient with
respect to the hospital. Our resource
cost data continue to show that new
patient visits are consistently more
costly than established patient visits of
the same level.
Since the implementation of the
OPPS, we have received very few
comments related to the definitions of
new and established patient visits.
However, during the past year, we have
heard from several provider groups that
hospitals cannot easily distinguish
between new and established patients
for purposes of correctly reporting clinic
visits under the OPPS, based on the
definition above. We considered several
options for refining the definitions of
new and established patients as they
would apply under the CY 2009 OPPS
in order to reduce hospitals’
administrative burden associated with
reporting appropriate clinic visit CPT
codes.
We considered proposing to eliminate
the distinction between new and
established patient visits under the
OPPS, as had previously been
recommended by the APC Panel for CY
2008. We considered instructing
hospitals to bill all visits as established
patient visits and the hospital would
determine the appropriate code level
based on the resources expended during
the visit. However, because hospital
claims data continue to show significant
cost differences between new and
established patient visits, we believe it
is most appropriate to continue to
recognize the CPT codes for both new
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and established patient visits and, in
some cases, provide differential
payment for new and established
patient visits of the same level. In
addition, we continue to believe it is
important that CPT codes be reported
consistent with their code descriptors,
and that some patients will always be
new to the hospital, regardless of any
potential refinement in the definition of
‘‘new’’ for reporting clinical visits under
the OPPS. Therefore, as we stated in the
CY 2009 OPPS/ASC proposed rule (73
FR 41507), we did not propose this
approach for reporting CPT codes for
clinic visits for CY 2009.
Another alternative we considered
was proposing to define an established
patient as a patient who already had a
hospital medical record number at the
hospital where he or she was currently
receiving services, regardless of when
this medical record was created. Several
commenters to the CY 2008 OPPS/ASC
proposed rule preferred this distinction
rather than the current policy, which
requires hospitals to determine if the
patient’s hospital medical record was
created within the past 3 years (72 FR
66793). However, one commenter noted
an extreme example in which a patient
who was born at a hospital and assigned
a medical record number would always
be considered an established patient to
that hospital, even if the patient was not
treated again at that hospital until
decades later. We continue to believe it
is appropriate to include a time limit
when determining whether a patient is
new or established from the hospital’s
perspective because we would expect
that care of a patient who was not
treated at the hospital for several years
prior to a visit could require
significantly greater hospital resources
than care for a patient who was recently
treated at the hospital. Therefore, as we
stated in the proposed rule (73 FR
41507), we did not propose this
alternative for CY 2009.
We considered proposing to modify
the new and established patient
definitions for reporting clinic visits
under the OPPS so they would pertain
to whether or not the patient was
registered in a specific hospital clinic
within the past 3 years. However, we
believe this approach could be
problematic because we do not believe
that every clinic has clear
administrative boundaries that define
whether the patient was previously seen
in that particular clinic. For example, a
hospital-based clinic may have several
locations, including on-campus and offcampus sites, or a specific area of the
hospital may house two or more
specialty clinics that treat disparate
types of clinical conditions.
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We considered the options described
above but did not propose to adopt
these three alternatives for CY 2009.
Instead, we proposed to modify the
definitions of ‘‘new’’ and ‘‘established’’
patients as they apply to hospital
outpatient visits. Specifically, the
meanings of ‘‘new’’ and ‘‘established’’
patients would pertain to whether or not
the patient has been registered as an
inpatient or outpatient of the hospital
within the past 3 years. Under this
proposed modification, hospitals would
not need to determine the specific clinic
where the patient was previously
treated because the modified definition
would not rely upon when the medical
record was initially created but rather
would depend upon whether the
individual has been registered as a
hospital inpatient or outpatient within
the previous 3 years.
In addition, hospitals would also not
need to determine when the medical
record was initially created. If the
patient has been registered as an
inpatient or outpatient of the hospital
within the past 3 years, that patient is
considered an ‘‘established’’ patient to
the hospital. If a patient has been
registered as an outpatient in a
hospital’s off-campus provider-based
clinic or emergency department within
the past 3 years, that patient would still
be considered an ‘‘established’’ patient
to the hospital for an on-campus or offcampus clinic visit even if the medical
record was initially created by the
hospital prior to the past 3 years.
Consistent with past policy, the same
patient may be ‘‘new’’ to the physician
but an ‘‘established’’ patient to the
hospital. The opposite would be true if
the physician has a longstanding
relationship with the patient, in which
case the patient would be an
‘‘established’’ patient with respect to the
physician and a ‘‘new’’ patient with
respect to the hospital. We believe that
our proposed modified definition of
new and established patients for
reporting visits under the OPPS would
be administratively straightforward for
hospitals to apply, while continuing to
capture differences in hospital resources
required to provide new and established
patient clinic visits. Furthermore, we
believe that costs from historical
hospital claims data for services
reported under the past OPPS
interpretation of new and established
patient visits could simply be
crosswalked to the expected costs of the
corresponding visit level reported under
our proposed modified definition,
thereby providing appropriate payment
for new and established clinic visits for
all five levels until CY 2009 claims data
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reflecting the refined definitions would
be available for CY 2011 ratesetting. We
expect only minimal cost differences for
clinic visits based on these proposed
new definitions established for CY 2009.
We invited the public to specifically
comment on the proposed modified
definitions of new and established
patients under the OPPS.
Comment: Most commenters
supported the first alternative described
above and requested that CMS eliminate
the need for hospitals to distinguish
between new and established patient
visits because of the administrative
difficulty in determining the correct
visit type. Specifically, these
commenters suggested that hospitals bill
an appropriate visit code, based on the
resources expended in the visit at a
level determined by the hospitals’
internal reporting guidelines, without
distinguishing whether the patient is
new or established. Several commenters
requested that we adopt the APC Panel’s
March 2007 recommendation, as related
to visits. Specifically, the APC Panel
recommended at that time that CMS
eliminate the ‘‘new’’ and ‘‘established’’
patient distinctions in the reporting of
hospital clinic visits. During its
discussion, the APC Panel suggested
that hospitals bill the appropriate level
clinic visit code according to the
resources expended while treating the
beneficiary, based on each hospital’s
internal guidelines. The APC Panel also
suggested that each hospital’s internal
guidelines reflect resource cost
differences (if a difference exists)
between new and established patients.
Several commenters suggested that
CMS change the status of the new
patient visit CPT codes to nonpayable
and require hospitals to bill the
established patient visit codes
exclusively. One commenter
acknowledged the payment difference
between new and established patient
visits but noted that its hospital system
chose to bill all visits as established
patients because of the administrative
burden associated with determining
whether a patient is new or established.
Other commenters suggested that CMS
require hospitals to bill the new patient
visit codes exclusively, particularly in
urgent care clinics, claiming that the
patients’ previous encounters are rarely
relevant to future visits. Another
commenter noted that resource
efficiencies that exist when treating an
established patient do not pertain in the
HOPD in the same way as they apply to
the physician’s office.
If CMS were to finalize a policy that
required hospitals to bill only one type
of visit code for a given visit level,
several commenters suggested setting
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the payment rate for the reportable visit
code at a blend of the new and
established patient visit rates for that
level. Several commenters believed that,
under both the current and proposed
definitions for new and established
patients, it is difficult for mid-sized
hospitals and impossible for small
hospitals to determine whether a patient
visit should be reported with the new or
established patient visit code. Many
commenters suggested that the AMA
create hospital-specific Category I CPT
visit codes that do not distinguish
between new and established patient
visits, as appropriate for reporting
hospital resource use. These
commenters indicated that it would be
most appropriate for the AMA to create
these hospital-specific visit codes
following implementation of national
visit guidelines. Other commenters
requested the creation of Level II HCPCS
G-codes for reporting clinic visits,
noting that implementation of national
guidelines does not appear to be
imminent, and that HCPCS G-codes
would solve the immediate problem.
While most commenters
recommended that CMS eliminate the
distinction between new and
established patient visits, other
commenters supported the proposed
definitions for new and established
patients. Some commenters supported
the general proposal to refine the
definition of a new patient under the
OPPS, but suggested that the 3 year
window was too long because
significant changes can occur in a
patient’s medical history that would not
be reflected in a medical record that had
not been updated for 3 years. Other
commenters noted a preference for
reporting visits without distinguishing
between new and established patient
visits, but stated that if it was necessary
to distinguish between new and
established patient visits, the proposed
refinement to the definition of a new
patient was an improvement from the
previous definition.
One commenter suggested that CMS
finalize another one of the alternatives
discussed above and modify the new
and established patient definitions for
reporting clinic visits under the OPPS
so they would pertain to whether or not
the patient was registered in a specific
hospital clinic within the past 3 years.
Response: Because hospitals will be
reporting CPT codes for CY 2009 and we
continue to observe significant cost
differences between new and
established patient visits of the same
level, we will continue to recognize new
and established patient visit codes
under the CY 2009 OPPS, consistent
with their CPT code descriptors. We
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agree with the commenters that it could
be less burdensome from a coding
perspective if hospitals only needed to
report one set of codes, rather than
continuing to distinguish between new
and established patient visits. However,
we do not believe that this would pay
most appropriately and accurately for
new and established visits at all five
levels based on the costs that have been
reported to us by hospitals for these
services. For CY 2009, hospitals should
continue to distinguish between new
and established patient visits, consistent
with their CPT code descriptors, in
order to receive appropriate payment for
these services and so that accurate
claims data are available for future
OPPS ratesetting. While we
acknowledge that some hospitals may
prefer HCPCS G-codes rather than
continuing to distinguish between new
and established patient visits in
reporting CPT codes, we are reluctant to
again consider establishing HCPCS Gcodes, particularly in the absence of
national guidelines, based on past
comments we have received to prior
proposed rules. Furthermore, public
comments we have received to the CY
2009 OPPS/ASC proposed rule and
prior proposed rules on the
establishment of Level II HCPCS codes
for services other than visits generally
have reflected a strong general
preference on the part of commenters
for OPPS’ use of CPT codes rather than
Level II HCPCS codes.
The majority of commenters who
expressed an opinion about the
definitions of new and established
patients, if we were to continue to
recognize a distinction, believed that the
proposed new and established patient
definitions would be easier to apply
than the current definitions. While we
are continuing to recognize the CPT
codes for new and established patient
visits, we are interested in minimizing
the administrative reporting burden of
hospitals, while continuing to capture
resource differences between new and
established patient visits of the same
level. Therefore, we believe that
adopting our proposed modifications to
these definitions is the most desirable
approach for CY 2009.
Comment: One commenter asked
whether the new and established patient
definitions apply to CPT codes other
than CPT codes 99201 through 99205
and CPT codes 99211 through 99215.
Specifically, the commenter questioned
whether the definitions would apply to
CPT codes 99605 (Medication therapy
management service(s) provided by a
pharmacist, individual, face-to-face with
patient, with assessment and
intervention if provided; initial 15
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68679
minutes, new patient) and 99606
(Medication therapy management
service(s) provided by a pharmacist,
individual, face-to-face with patient,
with assessment and intervention if
provided; initial 15 minutes, established
patient).
Response: CPT codes 99605 and
99606 are assigned status indicator ‘‘E’’
under the OPPS, indicating that they are
not payable under the OPPS and should
not be reported on OPPS claims. If a
hospital provided medication therapy
management services described by the
CPT codes as part of a clinic visit,
emergency department visit, or a
procedure, that visit or procedure would
be reportable, and the medication
therapy management services provided
as part of that service would be covered
by Medicare, but would not be
separately payable. For a complete
discussion of these codes, we refer
readers to the CY 2007 OPPS/ASC final
rule with comment period (71 FR
68061). The discussion relates to CPT
codes 0115T through 0117T, which
were the predecessor codes to CPT
codes 99605 through 99607.
In general, however, the new and
established patient definitions for CY
2009 would also apply under the OPPS
to payable CPT codes other than CPT
codes 99201 through 99205 and 99211
through 99215 that distinguish between
new and established patients unless we
have specifically provided different
instructions regarding the reporting of
those codes.
After consideration of the public
comments received, and for the reasons
explained in this section, we are
finalizing our CY 2009 proposal,
without modification, to change the
definitions of new and established
patients as they relate to reporting
hospital outpatient visits under the
OPPS. Specifically, beginning in CY
2009, the meanings of ‘‘new’’ and
‘‘established’’ patients pertain to
whether or not the patient has been
registered as an inpatient or outpatient
of the hospital within the past 3 years.
A patient who has been registered as an
inpatient or outpatient of the hospital
within the 3 years prior to the visit
would be considered to be an
established patient for that visit, while
a patient who has not been registered as
an inpatient or outpatient of the hospital
within the 3 years prior to the visit
would be considered to be a new patient
for that visit.
As discussed further in section
II.A.2.e.(1) of this final rule with
comment period and consistent with
our CY 2008 policy, when calculating
the median costs for the clinic visit
APCs (0604 through 0608), we will
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utilize our methodology that excludes
those claims for visits that are eligible
for payment through the extended
assessment and management composite
APC 8002 (Level I Extended Assessment
and Management Composite). We
believe that this approach will result in
the most accurate cost estimates for
APCs 0604 through 0608 for CY 2009.
2. Emergency Department Visits
As described in section IX.A. of this
final rule with comment period, CPT
defines an emergency department as ‘‘an
organized hospital-based facility for the
provision of unscheduled episodic
services to patients who present for
immediate medical attention. The
facility must be available 24 hours a
day.’’ Prior to CY 2007, under the OPPS
we restricted the billing of emergency
department CPT codes to services
furnished at facilities that met this CPT
definition. Facilities open less than 24
hours a day should not have reported
the emergency department CPT codes
for visits.
Sections 1866(a)(1)(I), 1866(a)(1)(N),
and 1867 of the Act impose specific
obligations on Medicare-participating
hospitals and CAHs that offer
emergency services. These obligations
concern individuals who come to a
hospital’s dedicated emergency
department and request examination or
treatment for medical conditions, and
apply to all of these individuals,
regardless of whether or not they are
beneficiaries of any program under the
Act. Section 1867(h) of the Act
specifically prohibits a delay in
providing required screening or
stabilization services in order to inquire
about the individual’s payment method
or insurance status. Section 1867(d) of
the Act provides for the imposition of
civil monetary penalties on hospitals
and physicians responsible for failing to
meet the provisions listed above. These
provisions, taken together, are
frequently referred to as the EMTALA
provisions.
Section 489.24 of the EMTALA
regulations defines ‘‘dedicated
emergency department’’ as any
department or facility of the hospital,
regardless of whether it is located on or
off the main hospital campus, that meets
at least one of the following
requirements: (1) It is licensed by the
State in which it is located under
applicable State law as an emergency
room or emergency department; (2) It is
held out to the public (by name, posted
signs, advertising, or other means) as a
place that provides care for emergency
medical conditions on an urgent basis
without requiring a previously
scheduled appointment; or (3) During
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the calendar year immediately
preceding the calendar year in which a
determination under the regulations is
being made, based on a representative
sample of patient visits that occurred
during that calendar year, it provides at
least one-third of all of its outpatient
visits for the treatment of emergency
medical conditions on an urgent basis
without requiring a previously
scheduled appointment.
In the CY 2008 OPPS/ASC proposed
rule (72 FR 42756), we reiterated our
belief that every emergency department
that meets the CPT definition of
emergency department also qualifies as
a dedicated emergency department
under EMTALA. However, we indicated
that we were aware that there are some
departments or facilities of hospitals
that meet the definition of a dedicated
emergency department under the
EMTALA regulations, but that do not
meet the more restrictive CPT definition
of an emergency department. For
example, a hospital department or
facility that meets the definition of a
dedicated emergency department may
not be available 24 hours a day, 7 days
a week. Nevertheless, hospitals with
such departments or facilities incur
EMTALA obligations with respect to an
individual who presents to the
department and requests, or has
requested on his or her behalf,
examination or treatment for an
emergency medical condition. However,
because they did not meet the CPT
requirements for reporting emergency
visit E/M codes, prior to CY 2007, these
facilities were required to bill clinic
visit codes for the services they
furnished under the OPPS. We had no
way to distinguish in our hospital
claims data the costs of visits provided
in dedicated emergency departments
that did not meet the CPT definition of
emergency department from the costs of
clinic visits.
Prior to CY 2007, some hospitals
requested that they be permitted to bill
emergency department visit codes under
the OPPS for services furnished in a
facility that met the CPT definition for
reporting emergency department visit E/
M codes, except that the facility was not
available 24 hours a day. These
hospitals believed that their resource
costs for visits were more similar to
those of emergency departments that
met the CPT definition than they were
to the resource costs of clinics.
Representatives of such facilities argued
that emergency department visit
payments would be more appropriate,
on the grounds that their facilities
treated patients with emergency
conditions whose costs exceeded the
resources reflected in the clinic visit
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APC payments, even though these
emergency departments were not
available 24 hours per day. In addition,
these hospital representatives indicated
that their facilities had EMTALA
obligations and should, therefore, be
able to receive emergency department
visit payments. While these emergency
departments may have provided a
broader range and intensity of hospital
services, and required significant
resources to assure their availability and
capabilities in comparison with typical
hospital outpatient clinics, the fact that
they did not operate with all capabilities
full-time suggested that hospital
resources associated with visits to
emergency departments or facilities
available less than 24 hours a day might
not be as great as the resources
associated with emergency departments
or facilities that were available 24 hours
a day, and that fully met the CPT
definition.
In the CY 2007 OPPS/ASC final rule
with comment period (71 FR 68132), we
finalized the definition of Type A
emergency departments to distinguish
them from Type B emergency
departments. A Type A emergency
department must be available to provide
services 24 hours a day, 7 days a week,
and meet one or both of the following
requirements related to the EMTALA
definition of a dedicated emergency
department, specifically: (1) It is
licensed by the State in which it is
located under the applicable State law
as an emergency room or emergency
department; or (2) It is held out to the
public (by name, posted signs,
advertising, or other means) as a place
that provides care for emergency
medical conditions on an urgent basis
without requiring a previously
scheduled appointment. For CY 2007
(71 FR 68140), we assigned the five CPT
E/M emergency department visit codes
for services provided in Type A
emergency departments to the five
newly created Emergency Visit APCs,
specifically 0609 (Level 1 Emergency
Visits), 0613 (Level 2 Emergency Visits),
0614 (Level 3 Emergency Visits), 0615
(Level 4 Emergency Visits), and 0616
(Level 5 Emergency Visits).
We defined a Type B emergency
department as any dedicated emergency
department that incurred EMTALA
obligations under § 489.24 of the
EMTALA regulations but that did not
meet the Type A emergency department
definition. To determine whether visits
to Type B emergency departments have
different resource costs than visits to
either clinics or Type A emergency
departments, in the CY 2007 OPPS/ASC
final rule with comment period (71 FR
68132), we finalized a set of five HCPCS
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G-codes for use by hospitals to report
visits to all entities that meet the
definition of a dedicated emergency
department under the EMTALA
regulations in § 489.24, but that are not
Type A emergency departments. These
codes are called ‘‘Type B emergency
department visit codes.’’ In the CY 2007
OPPS/ASC final rule with comment
period (71 FR 68132), we explained that
these new HCPCS G-codes would serve
as a vehicle to capture median cost and
resource differences among visits
provided by Type A emergency
departments, Type B emergency
departments, and clinics. For CYs 2007
and 2008, we assigned the five new
Type B emergency department visit
codes for services provided in a Type B
emergency department to the five Clinic
Visit APCs, specifically 0604 (Level 1
Hospital Clinic Visits), 0605 (Level 2
Hospital Clinic Visits), 0606 (Level 3
Hospital Clinic Visits), 0607 (Level 4
Hospital Clinic Visits), and 0608 (Level
5 Hospital Clinic Visits). This payment
policy for Type B emergency
department visits was similar to our
previous policy, which required that
services furnished in emergency
departments that had an EMTALA
obligation but did not meet the CPT
definition of emergency department be
reported using CPT clinic visit E/M
codes, resulting in payments based
upon clinic visit APCs. While
maintaining the same payment policy
for Type B emergency department visits
in CYs 2007 and 2008, we believe the
reporting of specific HCPCS G-codes for
emergency department visits provided
in Type B emergency departments
would permit us to specifically collect
and analyze the hospital resource costs
of visits to these facilities in order to
determine if in the future a proposal for
an alternative payment policy might be
warranted. We expected hospitals to
adjust their charges appropriately to
reflect differences in Type A and Type
B emergency department visit costs. We
noted that the OPPS rulemaking cycle
for CY 2009 would be the first year that
we would have cost data for these new
Type B emergency department HCPCS
codes available for analysis.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41509), we summarized the
CY 2007 proposed rule cost data
available for the CY 2009 ratesetting for
the Type B emergency department
HCPCS codes G0380 through G0384.
Based on those data, 342 hospitals
billed at least one Type B emergency
department visit code in CY 2007, with
a total frequency of visits provided in
Type B emergency departments of
approximately 200,000. All except 2 of
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the 342 hospitals reporting Type B
emergency department visits in CY 2007
also reported Type A emergency
department visits. Overall, many more
hospitals (approximately 2,911 total
hospitals) reported Type A emergency
department visits than Type B
emergency department visits. For
comparison purposes, the total
frequency of visits provided in hospital
outpatient clinics and Type A
emergency departments is
approximately 14.5 million and 10.3
million, respectively.
As stated in the CY 2009 OPPS/ASC
proposed rule (73 FR 41509), we
performed additional data analyses to
gather more information to support our
proposal for payment of Type B
emergency department visits. This
included studying the emergency
department visit charges and costs of
hospitals that billed Type B emergency
department visits, analyzing the cost
data for various subsets of hospitals that
billed the Type B emergency
department visit codes, and comparing
visit cost data for hospitals that did and
did not bill Type B emergency
department visit codes. Hospitals that
reported both Type A and Type B
emergency department visits billed
lower charges for Type B emergency
department visits than Type A
emergency department visits,
presumably reflecting the lower costs
for Type B emergency department visits.
Moreover, hospitals that billed both
Type A and Type B emergency
department visits also had lower costs
for Type B emergency department visits
than Type A emergency department
visits at all levels except for the level 5
Type B emergency department visit. The
Type A emergency department visit
costs for hospitals that billed both Type
A and Type B emergency department
visits resembled the Type A emergency
department visit costs of hospitals that
billed only Type A emergency
department visits and did not bill any
Type B emergency department visits.
We also determined that the majority of
Type B emergency department visits
were reported under an emergency
department revenue code. In summary,
our further analyses confirmed that the
median costs of Type B emergency
department visits were less than the
median costs of Type A emergency
department visits for all but the level 5
visit, and that the observed differences
were not attributable to provider-level
differences in the visit costs of the
different groups of hospitals reporting
Type A and Type B emergency
department visits. In other words, the
median costs from CY 2007 hospital
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claims represent real differences in the
hospital resource costs for the same
level of visit in a Type A or Type B
emergency department. As noted earlier
in this section, the CY 2007 claims data
are the first year of claims data that
include providers’ cost data for the Type
B emergency department visits. We
indicated in the CY 2009 OPPS/ASC
proposed rule (73 FR 41509) that we
would continue to perform additional
analyses to monitor patterns of billing
and costs of these services as additional
cost data become available.
We shared preliminary cost and
frequency data with the Visits and
Observation Subcommittee of the APC
Panel and the full APC Panel during its
March 2008 meeting. The APC Panel
recommended that CMS continue to pay
levels 1, 2, and 3 Type B emergency
department visits at the corresponding
clinic visit levels. The APC Panel also
recommended that CMS consider using
the clinic visit level 5 APC as the basis
of payment for the level 4 Type B
emergency department visit and the
level 5 Type A emergency department
visit APC as the basis of payment for the
level 5 Type B emergency department
visit. Given the limited data presently
available for Type B emergency
department visits, the APC Panel also
recommended that CMS reconsider
payment adjustments as more claims
data become available. In general, the
APC Panel’s recommended
configuration would pay appropriately
for each level of the Type B emergency
department visits, based on the resource
costs of the Type B emergency
department visits that are reflected in
claims data.
In accordance with the APC Panel’s
assessment, we proposed to establish
the payment for Type B emergency
department visits in CY 2009 consistent
with their median costs, although our
proposal did not fully adopt the APC
Panel’s recommended payment
configuration. Specifically, we proposed
to establish payment for levels 1, 2, 3,
and 4 Type B emergency department
visits through four levels of newly
created APCs, 0626 (Level 1 Type B
Emergency Visits), 0627 (Level 2 Type
B Emergency Visits), 0628 (Level 3 Type
B Emergency Visits), and 0629 (Level 4
Type B Emergency Visits). In addition,
for CY 2009, we proposed to assign
HCPCS codes G0380, G0381, G0382,
and G0383, the levels 1, 2, 3, and 4 Type
B emergency department visit Level II
HCPCS codes, to APCs 0626, 0627,
0628, and 0629, respectively. These
HCPCS codes would be the only HCPCS
codes assigned to these newly created
APCs. Furthermore, to distinguish these
new APCs from the APCs for levels 1,
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2, 3, and 4 Type A emergency
department visits, we proposed to
modify the titles of the current APCs for
these visits to incorporate Type A in
their names. We proposed the following
titles: APC 0609 (Level 1 Type A
Emergency Visits); APC 0613 (Level 2
Type A Emergency Visits); APC 0614
(Level 3 Type A Emergency Visits); and
APC 0615 (Level 4 Type A Emergency
Visits). Finally, we proposed to map the
level 5 Type B emergency department
visit code, HCPCS code G0384, to APC
0616 (Level 5 Emergency Visits), which
is the same APC that contains CPT code
99285, the level 5 Type A emergency
department visit code. Consistent with
the APC Panel recommendation, the
level 5 Type B emergency department
visit payment rate would be the same as
the level 5 Type A emergency
department visit payment rate based
upon the similar median costs for these
visits. For this highest level of
emergency department visits, the costs
of these relatively uncommon visits to
Type A and Type B emergency
departments are comparable, reflecting
the considerable hospital resources
required to care for these sick patients
in both settings.
During its August 2008 meeting, the
APC Panel recommended that CMS
adopt the proposed APC assignments
and payment rates for Type A and Type
B emergency department visits for CY
2009.
The median costs using final rule data
for the Type B emergency department
visit HCPCS codes, as compared to the
clinic visit and Type A emergency visit
APC median costs, are shown in Table
36 below.
TABLE 36—COMPARISON OF MEDIAN COSTS FOR CLINIC VISIT APCS, TYPE B EMERGENCY DEPARTMENT VISIT HCPCS
CODES, AND TYPE A EMERGENCY VISIT APCS
Final CY 2009
clinic visit APC
median cost
Visit level
Level
Level
Level
Level
Level
1
2
3
4
5
Final CY 2009
type B emergency department visit
HCPCS codespecific
median cost
Final CY 2009
type A emergency visit
APC median
cost
$53
67
88
111
158
$44
60
87
156
313
$51
84
134
213
317
.........................................................................................................................................
.........................................................................................................................................
.........................................................................................................................................
.........................................................................................................................................
.........................................................................................................................................
The median costs of the lowest level
visit are similar across all settings,
including clinic and Type A and B
emergency departments. Visit levels 2
and 3 share similar resource costs in the
clinic and Type B emergency
department settings, while visits
provided in Type A emergency
departments have higher estimated
resource costs at these levels. The level
4 clinic visit APC is less resource
intensive than the level 4 Type B
emergency department visit, which is
similarly less resource intensive than
the level 4 Type A emergency
department visit. The Type A and B
emergency department level 5 visit
median costs are similar to each other
and significantly exceed the level 5
clinic visit cost.
Table 37 below displays the APC
median costs for each level of Type B
emergency department visits using CY
2007 final rule data, under our proposed
CY 2009 configuration.
TABLE 37—CY 2009 TYPE B EMERGENCY DEPARTMENT VISIT APC ASSIGNMENTS AND MEDIAN COSTS
Final CY 2009
APC
assignment
Type B emergency department visit level
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Level
Level
Level
Level
Level
1
2
3
4
5
Final CY 2009
APC median
cost
0626
0627
0628
0629
0616
$44
60
87
156
317
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
For the CY 2009 OPPS, we also
proposed to include HCPCS code G0384
in the criteria that determine eligibility
for payment of composite APC 8003
(Level II Extended Assessment and
Management Composite).
Comment: The commenters
overwhelmingly supported the payment
proposal related to Type B emergency
department visits. One commenter
specifically commended CMS for
systematically creating HCPCS codes for
Type B emergency department visits
with the specific goal of measuring
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resource cost data to determine
appropriate payment rates. While most
commenters believed it was appropriate
to assign HCPCS code G0384 (Level 5
Type B emergency visit) to APC 0616
(Level 5 Emergency Visit), thereby
paying the level 5 Type B emergency
department visit at the same rate as the
level 5 Type A emergency department
visit, several commenters requested that
CMS assign HCPCS code G0384 to its
own Type B emergency department
APC. Other commenters requested that
CMS instruct hospitals to set charges
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that specifically reflect resource use for
Type B emergency department visits,
whether provided in a separate area of
the hospital, at an off-site location, or in
a ‘‘carved-out’’ section of the main
emergency department. Some
commenters noted their surprise that
hours of operation would lead to cost
differences between Type A and Type B
emergency department visits at most
levels, particularly because level 5
emergency department visits in both
Type A and Type B emergency
departments have similar costs. One
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commenter suggested that CMS should
determine the true cause of cost
differences between Type A and Type B
emergency department visits. Many
commenters recommended that CMS
continue to monitor data and propose
future payment changes as necessary.
One commenter hypothesized that Type
B emergency department visit costs
would grow more similar to Type A
emergency department visit costs than
clinic visit costs over time. Another
commenter noted that hospitals are still
becoming familiar with the relatively
new Type B emergency department visit
HCPCS codes so CMS should perform
similar analyses next year, using an
additional year of data.
Response: We agree with the
commenters that it would be
appropriate and informative to update
our analyses of the cost data related to
Type A and Type B emergency
department visits in preparation for the
CY 2010 rulemaking, and periodically
thereafter, to determine whether a
modified APC configuration would be
appropriate. This is, in fact, our regular
practice in the course of the annual
rulemaking cycle for all OPPS services.
In addition, we will specifically analyze
the Type B emergency department visit
level distributions when an additional
year of data are available, and regularly
thereafter. We do not expect to see
significant increases in the proportion of
high level Type B emergency
department visits as a result of the final
CY 2009 payment policy for these visits,
which pays more for these visits in CY
2009 than in CY 2008.
For CY 2009, we do not believe it is
necessary to assign HCPCS code G0384
(Level 5 Type B emergency visit) to its
own APC rather than assigning it to APC
0616 with the level 5 Type A emergency
visit CPT code as proposed. For this
highest level of emergency department
visits, the costs of these relatively
uncommon visits to Type A and Type
B emergency departments are
comparable, reflecting the considerable
hospital resources required to care for
these sick patients in both settings. We
also believe that level 5 emergency
department visits to Type A and Type
B emergency departments are clinically
similar as well, so that the two HCPCS
codes are most appropriately assigned to
the same clinical APC. As always, we
encourage hospitals to set charges that
specifically reflect resource use for all
services provided, including Type A
and Type B emergency department
visits.
We continue to believe that an
emergency department’s hours of
operation and associated available
capacity contribute significantly to the
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cost differences between levels 1
through 4 Type A and Type B
emergency department visits. We
acknowledge that the costs of the level
5 emergency department visits in both
the Type A and Type B emergency
department settings are comparable, and
we attribute this to the very significant
hospital resources that are often used to
care for the sickest patients in the
emergency department. We also note
that level 5 Type B emergency
department visits account for less than
2 percent of total Type B emergency
department visits, while level 5 Type A
emergency department visits account for
over 12 percent of total Type A
emergency department visits, suggesting
that for these intensive visits Type B
emergency departments may be less able
to benefit from efficiencies that may
result from the proportionately higher
volumes of lower level services in Type
B emergency departments.
Comment: Some commenters are still
concerned about the definition of a
Type B emergency department and
offered various suggestions for refining
the definition. Most of these
commenters requested that CMS adjust
the policy to broaden the definition of
Type A emergency departments,
specifically to revise the rule that
hospitals must carve out portions of the
emergency department that are not
available 24 hours a day. The
commenters specifically requested that
the definition be adjusted so that a ‘‘fast
track’’ area of an emergency department,
located within the same building as a
Type A emergency department, would
be considered Type A, regardless of its
hours of operation, if it provides
unscheduled emergency services and
shares a common patient registration
system with the Type A emergency
department. These commenters also
recommended that CMS analyze
whether cost differences between Type
A and Type B emergency departments
result from varying contractor criteria as
to what defines a Type A and Type B
emergency department. One commenter
suggested that we restrict the billing of
Type B emergency department visit
codes to emergency departments whose
‘‘host provider’’ is classified as a Type
A emergency department.
Response: We consider the main
distinguishing feature between Type A
and Type B emergency departments to
be the full-time versus part-time
availability of staffed areas for
emergency medical care, not the process
of care or the site of care (on the
hospital’s main campus or offsite). We
continue to believe, and as our CY 2007
claims data reflect, emergency
departments or areas of the emergency
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department that are available less than
24 hours a day for visits of lower
intensity have lower resource costs than
emergency departments or areas of the
emergency department that are available
24 hours a day. We have gathered 2
years of cost data based on the current
definition and do not believe a policy
change in the reporting of these Type A
and Type B emergency department
codes would be appropriate for CY
2009. In addition, if our Type A
emergency department payments
provide support for 24 hours a day, 7
days per week availability of services,
then visits provided in areas of the
hospital that are not staffed 24 hours a
day could be overpaid if we were to
redefine these services as Type A
emergency department visits. This
could also have the effect of diluting,
and ultimately decreasing, the median
resource costs associated with visits to
Type A emergency departments.
As recommended by several
commenters, we studied the cost
differences between Type A and Type B
emergency department visits by
Medicare contractor. There were 43
contractors who handled claims from
hospitals that reported both Type A and
Type B emergency department visits.
Our analyses revealed a distribution of
visits costs as expected, including
generally lower Type B emergency
department visit costs in comparison
with Type A emergency department
visits, and increasing costs for Type B
emergency department visits from levels
1 through 5, similar to the cost increases
we observed for levels 1 through 5 Type
A emergency department visits. There
were several contractors with more
unusual cost distributions for Type B
emergency department visits, such as
relatively similar costs across levels 1
through 5 visits for Type B emergency
department visits, and we will continue
to monitor these distributions in future
years. While there are some limitations
to our claims data, including that this is
the first year of claims for the Type B
emergency department visit HCPCS Gcodes, that there are relatively small
numbers of claims for Type B
emergency department visits from CY
2007, and that certain hospitals began
transitioning from fiscal intermediaries
to MACs during CY 2007 and, therefore,
may have received different contractor
instructions during the claims year,
overall, we have no reason to believe
that the cost differences between Type
A and Type B emergency departments
evident in our aggregate OPPS claims
data result from varying contractor
criteria as to what defines Type A and
Type B emergency departments. At this
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time, we see no reason to modify our
reporting instructions for Type A and
Type B emergency department visits for
CY 2009, and we see no evidence from
the claims data available to date of
markedly different interpretations of our
national reporting instructions by
Medicare contractors.
Comment: Several commenters
expressed disappointment that CMS
created Level II HCPCS G-codes for
reporting Type B emergency department
visits, an act which they believe is
inconsistent with previous statements
made by CMS that new codes would not
replace existing CPT codes until
national guidelines were implemented.
Response: We acknowledge that there
may be some administrative burden for
providers to bill HCPCS G-codes to
report visits provided in Type B
emergency departments rather than CPT
codes. We first established these Level
II HCPCS codes in CY 2007 and we will
continue their use for the third year, in
CY 2009. In this case, because current
CPT emergency visit codes do not
describe services provided in Type B
emergency departments, we saw no
alternative other than to create HCPCS
G-codes in order to collect cost
information specific to these Type B
emergency department visits that would
allow us to consider payment other than
at the clinic visit rates which would
have resulted from the continued
reporting of these visits as clinic visits.
In response to commenters past
concerns about HCPCS G-codes, we
have previously stated (71 FR 68127)
that we would postpone implementing
HCPCS G-codes for clinic and Type A
emergency department visits until
national guidelines have been
established. At such time, we will again
consider their possible utility.
Comment: Many commenters
supported CMS’ proposal to include
HCPCS code G0384 in the criteria that
determine eligibility for payment of the
Level II Extended Assessment and
Management Composite APC 8003.
Response: We are pleased that the
commenters support the proposal to
include HCPCS code G0384 as part of
the criteria for payment of APC 8003.
We believe that it is appropriate to
provide payment of composite APC
8003 in those cases of an intensive level
5 Type B emergency department visit in
association with 8 or more hours of
observation care, when the other criteria
for payment of composite APC 8003 are
met. This parallels our treatment of CPT
code 99285 for hospital reporting of
level 5 Type B emergency department
visits and payment of composite APC
8003.
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We refer readers to section II.A.2.e.(1)
of this final rule with comment period
for further discussion related to the
extended assessment and management
composite APCs. As discussed in detail
in section II.A.2.e.(1) of this final rule
with comment period and consistent
with our CY 2008 practice, when
calculating the median costs for the
Type A and Type B emergency visit
APCs (0609 through 0616 and 0626
through 0629), we are utilizing our
methodology that excludes those claims
for visits that are eligible for payment
through the extended assessment and
management composite APC 8003. We
believe that this approach results in the
most accurate cost estimates for APCs
0609 through 0616 and 0626 through
0629 for CY 2009.
In summary, for CY 2009, we are
finalizing our CY 2009 proposal,
without modification, and adopting the
August 2008 APC Panel
recommendation to assign levels 1
through 4 Type B emergency
department visits to their own APCs and
to assign the level 5 Type B emergency
department visit to the same APC as the
level 5 Type A emergency department
visit. Furthermore, we are also finalizing
our CY 2009 proposal to include HCPCS
code G0384 for reporting level 5 Type
B emergency department visits as part of
the criteria for payment of the Level II
Extended Assessment and Management
Composite APC 8003.
3. Visit Reporting Guidelines
As described in section IX.A. of this
final rule with comment period, since
April 7, 2000, we have instructed
hospitals to report facility resources for
clinic and emergency department
hospital outpatient visits using the CPT
E/M codes and to develop internal
hospital guidelines for reporting the
appropriate visit level.
As noted in detail in section IX.C. of
the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66802 through
66805), we observed a normal and stable
distribution of clinic and emergency
department visit levels in hospital
claims over the past several years. The
data indicated that hospitals, on
average, were billing all five levels of
visit codes with varying frequency, in a
consistent pattern over time. Overall,
both the clinic and emergency
department visit distributions indicated
that hospitals were billing consistently
over time and in a manner that
distinguished between visit levels,
resulting in relatively normal
distributions nationally for the OPPS, as
well as for specific classes of hospitals.
The results of these analyses were
generally consistent with our
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understanding of the clinical and
resource characteristics of different
levels of hospital outpatient clinic and
emergency department visits. In the CY
2008 OPPS/ASC proposed rule (72 FR
42764 through 42765), we specifically
invited public comment as to whether a
pressing need for national guidelines
continued at this point in the
maturation of the OPPS, or if the current
system where hospitals create and apply
their own internal guidelines to report
visits was currently more practical and
appropriately flexible for hospitals. We
explained that although we have
reiterated our goal since CY 2000 of
creating national guidelines, this
complex undertaking for these
important and common hospital
services was proving more challenging
than we initially thought as we received
new and expanded information from the
public on current hospital reporting
practices that led to appropriate
payment for the hospital resources
associated with clinic and emergency
department visits. We stated our belief
that many hospitals had worked
diligently and carefully to develop and
implement their own internal guidelines
that reflected the scope and types of
services they provided throughout the
hospital outpatient system. Based on
public comments, as well as our own
knowledge of how clinics operate, it
seemed unlikely that one set of
straightforward national guidelines
could apply to the reporting of visits in
all hospitals and specialty clinics. In
addition, the stable distribution of clinic
and emergency department visits
reported under the OPPS over the past
several years indicated that hospitals,
both nationally in the aggregate and
grouped by specific hospital classes,
were generally billing in an appropriate
and consistent manner as we would
expect in a system that accurately
distinguished among different levels of
service based on the associated hospital
resources.
Therefore, we did not propose to
implement national visit guidelines for
clinic or emergency department visits
for CY 2008. Since publication of the CY
2008 OPPS/ASC final rule with
comment period, we have once again
examined the distribution of clinic and
Type A emergency department visit
levels based upon updated CY 2007
claims data available for the CY 2009
OPPS/ASC proposed rule and
confirmed that we continue to observe
a normal and stable distribution of
clinic and emergency department visit
levels in hospital claims. We continue
to believe that, based on the use of their
own internal guidelines, hospitals are
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generally billing in an appropriate and
consistent manner that distinguishes
among different levels of visits based on
their required hospital resources. As a
result of our updated analyses, we are
encouraging hospitals to continue to
report visits during CY 2009 according
to their own internal hospital
guidelines.
In the absence of national guidelines,
we will continue to regularly reevaluate
patterns of hospital outpatient visit
reporting at varying levels of
disaggregation below the national level
to ensure that hospitals continue to bill
appropriately and differentially for
these services. We do not expect to see
an increase in the proportion of visit
claims for high level visits as a result of
the new extended assessment and
management composite APCs 8002 and
8003 adopted for CY 2008 and finalized
for CY 2009. Similarly, we expect that
hospitals will not purposely change
their visit guidelines or otherwise
upcode clinic and emergency
department visits reported with
observation care solely for the purpose
of composite APC payment. As stated in
the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66648), we
expect to carefully monitor any changes
in billing practices on a service-specific
and hospital-specific level to determine
whether there is reason to request that
Quality Improvement Organizations
(QIOs) review the quality of care
furnished, or to request that Benefit
Integrity contractors or other contractors
review the claims against the medical
record.
In addition, we note our continued
expectation that hospitals’ internal
guidelines will comport with the
principles listed in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66805). We encourage hospitals with
more specific questions related to the
creation of internal guidelines to contact
their local fiscal intermediary or
Medicare Administrative Contractor
(MAC).
Comment: Several commenters noted
that they are eagerly awaiting
implementation of national guidelines,
particularly because of the various
problems that they believe exist due to
the lack of national guidelines. Some of
these commenters noted that some
Medicare contractors use their own
auditing methods rather than reviewing
each hospital’s internal guidelines while
conducting medical review. These
commenters requested that CMS require
contractors to apply a hospital’s internal
guidelines while performing medical
review. Another commenter performed
extensive review on a large sample of
hospital emergency department visits to
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determine whether the distributions
seen in this sample resembled the
distribution described by CMS and
printed in the CY 2008 OPPS/ASC final
rule with comment period (72 FR
66804). The commenter explained that
the results are similar to those of CMS
at the national level, but that emergency
departments have increased the
proportion of level 4 and 5 emergency
department visits in recent years, and
that several outlier providers are billing
significantly higher level visits than
expected based on their geographic
location and hospital type. Therefore,
the commenter concluded that national
guidelines would yield more accurate
payment and would benefit all parties
involved. The commenter also did not
believe that all hospitals’ internal
guidelines fully comply with all the
principles articulated by CMS. Other
commenters supported moving
cautiously toward implementation of
national guidelines, acknowledging that
implementation of national guidelines
would create a major burden for
hospitals. One commenter submitted a
set of wound care guidelines for review
by CMS. Many commenters requested
that the AMA create CPT codes to report
hospital-specific visits, after national
guidelines are developed.
A few commenters recommended
that, in the absence of national
guidelines, CMS provide additional
guidance relating to the specific services
that should be included or bundled into
the visit codes. One commenter
specifically asked CMS to clarify what
services are included in the reporting of
critical care.
Response: We acknowledge that it
would be desirable to many hospitals to
have national guidelines. However, we
also understand that it would be
disruptive and administratively
burdensome to other hospitals that have
successfully adopted internal guidelines
to implement any new set of national
guidelines while we address the
problems that would be inevitable in the
case of any new set of guidelines that
would be applied by thousands of
hospitals. As noted in the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66806), we encourage
fiscal intermediaries and MACs to
review a hospital’s internal guidelines
when an audit occurs. We appreciate
the visit level distribution analysis
provided to us by one commenter and
note that in the absence of national
guidelines, we will continue to regularly
reevaluate patterns of hospital
outpatient visit reporting at varying
levels of disaggregation below the
national level to ensure that hospitals
continue to bill appropriately and
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68685
differentially for these services. We plan
to specifically analyze the Type B
emergency department distributions
when additional years of data are
available. We do not expect to see
significant increases in volume for high
level Type B emergency department
visits as a result of the CY 2009 payment
policy for these visits, which pays more
for these visits in CY 2009 than in CY
2008. In addition, we reiterate our
expectation that hospitals’ internal
guidelines fully comply with the
principles listed in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 68805). We appreciate receiving the
set of wound care guidelines and will
take these into consideration as we
pursue implementation of national
guidelines. We agree with the
commenter that it is unlikely that one
set of guidelines could be applied to
visits to all HOPDs of the hospital,
including specialty clinics.
Regarding the public comments
requesting clarification of services that
should be included or bundled into visit
codes, hospitals should separately
report all HCPCS codes in accordance
with correct coding principles, CPT
code descriptions, and any additional
CMS guidance, when available.
Specifically with respect to CPT code
99291 (Critical care, evaluation and
management of the critically ill or
critically injured patient; first 30–74
minutes), hospitals must follow the CPT
instructions related to reporting that
CPT code. Any services that CPT
indicates are included in the reporting
of CPT code 99291 should not be billed
separately by the hospital. In
establishing payment rates for visits,
CMS packages the costs of certain items
and services separately reported by
HCPCS codes into payment for visits
according to the standard OPPS
methodology for packaging costs as
outlined in sections II.A.2. and II.A.4. of
this final rule with comment period.
Correct reporting by hospitals ensures
the integrity of our CMS cost data. CMS
developed the National Correct Coding
Initiative (NCCI) to promote national
correct coding methodologies and to
prevent improper coding that could lead
to inappropriate Part B payments.
Medicare contractors implement NCCI
edits in their systems for purposes of
physician payment, and a subset of
NCCI edits, commonly referred to as CCI
edits, is incorporated into the I/OCE for
claims processed through that system.
While CMS currently applies CCI edits
for many services under the OPPS but
has temporarily suspended the
application of certain edits for a period
of time to allow hospitals to incorporate
coding for these types of services in
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their systems, CMS plans to soon apply
all appropriate CCI edits for purposes of
hospital reporting.
We refer readers to the July 2008
OPPS quarterly update, Transmittal
1536, Change Request 6094, issued on
June 19, 2008, for further clarification
about the reporting of CPT codes for
hospital outpatient services paid under
the OPPS. In that transmittal, we note
that while CPT codes generally are
created to describe and report physician
services, they are also used by other
providers/suppliers to describe and
report services that they provide.
Therefore, the CPT code descriptors do
not necessarily reflect the facility
component of a service furnished by the
hospital. Some CPT code descriptors
include reference to a physician
performing a service. For OPPS
purposes, unless indicated otherwise,
the usage of the term ‘‘physician’’ does
not restrict the reporting of the code or
application of related policies to
physicians only, but applies to all
practitioners, hospitals, providers, or
suppliers eligible to bill the relevant
CPT codes pursuant to applicable
portions of the Act, the CFR, and the
Medicare rules. In cases where there are
separate codes for the technical
component, professional component,
and/or complete procedure, hospitals
should report the code that represents
the technical component for their
facility services. If there is no separate
technical component code for the
service, hospitals should report the code
that represents the complete procedure.
Consistent with past input we have
received from many hospitals, hospital
associations, the APC Panel, and others,
we will continue to utilize CPT codes
for reporting services under the OPPS
whenever possible to minimize
hospitals’ reporting burden. If the AMA
were to create facility-specific CPT
codes for reporting visits provided in
HOPDs, we would certainly consider
such codes for OPPS use.
Comment: One commenter asked
whether it was appropriate for a
hospital to bill a visit code under the
OPPS for care provided to a registered
outpatient if the patient was not seen by
a physician.
Response: Under the OPPS, unless
indicated otherwise, we do not specify
the type of hospital staff (for example,
nurses or pharmacists) who may
provide services in hospitals because
the OPPS only makes payments for
services provided incident to
physicians’ services. Hospitals
providing services incident to
physicians’ services may choose a
variety of staffing configurations to
provide those services, taking into
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account other relevant factors such as
State and local laws and hospital
policies.
Billing a visit code in addition to
another service merely because the
patient interacted with hospital staff or
spent time in a room for that service is
inappropriate. A hospital may bill a
visit code based on the hospital’s own
coding guidelines which must
reasonably relate the intensity of
hospital resources to different levels of
HCPCS codes. Services furnished must
be medically necessary and
documented.
Comment: Several commenters
requested that CMS allow hospitals to
bill critical care with a minimum time
requirement of 15 minutes rather than
the current 30 minute time requirement.
The commenters noted that the hospital
may have its greatest resource use in the
first 10 minutes of critical care which is
much earlier than the 30 minute
minimum required in the CPT code
descriptor.
Response: The CPT instructions for
reporting of critical care services with
CPT code 99291 (Critical care,
evaluation and management of the
critically ill or critically injured patient;
first 30–74 minutes) and the CPT code
descriptor specify that the code can only
be billed if 30 minutes or more of
critical care services are provided.
Because hospitals will be reporting CPT
codes for critical care services for CY
2009, they must continue to provide a
minimum of 30 minutes of critical care
services in order to bill CPT code 99291,
according to the CPT code descriptor
and CPT instructions. We note that
hospitals can report the appropriate
clinic or emergency department visit
code consistent with their internal
guidelines if fewer than 30 minutes of
critical care is provided.
We appreciate all of the comments we
have received in the past from the
public on visit guidelines, and we
encourage continued submission of
comments throughout the year that
would assist us and other stakeholders
interested in the development of
national guidelines. Until national
guidelines are established, hospitals
should continue using their own
internal guidelines to determine the
appropriate reporting of different levels
of clinic and emergency department
visits. While we understand the interest
of some hospitals in our moving quickly
to promulgate national guidelines that
would ensure standardized reporting of
hospital outpatient visit levels, we
believe that the issues and concerns
identified both by us and others that
may arise are important and require
serious consideration prior to the
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implementation of national guidelines.
Because of our commitment to provide
hospitals with 6 to 12 months notice
prior to implementation of national
guidelines, we will not implement
national guidelines prior to CY 2010.
Our goal is to ensure that OPPS national
or hospital-specific visit guidelines
continue to facilitate consistent and
accurate reporting of hospital outpatient
visits in a manner that is resource-based
and supportive of appropriate OPPS
payments for the efficient and effective
provision of visits in hospital outpatient
settings.
X. Payment for Partial Hospitalization
Services
A. Background
Partial hospitalization is an intensive
outpatient program of psychiatric
services provided to patients as an
alternative to inpatient psychiatric care
for beneficiaries who have an acute
mental illness. Section 1833(t)(1)(B)(i) of
the Act provides the Secretary with the
authority to designate the HOPD
services to be covered under the OPPS.
The Medicare regulations at § 419.21(c)
that implement this provision specify
that payments under the OPPS will be
made for partial hospitalization services
furnished by CMHCs as well as those
furnished to hospital outpatients.
Section 1833(t)(2)(C) of the Act requires
that we establish relative payment
weights based on median (or mean, at
the election of the Secretary) hospital
costs determined by 1996 claims data
and data from the most recent available
cost reports. Because a day of care is the
unit that defines the structure and
scheduling of partial hospitalization
services, we established a per diem
payment methodology for the PHP APC,
effective for services furnished on or
after August 1, 2000 (65 FR 18452).
Historically, the median per diem cost
for CMHCs greatly exceeded the median
per diem cost for hospital-based PHPs
and fluctuated significantly from year to
year, while the median per diem cost for
hospital-based PHPs remained relatively
constant ($200-$225). We believe that
CMHCs may have increased and
decreased their charges in response to
Medicare payment policies. As
discussed in more detail in section X.B.
of this final rule with comment period
and in the CY 2004 OPPS final rule with
comment period (68 FR 63470), we also
believe that some CMHCs manipulated
their charges in order to inappropriately
receive outlier payments.
In the CY 2005 OPPS update, which
was based on CY 2003 data, the CMHC
median per diem cost was $310, the
hospital-based PHP median per diem
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cost was $215, and the combined CMHC
and hospital-based median per diem
cost was $289, a reduction in median
cost from previous years. We believed
the reduction indicated that the use of
updated CCRs had accounted for the
previous increase in CMHC charges and
represented a more accurate estimate of
CMHC per diem costs for PHP.
For the CY 2006 OPPS final rule with
comment period, which was based on
CY 2004 data, the median per diem cost
for CMHCs dropped to $154, while the
median per diem cost for hospital-based
PHPs was $201. We believed that a
combination of reduced charges and
slightly lower CCRs for CMHCs resulted
in a significant decline in the CMHC
median per diem cost between CY 2003
and CY 2004.
The CY 2006 OPPS updated
combined hospital-based and CMHC
median per diem cost was $161, a
decrease of 44 percent compared to the
CY 2005 combined median per diem
amount. Due to concern that this
amount may not have covered the cost
for PHPs, as stated in the CY 2006 OPPS
final rule with comment period (70 FR
68548 and 68549), we applied a 15percent reduction to the combined
hospital-based and CMHC median per
diem cost to establish the CY 2006 PHP
APC. (We refer readers to the CY 2006
OPPS final rule with comment period
for a full discussion of how we
established the CY 2006 PHP rate (70 FR
68548).) In that rule, we stated our belief
that a 15-percent reduction in the CY
2005 median per diem cost would strike
an appropriate balance between using
the best available data and providing
adequate payment for a program that
often spans 5–6 hours a day. We stated
that 15 percent was an appropriate
reduction because it recognized
decreases in median per diem costs in
both the hospital data and the CMHC
data, and also reduced the risk of any
adverse impact on access to these
services that might result from a large
single-year rate reduction. However, we
adopted this policy as a transitional
measure, and stated in the CY 2006
OPPS final rule with comment period
that we would continue to monitor
CMHC costs and charges for these
services and work with CMHCs to
improve their reporting so that
payments could be calculated based on
better empirical data (70 FR 68548). To
apply this methodology for CY 2006, we
reduced the CY 2005 combined
unscaled hospital-based and CMHC
median per diem cost of $289 by 15
percent, resulting in a combined median
per diem cost of $245.65 for CY 2006.
For the CY 2007 OPPS/ASC final rule
with comment period, we analyzed
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hospital and CMHC PHP claims for
services furnished between January 1,
2005, and December 31, 2005, and used
the most currently available CCRs to
estimate costs. The median per diem
cost for CMHCs was $173, while the
median per diem cost for hospital-based
PHPs was $190.
The combined hospital-based and
CMHC median per diem cost would
have been $175 for CY 2007. Rather
than allowing the PHP per diem rate to
drop to this level, we proposed to
reduce the PHP median cost by 15
percent, similar to the methodology
used for the CY 2006 update. However,
after considering all of the public
comments received concerning the
proposed CY 2007 PHP per diem rate
and results obtained using more current
data, we modified our proposal. We
made a 5-percent reduction to the CY
2006 median per diem rate to provide a
transitional path to the per diem cost
indicated by the data. This approach
accounted for the downward direction
of the data and addressed concerns
raised by commenters about the
magnitude of another 15-percent
reduction in 1 year. Thus, to calculate
the CY 2007 APC PHP per diem cost, we
reduced $245.65 (the CY 2005 combined
hospital-based and CMHC median per
diem cost of $289 reduced by 15
percent) by 5 percent, which resulted in
a combined per diem cost of $233.37.
For the CY 2008 OPPS/ASC final rule
with comment period, we analyzed 12
months of current data for hospitalbased PHP claims (condition code 41)
and CMHC PHP claims for PHP services
furnished between January 1, 2006, and
December 31, 2006. We also used the
most currently available CCRs to
estimate costs for a day of PHP services.
The median per diem cost for CMHCs
was $172, while the median per diem
cost for hospital-based PHPs was $177.
The combined median per diem cost,
which was computed from both
hospital-based and CMHC PHP data,
was $172.
For the prior 3 years, we have been
concerned that we did not have
sufficient evidence to support using the
median per diem cost produced by the
most current year’s PHP data. As
discussed in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66671), after extensive data analysis, we
believed the data reflect the level of cost
for the type of services that were being
provided. This analysis included an
examination of revenue-to-cost center
mapping, refinements to the per diem
methodology, and an in-depth analysis
of the number of units of services per
day. (We refer readers to the CY 2008
OPPS/ASC final rule with comment
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68687
period (72 FR 66671 through 66675) for
a detailed discussion of the data
analysis.)
For CY 2008, we proposed and
finalized two refinements to the
methodology for computing the PHP
median. However, these refinements did
not appreciably impact the median per
diem cost. We remapped the 10 revenue
codes to the most appropriate cost
centers and computed the median using
a per day methodology (as described
below). As noted in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66671), after extensive analysis, we
believed the data reflected the level of
cost for the type of services that were
being provided. We continued to
observe a clear downward trend in the
CY 2006 data used to develop the CY
2008 OPPS/ASC final rule with
comment period.
Thus, for CY 2008, we refined our
methodology for computing PHP per
diem costs. We developed an alternate
method to determine median cost by
computing a separate per diem cost for
each day rather than for each bill. Under
this method, we computed a cost
separately for each day of PHP care.
When there were multiple days of care
entered on a claim, a unique cost was
computed for each day of care. We only
assigned costs for line items on days
when a payment was made. All of these
costs were then arrayed from lowest to
highest and the middle value of the
array was considered the median per
diem cost. A complete discussion of the
refined method of computing the PHP
median cost can be found in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66672).
Because partial hospitalization is
provided in lieu of inpatient care, it
should be a highly structured and
clinically-intensive program, usually
lasting most of the day. Our goal is to
improve the level of service furnished in
a PHP day. For CY 2008, we were
concerned that the proposed decrease in
PHP payment might not have reflected
the mix and quantity of services that
should be provided under such an
intensive program. In an effort to ensure
access to this needed service to
vulnerable populations, we mitigated
the proposed reduction to 50 percent of
the difference between the CY 2007 APC
amount ($233) and the computed
amount based on the PHP data ($172),
resulting in an APC median cost of $203
for CY 2008. As stated in the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66673), we believed this
payment amount would give the
providers an opportunity to increase the
intensity of their programs and maintain
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partial hospitalization as part of the
continuum of mental health care.
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66673), we
reiterated our expectation that hospitals
and CMHCs will provide a
comprehensive program consistent with
the statutory intent. We also indicated
that we intend to explore changes to our
regulations and claims processing
systems in order to deny payment for
low intensity days.
B. PHP APC Update
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66672
through 66674), we presented our
analysis of the number of units of
service provided in a day of care, as a
possible explanation for the low per
diem cost for PHP. Both hospital-based
and CMHC PHPs had a significant
number of days where fewer than 4
units of service were provided. As noted
in the CY 2008 OPPS/ASC final rule
with comment period, review of CY
2006 data showed that 64 percent of the
CMHC days were days where fewer than
4 units of service were provided, and 31
percent of the hospital-based PHP days
were days where fewer than 4 units of
service were provided (72 FR 66672).
As discussed in the CY 2009 OPPS/
ASC proposed rule (73 FR 41513), we
have updated this analysis using
updated CY 2007 claims and found that
the results and trends have continued
for CMHCs. In fact, there are even more
days with less than 4 units of service
provided in CMHCs; however, there are
fewer days with less than 4 units of
service provided in hospital-based PHPs
compared to the CY 2006 data. Using
CY 2007 claims, 73 percent of CMHC
days have fewer than 4 units of service,
and 29 percent of hospital-based PHP
days have fewer than 4 units of service.
Based on these updated findings, we
computed median per diem costs in the
following three categories: (1) All days;
(2) days with 3 units of service; and (3)
days with 4 units or more of service.
These updated median per diem costs
were computed separately for CMHCs
and hospital-based PHPs and are shown
in the table below:
Hospital-based
PHPs
CMHCs
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All Days ......................................................................................................................
Days with 3 units .......................................................................................................
Days with 4 units or more .........................................................................................
Using updated CY 2007 data and our
refined methodology for computing PHP
per diem costs adopted in our CY 2008
OPPS/ASC final rule with comment
period (72 FR 66672), the median per
diem cost calculated from all claims is
$148. Using the updated CY 2007 data,
the trends noted in the CY 2009 OPPS/
ASC proposed rule (73 FR 41513) have
continued. The updated CY 2007 data
indicate that CMHCs provide far fewer
days with 4 or more units of service and
that CMHC median per diem cost ($145)
is substantially lower than the
comparable data from hospital-based
PHPs ($174). Medians for claims
containing 4 or more units of service are
$200 for hospital-based PHPs and $174
for all PHP claims regardless of site of
service. Medians for claims containing 3
units of service are $139 for CMHCs,
$157 for hospital-based PHPs, and $139
for all PHP claims regardless of site of
service.
As we stated in our CY 2008 OPPS/
ASC final rule with comment period (72
FR 66672), it was never our intention
that days with only 3 units of service
should represent the number of services
provided in a typical day. Our intention
was to cover days that consisted of 3
units of service only in certain limited
circumstances. For example, as we
noted in the CY 2009 OPPS/ASC
proposed rule, we believe 3-service days
may be appropriate when a patient is
transitioning towards discharge (or days
when a patient who is transitioning at
the beginning of his or her PHP stay).
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$145
139
172
Another example of when it may be
appropriate for a program to provide
only 3 units of service in a day is when
a patient is required to leave the PHP
early for the day due to an unexpected
medical appointment (73 FR 41513).
Therefore, we recognize there may be
limited circumstances when it is
appropriate for PHPs to receive payment
for days when only 3 units of service are
provided. However, as we indicated in
the CY 2009 OPPS/ASC proposed rule
(73 FR 41513), we believe that programs
that provide 4 or more units of service
should be paid an amount that
recognizes that they have provided a
more intensive day of care. A higher rate
for more intensive days is consistent
with our goal that hospitals and CMHCs
provide a comprehensive program in
keeping with the statutory intent.
Accordingly, although there are
circumstances when 3 units of service
provided may be appropriate, in order
to reflect our general belief that 4 or
more units of service more
appropriately reflect the comprehensive
nature of PHP services, for CY 2009, we
proposed to create two separate APC
payment rates for PHP: One for days
with three services (APC 0172) and one
for days with four or more services (APC
0173). For APC 0172, we proposed to
use the median per diem cost for CMHC
and hospital-based PHP days with 3
units of services ($140). For APC 00173,
we proposed to use the median per
diem cost for CMHC and hospital-based
PHP days with 4 or more units of
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$174
157
200
Combined
$148
139
174
service ($174). As noted previously,
these proposed payment rates are
derived from both PHP-based and
CMHC-based claims, and represent the
median cost of providing PHP services
for the unit of services described.
Comment: A number of commenters
expressed concern about the magnitude
of the PHP per diem rate reduction,
particularly in light of reductions over
the past few years (50 percent over 5
years). Many commenters believed that
a reduction of 14.2 percent for CY 2009
would reduce the financial viability of
PHP and possibly lead to the closure of
many PHPs, thus affecting access to this
crucial service that serves vulnerable
populations. In addition, because
hospital outpatient mental health
services paid under the OPPS are
capped at the PHP per diem rate, many
commenters were concerned about
overall access to outpatient mental
health treatment. The majority of the
commenters requested that CMS adjust
the rate upward or freeze the PHP per
diem rate at the CY 2008 level. Some
commenters suggested leaving Level II
services at the current rate, but reduce
the rate for the Level I PHP services as
proposed.
Several commenters requested that
CMS withdraw the provisions
pertaining to the proposal to create two
separate APCs. The commenters stated
that the split mechanism could
encourage providers to provide patients
with fewer services. Other commenters
supported creation of a Level I PHP day,
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stating that the two-tier payment
proposal is good but does not go far
enough to promote service intensity and
continued access to their important
services.
Many of the commenters supported
the creation of two separate APC
payment rates for PHPs based on the
number of units of service provided to
a patient per day but recommended that
CMS use only hospital-based PHP data
to determine the rates at which PHP
services will be paid in hospital-based
settings. These commenters believed
that hospital-based data are reliable,
predictable, and national in scope.
The commenters pointed out that
while the aggregate number of PHP
service providers has remained
relatively stable over time, the number
of hospital-based PHPs has dropped by
16 percent, while the number of CMHC
PHPs has increased by 53 percent (with
the majority of new CMHCs located in
Florida, Louisiana, and Texas). The
commenters reported that 80 percent of
the States have two or more hospital
programs, and only 30 percent of the
States have more than one CMHC. The
commenters believed that it is also
important to note that the number of
rural hospital-based PHPs has declined
during the 2003–2006 period by 47
percent.
Response: After consideration of the
public comments received on the twotiered payment approach, we have
decided to retain the two-tiered
payment approach in order to provide
PHPs scheduling flexibility to ensure
that patients receive at least 20 hours of
therapeutic services per week and to
reflect the lower costs of a less intensive
day. Although we do not expect Level
I days to be frequent, we do recognize
that there are times when a patient may
need a less intensive day. Therefore, we
recognize the need for a two-tiered
payment system: One payment for those
less intensive days with three services
and another payment for those more
intensive days with four or more
services. We believe that were a PHP to
provide only Level I days to a patient,
it would be difficult for the patient to
meet the eligibility criteria in 42 CFR
410.43 requiring a minimum of 20 hours
of service per week (discussed later in
this section).
We understand the commenters’
concerns over the magnitude of the PHP
per diem rate reduction and the impact
the reduction has on the payment cap
for other hospital outpatient mental
health services. We also understand the
commenters’ concerns regarding
continued access to the PHP benefit,
particularly in hospital-based PHPs,
which we believe are generally
providing the mix and quantity of
services that should be provided under
such an intensive program.
Hospital-only data have been used in
the past to set the PHP payment rates
when the CMHC data were unavailable
or too volatile to use. This year, using
the CMHC data would significantly
reduce the current rate and negatively
impact hospital-based PHPs, resulting
possibly in reduced access to care.
Because hospital-based PHPs are
geographically diverse, whereas CMHCs
are located in only a few States, we are
concerned that a significant drop in the
rate could result in hospital-based PHPs
closing and leading to possible access
problems. In addition, using hospitalbased PHP data alone results in a Level
II Partial Hospitalization rate (APC
0173) that is close to the current
payment level ($203).
In light of the reasons noted above, we
are finalizing the two-tiered payment
rates as proposed, but are instead using
hospital-based PHP data only to
calculate the two per diem payment
rates. As we stated earlier in this section
and in the CY 2009 OPPS/ASC
proposed rule, although there are
circumstances when 3 units of service
provided may be appropriate, in order
to reflect our general belief that 4 or
more units of service more
appropriately indicated the
comprehensive nature of PHP services,
for CY 2009, we are creating two
separate APC payment rates for PHP:
One for days with three services and
one for days with four or more services.
We are finalizing two new APCs for PHP
as follows:
Group title
0172 ...............................
0173 ...............................
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APC
Level I Partial Hospitalization (3 services) ..............................................................................................
Level II Partial Hospitalization (4 or more services) ...............................................................................
For APC 0172, we are using the
median per diem cost for hospital-based
PHP days with 3 units of services
($157). For APC 00173, we are using the
median per diem cost for hospital-based
PHP days with 4 or more units of
service ($200). These payment rates are
derived from hospital-based PHP
claims, and represent the median cost of
providing PHP services for the unit of
services described. We believe that
creating a rate specific to days with
three services is consistent with our
policy to require CMHCs and hospitalbased PHPs to provide a minimum of 3
units of service per day in order to
receive payment as discussed below in
section X.C.1. of this final rule with
comment period. Creating two separate
PHP rates provides a lower payment for
days with only 3 units of services, while
not penalizing programs that provide
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Per diem rate
four or more units of service by
excluding days with 3 units of service
in the computation of APC 0173. As we
stated in the CY 2009 OPPS/ASC
proposed rule, we believe this twotiered approach appropriately balances
our concern that a PHP is an intensive
program and should generally consist of
5 to 6 units of service, with the
realization that there may be certain
appropriate circumstances where 3
units of service may be provided in a
day.
As the PHP rates are applied to both
CMHC and hospital-based PHPs, we
would prefer to use both hospital-based
PHP and CMHC data in computing the
PHP rates. The changes we are making
with respect to the PHP benefit,
providing a two-tiered payment
approach, clarifying eligibility criteria
and denying payment for low intensity
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$157
200
days, are expected to create more
comparable programs in terms of the
number of units furnished in a typical
day for both CMHCs and hospitals. We
believe that these efforts also will
reduce the difference in the median cost
per day in these two settings over time
and CMHC data will be available for
future ratesetting.
Comment: A few commenters
requested that CMS further consider
separate payment rates for PHP
provided in CMHCs versus hospitalbased programs, given the significant
difference in costs for providing those
services in the two settings. The
commenters suggested that CMS
establish a total of four distinct rates
based upon claim data. The commenters
gave the following example: CMHC—
Level I 3 services, $139; CMHC—Level
II 4 or more services, $171; HB—Level
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I 3 services, $151 and; HB—Level II 4
or more services, $205.
Response: We appreciate this
comment, and we continue to evaluate
ways to better reflect the costs in
providing PHP services.
Comment: A few commenters
disagreed with the CMS approach to
establishing the median per diem cost
by summarizing the line-item costs on
each bill and dividing by the number of
days on the bills. The commenters
indicated that this calculation can
severely dilute the rate and penalize
providers. The commenters stated that
all programs are strongly encouraged by
the fiscal intermediaries to submit all
PHP service days on claims, even when
the patient receives less than 3 units of
service. The commenters were
concerned that programs are only paid
their per diem when 3 or more qualified
units of service are presented for a day
of service. The commenters stated that
if only 1 or 2 units of service are
assigned a cost and the day is divided
into the aggregate data, the cost per day
is significantly compromised and
diluted. They claimed that even days
that are paid but only have 3 units of
service dilute the cost factors on the
calculations.
One commenter suggested that the
CMS’ methodology is flawed because it
does not reflect actual costs. One
commenter expressed the view that the
CMS methodology for rate calculations
using CCRs does not fairly reflect the
actual costs of the providers. The
commenter stated that, with the change
to per diem payment in 2000, the CCRs
do not have the same influence on
services that they did under cost-based
reimbursement. The commenter noted
that, other than the reporting in the cost
reports, the charge factor has no bearing
on the services. The commenter
believed that, regardless of the charge,
payment is still made at the established
rate influenced only by the wage index.
The commenter stated that the higher
the ‘‘charge’’ established by the provider
and reported in the cost report, the
lower the proportionate rate of cost is
assigned by CMS when calculating the
costs to determine the median cost rates.
The commenter stated that hospitals
and CMHCs can drastically influence
the rates innocently, by the
identification of the charge per service
assigned to the particular intervention.
The commenter mentioned that
providers have unknowingly hurt their
own programs by raising their identified
charges for a service, as this lowers the
percentage of the applicable ratio when
applied to the claim services. The
commenter stated that the charges
themselves have no bearing whatsoever
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on the delivery or provision of the
services.
Response: We expect that a provider’s
charges will reflect the level of services
provided, which has a relationship to
the cost of providing those services. In
Medicare cost reporting, the total
charges are to be reported along with the
provider’s cost. To the extent that a
provider is submitting bills that have
charges that do not directly relate to the
delivery or provision of services, their
CCRs will be unpredictable and would
distort the costs of the services
provided.
Moreover, in developing the CY 2009
PHP rates, we excluded days that have
only 1 or 2 units of service. In addition,
we did not include days where no
payment was made. This resulted in our
using data only from those days where
we believe PHP services were actually
provided. To calculate the Level I PHP
rate, we used days with 3 units of
service, and to calculate the Level II
PHP rate, we used days with 4 or more
units of service. We believe our
methodology accurately reflects the
median cost of providing these two
levels of PHP.
As discussed in the CY 2008 OPPS
final rule with comment period (72 FR
66671–66672), we have refined our
methodology for computing per diem
costs. We have developed an alternate
way to determine median cost by
computing a separate per diem cost for
each day rather than for each bill and,
in so doing, we believe it more
accurately reflects the per diem cost of
providing PHP services. Under this
method, a cost is computed separately
for each day of PHP care. When there
are multiple days of care entered on a
claim, a unique cost is computed for
each day of care. We only assign costs
for line items on days when a payment
is made. All of these costs are then
arrayed from lowest to highest and the
middle value of the array would be the
median per diem cost.
We adopted this alternative method of
computing PHP per diem median cost
because we believe it produces a more
accurate estimate because each day gets
an equal weight towards computing the
median. This method for computing a
PHP per diem median cost more
accurately reflects the costs of a PHP
day and uses all available PHP data. In
addition, if a provider has charges on a
bill for which the provider does not
receive payment, this will be reflected
in that provider’s CCRs. This lower CCR
will be applied to the larger charges and
will result in the appropriate cost per
diem.
Comment: Several commenters asked
CMS to analyze the mapping of revenue-
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codes-to-cost centers for CMHCs similar
to the analysis CMS completed for
hospital-based programs and discussed
in the CY 2007 OPPS/ASC final rule
with comment period (71 FR 68000).
The commenters indicated that CMHC
PHP services have higher CCRs than the
overall CMHC CCRs.
Response: We cannot conduct a
revenue code mapping analysis for
CMHCs because PHP is the CMHCs’
only Medicare cost, and CMHCs do not
have the same cost centers as hospitals.
Therefore, for CMHCs, we use the
overall facility CCR from the Outpatient
Provider-Specific File.
Comment: One commenter stated that
two of the PHP codes, activity therapy
and education and training, are allowed
to be performed multiple times per day,
but only count as one therapy unit,
regardless of how many sessions are
actually provided.
Response: As we have stated in the
past, there is a misconception that CMS
only counts activity therapy and
education and training services as one
therapy unit, regardless of how many
sessions are actually performed. We
again note that when the PHP per diem
is calculated, all therapy sessions are
counted in the analysis. When we
established HCPCS code G0176 for
activity therapy, we defined the code as
‘‘Activity therapy, such as music, dance,
art or play therapies not for recreation,
related to the care and treatment of
patient’s disabling mental problems, per
session (45 minutes or more).’’ In
addition, when we established HCPCS
code G0177 for education and training,
we defined the code as ‘‘Training and
educational services related to the care
and treatment of patient’s disabling
mental health problems, per session (45
minutes or more).’’ Therefore, when
PHPs provide and bill for multiple
sessions of HCPCS codes G0176 and
G0177, they are counted as multiple
therapy units.
Comment: Many commenters stated
that, as CMS is aware, cost report
information for CMHCs is not currently
included in the Healthcare Cost Report
Information System (HCRIS) and
recommended that CMS base its
calculations only in the cost report
information that the agency can verify
directly and not on data provided by the
fiscal intermediary.
Response: We understand the
commenters’ need to have CMHC data
available through the HCRIS system and
are working to include them in the
system. However, we have no reason to
believe the Medicare contractors enter
incorrect CCRs in the Outpatient
Provider Specific File.
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Comment: With respect to the
methodology used to establish the PHP
APC amount, commenters were
concerned that data from settled cost
reports do not include costs reversed on
appeal. The commenters stated that
there are inherent problems in using
claims data from a time period that is
different from that for the CCRs from
settled cost reports. They indicated that
this methodology would artificially
lower the computed median costs, and
that the data used to calculate the PHP
rate should be revised to include costs
that were subsequently allowed. The
commenters also stated that CMS uses
costs that are at least 1 to 3 years old
to project rates 2 years forward and that
this approach does not accurately reflect
the true costs of the providers.
Response: Since 2000, Medicare has
paid for PHP through the OPPS, which
is not a cost-based reimbursement
system. We use the best available data
in computing the APCs. On January 17,
2003, we issued Program Memorandum
No. A–03–004 that directed fiscal
intermediaries to update the CCRs on an
ongoing basis whenever a more recent
full year settled or tentatively settled
cost report is available. In this way, we
minimize the time lag between the CCRs
and claims data and continue to use the
best available data for ratesetting
purposes.
Comment: A few commenters
expressed their concern as to why CMS
continues to state that a day of partial
hospitalization should not equal the
cost of the separate services provided in
a non-PHP setting or that even a full
partial day should not equal the cost of
the separate services in an outpatient
hospital setting. These commenters
presented two different typical days
using proposed CY 2008 rates: Typical
Day 1 included three group therapy
sessions (CPT code 90853, APC 0325, 3
× $64.45) and one individual
psychotherapy session (CPT code
90818, APC 0323, $106.49). The
commenter priced Typical Day 1 at
$299.84. Typical Day 2 included one
group therapy session (CPT code 90853,
APC 0325, $64.45), one individual
psychotherapy session (CPT code
90818, APC 0323, $106.49), and one
family therapy session (CPT code 90847,
APC 0324, $141.61). The commenter
priced Typical Day 2 at $312.55. Based
on the commenter’s presented material,
the commenter stated that the typical
days yield an average componentized
rate of $306. The commenter questioned
how CMS can set rates for APCs 0322
through 0325, but is unable to
determine a payment rate for a day that
is comprised of a minimum of 3 to 4
units of those services. Other
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commenters stated that while CMS
requires a minimum of four treatments
per day to qualify for a day of PHP, the
proposed per diem rate of $179.88 for
PHP is less than what CMS would pay
for four group therapy sessions.
Some commenters mentioned
variations of using the median cost of
$62.66 for APC 325 to illustrate the
inadequacy of the proposed PHP per
diem payment of $174.07. One
commenter stated that by multiplying 4
group therapy services by $62.66 yields
$250.64, which is more that $174.07.
Another commenter claimed that CMS
pays hospital facilities for outpatient
services on a per unit basis up to the per
diem PHP payment. The commenter
mentioned that CMS has identified
Group Therapy APC 0325 with a true
median cost of $62.66. The commenter
stated that the patients involved in
outpatient services are participating 1 to
3 days and generally receive 4 or more
units of service on those days. The
commenter added that while programs
are providing 4 or more units of service,
the per diem limit will only allow them
to be ‘‘paid their cost’’ for about 2.75
units of service (3 × $62.66 = $187.98).
The commenter stated that the program
is $13.91 short for the third service and
the fourth service and any others are
provided with no reimbursement.
Response: We do not believe that it is
appropriate to compare the partial
hospitalization services to separate
mental health services. The commenter
does not use the payment rates for the
PHP APCs, that is, APCs 0172 and 0173,
in its calculations. The payment rates
for APC services cited by the commenter
(APC 0323, APC 0324, and APC 0325)
are not computed from PHP bills. As
stated earlier, we used data from PHPs
to determine the median cost of a day
of PHP. PHP is a program of services
where savings can be realized by
hospitals and CMHCs over delivering
individual psychotherapy services.
We structured the PHP APCs (APCs
0172 and 0173) as a per diem
methodology in which the day of care
is the unit that reflects the structure and
scheduling of PHPs and the composition
of the PHP APCs consist of the cost of
all services provided each day.
Although we require that each PHP day
include a psychotherapy service, we do
not specify the specific mix of other
services provided, and our payment
methodology reflects the cost per day
rather than the cost of each service
furnished within the day.
We examined both CMHC and
hospital-based PHP data to determine
what services these programs are
providing to their patients. An
important finding was that the ‘‘typical’’
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days cited by the commenter are not
typical days for most CMHCs. For
CMHCs, 60 percent of services are group
psychotherapy (CPT codes 90853 and
90857), 26 percent of services are
training and education (HCPCS code
G0177), 12 percent are activity therapy
(HCPCS code G0176), and only 1
percent of PHP days included
individual therapy (brief or extended
(CPT code 90816 or 90818)).
The ‘‘typical’’ days cited by the
commenter also are not typical days for
hospital-based PHPs. For hospital-based
PHPs, 47 percent of services are group
psychotherapy (CPT codes 90853 and
90857), 27 percent of services are
training and education (HCPCS code
G0177), 16 percent are activity therapy
(HCPCS code G0176), 3 percent are
occupational therapy (HCPCS code
G0129), 2 percent of PHP days include
brief individual psychotherapy (CPT
code 90816), and only 1 percent of PHP
days include extended individual
therapy (CPT code 90818).
We note that the APCs for training
and education (HCPCS code G0177),
activity therapy (HCPCS code G0176),
and occupational therapy (HCPCS code
G0129) are not separately payable under
the OPPS. They are packaged services
and only payable as part of a PHP day
of care. In CMHCs, training and
education (HCPCS code G0177) and
activity therapy (HCPCS code G0176)
account for 38 percent of PHP services.
In hospital-based PHPs, training and
education and activity therapy account
for 43 percent of PHP services. In
addition to not being separately payable,
these services may be provided to
patients by less costly staff than staff
who provide psychotherapy and
occupational therapy. Based on the mix
of services provided on the majority of
PHP days, we believe the data used for
setting the PHP payment appropriately
reflect the typical PHP day and its costs
should not be compared to the costs of
providing separate services.
Comment: Several commenters
claimed that the costs of CMHCs are
higher because ‘‘hospitals can share and
spread their costs to other
departments.’’ The commenters believed
that the CMHC patient acuity level is
more intense than that for hospital
patients because HOPDs need only
provide one or two therapies, yet still
receive the full PHP per diem.
Response: We do not agree that CMHC
costs are necessarily higher than that of
a hospital. CMHCs are required to
furnish an array of outpatient services,
including specialized outpatient
services for children, elderly persons,
individuals with a serious mental
illness, and residents of its service area
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who have been discharged from
inpatient treatment. Accordingly,
CMHCs have the same ability as
hospitals to share costs among its
programs as needed. Further, we believe
hospital costs in some areas, for
example, capital and 24-hour
maintenance costs, greatly exceed
comparable CMHC costs. Regardless, we
believe patient acuity across hospitalbased and CMHC PHPs should be the
same, that is, the patients would
otherwise require inpatient psychiatric
care regardless of setting (section
1835(a)(2)(F) of the Act).
Comment: Many commenters
expressed concern that the proposed
rates exclude substantial costs from the
providers that should be considered for
calculating the per diem PHP rates. In
summary, the commenters stated ‘‘that
approximately 2.25 hours of direct
services per day are provided to
Medicare patients that are not billable or
do not have codes available to bill
Medicare.’’ The commenters cited as
examples: 100 percent of physician
supervision and related overhead
expenses; 85 to 93 percent of all nursing
related direct services for physical
health needs or family education
services; 92 percent of case management
services provided by licensed therapists
and other support staff; 85 percent of
unscheduled crisis intervention
services; and 80 percent of family
therapy without the client. Other
commenters also provided specific
examples of indirect services they
provide that are not reimbursable, such
as: assisting in finding housing;
accessing other health care services;
obtaining medications; working through
issues with family members; providing
transportation to medical and other
appointments; assisting with the
information and appointments regarding
Social Security and Medicare questions;
accessing food banks and food stamps;
obtaining eye and dental services;
providing occupational therapy, dual
diagnosis (conducted by a licensed
therapist), relaxation, humor,
mindfulness, nutrition education (run
by a registered dietician), pastoral care;
and trying to integrate volatile/anxious
patients into the milieu when they
cannot tolerate a group process and
need one-on-one attention.
Response: PHP services are
specifically defined in section 1861(ff)
of the Act. Meals and transportation are
specifically excluded under section
1861(ff)(2)(I) of the Act. While some of
the services the commenters list are
provided in a PHP setting, we only pay
for direct patient care costs. Other
services, such as case management and
team meetings, would be considered
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overhead costs and not direct patient
care costs. All Medicare allowable costs
will be included in the cost portion of
the CCR. By applying this ratio to the
billed charges, the cost estimate will
reflect all allowable costs.
Comment: Many commenters
expressed concern that CMS fails to
protect rural mental health providers.
The commenters claim that there is
documented evidence, published by
CMS, of the special hardships and needs
of rural providers. They noted that most
other rural provider types have been
recognized for this hardship and have
had allowance and special provisions to
ensure their viability. The commenters
requested that CMS consider treating
CMHCs in an equitable manner to other
rural provider types. The commenters
also mentioned that they reviewed all of
the documentation available and the
impact statement, but found no
evidence that any small rural providers
had been included. The commenters
wanted to remind CMS that the agency
is required by law to calculate and
disclose the impact of any action on
small and rural providers. A few
commenters specifically mentioned that
there were no Louisiana CMHCs
included in the impact.
Response: We believe we do take the
concerns of rural mental health
providers into account. Over the last
several years, our mitigation of rate
reductions for PHPs benefits all CMHCs,
including rural providers. As to the
particular treatment of rural providers,
we believe the commenter may be
referring to the statutory hold harmless
provisions. Section 1833(t)(7)(D) of the
Act authorizes such payments, on a
permanent basis, for children’s hospitals
and cancer hospitals and, through CY
2009, for rural hospitals having 100 or
fewer beds and is not a SCH, and for
SCHs in rural areas. Section
1866(t)(7)(D) of the Act does not
authorize hold harmless payments to
CMHCs. In addition, another provision
directed at rural providers, section 411
of Public Law 108–173 that requires
CMS to determine the appropriateness
of additional payments for certain rural
hospitals, does not extend to CMHCs.
In this year’s impact table, we
included CMHCs in the total count of
providers, but they are not shown
separately. We typically do not report a
separate impact for CMHCs because
they are only paid for one service, PHP,
under the OPPS, and each CMHC can
typically easily estimate the impact of
payment rate changes by referencing
payment for PHP in Addendum A to
both the proposed rule and this final
rule with comment period. Because we
proposed a CY 2009 policy change to
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PHP payment, we presented separate
impacts for CMHCs in Table 45 and
discussed the impact in section XXI.B.4
in the CY 2009 OPPS/ASC proposed
rule (73 FR 41558). We have updated
this analysis for this final rule with
comment period. (For additional
information, we refer readers to section
XXIII of this final rule with comment
period.)
Comment: Several commenters
requested that CMS support a legislative
amendment to remove PHP from the
APC codes and create an independent
status similar to home health and then
establish a reasonable base rate for PHP
such as the current 2008 per diem. The
commenters also recommended that
CMS annually adjust the base rate by a
conservative inflation factor such as the
CPI. Other commenters suggested
establishing a PHP rate calculation task
force to develop a new rate methodology
that captures all relevant data and
reflects the actual costs to providers to
deliver PHP services. The commenter
recommended that the ratesetting task
force be composed of CMS staff and a
diverse group of stakeholders that
includes front-line providers of PHP
services and representatives from
national industry organizations.
Response: As the commenters stated,
currently, the statutory authority does
not provide for a separate payment
system for partial hospitalization
services. Therefore, it would require a
statutory change to establish an
independent payment system for PHPs.
In response to commenters’ request for
a PHP rate calculation task force, we do
not believe an official task force is
required, but we continue to support an
informal process. We have met with
industry groups and providers
numerous times over the years and
continue to be open to discussion about
the partial hospitalization benefit.
Comment: A few commenters
recommended that CMS establish
quality criteria to judge performance
and that would influence future
payment rates.
Response: We agree with the
commenters that information about the
status of quality benchmarks and
indicators would be useful and we
encourage providers to submit that
information to us. While the
commenters did not provide any
specifics, we would be interested in
how such a quality program would be
structured.
Comment: A few commenters stated
that the wage index adjustment does not
accurately reflect the cost of labor in
areas affected by Hurricanes Katrina and
Rita. The commenters also pointed out
that the proposed wage index in
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Louisiana has decreased post-hurricane
instead of increasing, which has
resulted in a much lower payment rate
in Louisiana. The commenters further
stated that the time lag for wage
indexing is a huge factor for Hurricane
Zone providers and that the wage index
decrease makes the assumption that the
cost of labor has actually decreased
since the hurricanes. Some commenters
noted that the lack of facilities and
trained professionals and inadequate
reimbursement will make Louisiana
worse off now than prior to Hurricanes
Katrina and Rita.
Response: The hospital wage data
used to compute the FY 2009 IPPS
hospital wage index is from the FY 2005
hospital cost reports for all hospitals.
This is the standard lag timeframe in
determining the hospital wage index.
The FY 2005 data are reflected in the FY
2009 IPPS hospital wage index.
However, we note that the wage index
is a relative measure of differences in
area hourly wage levels. It compares a
labor market’s average hourly wage to
the national average hourly wage. To the
extent that post-hurricane hospital labor
costs are higher relative to the national
average, the wage index reflects the
higher relative labor cost beginning with
the FY 2005 data that are in the FY 2009
IPPS hospital wage index (which will be
applied to the CY 2009 OPPS rate year).
In addition, the statutory authority for
the OPPS wage index policy in section
1833(t)(2)(D) of the Act requires that the
wage adjustments be made in a budget
neutral manner. Therefore, any increase
in one wage area factor would need to
be budget neutral. Finally, it should be
noted that CMHCs and hospitals located
in Federal Emergency Management
Agency (FEMA) designated disaster
areas received relief funds by the
Department of Health and Human
Services in 2007.
Comment: One commenter stated that
CMS data and per diem payment rates
are strongly biased by just a few
providers. The commenter stated that
CMS’ data identifies 631 providers of
partial hospitalization services and
identifies the overall industry costs at
$288 million with approximately
1,400,000 days of partial hospitalization
services. The commenter stated that this
suggests an average daily census per
program of less than 9 patients per day,
based on 250 days of services in a year.
The commenter was aware of only 2 or
3 programs that maintain a daily census
in PHPs in excess of 50 to 60 per day,
some as high as 200 to 250 per day. The
commenter stated that these individual
providers skew the data and
disproportionately influence the
calculated rates with severe cost
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advantages that other providers cannot
duplicate because of economies of scale.
The commenter stated that these few
high volume providers should not set
the rates for all providers and should be
excluded from the rate calculations.
Response: In response to this
comment, we analyzed the cost per day
for various high volume providers and
determined that the high volume
providers have a cost per day similar to
that of smaller, lower volume providers.
For this reason, although high volume
providers may have a greater proportion
of days used for median rate setting, we
do not believe that including the data
for these providers skews the resulting
median. Our analysis shows that
economies of scale do not appear to
influence the cost per day for these
providers.
Comment: One commenter expressed
concern that the proposed PHP APC rate
decrease is inconsistent with a response
CMS gave to a MedPAC
recommendation. The commenter
claimed that MedPAC recommended
that the Congress should increase
payment rates for the acute inpatient
and outpatient prospective payment
systems in 2009 by the projected rate of
increase in the hospital market basket
index, concurrent with implementation
of a quality incentive payment program.
The commenter also claimed that CMS’
response was that it was proposing to
increase payment rates for the CY 2009
OPPS by the projected rate of increase
in the hospital market basket through
adjustment of the full CY 2009
conversion factor.
Response: All APCs under the OPPS
receive a market basket increase as part
of the calculation of the conversion
factor. The proposed PHP APC rates
were based upon standard OPPS
ratesetting methodology. Barring a
decrease due to the quality reporting
requirements, we anticipate a full
market basket increase and not an
update of less than a full market basket
to the OPPS payment rates. The PHP
APCs are converted to a weight relative
to the median cost of a Mid-Level Office
Visit. The relative weight is multiplied
by the conversion factor to convert it to
a dollar amount. However, there are
other factors in the conversion factor
that may offset the market basket
increase. For example, the conversion
factor includes the wage index and rural
budget neutrality adjustments, an
adjustment for pass-through set asides,
among others. (We refer readers to
section X.D of this final rule with
comment period for a more detailed
discussion of the conversion factor
update.)
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Comment: One commenter suggested
that CMS take a proactive step to
prevent the duplication of services by
CMHCs by implementing a ‘‘Needs
Assessment’’ protocol before allowing
centers to be established. The
commenters stated that these
assessments could be used as a way for
CMS to determine if the establishment
of a CMHC is necessary in a certain area.
Response: We believe the commenter
is referring to certificate of need
programs implemented by many States,
which is beyond the scope of the
proposed rule and this final rule with
comment period.
Comment: Several commenters
expressed concern that cost report data
frequently do not reflect bad debt
expense for the entire year. The
commenters were concerned that these
costs are not being considered in the
CMS data and severely shortchange the
rate calculations.
Response: The bad debt policy is
outside the scope of the proposed rule
and this final rule with comment
period. We refer the commenter to 42
CFR 413.89 and the Provider
Reimbursement Manual Part I (PRM),
Chapter 3, concerning our bad debt
requirements.
Comment: One commenter noted that
CMS did not respond to previous
statements from commenters that the
industry would welcome accreditation
rules and/or stricter policies for PHPs.
Response: We agree with the
commenters that this is an area that
should be addressed, and we are
exploring proposing conditions of
participation for CMHCs to establish
minimum standards for patient rights,
physical environment, staffing, and
documentation requirements. We
believe that adding conditions of
participation would contribute to more
consistency between CMHCs and
hospital-based PHPs.
Comment: One commenter suggested
that CMS should consider that licensed
professionals with a master’s degree in
psychology to be equivalent to those
with a master’s degree in social work
with an LCSW. Specifically, the
commenter questioned how someone
trained in the field to conduct therapy
is considered less able than a social
worker who may have had minimal or
any clinical training.
Response: Specific policy related to
the qualification or licensure
requirements of mental health
professionals is beyond the scope of the
proposed rule and this final rule with
comment period.
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C. Policy Changes
1. Policy To Deny Payment for Low
Intensity Days
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66673), we
reiterated our expectation that hospitals
and CMHCs will provide a
comprehensive program consistent with
the statutory intent. We also indicated
that we intend to explore changes to our
regulations and claims processing
systems in order to deny payment for
low intensity days, and we specifically
invited public comment on the most
appropriate threshold. We did not
receive any public comments on this
subject. Our analysis of claims data
indicates that CMHCs (and to a lesser
extent hospital-based PHPs) are
furnishing a substantial number of low
unit days. We consider providing only
one or two services to be a low unit day.
Although we currently consider the
acceptable minimum units of PHP
services required in a PHP day to be
three, it was never our intention that
three units of service should represent
the number of services to be provided in
a typical PHP day. PHP is furnished in
lieu of an inpatient psychiatric
hospitalization and is intended to be
more intensive than a half-day program.
We believe the typical PHP day should
include five to six units of service with
a break for lunch. As indicated in
section X.B. of this final rule with
comment period, we proposed two PHP
per diem rates that reflect the level of
care provided.
In conjunction with and to conform to
our proposed CY 2009 PHP per diem
rates that account for a minimum of 3
units of service provided, we also
proposed changes to the existing PHP
logic portion of the I/OCE to require that
CMHCs and hospital-based PHPs
provide a minimum of 3 units of service
per day in order to receive PHP
payment. Currently, the PHP logic
portion of the I/OCE results in a
‘‘suspension of claim for medical
review’’ for claims with fewer than three
services provided in a day. For CY 2009,
we proposed to deny payment for any
PHP claims for days when fewer than
three units of therapeutic services are
provided. We believe that three units of
services should be the minimum
number of services allowed in a PHP
day because a day with one or two units
of services does not meet the statutory
intent of a PHP program. Three units of
services are a minimum threshold that
permits unforeseen circumstances, such
as medical appointments, while
allowing payment, but still maintains
the integrity of a comprehensive
program. As noted previously, we also
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believe that a day where a patient
receives only three units of services
should only occur under certain
circumstances. As we explained in
section X.B. of this final rule with
comment period, an example of when it
may be appropriate to bill only three
units of services a day would be when
a patient might need to leave early for
a medical appointment and, therefore,
would be unable to complete a full day
of PHP treatment. However, PHP
programs that provide three units of
services in a day should be the
exception, as we expect PHP programs
to generally provide a more intensive
day of services as PHP is a more
comprehensive program than three units
of services. As we noted in the CY 2009
OPPS/ASC proposed rule (73 FR 41514),
we will be observing trends and
assessing the two payment rate
approach in our continued review to
protect the integrity of the PHP program.
Comment: Commenters supported
CMS’ proposal to deny payment for
‘‘low unit’’ days. However, they stated
that CMS should contemplate that there
are rare instances when a patient
becomes ill or has a family or personal
emergency and needs to leave the
program early on that day; therefore,
they receive fewer services. The
commenters suggested that CMS create
a modifier to be used to trigger a
‘‘suspension of claim for medical
review’’ and potential payment at a
reduced rate. Other commenters
suggested that CMS continue to pay and
maintain the current policy of
suspending claims for medical review.
The commenters believed that this is an
appropriate way to make payment
determinations. A few other
commenters opposed the idea of
denying payment; they proposed that
CMS pay the fee schedule amount for
the one or two services.
Response: While we recognize that
special circumstances exist where a
patient might have to leave a PHP early,
we continue to believe that days with
one or two units of services are
inconsistent with a benefit designed as
a full-day program and substitute for
inpatient care. Therefore, we do not
believe it is appropriate to establish a
modifier at this time or continue to pay
and are maintaining the current policy
of suspending claims for medical
review. In addition, we have codified
patient eligibility criteria in this final
rule with comment period that will
require a minimum of 20 hours of
service per week, which strengthens our
view that these low intensity days are
rare and do not represent a normal day,
such that payment should be denied. If
there are legitimate instances when one
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or two units of service days are justified,
denial still leaves the provider the
option to appeal as specified in the
Medicare Claims Processing Manual,
Pub. 100–04, Chapter 30, Section 30.2.2.
We will continue to monitor data in the
future to assess the potential later need
for a modifier for such claims.
2. Policy To Strengthen PHP Patient
Eligibility Criteria
As discussed in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66671), we established the current
PHP payment rate of $203. As part of
our ongoing review of ensuring the most
appropriate payment is made for these
intensive, service-oriented programs, we
also explored changes that could
enhance and strengthen the integrity of
the PHP benefit overall. As part of this
review, we looked at existing
instructions to providers, including
current regulations, manuals, and other
guidance. In the CY 2009 OPPS/ASC
proposed rule (73 FR 41514), we
proposed to codify existing policy
regarding PHP patient eligibility as we
believe it will help strengthen the
integrity of the PHP benefit by
conforming our regulations to our
longstanding policy and making
available the general program
requirements in one regulatory section.
These requirements are currently stated
in the Medicare Benefit Policy Manual,
Pub. 100–02, Chapter 6, section 70.3,
available on the CMS Web site at:
https://www.cms.hhs.gov/manuals/
Downloads/bp102c06.pdf and in
Transmittal 10, Change Request 3298,
dated May 7, 2004, but not codified. The
regulatory text changes that we
proposed are intended to strengthen
PHP requirements by adding the
existing patient eligibility conditions to
the existing PHP regulations, and do not
reflect a change in policy. Specifically,
we proposed to revise 42 CFR 410.43 to
add a reference to current regulations at
§ 424.24(e) that requires that PHP
services are furnished pursuant to a
physician certification and plan of care.
While the requirements at § 424.24(e)
are not new, we believe the addition of
this reference to § 410.43 will provide a
more complete description of our
expectations for PHP programs in
§ 410.43.
We also proposed to revise 42 CFR
410.43 to add the following patient
eligibility criteria. We proposed to state
that partial hospitalization programs are
intended for patients who—
(1) Require 20 hours per week of
therapeutic services;
(2) Are likely to benefit from a
coordinated program of services and
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require more than isolated sessions of
outpatient treatment;
(3) Do not require 24-hour care;
(4) Have an adequate support system
while not actively engaged in the
program;
(5) Have a mental health diagnosis;
(6) Are not judged to be dangerous to
self or others; and
(7) Have the cognitive and emotional
ability to participate in the active
treatment process and can tolerate the
intensity of the partial hospitalization
program.
As we noted in the CY 2009 OPPS/
ASC proposed rule (73 FR 41514),
partial hospitalization is the level of
intervention that falls between inpatient
hospitalization and episodic treatment
in the continuum of care for the
mentally ill. While we require a patient
to have a mental health diagnosis, we
caution that the diagnosis in itself is not
the sole determining factor for coverage.
Because partial hospitalization is
provided in lieu of inpatient care, it
should be a highly structured and
clinically-intensive program. As
reiterated in the CY 2009 OPPS/ASC
proposed rule (73 FR 41514), our goal is
to improve the level of service furnished
in a PHP day, while also ensuring that
the partial hospitalization benefit is
being utilized by the appropriate
population. For example, a PHP
candidate should be able to tolerate a
day of PHP and benefit from the intense
treatment provided in the program. In
addition, for the program to be fully
beneficial, a PHP participant should
have a strong support system outside of
the PHP program to help to ensure
success. Moreover, the safety of all PHP
patients is extremely important and,
therefore, all PHP participants should be
able to live safely in the community,
and not be a danger to self or others. For
these reasons, it has been our
longstanding policy that these criteria
are vital in determining the patient’s
eligibility to participate in a PHP and
we believed it necessary to propose to
codify the above list of basic patient
eligibility requirements in § 410.43.
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66673), we
reiterated our expectation that hospitals
and CMHCs will provide a
comprehensive program consistent with
the statutory intent. We believe the
addition of these requirements to the
regulations reflects our longstanding
policy and helps provide a clear and
consistent description of our
expectations for PHP programs and
would strengthen the integrity of the
PHP benefit by noting such in the PHP
regulations.
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Comment: Generally, commenters
supported the eligibility requirements
and their incorporation in the
regulations at § 410.43, with the
exception of the requirement that PHPs
are intended for patients who require 20
hours per week of therapeutic services.
A few commenters requested that CMS
clarify that the list of patient eligibility
requirements will be used as general
requirements or guidelines and not as
patient-specific requirements with the
potential to deny coverage of services or
payments for individual patients. The
commenters also indicated that the 20
hours per week requirement, while
fundamentally sound, is insufficiently
refined for inclusion in regulation and
feared the impact of such a strict
requirement on patient care. The
commenters were concerned that a
regulatory provision could result in the
denial of coverage for services or
payments for individual patients.
Some commenters indicated that a
guideline of 16 to 20 hours per week
could accommodate the beneficiary,
particularly during the transition period
following hospital discharge. They
stated that partial hospitalization is an
intensive form of outpatient care
intended for patients with acute
psychiatric illness who could benefit
from ongoing intensive and structured
psychotherapy. The commenters also
stated that PHP is frequently used as a
substitute or a step-down from hospital
care with the patient being transitioned
into a less intensive level of care. Other
commenters expressed the concern that
a patient may not be able to participate
at the 20 hour per week minimum for
intense therapy, particularly during the
transition period. They stated that
during the transition, the patient, in
addition to psychiatric treatment,
frequently needs to make and keep
appointments to resolve physical or
social issues. A few commenters also
indicated that a patient may need an
occasional day to acclimate to the
rigorous demands of the very intensive
level of PHP services. They added that
the transition period either before or
after hospitalization may frequently
warrant clinical discretion and
flexibility in patient care management.
Response: We note that the eligibility
requirements that we proposed to codify
in the regulations at § 410.43 are not
new, and are currently a part of the
operational policy that is contained in
the Medicare Benefits Policy Manual,
Pub. 100–02, Chapter 6, Section 70.3.
We understand commenters’ concerns
about the 20 hours per week
requirement with regard to scheduling
flexibility, but we are concerned that if
we reduce the minimum number of
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hours lower than the current guideline,
the low end of the range will become
the new minimum. Therefore, instead of
reducing the number of hours a patient
needs in order to be eligible to receive
the benefit, in this final rule with
comment period, we are clarifying that
the patient eligibility requirement that
patients require 20 hours of therapeutic
services is evidenced in a patient’s plan
of care rather than in the actual hours
of therapeutic services a patient
receives. The intent of this eligibility
requirement is that for most weeks we
expect attendance conforming to the
patient’s plan of care. We recognize that
there may be times at the beginning (or
end) of a patient’s transition into (or out
of) a PHP where the patient may not
receive 20 hours of therapeutic services.
For example, if a patient begins
treatment on a Wednesday and receives
services for the remainder of that week
(Thursday and Friday), that patient’s
first week may not include 20 hours of
therapeutic services. However, we
expect that for generally all weeks the
PHP patients are receiving the amount
and type of services identified in the
plan of care.
Therefore, we are finalizing our
proposal, with the clarification noted
above, the patient eligibility criteria at
42 CFR 410.43 as follows:
Partial hospitalization programs are
intended for patients who—
(1) Require a minimum of 20 hours
per week of therapeutic services as
evidenced in their plan of care;
(2) Are likely to benefit from a
coordinated program of services and
require more than isolated sessions of
outpatient treatment;
(3) Do not require 24-hour care;
(4) Have an adequate support system
while not actively engaged in the
program;
(5) Have a mental health diagnosis;
(6) Are not judged to be dangerous to
self or others; and
(7) Have the cognitive and emotional
ability to participate in the active
treatment process and can tolerate the
intensity of the partial hospitalization
program.
We did not receive any public
comments on our proposal to revise 42
CFR 410.43 to add a reference to current
regulations at § 424.24(e) that requires
that PHP services are furnished in
accordance with a physician
certification and plan of care. Therefore,
we are finalizing the cross-reference
change as proposed.
3. Partial Hospitalization Coding Update
As part of our ongoing evaluation of
partial hospitalization codes, in the CY
2009 OPPS/ASC proposed rule (73 FR
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41515), we proposed several coding
changes. We identified several CPT
codes that we believed were
inappropriate for billing PHP claims.
Upon further study and after
consultation with CMS medical
advisors, we proposed to eliminate use
of the following three CPT codes for
billing PHP claims: 90846 (Family
psychotherapy (without the patient
present)), 90849 (Multi-family group
psychotherapy), and 90899 (Unlisted
psychiatric service or procedure). While
these three CPT codes constitute 0.157
percent of the total PHP claims for CY
2006, as explained in the CY 2009
OPPS/ASC proposed rule, we believe
there are similar and more appropriate
HCPCS codes to use to bill for these
services.
Our review of the claims data
associated with CPT code 90846 found
that this code accounts for
approximately 0.004 percent of the total
services billed on PHP claims in CY
2006. In the CY 2009 OPPS/ASC
proposed rule (73 FR 41515) we noted
our belief that CPT code 90846 is not an
appropriate code for the PHP benefit,
because it excludes the beneficiary. We
further noted that another available PHP
code, CPT code 90847 (Family
psychotherapy (conjoint psychotherapy
with patient present)), which is
currently a billable PHP code, is a more
appropriate CPT code to use to bill for
family psychotherapy services because
it requires the presence of the patient as
part of the family psychotherapy
session.
In addition, our review of the CY 2006
claims data associated with CPT code
90849 found that this code accounts for
approximately 0.058 percent of the total
services billed on PHP claims in CY
2006. We also believe that the intended
use of this code, which is for the
reporting of multiple-family group
therapy sessions, is not appropriate for
our use under PHP because PHP care is
centered on the beneficiary. As stated
earlier, we believe that CPT code 90847
is the more appropriate code to use for
PHP payment of family psychotherapy
services because it provides for the
conduct of individualized family
psychotherapy with the patient present.
Therefore, for CY 2009, we proposed to
eliminate CPT code 90849 for use as a
PHP code.
In addition, evaluation of the CY 2006
claims data found that CPT code 90899
accounted for approximately 0.095
percent of total services billed on PHP
claims. Upon closer examination, we
found that CPT code 90899 is
predominantly used to bill for patient
education services. This is an unlisted
CPT procedure code and such CPT
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unlisted procedure codes are used to
report unlisted psychiatric procedures
that are not accurately described by any
other more specific CPT codes. Because
of our concerns about the type of
services that may be billed using an
unlisted CPT code and because a more
appropriate code is currently available
that better describes the patient
education services for which PHP
payment may be made, we proposed to
eliminate PHP payment for CPT code
90899 in CY 2009. In the CY 2009
OPPS/ASC proposed rule (73 FR 41515),
we further noted that eliminating
unlisted CPT procedure codes is
consistent with how other payment
systems currently treat such codes, in
that more specific coding is preferred
over general coding.
In addition, we proposed to eliminate
two group therapy CPT codes currently
used in a PHP setting, 90853 (Group
psychotherapy other than of a multiplefamily group) and 90857 (Interactive
group psychotherapy), and replace them
with two new parallel timed HCPCS Gcodes: GXXX1 (Group psychotherapy
other than of a multiple-family group, in
a partial hospitalization setting,
approximately 45 to 50 minutes) (now
identified as G0410); and GXXX2
(Interactive group psychotherapy, in a
partial hospitalization setting,
approximately 45 to 50 minutes) (now
identified as G0411) (73 FR 41515). As
most of the current PHP codes already
include time estimates, we indicated in
the CY 2009 OPPS/ASC proposed rule
that we believe in order to maintain
consistency with the existing HCPCS
codes used in PHP, the group therapy
codes should likewise include a time
descriptor. We believe the time of 45 to
50 minutes for a group therapy session
is reasonable as it approximately reflects
the timing of group sessions in current
clinical practices. Therefore, we
proposed the two new timed HCPCS Gcodes for PHP group therapies. As we
noted in the CY 2009 OPPS/ASC
proposed rule, both CPT codes 90853
and 90857 may still be used in a nonPHP setting.
Comment: Commenters generally
supported the proposed PHP coding
changes. Other commenters requested
CMS to modify the original proposal
and retain a couple of the codes. For
example, the commenters agreed with
eliminating CPT code 90899 (Unlisted
psychiatric service or procedure); they
believed removal is reasonable as the
code is a generic code and is often
misinterpreted by the payer. However, a
few commenters opposed the
elimination of CPT code 90846 (Family
psychotherapy (without the patient
present)), and suggested that there are
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times when family therapy without the
patient is highly therapeutic and
necessary. The commenters stated
discussions with the family on how to
handle potential volatile topics with the
patient present could have an adverse
effect on the patient’s behavior.
Some commenters agreed with the
removal of CPT code 90849 (Multifamily group psychotherapy). A few
other commenters opposed the removal,
stating that multigroup psychotherapy is
especially beneficial in cases of
addiction, as it impacts the entire
family. A few commenters requested
that CMS not replace the two existing
group therapy CPT code 90853 and CPT
90857 with the two new timed G-codes
because they believed that using Gcodes may create programming and
business operational issues and may be
administratively burdensome for
hospitals. The commenters further
believed that the use of G-codes is not
consistent with government and
industry goals of data uniformity and
consistency and, instead, recommended
that CMS submit a code proposal to the
AMA modifying the two existing group
psychotherapy CPT codes 90853 and
90857 by adding the timed elements in
their definitions and maintain only one
set of codes for these services. Several
commenters also believed that the new
G-codes’ time estimates are inadequate
and requested the codes be extended to
60 to 90 minutes.
Response: We appreciate the support
of the commenters for removal of CPT
code 90899 and, therefore, are finalizing
removal of this code from the PHP code
set for CY 2009. Although CPT code
90899 will continue to be a billable
mental health code, it will no longer be
accepted as a PHP billable code. We also
appreciate the commenters’ support for
the use of CPT code 90846 and believe
the need for this code in specific
clinical situations is valuable. While we
remain concerned about therapy that
excludes the patient, we agree that this
code does have a narrow, although
useful, scope. Therefore, CPT code
90846 will remain a billable PHP code.
However, we will be monitoring the use
of this code to ensure that the frequency
of this code does not unduly increase.
We are finalizing the elimination of
CPT code 90849 as proposed because
we continue to believe that this code is
not consistent with the intent of the
statute that PHP treatment be focused on
the patient’s condition. We continue to
believe CPT code 90849 focuses the
service on the needs of the family and
does not specifically focus therapeutic
treatment on an individual patient.
Therefore, although it will continue to
be a billable mental health code, we are
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45 to 50 minutes) and G0411
(Interactive group psychotherapy, in a
partial hospitalization setting,
approximately 45 to 50 minutes).
Lastly, as noted above, while we
removed CPT code 90899 from the PHP
billable code set, we did not intend to
replace it with HCPCS code G0177
(Training and education services related
to the care and treatment of patient’s
disabling mental health problems, per
session (45 minutes or more)). HCPCS
code G0177 is currently a valid HCPCS
code for PHP and will remain a valid
HCPCS code for billing patient
education and training services in a PHP
program. Although HCPCS code G0177
is a packaged code, it is the only valid
HCPCS under PHP to bill patient
education and training services. It was
during data analysis for the CY 2009
OPPS/ASC proposed rule (73 FR 41515)
that we observed some providers
incorrectly billing patient and education
services using CPT code 90899. To
clarify, HCPCS code G0177 is the only
valid PHP code to bill patient training
and education services. We note that
HCPCS code G0177 may also be used in
a non-PHP setting.
In summary, after consideration of the
public comments received, in this final
rule with comment period, we are
modifying the PHP billable code set to
remove CPT codes 90899, 90853, and
90857 for CY 2009. We are retaining
CPT code 90846 and adding two new
timed G-codes: G0410 (Group
psychotherapy other than of a multiplefamily group, in a partial hospitalization
setting, approximately 45 to 50 minutes)
and G0411 (Interactive group
psychotherapy in a partial
hospitalization setting, approximately
45 to 50 minutes).
The table of billable PHP revenue and
HCPCS codes originally published in
the April 7, 2000 OPPS final rule with
comment period (65 FR 18454) was
updated and published in Transmittal
1487, Change Request 5999, dated April
8, 2008, and is currently located in the
Medicare Claims Processing Manual,
Pub. 100–04, Chapter 4, Section 260.1,
which is available on the CMS Web site
at: https://www.cms.hhs.gov/manuals/
downloads/clm104c04.pdf. Table 38
below displays the revised list of
billable PHP revenue codes and HCPCS
codes shown in Transmittal 1487. This
table also includes the four CPT codes
that we are removing from the PHP code
set for CY 2009 and the two new HCPCS
G-codes we are adding to the PHP code
set for CY 2009. The four CPT codes that
we are removing are shown in the
HCPCS code column with a line struck
through each code. The two new HCPCS
G-codes that we are adding are shown
in the HCPCS code column, in the row
with revenue code 0915 (Group
Therapy). HCPCS code 90846 is shown
as retained in the row with revenue
code 0916 (Family Psychotherapy).
D. Separate Threshold for Outlier
Payments to CMHCs
appropriate to make outlier payments to
CMHCs using the outlier percentage
target amount and threshold established
for hospitals. There was a significant
difference in the amount of outlier
payments made to hospitals and CMHCs
for PHP. In addition, further analysis
indicated that using the same OPPS
outlier threshold for both hospitals and
CMHCs did not limit outlier payments
to high cost cases and resulted in
excessive outlier payments to CMHCs.
Therefore, beginning in CY 2004, we
established a separate outlier threshold
In the November 7, 2003 final rule
with comment period (68 FR 63469), we
indicated that, given the difference in
PHP charges between hospitals and
CMHCs, we did not believe it was
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finalizing our policy that CPT code
90849 will no longer be a PHP billable
code.
After consideration of the public
comments received concerning the
creation of the two timed group
psychotherapy G-codes, we continue to
believe that we have a need to create
and maintain G-codes when CPT codes
are not available to meet our needs.
Moreover, although we generally follow
CPT guidelines, there are cases where
the CPT system does not meet our payer
needs for code specificity, payment and
timeliness of assignment, and thus we
assign HCPCS codes for those services.
We acknowledge that there may be some
administrative burden for providers to
bill G-codes rather than CPT codes.
However, we proposed to establish
these two group therapy G-codes
because existing CPT group therapy
codes do not capture the time
component that the proposed G-codes
do and, therefore, we continue to
believe that creation of G-codes in order
to capture timed group psychotherapy
visits is necessary. We continue to
believe we defined the G-codes
according to industry standard for group
psychotherapy, allowing for 45 to 50
minutes of therapy with 10 to 15
minutes for documentation. Therefore,
we are finalizing the proposed G-codes,
with final assigned numbers as follows:
G0410 (Group psychotherapy other than
of a multiple-family group, in a partial
hospitalization setting, approximately
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for CMHCs. For CYs 2004 and 2005, we
designated a portion of the estimated 2.0
percent outlier target amount
specifically for CMHCs, consistent with
the percentage of projected payments to
CMHCs under the OPPS in each of those
years, excluding outlier payments. For
CY 2006, we set the estimated outlier
target at 1.0 percent and allocated a
portion of that 1.0 percent, an amount
equal to 0.6 percent (or 0.006 percent of
total OPPS payments), to CMHCs for
PHP outliers. For CY 2007, we set the
estimated outlier target at 1.0 percent
and allocated a portion of that 1.0
percent, an amount equal to 0.15
percent of outlier payments (or 0.0015
percent of total OPPS payments), to
CMHCs for PHP outliers. For CY 2008,
we set the estimated outlier target at 1.0
percent and allocated a portion of that
1.0 percent, an amount equal to 0.02
percent of outlier payments (or 0.0002
percent of total OPPS payments), to
CMHCs for PHP outliers. The CY 2008
CMHC outlier threshold is met when the
cost of furnishing services by a CMHC
exceeds 3.40 times the PHP APC
payment amount. The CY 2008 OPPS
outlier payment percentage is 50
percent of the amount of costs in excess
of the threshold.
The separate outlier threshold for
CMHCs became effective January 1,
2004, and has resulted in more
commensurate outlier payments. In CY
2004, the separate outlier threshold for
CMHCs resulted in $1.8 million in
outlier payments to CMHCs. In CY 2005,
the separate outlier threshold for
CMHCs resulted in $0.5 million in
outlier payments to CMHCs. In contrast,
in CY 2003, more than $30 million was
paid to CMHCs in outlier payments. We
believe this difference in outlier
payments indicates that the separate
outlier threshold for CMHCs has been
successful in keeping outlier payments
to CMHCs in line with the percentage of
OPPS payments made to CMHCs.
As noted in section II.F. of this final
rule with comment period, for CY 2009,
we proposed to continue our policy of
setting aside 1.0 percent of the aggregate
total payments under the OPPS for
outlier payments. We proposed that a
portion of that 1.0 percent, an amount
equal to 0.07 percent of outlier
payments (or 0.0007 percent of total
OPPS payments), would be allocated to
CMHCs for PHP outliers. As discussed
in section II.F. of this final rule with
comment period, we again proposed to
set a dollar threshold in addition to an
APC multiplier threshold for OPPS
outlier payments. However, because the
PHP APC is the only APC for which
CMHCs may receive payment under the
OPPS, we would not expect to redirect
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outlier payments by imposing a dollar
threshold. Therefore, we did not
propose to set a dollar threshold for
CMHC outliers. As noted in section II.F.
of this final rule with comment period,
we proposed to set the outlier threshold
for CMHCs for CY 2009 at 3.40 times the
APC payment amount and the CY 2009
outlier payment percentage applicable
to costs in excess of the threshold at 50
percent.
Comment: A few commenters
indicated that they are in favor of
eliminating the outlier payments for
CMHCs and returning the money in
order to possibly increase the base for
the PHP payments.
Response: We note that section
1833(t)(5) of the Act requires an outlier
policy for covered HOPD services.
Partial hospitalization program services
are covered HOPD services. Because
CMHCs are a provider of PHP services,
outlier payments must be provided for
them in accordance with the statute.
Therefore, until the statute is changed to
eliminate the statutory requirement for
outlier payments that will affect
payment to CMHCs, we are maintaining
the current outlier threshold for CMHCs.
We would anticipate that if the outlier
authority were removed, all OPPS
providers, not just CMHCs, would be
affected.
As discussed in section II.F of this
final rule with comment period, using
more recent data for this final rule with
comment period, we set the target for
hospital outpatient outlier payments at
1.0 percent of total estimated OPPS
payments. We allocated a portion of that
1.0 percent, and amount equal to 0.12
percent of outlier payments and 0.0012
percent of total estimated OPPS
payments to CMHCs for PHP outliers.
For CY 2009, as proposed, we are setting
the outlier threshold at 3.40 times the
APC amount and CY 2009 outlier
percentage applicable to costs in excess
of the threshold at 50 percent.
After considering the public comment
received, and as noted above, we are
finalizing our CY 2009 proposal to set
a separate outlier threshold for CMHCs.
XI. Procedures That Will Be Paid Only
as Inpatient Procedures
A. Background
Section 1833(t)(1)(B)(i) of the Act
gives the Secretary broad authority to
determine the services to be covered
and paid for under the OPPS. Before
implementation of the OPPS in August
2000, Medicare paid reasonable costs for
services provided in the HOPD. The
claims submitted were subject to
medical review by the fiscal
intermediaries to determine the
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appropriateness of providing certain
services in the outpatient setting. We
did not specify in regulations those
services that were appropriate to
provide only in the inpatient setting and
that, therefore, should be payable only
when provided in that setting.
In the April 7, 2000 final rule with
comment period (65 FR 18455), we
identified procedures that are typically
provided only in an inpatient setting
and, therefore, would not be paid by
Medicare under the OPPS. These
procedures comprise what is referred to
as the ‘‘inpatient list.’’ The inpatient list
specifies those services that are only
paid when provided in an inpatient
setting because of the nature of the
procedure, the underlying physical
condition of the patient, or the need for
at least 24 hours of postoperative
recovery time or monitoring before the
patient can be safely discharged. As we
discussed in that rule and in the
November 30, 2001 final rule (66 FR
59856), we may use any of the following
criteria when reviewing procedures to
determine whether or not they should
be moved from the inpatient list and
assigned to an APC group for payment
under the OPPS:
• Most outpatient departments are
equipped to provide the services to the
Medicare population.
• The simplest procedure described
by the code may be performed in most
outpatient departments.
• The procedure is related to codes
that we have already removed from the
inpatient list.
In the November 1, 2002 final rule
with comment period (67 FR 66741), we
added the following criteria for use in
reviewing procedures to determine
whether they should be removed from
the inpatient list and assigned to an
APC group for payment under the
OPPS:
• We have determined that the
procedure is being performed in
numerous hospitals on an outpatient
basis; or
• We have determined that the
procedure can be appropriately and
safely performed in an ASC, and is on
the list of approved ASC procedures or
has been proposed by us for addition to
the ASC list.
We believe that these additional
criteria help us to identify procedures
that are appropriate for removal from
the inpatient list.
The list of codes that we proposed to
be paid by Medicare in CY 2009 only as
inpatient procedures were included as
Addendum E to the CY 2009 OPPS/ASC
proposed rule.
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B. Changes to the Inpatient List
For the CY 2009 OPPS, we used the
same methodology as described in the
November 15, 2004 final rule with
comment period (69 FR 65835) to
identify a subset of procedures currently
on the inpatient list that are being
performed a significant amount of the
time on an outpatient basis. These
procedures were then clinically
reviewed for possible removal from the
inpatient list. As discussed in the CY
2009 OPPS/ASC proposed rule (73 FR
41517), we solicited the APC Panel’s
input at its March 2008 meeting on the
appropriateness of removing the
following six CPT codes from the CY
2009 OPPS inpatient list: 21172
(Reconstruction superior-lateral orbital
rim and lower forehead, advancement or
alteration, with or without grafts
(includes obtaining autografts)); 21386
(Open treatment of orbital floor blowout
fracture; periorbital approach); 21387
(Open treatment of orbital floor blowout
fracture; combined approach); 27479
(Arrest, epiphyseal, any method (eg,
epiphysiodesis); combined distal femur,
proximal tibia and fibula); 54535
(Orchiectomy, radical, for tumor; with
abdominal exploration); and 61850
(Twist drill or burr hole(s) for
implantation of neurostimulator
electrodes, cortical).
In addition to presenting to the APC
Panel the six candidate procedures that
we believed could be appropriate for
removal from the inpatient list for CY
2009, we also presented utilization data
for two procedures, specifically CPT
code 64818 (Sympathectomy, lumbar)
and CPT code 20660 (Application of
cranial tongs caliper, or stereotactic
frame, including removal (separate
procedure)) that were discussed as
possible procedures for removal from
the inpatient list during the March 2007
APC Panel meeting. At that meeting, the
APC Panel recommended that we obtain
additional utilization data for these two
procedures for its consideration at the
winter 2009 meeting.
Following discussion at the March
2008 APC Panel meeting, the APC Panel
recommended that CMS remove from
the inpatient list four of the six
procedures (presented as candidates for
removal from the list), specifically CPT
codes 21172, 21386, 21387, and 27479,
and one of the two codes for which
additional utilization data had been
presented, specifically CPT code 20660.
The APC Panel also recommended that
CMS seek input from relevant physician
specialty groups on the removal of two
of the six procedures (presented to them
as possible candidates for removal from
the inpatient list), CPT codes 54535 and
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61850. The APC Panel made no
recommendation regarding removal of
CPT code 64818 from the inpatient list
after review of the additional data
presented. For CY 2009, we proposed to
remove all of the codes except for CPT
code 64818 from the inpatient list that
were presented to the APC Panel as
candidates for removal during its March
2008 meeting and, as recommended by
the APC Panel, specifically solicited
public comment on the proposed
removal of CPT codes 54535 and 61850
from the inpatient list.
In addition to the procedures
discussed at the APC Panel’s March
2008 meeting, we also reviewed and
proposed to remove three procedures
from the inpatient list that commenters
on the CY 2008 OPPS/ASC proposed
rule had requested to be removed. As
indicated in the CY 2009 OPPS/ASC
proposed rule (73 FR 41517), we believe
that these procedures are appropriate for
removal from the inpatient list and
specifically solicited public comment
on our proposal to remove the following
three procedures: CPT codes 27886
(Amputation, leg, through tibia and
fibula; reamputation); 43420 (Closure of
esophagostomy or fistula; cervical
approach); and 50727 (Revision of
urinary-cutaneous anastomosis (any
type urostomy)).
Furthermore, during the APC Panel’s
March 2008 meeting, a meeting attendee
requested removal of several CPT codes
from the inpatient list. The attendee’s
verbal request was followed by written
correspondence in which the
stakeholder requested that we remove
five additional procedures from the
inpatient list for CY 2009. These
procedures were: CPT code 50580
(Renal endoscopy through nephrotomy
or pyelotomy, with or without
irrigation, instillation, or
ureteropyelography, exclusive of
radiologic service; with removal of
foreign body or calculus); CPT code
51845 (Abdomino-vaginal vesical neck
suspension, with or without endoscopic
control (e.g., Stamey, Raz, modified
Pereyra); CPT code 51860
(Cystorrhaphy, suture of bladder
wound, injury or rupture; simple); CPT
code 54332 (One stage proximal penile
or penoscrotal hypospadias repair
requiring extensive dissection to correct
chordee and urethroplasty by use of
skin graft tube and/or island flap); and
CPT code 54336 (One stage perineal
hypospadias repair requiring extensive
dissection to correct chordee and
urethroplasty by use of skin graft tube
and/or island flap). Based on our
utilization data and clinical review, we
proposed to remove one of these
procedures from the inpatient list,
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68699
specifically CPT code 54332, and noted
that effective January 1, 2008, CPT code
50580 was removed from the inpatient
list and assigned to APC 0161.
At its August 2008 meeting, the APC
Panel recommended that we remove
three of the procedures that were
proposed for removal from the inpatient
list, CPT codes 50727, 54332, and
54535, and three additional procedures
that were discussed at the meeting in a
public presentation. The three
additional procedures were CPT codes
51845, 51860, and 54336, codes that
were first brought to our attention after
the March 2008 APC Panel meeting in
the stakeholder letter discussed earlier
in this section.
Consistent with our established policy
for removing procedures from the
inpatient list, we rely on
recommendations from the public and
the APC Panel, combined with our
utilization data and review by CMS
medical advisors, to determine which
procedures are candidates for removal.
We believe that our policy of proposing
the procedures for removal and
soliciting comments from the public,
which includes physician specialty
societies, is the most appropriate
process to receive input from the public
on this issue. Rather than solicit
approval from a select group (for
example, specific physician specialty
societies), we believe that solicitation of
comments from all interested parties is
more consistent with meeting our
obligation to the public regarding
outpatient services provided by
hospitals. Therefore, as noted in the CY
2009 OPPS/ASC proposed rule (73 FR
41517), we accepted both
recommendations of the APC Panel
from its March 2008 meeting regarding
the inpatient list and (1) proposed to
remove the five specific procedures the
APC Panel recommended for removal
(CPT codes 21172, 21386, 21387, 27479,
and 20660) and (2) sought input from
relevant professional societies regarding
our CY 2009 proposal to remove from
the inpatient list CPT codes 54535 and
61850.
Comment: One commenter expressed
concerns about the proposed removal of
CPT codes 27886 and 54535 from the
inpatient list. The commenter stated
that there is uncertainty about whether
these procedures can be safely
performed in an outpatient setting and
asked that CMS reconsider the proposed
removal of these two procedures.
Another commenter supported the
proposed removal of CPT code 54535
from the inpatient list.
A few commenters recommended that
CMS not remove CPT code 61850 from
the inpatient list. One of the
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commenters reported that the procedure
requires careful observation for
hemorrhaging, and expressed the
opinion that the procedure should be
performed only on an inpatient basis.
Response: Because of the concerns
raised by the commenters, we
reevaluated CPT codes 27886, 54535,
and 61850 in light of the commenters’
recommendations combined with our
review of updated utilization data and
the clinical judgment of our medical
advisors. For CPT codes 27886 and
61850, the updated physician billing
data for all sites of service indicate that
the inpatient utilization for these two
CPT codes is higher than their
outpatient utilization. In addition, as
noted earlier, a commenter has
indicated that there is some degree of
uncertainty as to whether CPT code
27886 can be performed safely in an
outpatient setting. With regard to CPT
code 61850, the commenters contended
that this procedure cannot be performed
safely on an outpatient basis. As stated
earlier, one of the commenters indicated
that there is a risk of hemorrhaging
associated with this procedure.
Therefore, based on our reevaluation of
CPT codes 27886 and 61850, we agree
with the commenters and are not
finalizing our proposal to remove these
two procedures from the inpatient list
for CY 2009.
In reevaluating CPT code 54535 for
removal from the inpatient list, we took
several additional factors into
consideration. First, according to our
updated physician billing utilization
data, the outpatient utilization for this
procedure is somewhat higher than the
inpatient utilization. Second, when we
presented this procedure to the APC
Panel as a possible candidate for
removal from the inpatient list at its
March 2008 meeting and again at its
August 2008 meeting, the APC Panel
first requested that we seek stakeholder
input on removing CPT code 54535
from the inpatient list at its March
meeting and then provided a specific
recommendation at its August meeting
to remove CPT code 54535 from the
inpatient list for CY 2009. Finally, we
note that commenters were split in their
opinion to remove CPT code 54535 from
the inpatient list, with one commenter
concerned about the safety of
performing this procedure in the
outpatient setting while the other
commenter supported its removal from
the inpatient list. Based on our
reevaluation of CPT code 54535, we
continue to believe that this procedure
can be safely performed in the
outpatient setting and we are removing
it from the inpatient list for CY 2009.
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Comment: One commenter supported
CMS’ proposal to remove CPT codes
21386 and 21387 from the inpatient list
and requested that CMS also remove
CPT code 21385 (Open treatment of
orbital floor blowout fracture;
transantral approach (Caldwell-Luc
operation)) from the inpatient list. The
commenter pointed out that it was
questionable why CMS would propose
to remove CPT codes 21386 and 21387
from the inpatient list, but not also
remove CPT code 21385 from the
inpatient list for CY 2009.
Response: We appreciate the
commenter’s support for our proposal to
remove CPT codes 21386 and 21387
from the CY 2009 inpatient list. We are
removing these two procedures from the
CY 2009 inpatient list as proposed.
With regard to CPT code 21385, that
procedure is not currently on the
inpatient list. For CY 2008, CPT code
21385 is assigned to APC 0256 (Level V
ENT Procedures). For CY 2009, CPT
code 21385 is retained in APC 0256,
which we have retitled (Level VI ENT
Procedures), and to which CPT codes
21386 and 21387 are assigned.
Comment: One commenter requested
that CMS remove CPT code 0184T
(Excision of rectal tumor, transanal
endoscopic microsurgical approach (i.e.,
TEMS)) from the inpatient list. The
commenter stated that the procedure is
minimally invasive and is comparable
to CPT code 45170 (Excision of rectal
tumor, transanal approach), which is
not on the inpatient list.
Response: We consulted with our
medical advisors in reevaluating CPT
code 0184T for removal from the
inpatient list. We note that this CPT
code was implemented on January 1,
2008, and was approved by the CPT
Editorial Panel in the prior year. When
the service was reviewed by the CPT
Editorial Panel based on a request for a
new CPT code, the procedure was
described as requiring a full thickness
excision of the rectal wall, with a
typical site of service in the inpatient
setting and not the HOPD. We have no
utilization data for this procedure but,
based on the clinical judgment of our
medical advisors and the recent
deliberations in establishing this new
CPT code, we believe that this
procedure should remain on the
inpatient list.
Comment: One commenter supported
CMS’ proposal to remove CPT codes
54332 and 50727 from the inpatient list
and further recommended that CMS also
remove CPT codes 51845, 51860, and
54336 from the inpatient list for CY
2009.
Response: We appreciate the
commenter’s support. After reevaluating
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these five CPT codes for payment under
the OPPS in CY 2009, we continue to
agree that CPT codes 54332 and 50727
can be appropriately performed in the
HOPD, consistent with our proposal and
the APC Panel’s August 2008
recommendation in support of their
removal from the inpatient list, and that
CPT codes 51845, 51860, and 54336, as
recommended by the APC Panel in
August 2008, can be safely performed
on Medicare beneficiaries in the
outpatient setting. Therefore, for CY
2009, we are removing all five of these
CPT codes from the inpatient list.
Comment: Many commenters
suggested that CMS eliminate the
inpatient list and gave several reasons
why it should be eliminated. They
stated that there was inconsistency
between the Medicare payment policies
for hospitals and physicians related to
performance of inpatient procedures in
the HOPD that allows physicians to
receive full payment for inpatient
procedures that are performed on
beneficiaries who are not inpatients but
denies hospitals payment for those same
procedures. They noted that under,
current payment policy, physicians
have little incentive to avoid providing
inpatient procedures to beneficiaries
who are outpatients. The commenters
argued that there are a variety of
circumstances that result in procedures
on the inpatient list being performed
without an inpatient admission. For
example, they explained that sometimes
during the intraoperative period, due to
clinical circumstances, the surgeon
performs a procedure that is on the
inpatient list rather than the procedure
that was planned. Further, they asserted
that because the inpatient list changes
every year, physicians may not always
be aware that a particular procedure is
on the inpatient list. Finally, some
commenters contended that the decision
about whether the beneficiary should be
an inpatient for surgery should be left to
the surgeon and should not be regulated
by CMS. They pointed out the many
safety provisions that are met by
hospitals participating in the Medicare
program as evidence that hospitals
would provide care safely and
appropriately.
Response: We appreciate the
comments and understand the
commenters’ reasons for advocating the
elimination of the inpatient list.
However, we continue to believe that
the inpatient list serves an important
purpose in identifying procedures that
cannot be safely and effectively
provided to Medicare beneficiaries in
the HOPD. We are concerned that
elimination of the inpatient list could
result in unsafe or uncomfortable care
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for Medicare beneficiaries. Therefore,
we are not discontinuing our use of the
inpatient list at this time.
In addition to the above concerns
about differences in physician and
hospital outpatient payment policy,
hospitals have expressed ongoing
concerns related to inpatient procedures
being performed inappropriately for
beneficiaries who are not inpatients and
that, as a result, beneficiaries may be
liable for the charges for the services.
We believe that it is the responsibility
of physicians and hospitals to know
which procedures are on the inpatient
list.
We also are concerned about the
potential results of eliminating the
inpatient list on beneficiary liability.
For instance, we are concerned that,
without the inpatient list, beneficiaries
could experience longer stays in
observation units after some procedures.
The APC Panel has discussed its
concern with extended time in
observation units, frequently exceeding
24 hours. We know that it is not
unusual in such cases for the
beneficiary to be unaware of his or her
outpatient status, which typically means
he or she incurs higher out-of-pocket
costs. Moreover, the financial liability
for OPPS copayments for complex
surgical procedures and long periods in
the HOPD differs significantly from a
beneficiary’s inpatient cost-sharing
responsibilities.
Comment: In addition to requesting
elimination of the inpatient list, a few
commenters suggested that if CMS
chooses to maintain the list that CMS
should establish an appeal process to
address those circumstances in which
OPPS payment for a service provided on
an outpatient basis is denied because it
is on the inpatient list. The commenters
believed that if CMS maintains the
inpatient list that there should be a
mechanism by which payment could
still be made in some cases. For
instance, commenters suggested an
appeal process that would allow
hospitals to submit information to
explain the unusual circumstances that
necessitated performance of an inpatient
procedure for a beneficiary who is an
outpatient.
Response: We appreciate the
commenters’ suggestions. We intend to
continue to encourage physicians’
awareness of the implications for
beneficiaries and hospitals of
performing the inpatient list procedures
on beneficiaries who are not inpatients.
We do not plan to adopt a specific
appeals process for claims related to
inpatient list procedures performed in
the HOPD at this time. The existing
established processes for a beneficiary
or provider to appeal a specific claim
remain in effect.
Comment: One commenter suggested
that CMS implement a method by which
the ancillary services related to
unscheduled inpatient procedures
performed on an outpatient basis could
be recognized for payment. The
commenter asserted that due to hospital
billing practices, hospital coding staff
do not know until well after the surgery
is complete that an unscheduled
inpatient procedure was performed on
an outpatient who was not admitted as
an inpatient. The commenter requested
that CMS create a modifier that
hospitals could append to the HCPCS
codes for unscheduled inpatient
procedures that would enable CMS to
recognize and pay for the ancillary
services associated with them,
comparable to the –CA modifier that
addresses situations where a procedure
on the OPPS inpatient list must be
performed to resuscitate or stabilize a
patient (whose status is that of an
outpatient) with an emergent, lifethreatening condition, and the patient
dies before being admitted as an
inpatient.
Response: We thank the commenter
for the suggestion but do not believe
there is a need for a specific modifier to
identify unscheduled outpatient
performance of inpatient procedures on
Medicare beneficiaries. We continue to
believe that the inpatient list procedures
are not appropriate for performance in
the HOPD, and therefore, we expect that
when such a procedure is performed on
a Medicare beneficiary, the patient
would be admitted as an inpatient. We
established payment for ancillary
services reported in association with an
inpatient procedure to which the –CA
68701
modifier is appended in order to
provide payment to hospitals for
services provided in those rare cases
when the patient dies before being
admitted as an inpatient. In these
situations, hospitals are absolutely
unable to admit these patients. In the
circumstances described by the
commenter concerning unscheduled
inpatient procedures in the HOPD, we
do not believe it would be appropriate
to make payment under the OPPS for
ancillary services that are provided in
association with a procedure that we
have designated as only safe for
performance on inpatients, and we see
no insurmountable hospital barriers to
admitting those patients as inpatients of
the hospital. We understand hospitals’
dilemma when the decision is made
intraoperatively to perform an
unscheduled procedure. However, we
continue to believe that it is very
important for hospitals to educate
physicians on Medicare services paid
under the OPPS to avoid inadvertently
providing services in a hospital
outpatient setting that would be paid
only during an inpatient stay because
we believe that the HOPD is not an
appropriate site of service for the
procedures.
After consideration of the public
comments received, we are modifying
our CY 2009 proposal to remove 12 CPT
codes from the inpatient list. The final
list of 12 procedures that we are
removing from the inpatient list for CY
2009 is displayed in Table 39 below.
The table shows each CPT code and the
APC to which the procedure is assigned
for OPPS payment in CY 2009. Also, as
stated earlier in this section, we will
present data regarding CPT codes 20660
and 64818 to the APC Panel at its first
CY 2009 meeting. Therefore, in this
final rule with comment period, we are
accepting the APC Panel’s August 2008
recommendation to remove CPT codes
51845, 51860, and 54336 from the
inpatient list for CY 2009. We also are
accepting the APC Panel’s August 2008
recommendation which supported our
proposal to remove CPT codes 50727,
54332, and 54535 from the inpatient list
for CY 2009.
TABLE 39—HCPCS CODES REMOVED FROM THE INPATIENT LIST AND THEIR APC ASSIGNMENTS FOR CY 2009
Final CY 2009
APC
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CY 2009 HCPCS Code
CY 2009 Long descriptor
20660 ..............................................................
Application of cranial tongs caliper, or stereotactic frame, including
removal (separate procedure).
Reconstruction superior-lateral orbital rim and lower forehead, advancement or alteration, with or without grafts (includes obtaining
autografts).
21172 ..............................................................
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TABLE 39—HCPCS CODES REMOVED FROM THE INPATIENT LIST AND THEIR APC ASSIGNMENTS FOR CY 2009—
Continued
Final CY 2009
APC
CY 2009 HCPCS Code
CY 2009 Long descriptor
21386 ..............................................................
Open treatment of orbital floor blowout fracture; periorbital approach.
Open treatment of orbital floor blowout fracture; combined approach.
Arrest, epiphyseal, any method (eg, epiphysiodesis); combined distal femur proximal tibia and fibula.
Closure of esophagostomy or fistula; cervical approach ...................
Revision of urinary-cutaneous anastomosis (any type urostomy) .....
Abdomino-vaginal vesical neck suspension, with or without
endoscopic control (eg, Stamey, Raz, modified Pereyra).
Cystorrhaphy, suture of bladder wound, injury or rupture; simple .....
One stage proximal penile or penoscrotal hypospadias repair requiring extensive dissection to correct chordee and urethroplasty
by use of skin graft tube and/or island flap.
One stage perineal hypospadias repair requiring extensive dissection to correct chordee and urethroplasty by use of skin graft tube
and/or island flap.
Orchiectomy, radical, for tumor; with abdominal exploration .............
21387 ..............................................................
27479 ..............................................................
43420 ..............................................................
50727 ..............................................................
51845 ..............................................................
51860 ..............................................................
54332 ..............................................................
54336 ..............................................................
54535 ..............................................................
XII. OPPS Nonrecurring Technical and
Policy Changes and Clarifications
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A. Physician Supervision of HOPD
Services
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41518), we provided a
restatement and clarification of the
requirements for physician supervision
of diagnostic and therapeutic hospital
outpatient services that were set forth in
the April 7, 2000 OPPS final rule with
comment period (65 FR 18524 through
18526).
As we stated before, section
1861(s)(2)(C) of the Act authorizes
payment for diagnostic services that are
furnished to a hospital outpatient for the
purpose of diagnostic study. We have
further defined the requirements for
diagnostic services furnished to hospital
outpatients, including requirements for
physician supervision of diagnostic
services, in §§ 410.28 and 410.32 of our
regulations. Section 410.28(e) states that
Medicare Part B will make payment for
diagnostic services furnished at
provider-based departments of hospitals
‘‘only when the diagnostic services are
furnished under the appropriate level of
physician supervision specified by CMS
in accordance with the definitions in
§§ 410.32(b)(3)(i), (b)(3)(ii), and
(b)(3)(iii).’’ In addition, in the April 7,
2000 OPPS final rule with comment
period (65 FR 18526), we stated that our
model for the requirement was the
requirement for physician supervision
of diagnostic tests payable under the
MPFS that was set forth in the CY 1998
MPFS final rule (62 FR 59048) that was
published in the Federal Register on
October 31, 1998. We also explained
with respect to the supervision
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requirements for individual diagnostic
tests that we intended to instruct
hospitals and fiscal intermediaries to
use the MPFS as a guide pending
issuance of updated requirements. For
diagnostic services not listed in the
MPFS, we stated that fiscal
intermediaries, in consultation with
their medical directors, would define
appropriate supervision levels in order
to determine whether claims for these
services are reasonable and necessary.
We have not subsequently issued new
requirements for the physician
supervision of diagnostic tests in
provider-based departments of
hospitals. Instead, we have continued to
follow the supervision requirements for
individual diagnostic tests as listed in
the Physician Fee Schedule Relative
Value File. The file is updated quarterly
and is available on the CMS Web site at
https://www.cms.hhs.gov/
PhysicianFeeSched/.
Section 1861(s)(2)(B) of the Act
authorizes payment for hospital services
‘‘incident to physicians’’ services
rendered to outpatients.’’ We have
further defined the requirements for
outpatient hospital therapeutic services
and supplies ‘‘incident to’’ a physician’s
service in § 410.27 of our regulations.
More specifically, § 410.27(f) states,
‘‘Services furnished at a department of
a provider, as defined in § 413.65(a)(2)
of this subchapter, that has providerbased status in relation to a hospital
under § 413.65 of this subchapter, must
be under the direct supervision of a
physician. ‘Direct supervision’ means
the physician must be present and on
the premises of the location and
immediately available to furnish
assistance and direction throughout the
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performance of the procedure. It does
not mean that the physician must be
present in the room when the procedure
is performed.’’ This language makes no
distinction between on-campus and offcampus provider-based departments.
However, in the preamble of the April
7, 2000 OPPS final rule with comment
period (68 FR 18525), we further
discussed the requirement for physician
supervision and the finalization of the
proposed regulation text. In that
discussion, we stated that the language
of § 410.27(f) ‘‘applies to services
furnished at an entity that is located off
the campus of a hospital that we
designate as having provider-based
status as a department of a hospital in
accordance with § 413.65.’’ We also
stated that, for services furnished in a
department of a hospital that is located
on the campus of a hospital, ‘‘we
assume the direct supervision
requirement to be met as we explain in
section 3112.4(a) of the Intermediary
Manual.’’ We further stated that ‘‘we
assume the physician supervision
requirement is met on hospital premises
because staff physicians would always
be nearby within the hospital.’’
As we explained in the CY 2009
OPPS/ASC proposed rule (73 FR 41519),
we restated the existing policy because
we were concerned that some
stakeholders may have misunderstood
our use of the term ‘‘assume’’ in the
April 7, 2000 OPPS final rule with
comment period, believing that our
statement meant that we do not require
any supervision in the hospital or in an
on-campus provider-based department
for therapeutic OPPS services, or that
we only require general supervision for
those services. This is not the case. It
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has been our expectation that hospital
outpatient therapeutic services are
provided under the direct supervision of
physicians in the hospital and in all
provider-based departments of the
hospital, specifically both on-campus
and off-campus departments of the
hospital. The expectation that a
physician would always be nearby
predates the OPPS and is related to the
statutory authority for payment of
hospital outpatient services—that
Medicare makes payment for hospital
outpatient services ‘‘incident to’’ the
services of physicians in the treatment
of patients as described in section
1861(s)(2)(B) of the Act. Longstanding
hospital outpatient policy language
states that ‘‘the services and supplies
must be furnished as an integral though
incidental part of the physicians’
professional services in the course of
treatment of an illness or injury.’’ We
refer readers to § 410.27(a) of our
regulations and to the Medicare Benefit
Policy Manual, Pub. 100–2, Chapter 6,
Section 20.5.1, for further description of
hospital outpatient services incident to
a physician’s service. The Medicare
Benefit Policy Manual also states in
Chapter 6, Section 20.5.1, that services
and supplies must be furnished on a
physician’s order and delivered under
physician supervision. However, the
manual indicates further that each
occasion of a service by a nonphysician
does not need to also be the occasion of
the actual rendition of a personal
professional service by the physician
responsible for the care of the patient.
Nevertheless, as stipulated in that same
section of the manual ‘‘during any
course of treatment rendered by
auxiliary personnel, the physician must
personally see the patient periodically
and sufficiently often enough to assess
the course of treatment and the patient’s
progress and, where necessary, to
change the treatment regimen.’’
The expectation that a physician
would always be nearby also dates back
to a time when inpatient hospital
services provided in a single hospital
building represented the majority of
hospital payments by Medicare. Since
that time, advances in medical
technology, changes in the patterns of
health care delivery, and changes in the
organizational structure of hospitals
have led to the development of
extensive hospital campuses, sometimes
spanning several city blocks, as well as
off-campus and satellite provider-based
campuses at different locations. In the
April 7, 2000 OPPS final rule with
comment period (65 FR 18525), we
described the focus of the direct
physician supervision requirement on
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off-campus provider-based departments.
We will continue to emphasize the
physician supervision requirement for
off-campus provider-based departments.
However, we note that if there were
problems with outpatient care in a
hospital or in an on-campus providerbased department where direct
supervision was not in place (that is, the
expectation of direct physician
supervision was not met), we would
consider that to be a quality concern.
We want to ensure that OPPS payment
is made for high quality hospital
outpatient services provided to
beneficiaries in a safe and effective
manner and consistent with Medicare
requirements.
The definition of direct supervision in
§ 410.27(f) requires that the physician
must be present and on the premises of
the location and immediately available
to furnish assistance and direction
throughout the performance of the
procedure. In the April 7, 2000 OPPS
final rule with comment period (65 FR
18525), we define ‘‘on the premises of
the location’’ by stating ‘‘* * * a
physician must be present on the
premises of the entity accorded status as
a department of the hospital and
therefore, immediately available to
furnish assistance and direction for as
long as patients are being treated at the
site.’’ We also stated that this does not
mean that the physician must be
physically in the room where a
procedure or service is furnished.
Although we have not further defined
the term ‘‘immediately available’’ for
this specific context, the lack of timely
physician response to a problem in the
HOPD would represent a quality
concern from our perspective that
hospitals should consider in structuring
their provision of services in ways that
meet the direct physician supervision
requirement for HOPD services.
Comment: Several commenters
supported the clarification that was
provided as a clear and warranted
safeguard to individuals being served in
on-campus and off-campus departments
of hospitals. One commenter was
concerned that the restatement and
clarification of policy included in the
proposed rule would interfere with its
ability to provide services in PHP
programs and rural CMHCs and stated
that ‘‘the current policy is appropriate.’’
Another commenter stated that the
clarification of policy would cause
hospitals to incur significant costs and
would result in physician contractual
problems and suggested that CMS
conduct a study to better understand
outpatient settings and the physician
supervision currently available to them.
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68703
Response: We agree with many of the
commenters that appropriate
supervision is a key aspect of the
delivery of safe and high quality
hospital outpatient services to Medicare
beneficiaries. As for the concerns of
commenters related to hospital staffing
and costs, we note that the discussion
in the CY 2009 OPPS proposed rule was
not a proposed change in policy but was
an intended clarification to assist
providers who may have misunderstood
the policy in the past.
Comment: One commenter requested
clarification about whether a
nonphysician practitioner can provide
supervision of ‘‘incident to’’ services in
the hospital outpatient setting when the
‘‘incident to service’’ is within the
practitioner’s scope of practice.
Response: According to section
1861(r) of the Act, ‘‘[t]he term
‘physician’ ’’, when used in connection
with the performance of any function or
action, means (1) a doctor of medicine
or osteopathy legally authorized to
practice medicine and surgery by the
State in which he performs such
function or action * * *; (2) a doctor of
dental surgery or of dental medicine
* * *; (3) a doctor of podiatric
medicine * * *; (4) a doctor of
optometry * * *; or (5) a chiropractor.
In addition, the conditions of
participation for hospitals under
§ 482.12(c)(1)(i) through (c)(1)(vi) of our
regulations require that every Medicare
patient is under the care of a doctor of
medicine or osteopathy, a doctor of
dental surgery or dental medicine, a
doctor of podiatric medicine, a doctor of
optometry, a chiropractor, or a clinical
psychologist; each practicing within the
extent of the Act, the Code of Federal
Regulations, and State law. Further,
§ 482.12(c)(4) of our regulations requires
that a doctor of medicine or osteopathy
must be responsible for the care of each
Medicare patient with respect to any
medical or psychiatric condition that is
present on admission or develops
during hospitalization and is not
specifically within the scope of practice
of one of the other practitioners listed in
§ 482.12(c)(1)(ii) through (c)(1)(vi). Also,
section 1861(s)(2)(B) of the Act
authorizes payment for hospital services
‘‘incident to physicians’ ’’ services
rendered to outpatients.’’ We have
further defined the requirements for
outpatient hospital therapeutic services
and supplies ‘‘incident to’’ a physician’s
service in § 410.27 of our regulations.
Section 410.27(a)(1)(ii) describes
payment for hospital outpatient services
when they are ‘‘an integral though
incidental part of a physician’s
services.’’ Also, § 410.27(f) requires that
hospital outpatient services provided in
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provider-based departments must be
under the direct supervision of a
physician. Direct supervision is defined
in this paragraph: ‘‘Direct supervision
means that the physician must be
present and on the premises of the
location and immediately available to
furnish assistance and direction
throughout the performance of the
procedure. It does not mean that the
physician must be present in the room
when the procedure is performed.’’ The
language of the statute and regulations
does not include other nonphysician
practitioners. Therefore, it would not be
in accordance with the law and
regulations for a nonphysician
practitioner to be providing the
physician supervision in a providerbased department, even if a nurse
practitioner’s or a physician assistant’s
professional service was being billed as
a nurse practitioner or a physician
assistant service and not a physician
service.
Comment: One commenter requested
clarification of the supervision required
for diagnostic services provided in a
department of a hospital that is located
on the hospital campus.
Response: As explained above,
§ 410.28(e) of our regulations states that
Medicare Part B will make payment for
diagnostic services furnished at
provider-based departments of hospitals
‘‘only when the diagnostic services are
furnished under the appropriate level of
physician supervision specified by CMS
in accordance with the definitions in
§§ 410.32(b)(3)(i), (b)(3)(ii), and
(b)(3)(iii).’’ We also explained that we
have continued to follow the
supervision requirements for individual
diagnostic tests as listed in the
Physician Fee Schedule Relative Value
File, updated quarterly and maintained
on the CMS Web site as shown above.
For diagnostic services not listed in the
MPFS, Medicare contractors, in
consultation with their medical
directors, would define appropriate
supervision levels in order to determine
whether claims for these services are
reasonable and necessary. Section
410.28(e) does not distinguish between
on-campus and off-campus providerbased departments. Therefore, all
provider-based departments providing
diagnostic services, whether on or off
the hospital’s main campus, should
follow the requirements of the MPFS or
their Medicare contractor, as
appropriate, for individual diagnostic
services.
Comment: Several commenters
provided specific hypothetical scenarios
related to the location of the physician
and asked whether these situations
would meet the definition of direct
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supervision. One commenter asked for
further clarification regarding the
supervision level required for specific
services.
Response: As stated above and in the
CY 2009 OPPS/ASC proposed rule, we
require direct supervision for
therapeutic services provided in the
hospital or in provider-based
departments of the hospital. For
diagnostic services furnished in
provider-based departments, the MPFS
level of supervision is applied or the
Medicare contractor determines the
level of supervision required for
services not listed in the MPFS. The
definition of direct supervision in
§ 410.27(f) requires that the physician
must be present and on the premises of
the location and immediately available
to furnish assistance and direction
throughout the performance of the
procedure. In the April 7, 2000 OPPS
final rule with comment period (65 FR
18525), we further clarified that ‘‘on the
premises of the location’’ means that the
physician must be present on the
premises of the entity accorded status as
a department of the hospital. This
means that the physician must be
present in the provider-based
department. As we explained in the
April 7, 2000 final rule with comment
period (65 FR 18526), the direct
supervision requirement for providerbased departments of hospitals was
taken from and parallels the definition
of direct supervision in
§ 410.32(b)(3)(ii), which requires that
the physician must be present in the
office suite.
Comment: A number of commenters
requested that CMS change the level of
physician supervision listed in the
MPFS for CPT code 77421 (Stereoscopic
X-Ray guidance for localization of target
volume for the delivery of radiation
therapy) from personal supervision to
direct supervision.
Response: Changes to supervision
requirements for specific CPT codes
under the MPFS are outside of the scope
of this CY 2009 OPPS/ASC final rule
with comment period. We have referred
these comments to the appropriate CMS
component and would encourage
individuals to work with the
appropriate specialty society to bring
future requests to CMS’ attention.
In summary, direct physician
supervision is the standard set forth in
the April 7, 2000 OPPS final rule with
comment period for supervision of
hospital outpatient therapeutic services
covered and paid by Medicare in
hospitals and provider-based
departments of hospitals. While we
have emphasized and will continue to
emphasize the direct supervision
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requirement for off-campus providerbased departments, we do expect direct
physician supervision of all hospital
outpatient therapeutic services,
regardless of their on-campus or offcampus location. Appropriate
supervision is a key aspect of the
delivery of safe and high quality
hospital outpatient services that are
paid based on the statutory authority of
the OPPS.
B. Reporting of Pathology Services for
Prostate Saturation Biopsy
Prostate saturation biopsy is a
technique currently described by
Category III CPT code 0137T (Biopsy,
prostate, needle, saturation sampling for
prostate mapping). Typically this
service entails obtaining 40 to 80 core
samples from the prostate under general
anesthesia. The samples are reviewed by
a pathologist, and the pathology service
is reported with CPT code 88305 (Level
IV—Surgical pathology, gross and
microscopic examination). Since the
beginning of the OPPS, Medicare has
paid for the gross and microscopic
pathology examination of prostate
biopsy specimens using CPT code
88305. This CPT code has been paid
separately under the OPPS and assigned
to APC 0343 (Level III Pathology) with
status indicator ‘‘X’’ since August 2000.
For CY 2008, CPT code 88305 is
assigned to APC 0343 with a payment
rate of approximately $33.
In view of the large number of
samples that are taken from a single
body organ during prostate saturation
biopsy and that must undergo gross and
microscopic examination by a
pathologist, in the CY 2009 OPPS/ASC
proposed rule (73 FR 41519 through
41520), we proposed to recognize four
new more specific Level II HCPCS Gcodes under the CY 2009 OPPS for these
pathology services, consistent with the
CY 2009 proposal for the MPFS. The
proposed HCPCS codes were: GXXX1
(Surgical pathology, gross and
microscopic examination for prostate
needle saturation biopsy sampling, 1–20
specimens); GXXX2 (Surgical pathology,
gross and microscopic examination for
prostate needle saturation biopsy
sampling 21–40 specimens); GXXX3
(Surgical pathology, gross and
microscopic examination for prostate
needle saturation biopsy sampling, 41–
60 specimens); and GXXX4 (Surgical
pathology, gross and microscopic
examination for prostate needle
saturation biopsy sampling, greater than
60 specimens). We stated in the CY
2009 OPPS/ASC proposed rule (73 FR
41520), that we believe that the
descriptors of these proposed HCPCS Gcodes more specifically reflect the
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characteristics of prostate saturation
biopsy pathology services so that
reporting would result in more accurate
cost data for OPPS ratesetting and,
ultimately, more appropriate payment.
CPT code 88305 would continue to be
recognized under the OPPS for those
surgical pathology services unrelated to
prostate needle saturation biopsy
sampling. Consistent with the proposed
CY 2009 APC assignment for CPT code
88305, we proposed to assign these four
new HCPCS G-codes to APC 0343 with
a proposed APC median cost of
approximately $35. We specifically
solicited public comment on the
appropriateness of recognizing these
proposed new HCPCS G-codes under
the OPPS and their proposed APC
assignments especially with regard to
the expected hospital resources required
for the preparation of the biopsy
specimens that would be reported with
the proposed new HCPCS G-codes and
the extent to which those resources
necessary to provide a single unit of
each proposed new HCPCS G-code
would differ from the resources required
to provide a single unit of CPT code
88305 for a conventional prostate needle
biopsy specimen.
Comment: One commenter opposed
the proposal to utilize HCPCS G-codes
to report pathology services for prostate
saturation biopsy and requested that
CMS seek CPT codes for these services
in order to avoid coding confusion and
the administrative burden of having two
code sets for the same service. Another
commenter supported the creation of
HCPCS G-codes for services involving
the examination of more than 21 core
samples, but stated that a HCPCS Gcode for 20 or fewer samples would be
unnecessary and confusing because it
would be highly unlikely that a
saturation biopsy would be performed
to obtain less than 20 specimens. This
latter commenter stated that a
pathologist would not know whether
core samples came from a sextant
biopsy versus a saturation biopsy and,
therefore, would not know whether to
report the proposed HCPCS code
GXXX1 or CPT code 88305. The
commenter recommended that CPT
code 88305 be used for saturation
biopsy to report the examination of up
to 20 core samples and the following
HCPCS G-codes be used to report the
examination of more than 20 core
samples: GXXX1 (21–40 specimens);
GXXX2 (41–60 specimens); and GXXX3
(greater than 60 specimens). The
commenter also opposed the proposed
assignment of all of the HCPCS G-codes
to APC 0343 because the commenter
was unclear as to how the proposed
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payment rate of $35 was calculated. The
commenter also believed that CMS did
not provide information about whether
there would be increased payment for
each successive level of specimen
samples.
Response: We continue to believe
that it is important to pay more
appropriately for the pathology services
associated with examination of core
samples obtained during prostate
saturation biopsy. No new CPT codes
are being implemented to describe these
services for CY 2009. Therefore, we
believe that the creation of Level II
HPCPCS codes, as we proposed, is
essential to providing more appropriate
payment for the services in the short
term and to collecting claims data that
reflect hospitals’ costs for the services
for future OPPS ratesetting. In contrast
to the perspective of one commenter, we
believe that, in uncommon cases,
prostate saturation biopsy may result in
20 or fewer core samples for
examination and that, in such cases, we
would expect the hospital resources to
differ from the hospital resources
required to provide CPT code 88305.
Therefore, we are finalizing the creation
of the proposed four new more specific
Level II HCPCS G-codes under the OPPS
for these pathology services, consistent
with the CY 2009 final payment policy
for the MPFS. As stated in the CY 2009
OPPS/ASC proposed rule (73 FR 41519
through 41520), we believe the
proposed descriptors of these HCPCS Gcodes more specifically reflect the
characteristics of prostate saturation
biopsy pathology services so that
reporting will result in more accurate
cost data for OPPS ratesetting and,
ultimately, more appropriate payment.
In considering the commenter’s
concerns related to the proposed APC
assignments for the HCPCS G-codes, we
took into account the characteristics of
the prostate saturation biopsy pathology
services, including typical cases and
typical complexity of the pathology
review, and we examined the OPPS
claims data available for CPT code
88305 and related surgical pathology
services. Furthermore, we explicitly
assessed the expected incremental
hospital resource costs associated with
examination of an increasing number of
core samples. Based on these analyses
and review of the public comments, we
concluded that all four HCPCS G-codes
are more appropriately assigned to New
Technology APCs under the OPPS
because there are no established clinical
APCs that we believe are appropriate
based on consideration of the clinical
characteristics and expected hospital
resources costs of the services described
by the HCPCS G-codes. As discussed
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further in section III.C. of this final rule
with comment period, we maintain new
services in New Technology APCs until
we have sufficient data to reassign them
to appropriate clinical APCs.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal to recognize four
new HCPCS G-codes for pathology
services associated with prostate
saturation biopsy, specifically HCPCS
codes G0416 (Surgical pathology, gross
and microscopic examination for
prostate needle saturation biopsy
sampling, 1–20 specimens); G0417
(Surgical pathology, gross and
microscopic examination for prostate
needle saturation biopsy sampling 21–
40 specimens); G0418 (Surgical
pathology, gross and microscopic
examination for prostate needle
saturation biopsy sampling, 41–60
specimens); and G0419 (Surgical
pathology, gross and microscopic
examination for prostate needle
saturation biopsy sampling, greater than
60 specimens). CPT code 88305 will
continue to be recognized under the
OPPS for those surgical pathology
services unrelated to prostate saturation
biopsy. CPT code 88305 will also
continue to be assigned to APC 0343,
with a final CY 2009 median cost of
approximately $34.
We are not adopting our proposal to
assign these four HCPCS G-codes to
APC 0343. Instead, in this final rule
with comment period, we are assigning
these HCPCS G-codes to four different
New Technology APCs for CY 2009. For
the CY 2009 OPPS, HCPCS code G0416
is assigned to APC 1505 (New
Technology—Level V ($300–400)), with
a CY 2009 final payment rate of
approximately $350; HCPCS code
G0417 is assigned to APC 1507 (New
Technology—Level VII ($500–600)),
with a CY 2009 final payment rate of
approximately $550; HCPCS code
G0418 is assigned to APC 1511 (New
Technology—Level XI ($900–1000)),
with a CY 2009 final payment rate of
approximately $950; and HCPCS code
G0419 is assigned to APC 1513 (New
Technology—Level XIII ($1,100–1,200)),
with a CY 2009 final payment rate of
approximately $1,150. Payment for
these services is made at the midpoint
of each New Technology APC cost band.
Furthermore, each of these New
Technology APCs has a status indicator
of ‘‘S,’’ indicating that there is no
discount when multiple significant
procedures are provided on the same
day to a single Medicare beneficiary.
Because the four HCPCS G-codes are
new for CY 2009, we are assigning
comment indicator ‘‘NI’’ in Addendum
B to this final rule with comment
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period, indicating that their CY 2009
interim OPPS treatment is open to
public comment in this final rule with
comment period.
C. Changes to the Initial Preventive
Physical Examination (IPPE)
In order to implement section 101(b)
of the MIPPA, beginning January 1,
2009, we will pay for an IPPE performed
not later than 12 months after the date
of the beneficiary’s initial enrollment in
Medicare Part B. Any beneficiary who
has not yet had an IPPE and whose
initial enrollment in Medicare began in
CY 2008 will be able to have an IPPE in
CY 2009, as long as it is done within 12
months of the beneficiary’s initial
enrollment. We will pay for one IPPE for
each beneficiary in a lifetime. The
Medicare deductible does not apply to
the IPPE if it is performed on or after
January 1, 2009. Providers paid under
the OPPS will report IPPE visits
occurring on or after January 1, 2009,
using new HCPCS code G0402 (Initial
preventive physical examination; faceto-face visit, services limited to new
beneficiary during the first 12 months of
Medicare enrollment). HCPCS code
G0344 (Initial preventive physical
examination; face-to-face visit, services
limited to new beneficiary during the
first 6 months of Medicare enrollment)
will be active until December 31, 2008
for beneficiaries who have the IPPE
prior to January 1, 2009.
In the CY 2009 OPPS/ASC proposed
rule, we proposed to continue the
assignment of HCPCS code G0344 to
APC 0605 (Level 2 Hospital Clinic
Visits) for CY 2009, with a proposed
payment rate of approximately $68. We
did not receive any public comments on
our proposed CY 2009 OPPS treatment
of HCPCS code G0344, and therefore,
are adopting it as final. We are
crosswalking new HCPCS code G0402 to
HCPCS code G0344 because of their
clinical and expected resource
similarity and assigning the new code to
APC 0605 on an interim basis for CY
2009. As a new HCPCS code for CY
2009, the OPPS treatment of HCPCS
code G0402 is open to public comment
in this final rule with comment period.
The final CY 2009 median cost of APC
0605 is approximately $67.
We note that the policy for reporting
a medically necessary hospital visit
during the same visit as the IPPE still
applies. CPT codes 99201 through
99215 for hospital clinic visits of new
and established patients at all five levels
of resource intensity may also be
appropriately reported, depending on
the circumstances, but they must be
appended with the CPT–25 modifier,
identifying the hospital visit as a
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separately identifiable service from the
IPPE described by HCPCS code G0402.
Section 101(b) of the MIPPA also
removes the screening
electrocardiogram (EKG) as a mandatory
requirement, as identified in section
1861(ww)(1) of the Act, to be performed
as part of the IPPE. The MIPPA requires
that there be education, counseling, and
referral for an EKG, as appropriate, for
a once-in-a lifetime screening EKG
performed as a result of a referral from
an IPPE. The facility service for the
screening EKG (tracing only) is payable
under the OPPS when it is the result of
a referral from an IPPE. Providers paid
under the OPPS should report new
HCPCS code G0404 (Electrocardiogram,
routine ECG with 12 leads, tracing only,
without interpretation and report,
performed as a screening for the initial
preventive physical examination) for
services furnished on or after January 1,
2009. HCPCS code G0367 (Tracing only,
without interpretation and report,
performed as a component of the initial
preventive physical exam) will be active
until December 31, 2008 for reporting
the facility service for a screening EKG
performed prior to January 1, 2009.
In the CY 2009 OPPS/ASC proposed
rule, we proposed to continue the
assignment of HCPCS code G0367 to
APC 0099 (Electrocardiograms) for CY
2009, with a proposed payment rate of
approximately $26. We did not receive
any public comments on our proposed
CY 2009 OPPS treatment of HCPCS code
G0367 and, therefore, are adopting it as
final. We are crosswalking new HCPCS
code G0404 to HCPCS code G0367
because of their clinical and expected
resource similarity and assigning the
new code to APC 0099 on an interim
basis for CY 2009. As a new HCPCS
code for CY 2009, the OPPS treatment
of HCPCS code G0404 is open to public
comment in this final rule with
comment period. We note that the two
other new related screening EKG codes,
specifically HCPCS code G0403
(Electrocardiogram, routine ECG with 12
leads; performed as a screening for the
initial preventive physical examination
with interpretation and report) and
HCPCS code G0405 (Electrocardiogram,
routine ECG with 12 leads;
interpretation and report only,
performed as a screening for the initial
preventive physical examination),
include an interpretation and report
and, therefore, are assigned status
indicators ‘‘M’’ and ‘‘B,’’ respectively,
on an interim basis for the CY 2009
OPPS. HCPCS code G0403 and HCPCS
code G0405 replace predecessor HCPCS
code G0366 (Electrocardiogram, routine
ECG with 12 leads; performed as a
component of the initial preventive
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examination with interpretation and
report) and HCPCS code G0368
(Interpretation and report only,
performed as a component of the initial
preventive examination), respectively.
Our instructions in the July 2008 OPPS
quarterly update, Transmittal 1536,
Change Request 6094, issued on June
19, 2008, specify that, in cases where
there are separate codes for the
technical component, professional
component, and/or complete procedure,
hospitals paid under the OPPS should
report the code that represents the
technical component for their facility
services. Therefore, hospitals that are
billing for HOPD services paid under
the OPPS should not report new HCPCS
code G0403 or HCPCS code G0405 for
payment of the screening EKG under the
CY 2009 OPPS, but should instead
report new HCPCS code G0404. The
final CY 2009 median cost of APC 0099
is approximately $26.
D. Reporting of Wound Care Services
Section 1834(k) of the Act, as added
by section 4541 of the BBA, allows
payment at 80 percent of the lesser of
the actual charge for the services or the
applicable fee schedule amount for all
outpatient therapy services; that is,
physical therapy services, speechlanguage pathology services, and
occupational therapy services. As
provided under section 1834(k)(5) of the
Act, we created a therapy code list
based on a uniform coding system (that
is, the HCPCS) to identify and track
these outpatient therapy services paid
under the MPFS. We provide this list of
therapy codes along with their
respective designation in the Medicare
Claims Processing Manual, Pub 100–04,
Chapter 5, Section 20. Two of the
designations that we use in that manual
denote whether the listed therapy code
is an ‘‘always therapy’’ service or a
‘‘sometimes therapy’’ service. We define
an ‘‘always therapy’’ service as a service
that must be performed by a qualified
therapist under a certified therapy plan
of care, and a ‘‘sometimes therapy’’
service as a service that may be
performed by an individual outside of a
certified therapy plan of care. We
provide payment for several ‘‘sometimes
therapy’’ wound care services under
OPPS if they are provided by the
hospital outside of a certified therapy
plan of care.
As added to the OPPS via the MPFS
process, for CY 2009, CPT code 0183T
(Low frequency, non-contact, nonthermal ultrasound, including topical
application(s), when performed, wound
assessment, and instruction(s) for
ongoing care, per day) is newly
designated as a ‘‘sometimes therapy’’
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service. In CY 2009, hospitals will
receive separate payment under the
OPPS when they bill for wound care
services described by CPT code 0183T
that are furnished to hospital
outpatients by individuals independent
of a therapy plan of care. In contrast,
when such services are performed by a
qualified therapist under a certified
therapy plan of care, providers should
attach an appropriate therapy modifier
(that is, ‘‘GP’’ for physical therapy,
‘‘GO’’ for occupational therapy, and
‘‘GN’’ for speech language pathology) or
report their charges under a therapy
revenue code (that is, revenue codes in
the 042x, 043x, or 044x series), or both,
to receive payment under the MPFS. For
CY 2009, the I/OCE logic assigns this
service to APC 0015 (Level III
Debridement & Destruction) for payment
under the OPPS if the service is not
provided under a certified therapy plan
of care or directs contractors to pay
under the MPFS if the service is
identified on a hospital claim with a
therapy modifier or therapy revenue
code as a therapy service.
E. Standardized Cognitive Performance
Testing
Section 1834(k) of the Act, as added
by section 4541 of the BBA, essentially
establishes that payment for all
outpatient therapy services, that is,
physical therapy services, speechlanguage pathology services, and
occupational therapy services be
provided under a fee schedule. As
provided under section 1834(k)(5) of the
Act, we created a therapy code list
based on a uniform coding system (that
is, the HCPCS) to identify and track
these outpatient therapy services paid
under the MPFS. This list of therapy
codes, along with their respective
designation, is set forth in the Medicare
Claims Processing Manual, Pub. 100–04,
Chapter 5, Section 20. Two of the
designations that we use in that manual
denote whether the listed therapy code
is an ‘‘always therapy’’ service or a
‘‘sometimes therapy’’ service. We define
an ‘‘always therapy’’ service as a service
that must be performed by a qualified
therapist under a certified therapy plan
of care, and a ‘‘sometimes therapy’’
service as a service that may be
performed by an individual outside of a
certified therapy plan of care.
CPT code 96125 (Standardized
cognitive performance testing (eg, Ross
Information Processing Assessment) per
hour of a qualified health care
professional’s time, both face-to-face
time administering tests to the patient
and time interpreting these test results
and preparing the report) was a new
CPT code effective January 1, 2008, and
was assigned status indicator ‘‘A’’ in the
CY 2008 OPPS/ASC final rule with
comment period because it is designated
as an ‘‘always’’ therapy service under
the MPFS. When CPT code 96125 is
reported by a hospital, the hospital
should attach an appropriate therapy
modifier (that is, ‘‘GP’’ for physical
therapy, ‘‘GO’’ for occupational therapy,
and ‘‘GN’’ for speech language
pathology), as noted in the Medicare
Claims Processing Manual, Pub. 100–04,
Chapter 5, Section 20, and the hospital
will receive payment for the service
under the MPFS.
Comment: One commenter who
addressed our CY 2008 interim
assignment of CPT code 96125 asked
why this CPT code was assigned status
indicator ‘‘A,’’ while many other central
nervous system assessments and tests
were assigned status indicator ‘‘Q’’ for
the CY 2008 OPPS.
Response: CPT code 96125 is
correctly assigned status indicator ‘‘A’’
because it is designated as an ‘‘always
therapy’’ service, as described earlier.
The other similar central nervous
system assessments and tests are not
designated as ‘‘always therapy’’ services
codes and, therefore, are assigned other
appropriate status indicators.
After consideration of the public
comment received, we are finalizing the
CY 2008 interim assignment of status
indicator ‘‘A’’ to CPT code 96125 which
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is designated as an ‘‘always therapy’’
service. When reported appropriately by
hospitals as a therapy service, CPT code
96125 will be paid under the MPFS.
XIII. OPPS Payment Status and
Comment Indicators
A. OPPS Payment Status Indicator
Definitions
The OPPS payment status indicators
(SIs) that we assign to HCPCS codes and
APCs play an important role in
determining payment for services under
the OPPS. They indicate whether a
service represented by a HCPCS code is
payable under the OPPS or another
payment system and also whether
particular OPPS policies apply to the
code. Our CY 2009 status indicator
assignments for APCs and HCPCS codes
are shown in Addendum A and
Addendum B, respectively, to this final
rule with comment period. As we
proposed in the CY 2009 OPPS/ASC
proposed rule (73 FR 41520), in this
final rule with comment period, we are
using the status indicators that were
listed in Addendum D1 to the proposed
rule, which we discuss below in greater
detail. We have made several
modifications to the information
included in the two columns labeled
Item/Code/Service and OPPS Payment
Status as displayed in the tables below
for this final rule with comment period
in response to public comments and to
reflect implementation of certain
provisions of Public Law 110–275
applicable to services paid under the
OPPS in CY 2009.
1. Payment Status Indicators To
Designate Services That Are Paid under
the OPPS
We proposed several changes to these
status indicators for the CY 2009 OPPS,
and the Item/Code/Service and OPPS
Payment Status columns listed in the
table below reflect further modifications
based on the provisions of Public Law
110–275 for CY 2009.
Indicator
Item/code/service
OPPS Payment status
G ...............................................
H ................................................
Pass-Through Drugs and Biologicals ..............
(1) Pass-Through Device Categories ..............
(1) Paid under OPPS; separate APC payment.
(1) Separate cost-based pass-through payment; not subject
to copayment.
(2) Separate cost-based nonpass-through payment; subject to
copayment.
Paid under OPPS; separate APC payment.
Paid under OPPS; payment is packaged into payment for
other services.
Therefore, there is no separate APC payment.
Paid under OPPS; per diem APC payment.
Paid under OPPS; Addendum B displays APC assignments
when services are separately payable.
(2) Therapeutic Radiopharmaceuticals ............
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K ................................................
N ................................................
Nonpass-Through Drugs and Biologicals ........
Items and Services Packaged into APC Rates
P ................................................
Q1 .............................................
Partial Hospitalization .......................................
STVX-Packaged Codes ...................................
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Indicator
Item/code/service
OPPS Payment status
Q2 .............................................
T-Packaged Codes ..........................................
Q3 .............................................
Codes that may be paid through a composite
APC.
R ................................................
S ................................................
Blood and Blood Products ...............................
Significant Procedure, Not Discounted when
Multiple.
Significant Procedure, Multiple Reduction Applies.
Brachytherapy Sources ....................................
Clinic or Emergency Department Visit .............
Ancillary Services .............................................
(1) Packaged APC payment if billed on the same date of
service as a HCPCS code assigned status indicator ‘‘S,’’
‘‘T,’’ ‘‘V,’’ or ‘‘X.’’
(2) In all other circumstances, payment is made through a
separate APC payment.
Paid under OPPS; Addendum B displays APC assignments
when services are separately payable.
(1) Packaged APC payment if billed on the same date of
service as a HCPCS code assigned status indicator ‘‘T.’’
(2) In all other circumstances, payment is made through a
separate APC payment.
Paid under OPPS; Addendum B displays APC assignments
when services are separately payable.
Addendum M displays composite APC assignments when
codes are paid through a composite APC.
(1) Composite APC payment based on OPPS composite-specific payment criteria. Payment is packaged into a single
payment for specific combinations of service.
(2) In all other circumstances, payment is made through a
separate APC payment or packaged into payment for other
services.
Paid under OPPS; separate APC payment.
Paid under OPPS; separate APC payment.
Paid under OPPS; separate APC payment.
T ................................................
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U ................................................
V ................................................
X ................................................
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41521), we proposed to
replace current status indicator ‘‘Q’’
with three new separate status
indicators: ‘‘Q1,’’ ‘‘Q2,’’ and ‘‘Q3’’ for
CY 2009. We proposed that status
indicator ‘‘Q1’’ would be assigned to all
‘‘STVX-packaged codes,’’ status
indicator ‘‘Q2’’ would be assigned to all
‘‘T-packaged codes;’’ and status
indicator ‘‘Q3’’ would be assigned to all
codes that may be paid through a
composite APC based on compositespecific criteria or separately through
single code APCs when the criteria are
not met. We believe this proposed
change to establish new status
indicators ‘‘Q1,’’ ‘‘Q2,’’ and ‘‘Q3’’ would
make our policies more transparent to
hospitals and would facilitate the use of
status indicator-driven logic in our
ratesetting calculations, and in hospital
billing and accounting systems.
For CY 2009, we also proposed to use
new payment status indicator ‘‘R’’ for all
blood and blood product APCs and to
use new payment status indicator ‘‘U’’
for brachytherapy source APCs.
Nonpass-through drugs and biologicals
which do not require a conversion factor
to calculate their payment rates would
continue to be assigned status indicator
‘‘K.’’ We proposed to create these new
status indicators for blood and blood
products and for brachytherapy sources
to facilitate implementation of the
reduced conversion factor that would
apply to payments to hospitals that are
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Paid under OPPS; separate APC payment.
Paid under OPPS; separate APC payment.
Paid under OPPS; separate APC payment.
required to report quality data but that
fail to meet the established quality data
reporting standards.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41521), we noted our belief
that this proposal was necessary to
continue the final CY 2008 policies of
setting prospective payment rates for
brachytherapy sources and blood and
blood products calculated as the
product of scaled relative weights and
the conversion factor. Under our CY
2009 proposal, payment for blood and
blood products and brachytherapy
sources would have been subject to the
reduced market basket conversion factor
for hospitals that failed to meet the
requirements of the HOP QDRP, while
separately payable nonpass-through
drugs and biologicals would not have
been paid based on the conversion
factor. We would have been unable to
use status indicator ‘‘K’’ alone to
indicate application of the reduced
conversion factor to payment for the
appropriate products if we continued to
assign status indicator ‘‘K’’ to all of
these items. Section XVI. of this final
rule with comment period provides a
full discussion of the requirements of
the HOP QRDP and the reduced market
basket conversion factor that will apply
to payment for specific services when
hospitals for which the reporting is
required fail to meet the reporting
standards.
Subsequent to issuance of the CY
2009 OPPS/ASC proposed rule, Public
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Law 110–275 was enacted on July 15,
2008. Section 142 of Public Law 110–
275 requires CMS to continue to pay for
brachytherapy sources and therapeutic
radiopharmaceuticals for the period of
July 1, 2008 through December 31, 2009,
at hospitals’ charges adjusted to the
costs, a methodology that is different
from the approaches we proposed for
these items in CY 2009. We have
continued to assign status indicator ‘‘H’’
to brachytherapy sources for July 1,
2008 through December 1, 2008, to
ensure appropriate payment for these
items. Moreover, we are not adopting
the proposed prospective payment for
brachytherapy sources and therapeutic
radiopharmaceuticals, and we are not
assigning status indicator ‘‘K’’ to
therapeutic radiopharmaceuticals for CY
2009, as proposed. For this final rule
with comment period, we have
modified our proposed definition of
status indicator ‘‘K’’ to include only
nonpass-through drugs and biologicals
and, in parallel fashion, we have
modified our proposed definition of
status indicator ‘‘H’’ to include
therapeutic radiopharmaceuticals for CY
2009. We note that beneficiary
copayment does apply to payment for
therapeutic radiopharmaceuticals
assigned status indicator ‘‘H,’’ although
pass-through device category, also
assigned status indicator ‘‘H,’’ will
continue to have no beneficiary
copayment applied. The national
unadjusted copayment or minimum
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unadjusted copayment, as applicable,
applies to all APC payments for OPPS
services unless there is a statutory
exception. There is no statutory
exception for payment of therapeutic
radiopharmaceuticals and, therefore,
copayment applies to these products in
CY 2009. However, where additional
pass-through payment is made for a
device category or drug that has passthrough status, section 1833(t)(8)(E) of
the Act requires that the copayment for
the device category or drug furnished be
calculated as though the additional
pass-through payment had not been
made. Therefore, there is no copayment
for the additional pass-through payment
for a device category with OPPS passthrough status. The OPPS PRICER
would continue to ensure that no
copayment would be assigned for passthrough device categories that may be
approved for CY 2009.
CY 2009 payment for therapeutic
radiopharmaceuticals, to which the
reduced market basket conversion factor
does not apply, is discussed in detail in
section V.B.4. of this final rule with
comment period. The payment
methodology for brachytherapy sources
specified by section 142 of Public Law
110–275 requires no changes to our
proposed definition of status indicator
‘‘U’’ for brachytherapy sources because
the definition only indicated that
separate payment would be made,
without specifying the payment
methodology. CY 2009 payment for
brachytherapy sources, to which the
reduced market basket conversion factor
does not apply, is discussed in detail in
section VII. of this final rule with
comment period.
Comment: Several commenters
supported the proposed assignment of a
separate status indicator to blood and
blood products and encouraged CMS to
make status indicator ‘‘R’’ final.
Response: We appreciate the
commenters’ support of status indicator
‘‘R.’’ New status indicator ‘‘R’’ for blood
and blood products was created in order
to facilitate implementation of the
reduced market basket conversion factor
that applies to payments to hospitals
that are required to report quality data
but fail to meet the established quality
reporting standards. This reduced
conversion factor applies to CY 2009
payment for blood and blood products,
as further discussed in section XVI.D.2.
of this final rule with comment period.
Comment: Several commenters
supported the proposal to refine status
indicator ‘‘Q’’ by creating three related
status indicators: ‘‘Q1,’’ ‘‘Q2,’’ and
‘‘Q3.’’ These commenters stated that
these changes would allow providers to
quickly and easily isolate HCPCS codes
that are packaged for different reasons.
68709
Commenters believed that the creation
of status indicators ‘‘Q1,’’ ‘‘Q2,’’ and
‘‘Q3’’ make the conditionally packaged
payment policy for each HCPCS code
more transparent and urged CMS to
finalize this proposal.
Response: We appreciate the
commenters’ support regarding the
development and use of status
indicators ‘‘Q1,’’ ‘‘Q2,’’ and ‘‘Q3’’ to
identify different types of conditionally
packaged services. We continue to
believe that these refinements are
helpful in identifying the packaging
rationale for different HCPCS codes
under the OPPS.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal for status
indicators to designate services payable
under the OPPS, with modification to
take into consideration provisions of
Public Law 110–275 for CY 2009. The
final status indicators and their
descriptions are displayed in the table
above, as well as in Addendum D1 to
this final rule with comment period.
2. Payment Status Indicators To
Designate Services That Are Paid Under
a Payment System Other Than the OPPS
We did not propose any changes to
the status indicators as listed below for
the CY 2009 OPPS.
Indicator
Item/code/service
OPPS Payment status
A ......................................................
Services furnished to a hospital outpatient that are
paid under a fee schedule or payment system
other than OPPS, for example:
• Ambulance Services ..............................................
• Clinical Diagnostic Laboratory Services ................
• Non-Implantable Prosthetic and Orthotic Devices
• EPO for ESRD Patients .........................................
• Physical, Occupational, and Speech Therapy .......
• Routine Dialysis Services for ESRD Patients Provided in a Certified Dialysis Unit of a Hospital.
• Diagnostic Mammography .....................................
• Screening Mammography ......................................
Inpatient Procedures .................................................
Not paid under OPPS. Paid by fiscal intermediaries/
MACs under a fee schedule or payment system
other than OPPS.
C ......................................................
F ......................................................
L ......................................................
M .....................................................
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Y ......................................................
Corneal Tissue Acquisition; Certain CRNA Services;
and Hepatitis B Vaccines.
Influenza Vaccine; Pneumococcal Pneumonia Vaccine.
Items and Services Not Billable to the Fiscal Intermediary/MAC.
Non-Implantable Durable Medical Equipment ...........
We did not receive any public
comments regarding the status
indicators that designate services paid
under a payment system other than the
OPPS. Therefore, we are finalizing our
CY 2009 proposal, without
modification. The final status indicators
are displayed in the table above, as well
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as in Addendum D1 to this final rule
with comment period.
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Not subject to deductible or coinsurance.
Not subject to deductible.
Not paid under OPPS. Admit patient. Bill as inpatient.
Not paid under OPPS. Paid at reasonable cost.
Not paid under OPPS. Paid at reasonable cost; not
subject to deductible or coinsurance.
Not paid under OPPS.
Not paid under OPPS. All institutional providers
other than home health agencies bill to DMERC.
3. Payment Status Indicators To
Designate Services That Are Not
Recognized Under the OPPS But That
May Be Recognized by Other
Institutional Providers
We did not propose any changes to
the status indicators listed below for the
CY 2009 OPPS.
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Indicator
Item/code/service
B ......................................................
Codes that are not recognized by OPPS when submitted on an outpatient hospital Part B bill type
(12x and13x).
We did not receive any public
comments regarding the status
indicators that designate services that
are not recognized under the OPPS but
that may be recognized for payment to
other institutional providers. Therefore,
we are finalizing our CY 2009 proposal,
without modification. The final status
OPPS Payment status
Not paid under OPPS.
• May be paid by fiscal intermediaries/MACs when
submitted on a different bill type, for example, 75x
(CORF), but not paid under OPPS.
• An alternate code that is recognized by OPPS
when submitted on an outpatient hospital Part B
bill type (12x and 13x) may be available.
indicators are displayed in the table
above, as well as in Addendum D1 to
this final rule with comment period.
4. Payment Status Indicators To
Designate Services That Are Not Payable
by Medicare on Outpatient Claims
We did not propose any changes to
these status indicators for the CY 2009
OPPS, but the Item/code/service and
OPPS Payment status columns for status
indicator ‘‘E’’ listed in this table below
reflect modifications in response to
public comments.
Indicator
Item/code/service
OPPS Payment status
D ......................................................
Discontinued Codes ..................................................
E ......................................................
Items, Codes, and Services: .....................................
Not paid under OPPS or any other Medicare payment system.
Not paid by Medicare when submitted on outpatient
claims (any outpatient bill type).
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• That are not covered by any Medicare outpatient
benefit based on statutory exclusion.
• That are not covered by any Medicare outpatient
benefit for reasons other than statutory exclusion.
• That are not recognized by Medicare for outpatient claims; alternate code for the same item
or service may be available.
• For which separate payment is not provided on
outpatient claims.
Comment: Several commenters
observed that as the Medicare program
has evolved to incorporate other
benefits, such as payment for
prescription drugs under Medicare Part
D, the historical definition of status
indicator ‘‘E,’’ specifically that these
items and services are not paid under
the OPPS or any other Medicare
payment system, is no longer accurate.
Response: We appreciate the
commenters’ concern and have clarified
the definition of status indicator ‘‘E’’ in
the table above to indicate more
precisely that status indicator ‘‘E’’
designates items and services that are
not payable when submitted on
outpatient claims of any bill type. We
have also clarified that these items and
services are not covered by the Medicare
outpatient benefit, in recognition that
they may be covered under some
circumstances under other benefits of
the Medicare program.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal for payment
status indicators to designate services
that are not payable by Medicare for
outpatient claims, with modification to
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clarify that status indicator ‘‘E’’
indicates no payment for outpatient
claims, rather than no payment under
any Medicare benefit. The final status
indicators are displayed in the table
above, as well as in Addendum D1 to
this final rule with comment period.
To address providers’ broader
interests and to make the published
Addendum B more convenient for
public use, we are displaying in
Addendum B to this final rule with
comment period all active HCPCS codes
for CY 2009 and currently active HCPCS
codes that will be discontinued at the
end of CY 2008 that describe items and
services that are: (1) Payable under the
OPPS; (2) paid under a payment system
other than the OPPS; (3) not recognized
under the OPPS but that may be
recognized by other institutional
providers; and (4) not payable by
Medicare. The universe of CY 2009
status indicators that we are finalizing
for these items and services are listed in
the tables above and in Addendum D1
to this final rule with comment period.
Addendum B, with a complete listing
of HCPCS codes that includes their
payment status indicators and APC
PO 00000
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assignments for CY 2009, is available
electronically on the CMS Web site
under supporting documentation for
this final rule with comment period at:
https://www.cms.hhs.gov/
HospitalOutpatientPPS/HORD/
list.asp#TopOfPage
B. Comment Indicator Definitions
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41522), we proposed to use
for the CY 2009 OPPS the two comment
indicators that are in effect for the CY
2008 OPPS. These two comment
indicators are listed below.
• ‘‘CH’’—Active HCPCS codes in
current and next calendar year; status
indicator and/or APC assignment have
changed or active HCPCS code that will
be discontinued at the end of the
current calendar year.
• ‘‘NI’’—New code, interim APC
assignment; Comments will be accepted
on the interim APC assignment for the
new code.
Except as discussed below with
regard to services to which we have
assigned status indicators ‘‘R,’’ ‘‘Q1,’’
‘‘Q2,’’ ‘‘Q3,’’ and ‘‘U,’’ we proposed to
use the ‘‘CH’’ comment indicator in this
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final rule with comment period to
indicate HCPCS codes for which the
status indicator or APC assignment, or
both, will change in CY 2009 compared
to their assignment as of December 31,
2008.
As was proposed, we are using the
‘‘CH’’ indicator in this CY 2009 OPPS/
ASC final rule with comment period to
call attention to changes in the payment
status indicator and/or APC assignment
for HCPCS codes for CY 2009 compared
to their assignment as of December 31,
2008. We believe that use of the ‘‘CH’’
indicator in the CY 2009 OPPS/ASC
final rule with comment period will
facilitate the public’s review of the
changes that we are finalizing for CY
2009. The use of the comment indicator
‘‘CH’’ in association with a composite
APC indicates that the configuration of
the composite APC is changed in this
CY 2009 OPPS/ASC final rule with
comment period.
‘‘STVX-packaged codes,’’ ‘‘Tpackaged codes,’’ and other HCPCS
codes that could be paid through a
composite APC with final CY 2009
changes in status indicator assignments
from ‘‘Q’’ to ‘‘Q1,’’ from ‘‘Q’’ to ‘‘Q2,’’
and from ‘‘Q’’ to ‘‘Q3,’’ as well as
HCPCS codes for blood and blood
products and for brachytherapy sources
with final CY 2009 changes in status
indicator assignments from ‘‘K’’ to ‘‘R’’
and from ‘‘H’’ to ‘‘U,’’ respectively, are
not flagged with comment indicator
‘‘CH’’ in Addendum B to this final rule
with comment period. As noted in the
CY 2009 OPPS/ASC proposed rule (73
FR 41522), these changes in status
indicators are to facilitate policy
transparency and operational logic
rather than to reflect changes in OPPS
payment policy for these services, so we
believe that identifying these HCPCS
codes with ‘‘CH’’ could be confusing to
the public.
As was proposed, we are continuing
our policy of using comment indicator
‘‘NI’’ in this CY 2009 OPPS/ASC final
rule with comment period. Only HCPCS
codes with comment indicator ‘‘NI’’ in
this CY 2009 OPPS/ASC final rule with
comment period are subject to
comment. HCPCS codes that do not
appear with comment indicator ‘‘NI’’ in
this CY 2009 OPPS/ASC final rule with
comment period are not open to public
comment, unless we specifically have
requested additional comments
elsewhere in this final rule with
comment period. The CY 2009
treatment of HCPCS codes that appear
in this CY 2009 OPPS/ASC final rule
with comment period to which
comment indicator ‘‘NI’’ is not
appended was open to public comment
during the comment period for the CY
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2009 OPPS/ASC proposed rule, and we
are responding to those comments in
this final rule with comment period.
We did not receive any public
comments regarding comment
indicators. Therefore, we are continuing
to use the two comment indicators,
‘‘CH’’ and ‘‘NI,’’ for CY 2009 and their
definitions are listed in Addendum D2
to this final rule with comment period.
implementation of the reduced
conversion factor that will apply to
hospitals that fail their quality reporting
requirements for the CY 2009 OPPS are
discussed in detail in section XVI.D.2.
of this final rule with comment period.
This full MedPAC report can be
downloaded from MedPAC’s Web site
at: https://www.medpac.gov/documents/
Mar08_EntireReport.pdf.
XIV. OPPS Policy and Payment
Recommendations
2. June 2007 Report
In its June 2007 ‘‘Report to the
Congress: Promoting Greater Efficiency
in Medicare,’’ MedPAC included
analysis and recommendations on
alternatives to the current method for
computing the IPPS wage index for FY
2009. (We refer readers to Chapter 6 of
the June 2007 MedPAC report to
Congress.) In accordance with our
established policy, under the OPPS we
adopt the IPPS wage indices to adjust
the OPPS standard payment amounts for
labor market differences. Therefore,
MedPAC’s analysis and
recommendations have implications for
the CY 2009 OPPS. We considered
MedPAC’s recommendations and
analysis in making a proposal to revise
the IPPS wage indices in the FY 2009
IPPS proposed rule (73 FR 23617
through 23623), as required by section
106(b)(2) of the MIEA–TRHCA, and we
briefly highlighted the CMS contractor’s
comparative and impact analyses of the
MedPAC and CMS wage indices and the
public comments received regarding the
recommendations in the FY 2009 IPPS
final rule (73 FR 48564 through 48567).
In section II.C. of this final rule with
comment period, we discuss changes to
the wage index related to the MedPAC
recommendations that were adopted in
the FY 2009 IPPS final rule and our
application of these changes to the wage
index for the CY 2009 OPPS.
This full MedPAC report can be
downloaded from MedPAC’s Web site
at: https://www.medpac.gov/documents/
Jun07_EntireReport.pdf.
A. Medicare Payment Advisory
Commission (MedPAC)
Recommendations
MedPAC was established under
section 1805 of the Act to advise the
U.S. Congress on issues affecting the
Medicare program. As required under
the statute, MedPAC submits reports to
Congress not later than March and June
of each year that present its Medicare
payment policy recommendations. The
following section describes recent
recommendations relevant to the OPPS
that have been made by MedPAC.
1. March 2008 Report
The March 2008 MedPAC ‘‘Report to
Congress: Medicare Payment Policy’’
included the following recommendation
relating specifically to the Medicare
hospital OPPS:
Recommendation 2A–1: The Congress
should increase payment rates for the
acute inpatient and outpatient
prospective payment systems in 2009 by
the projected rate of increase in the
hospital market basket index,
concurrent with implementation of a
quality incentive payment program.
CMS Response: As proposed in the
CY 2009 OPPS/ASC proposed rule (73
FR 41457), in this final rule with
comment period we are increasing the
payment rates for the CY 2009 OPPS by
the projected rate of increase in the
hospital market basket through
adjustment of the full CY 2009
conversion factor. We also are
implementing, effective for CY 2009, the
reduction in the annual update factor by
2.0 percentage points for hospitals that
are defined under section 1886(d)(1)(B)
of the Act and that do not meet the
hospital outpatient quality data
reporting required by section 1833(t)(17)
of the Act, as added by section 109(a)
of the MIEA–TRHCA (Pub. L. 109–432).
Specifically, we have calculated two
conversion factors: A full conversion
factor based on the full hospital market
basket increase and a reduced
conversion factor that reflects the 2.0
percentage point reduction to the
market basket. Our update of the
conversion factor and our adoption and
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B. APC Panel Recommendations
Recommendations made by the APC
Panel at its March 2008 and August
2008 meetings are discussed in sections
of this final rule with comment period
that correspond to topics addressed by
the APC Panel. The report and
recommendations from the APC Panel’s
March 5–6, 2008 and August 27–28,
2008 meetings are available on the CMS
Web site at: https://www.cms.hhs.gov/
FACA/05_AdvisoryPanelonAmbulatory
PaymentClassificationGroups.asp.
C. OIG Recommendations
The mission of the OIG, as mandated
by Public Law 95–452, as amended, is
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to protect the integrity of the U.S.
Department of Health and Human
Services (HHS) programs, as well as the
health and welfare of beneficiaries
served by those programs. This statutory
mission is carried out through a
nationwide network of audits,
investigations, and inspections. In June
2007, the OIG released a report, entitled
‘‘Impact of Not Retroactively Adjusting
Outpatient Outlier Payments,’’ that
described the OIG’s research into
sources of error in CMHC outlier
payments. The OIG report included the
following two recommendations related
specifically to the hospital OPPS under
which payment is made for outpatient
services provided by CMHCs.
Recommendation 1: The OIG
recommended that CMS require
adjustments of outpatient outlier
payments at final cost report settlement,
retroactive to the beginning of the cost
report period.
CMS Response: We have been
proactive in addressing this issue for
partial hospitalization prospective
payment by designating a unique outlier
threshold for CMHCs beginning in CY
2004. As discussed in the CY 2007
OPPS/ASC final rule with comment
period (71 FR 68002 through 68003),
differences in total CMHC outlier
payments between CY 2004 and CY
2005 demonstrate that designating a
separate threshold has successfully
restrained CMHC outlier payments.
Moreover, until the CY 2005
implementation of a fixed-dollar outlier
threshold for most other hospital
outpatient services that concentrates
outlier payments on costly and complex
services, we did not believe it would be
cost-effective to pursue adjustments of
outlier payments for all of the OPPS.
However, in addition to the unique
outlier threshold for CMHCs that we
have recently adopted to address
excessive CMHC outlier payments, we
proposed to provide for reconciliation of
outlier payments under the OPPS at
final cost report settlement as
recommended by the OIG, beginning in
CY 2009. We discuss our final policy to
reconcile outlier payments, beginning in
CY 2009, in more detail in section II.F.3.
of this final rule with comment period.
Recommendation 2: The OIG
recommended that CMS require
retroactive adjustments of outpatient
outlier payments when an error caused
by the fiscal intermediary or provider is
identified after the cost report is settled.
CMS Response: We note that the
OIG’s findings were based largely on
information from the OPPS’ early
implementation period, between CY
2000 and CY 2003. We believe we have
taken several steps since that time in
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order to improve the accuracy and
frequency of the Medicare contractors’
CCR calculations, including updating
our instructions for calculating CCRs,
increasing the frequency of CCR
calculation, and conducting an annual
review of CMHC CCRs. However, in
light of this OIG recommendation, for
the CY 2009 OPPS, we also proposed to
provide for reconciliation of outlier
payments under the OPPS. We discuss
our final policy to reconcile outlier
payments in more detail in section
II.F.3. of this final rule with comment
period.
XV. Ambulatory Surgical Centers:
Updates and Revisions to the
Ambulatory Surgical Center Conditions
for Coverage and Updates to the
Revised Ambulatory Surgical Center
Payment System
A. Legislative and Regulatory Authority
for the ASC Conditions for Coverage
As the single largest payer for health
care services in the United States, the
Federal Government assumes a critical
responsibility for the quality of care
furnished under its programs.
Historically, the Medicare program’s
quality assurance approach was focused
on identifying health care entities that
furnished poor quality care or that failed
to meet minimum Federal standards.
Overall, we found that this problemfocused approach had inherent
limitations and did not necessarily
translate into better care for patients.
Ensuring quality through the
enforcement of prescriptive health and
safety standards alone has resulted in us
expending many of our resources on
working with marginal providers, rather
than stimulating broad-based
improvements in quality of care.
Section 1832(a)(2)(F)(i) of the Act
provides that benefits under Medicare
Part B include payment for facility
services furnished in connection with
surgical procedures specified by the
Secretary that are performed in an ASC.
To participate in the Medicare program
as an ASC, a facility must meet health,
safety, and other requirements under the
statutory authority of section
1832(a)(2)(F)(i) of the Act. The
substantive requirements are set forth in
42 CFR Part 416, Subpart B and Subpart
C of our regulations. The regulations at
42 CFR Part 416, Subpart B describe the
general conditions and requirements for
ASCs, and the regulations at 42 CFR
Part 416, Subpart C specify the
conditions for coverage (CfCs) for ASCs.
The Secretary is responsible for
ensuring that the CfCs and their
enforcement are adequate to protect the
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health and safety of individuals treated
by ASCs.
To implement the CfCs, we determine
compliance through State survey
agencies or accreditation organizations
that conduct onsite inspections utilizing
these requirements. In order to
participate in the Medicare program,
ASCs must meet Medicare standards as
determined by a State agency or by a
national accrediting organization
approved by the Secretary and whose
standards meet or exceed the CfCs.
Currently, there are four national
accreditation organizations that are
approved by the Secretary:
• The Joint Commission;
• The American Association for
Accreditation of Ambulatory Surgical
Facilities (AAAASF);
• The Accreditation Association for
Ambulatory Health Care (AAAHC); and
• The American Osteopathic
Association (AOA).
With respect to payment for surgical
procedures performed in a Medicarecertified ASC, there are two primary
elements to the total cost of performing
a surgical procedure: (a) The cost of the
physician’s professional services to
perform the procedure; and (b) the cost
of items and services furnished by the
facility where the procedure is
performed (for example, surgical
supplies, equipment, and nursing
services). Payment for the first element
is made under the Medicare Physician
Fee Schedule (MPFS). We address the
second element, payment for the cost of
items and services furnished by the
facility, in sections XV.C. through XV.F.
of this document.
B. Updates and Revisions to the ASC
Conditions for Coverage
1. Background
On August 31, 2007, we published a
proposed rule in the Federal Register
entitled ‘‘Medicare and Medicaid
Programs; Ambulatory Surgical Centers,
Conditions for Coverage’’ (72 FR 50470).
In that proposed rule, we proposed to
revise the definitions of certain terms
used in the ASC CfCs set forth in § 416.2
and some of the existing specific CfCs
pertaining to the ASC governing body
and management, evaluation of quality,
and laboratory and radiologic services,
which are set forth in §§ 416.41, 416.43,
and 416.49, respectively, to reflect
current ASC practices. In addition, we
proposed to add several new CfCs on
patient rights, infection control, and
patient admission, assessment, and
discharge to promote and protect patient
health and safety.
The current ASC CfCs were originally
published on August 5, 1982 (47 FR
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34082), and, for the most part, these
regulations have remained unchanged
since that time. From 1990 to 2000, the
number of ASCs participating in the
Medicare program has increased at a
rate of about 175 facilities a year. The
total number of ASCs more than
doubled from 1,197 to 2,966 during this
10-year period, making ASCs one of the
fastest growing facility types in the
Medicare program. The annual volume
of procedures performed on both
Medicare and non-Medicare patients
has tripled.
Currently, over 5,100 ASCs
participate in the Medicare program.1
This growth is due in part to advances
in medical technology that allow
additional surgical procedures to be
safely performed outside of a hospital
setting. This shift has paved the way for
increasing numbers of procedures to be
performed in an ASC. The changes we
proposed are more aligned with today’s
ASC health care industry standards.
In addition, HHS’ health care
information transparency initiative
(discussed more fully in the CY 2007
OPPS/ASC final rule with comment
period (71 FR 67960)) gives consumers
what we believe to be accessible and
useful information on the price and
quality of health care items and services
so that they can more meaningfully
exercise choices in selecting health care.
In support of this initiative, in August
2006, we announced the release of
Medicare payment information for 61
procedures performed in ASCs. This
information is available on the CMS
Web site at: https://www.cms.hhs.gov/
HealthCareConInit/ and will assist
patients undergoing surgical procedures
to select the most appropriate setting for
the delivery of high quality, efficient
care. The information shows
‘‘Commonly Performed Procedures in
ASCs’’ and contains ASC charges and
Medicare payment data for ASC facility
costs for a limited number of services
administered in States and counties.
The data are broken down at the county,
State, and national level. Moreover, the
CMS Web site at https://
www.cms.hhs.gov/center/
ombudsman.asp is available to the
public and ASC patients to get
information about the Medicare and
Medicaid programs, prescription drug
coverage, and how to coordinate
Medicare benefits with other health
insurance programs. The Web site also
1 Only comprehensive rehabilitation facilities and
rural health clinics have experienced a higher rate
of growth. Office of Evaluations and Inspections
(OEI) analysis of Part B Medicare data. See Office
of Inspector General Quality Oversight of
Ambulatory Surgical Centers Supplemental Report
1: The Role of Certification and Accreditation.
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includes information about filing a
grievance or complaint.
Section 109(b) of the MEIA–TRHCA
(Pub. L. 109–432) amended section
1833(i) of the Act to authorize the
Secretary to develop measures that are
appropriate to determine the
measurement of quality care (including
medication errors) furnished by ASCs
that reflect the consensus among
affected parties and to reduce the
annual payment update by 2 percentage
points for any ASC that does not submit
data on quality measures in the form
and manner required by the Secretary.
These measures, to the extent feasible
and practicable, must include measures
set forth by one or more national
consensus building entities (section
1833(t)(17)(C) of the Act). We refer
readers to section XVI.H. of this rule for
a more detailed discussion of these
measures. We expect Medicare
beneficiaries to receive high quality
surgical services and, for that reason, we
proposed a Quality Assessment
Performance Improvement (QAPI)
requirement as a new condition for
coverage (§ 416.43). (We refer readers to
section XV.B.2.b.(2) of this final rule for
a more detailed discussion of the QAPI
provision.)
2. Provisions of the Proposed and Final
Regulations
As stated earlier, the ASC CfCs were
originally issued in 1982. Most of the
revisions made since then have been
payment-related. Since 1982, significant
innovations in ASC patient care
delivery and quality assessment
practices have emerged. In an effort to
ensure continued quality in the ASC
setting, in the 2007 ASC CfCs proposed
rule, we proposed to revise three of the
existing conditions and create three new
conditions. The proposed revised
conditions are: Governing body and
management; Evaluation of quality
(renamed Quality Assessment and
Performance Improvement (QAPI)); and
Laboratory and radiologic services. The
proposed new conditions are: Patient
rights; Infection control, and Patient
admission, assessment, and discharge.
As stated in the 2007 ASC CfCs
proposed rule (72 FR 50470), our
objective is to achieve a balanced
regulatory approach by ensuring that an
ASC furnishes health care to meet
essential health and quality standards,
while ensuring that it monitors and
improves its own performance.
In this section, we discuss the revised
and new ASC requirements that we
proposed, summarize the public
comments received, present our
responses, and set forth our final
policies.
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68713
a. Definitions (§ 416.2)
Existing § 416.2 sets forth definitions
for terms used in the ASC CfCs. We
proposed to revise the definition of
‘‘Ambulatory surgical center’’ or ‘‘ASC.’’
In addition, we proposed to add a
definition for ‘‘overnight stay’’ to
§ 416.2.
We proposed to revise the ASC
definition to read as follows:
Ambulatory surgical center or ASC
means any distinct entity that operates
exclusively for the purpose of providing
surgical services to patients not
requiring an overnight stay following
the surgical services, has an agreement
with CMS to participate in Medicare as
an ASC, and meets the conditions set
forth in subparts B and C of this part
[416].
We proposed to revise the overnight
stay definition to read as follows:
Overnight stay means the patient’s
recovery requires active monitoring by
qualified medical personnel, regardless
of whether it is provided in the ASC,
beyond 11:59 p.m. of the day on which
the surgical procedure was performed.
In the Medicare cost reporting manual
(Provider Reimbursement Manual, Part
1, Section 2205 (Medicare Patient Days,
page 22–16)), we have defined a
hospital inpatient day as beginning at
midnight and ending 24 hours later.
Consistent with this longstanding
policy, we proposed to codify in
regulations that any patient whose
recovery requires active monitoring by
qualified personnel beyond 11:59 p.m.
of the day on which the surgical
procedure was performed, is a patient
who may require hospitalization or
more intensive care. Accordingly, we
proposed that ASCs that are Medicarecertified may not keep patients beyond
11:59 p.m. of the day on which the
surgical procedure was performed.
In the August 2, 2007 final rule that
established the revised ASC payment
system (72 FR 42546), we added in new
§ 416.166(b) that covered surgical
procedures ‘‘would not typically be
expected to require active medical
monitoring and care at midnight
following the procedure.’’ In the CY
2007 OPPS/ASC proposed rule and CY
2007 OPPS/ASC final rule with
comment period (71 FR 49639 and 71
FR 68168, respectively), we addressed
the denial of payment of an ASC facility
fee for any procedure for which
prevailing medical practice dictated that
the beneficiary would typically be
expected to require active medical
monitoring and care at midnight
following the procedure. We also note
that the patient’s location at midnight
was a generally accepted standard for
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determining his or her status as a
hospital inpatient or SNF patient and, as
such, it is reasonable to apply the same
standard in the ASC setting.
Comment: Many commenters
suggested that CMS keep the current
ASC definition as it is currently written.
The commenters believed the proposed
definition was too restrictive. Other
commenters noted that some ASCs
operate on a 24-hour basis and that the
11:59 p.m. cutoff time was not in
keeping with current practice.
Response: After consideration of the
public comments received, we are not
finalizing the proposed definition of
‘‘overnight stay’’ and have revised the
proposed definition of ‘‘ASC’’ to
recognize that the hours of operation of
an ASC have an impact on patient
discharge schedules. In this final rule,
we have defined ‘‘ASC’’ to mean a
‘‘distinct entity that operates exclusively
for the purpose of providing surgical
services to patients not requiring
hospitalization and in which the
expected duration of services would not
exceed twenty-four hours following
admission. The entity must have an
agreement with CMS to participate in
Medicare as an ASC and must meet the
conditions set forth in subparts B and C
of this part [416].’’
Patients admitted to an ASC will be
allowed to stay in the facility for 23
hours and 59 minutes starting at the
time of admission. This policy will
create a 24-hour rolling clock that will
allow ASCs the flexibility to perform
procedures later in the day or to perform
those procedures that require more
lengthy patient recovery times.
In summary, we are finalizing our
proposal, with modification, to revise
the definition of ‘‘ASC’’ at § 416.2 to
state that an ASC means any distinct
entity that operates exclusively for the
purpose of providing surgical services to
‘‘patients not requiring hospitalization
and in which the expected duration of
services would not exceed 24 hours
following an admission,’’ instead of
‘‘patients not requiring an overnight stay
following the surgical services,’’ as
proposed. There may be rare instances
when a Medicare patient is required to
stay beyond 24 hours due to an
unexpected result from a surgery that
would require further monitoring and
care. Such a stay would be unplanned
and the ASC would continue to be
responsible for the patient and provide
care until the patient is stable and able
to be discharged in accordance with the
ASC regulations and facility policy.
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b. Specific Conditions for Coverage
(1) Condition for Coverage: Governing
Body and Management (§ 416.41)
The proposed Governing body and
management CfC was separated into
three standards to more clearly
articulate CMS expectations. We also
proposed two new items: First, the
governing body would have oversight
and be accountable for the quality
assessment and performance
improvement program; and second, the
ASC would be expected to maintain a
written disaster preparedness plan for
the emergency care of patients to
address fire, natural disaster, functional
failure of equipment, or other
unexpected events or circumstances that
are likely to threaten the health and
safety of its patients. The ASC would
coordinate the plan with State and local
agencies and would be responsible for
conducting annual drills, written
evaluations and implementation of any
corrections needed to improve the plan.
Comment: One commenter suggested
the disaster preparedness plan should
only require ASCs to have a plan to
provide for the emergency care of the
ASC’s patients on the premises during
events that threaten their health and
safety.
Response: We disagree with the
commenter. Our intent is for the ASC to
have a disaster preparedness plan in
place to care not only for the facility’s
patients on the premises, but also staff,
and others who may be in the facility
during an emergency if intervention is
needed. We believe that the safety of
others in the facility is not subject to
individual facility decisionmaking.
Therefore, we have revised
§ 416.41(c)(1) accordingly.
Comment: Several commenters were
concerned that the proposed language to
‘‘coordinate’’ the disaster preparedness
plan with State and local agencies could
be interpreted by survey officials as a
requirement to integrate the ASC facility
into State and local disaster relief
efforts. The commenters recommended
that CMS modify the proposed language
and utilize the word ‘‘communicate’’ as
an alternative.
Response: After consideration of the
public comments received, we are
retaining the proposed language at
§ 416.41(c)(2) as final, and are requiring
that ASCs coordinate their disaster
preparedness plan with State and local
authorities. Coordinating the plan with
State and local authorities would assist
in overall planning efforts and would
make known the availability of assets
and capabilities that exist during an
emergency.
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Comment: One commenter expressed
support for the requirement that the
ASC conduct disaster preparedness
drills. However, the commenter
believed that to require an ASC to
‘‘immediately implement any
corrections’’ would be unrealistic.
Response: We agree that an overly
literal interpretation of the phrase
‘‘immediately implement any
corrections’’ located at proposed
§ 416.41(c)(3) could be problematic.
However, we continue to believe an
inordinate delay in addressing concerns
with the disaster preparedness plan
would not be beneficial. In response to
the public comment, in this final rule,
we have changed § 416.41(c)(3) to read,
‘‘The ASC conducts drills, at least
annually, to test the plan’s effectiveness.
The ASC must complete a written
evaluation of each drill and promptly
implement any corrections to the plan.’’
We believe this change will provide an
appropriate balance between urgency of
correction and thoughtful planning.
Comment: One commenter stated that
the reference to a ‘‘local’’ Medicareparticipating or nonparticipating
hospital in proposed § 416.41(b)(2) is
too vague and suggested an alternate
definition.
Response: We understand there have
been problems in the past related to the
definition of ‘‘local’’ when referring to
the requirement that ASCs must have an
effective procedure for the immediate
transfer to a local Medicareparticipating hospital or a local
nonparticipating hospital. We
specifically addressed this issue in the
ASC CfCs proposed rule and are
reiterating our position here. The
definition of local hospital would
require the ASC to consider the most
appropriate facility to which the ASC
would transport its patients in the event
of an emergency. If the closest hospital
could not accommodate the patient
population or the predominant medical
emergencies associated with the types of
surgeries performed by the ASC, a more
distant hospital might also meet the
‘‘local’’ definition. In this case, transfer
to the more distant hospital would be
appropriate. However, under normal
circumstances, the ASC would be
required to transfer patients to the
nearest, most appropriate local hospital,
as transfer to a more distant hospital
could affect patient health.
After consideration of the public
comments received, we are finalizing
the proposed revisions to § 416.41 with
the following modifications.
In § 416.41(c)(1) of this final rule, we
have revised the proposed language to
state that the ASC must maintain a
written disaster preparedness plan that
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provides for the emergency care of
patients, staff, and others in the facility
in the event of fire, natural disaster,
functional failure of equipment, or other
unexpected events or circumstances that
are likely to threaten ‘‘the health and
safety of those in the ASC’’ instead of
the ‘‘health and safety of its patients’’ as
proposed.
In § 416.41(c)(3) of this final rule, we
have revised the proposed language to
state that when the ASC conducts drills,
at least annually, to test the disaster
preparedness plan’s effectiveness, the
ASC must complete a written evaluation
of each drill and ‘‘promptly’’ implement
any corrections to the plan, instead of
‘‘immediately’’ as proposed. (2)
Condition for Coverage: Quality
Assessment and Performance
Improvement (QAPI) (§ 416.43)
The existing § 416.43, ‘‘Condition for
coverage: Evaluation of quality,’’ relies
on a reactive problem-oriented approach
to identify and resolve patient care
issues. Failure to meet this requirement
has consistently been one of the top 10
deficiencies cited by Medicare
surveyors nationwide.
During the last decade, the health care
industry has moved beyond the
problem-oriented, after-the-fact,
corrective approach of quality assurance
to an approach that focuses on a
proactive, preemptive plan that
continuously addresses quality
improvement. We proposed that each
ASC would develop, implement, and
maintain an effective, continuous
quality assessment and performance
improvement program that stimulates it
to constantly monitor and improve its
own performance, and to be responsive
to the needs, desires, and satisfaction
levels of the patients and families it
serves. The desired outcome of this
proposed requirement would be that an
ASC improve its provision of services
by proactively implementing its own
quality improvement activities. With an
effective quality assessment and
performance improvement program in
place and operating properly, an ASC
would be able to prevent the adverse
affects of care by identifying the
activities that lead to poor patient
outcomes. Therefore, an ASC would be
free to develop its own individualized
program. As proposed, an ASC’s QAPI
program would not be judged against a
specific model.
The proposed QAPI requirement was
divided into five standards. Under
standard § 416.43(a), ‘‘Program scope,’’
an ASC’s quality assessment and
performance improvement program
would include, but not be limited to, an
ongoing program that would be able to
show measurable improvement in
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indicators that were associated with
improved health outcomes and with the
identification and reduction of medical
errors. We expect that an ASC would
use standards of care and the findings
made available in current literature to
select indicators to monitor its program.
The ASC would measure, analyze, and
track these quality indicators, including
areas such as adverse patient events,
infection control and other aspects of
performance that include processes of
care and services furnished in the ASC.
(‘‘Adverse patient events,’’ as used in
the field, generally refer to occurrences
that are harmful or contrary to the
targeted patient outcomes.)
The second proposed standard at
§ 416.43(b), ‘‘Program data,’’ would
require the ASC program to incorporate
quality indicator data into its QAPI
program, including patient care and
other relevant data regarding services
furnished in the ASC. We did not
propose to require that ASCs use any
particular process or outcome measures.
Proposed standard (b) also would
require that data collected by the ASC,
regardless of the source of the data
elements, would be collected in
accordance with the detail and
frequency specifications established by
the ASC’s governing body. Once
collected, ASCs would analyze the data
to determine the effectiveness and safety
of its services, and to identify
opportunities for improvement.
The third standard as proposed at
§ 416.43(c), ‘‘Program activities,’’ would
require the ASC to set priorities for its
performance improvement activities
that focused on high risk, high volume
and problem-prone areas, that
considered the incidence, prevalence
and severity of identified problems, and
that gave priority to improvement
activities that affected health outcomes,
patient safety, and quality of care. In
§ 416.43(c), we also proposed to require
the ASC to track adverse patient events,
analyze their causes, implement
improvements and ensure that the
improvements are sustained over time.
The fourth standard as proposed at
§ 416.43(d), ‘‘Performance improvement
projects,’’ would require the number
and scope of improvement projects that
the ASC conducted annually reflect the
scope and complexity of the ASC’s
services and operations. The ASC would
document what improvement projects
were being conducted, the reasons for
conducting them, and the measurable
progress achieved on them.
Finally, at § 416.43(e), ‘‘Governing
body responsibilities,’’ we proposed that
the ASC’s governing body would be
responsible and accountable for
ensuring that the ongoing quality
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improvement program was defined,
implemented, and maintained, and that
ASC resources were adequately
allocated for implementing the facility’s
program. The governing body would
ensure that the program addressed
priorities for improved quality of care
and patient safety. The governing body
would also specify the frequency and
detail of the data collection and ensure
that all quality improvement actions
were evaluated for effectiveness. It
would be incumbent on the governing
body to lend its full support to all ASC
quality assessment and performance
improvement efforts.
Comment: Some commenters
indicated that the QAPI approach in the
2007 ASC CfCs proposed rule is
impractical compared to the existing
requirement, ‘‘Evaluation of quality.’’
Response: We disagree that the QAPI
approach is impractical. The QAPI focus
for ASCs, and other Medicare-certified
providers and suppliers, is aimed at
proactively accessing the quality of care
provided and improving health
outcomes. A more effective QAPI
program will allow ASCs to improve
patient care. Many ASCs have already
implemented a more effective quality
improvement program in place of the
current ASC requirement.
Comment: One commenter stated the
details of the proposed QAPI program
duplicated the requirements imposed by
the accrediting bodies.
Response: As stated in the preamble
of the 2007 ASC CfCs proposed rule,
one of the intents of the revisions to the
ASC regulations is to update some of the
CfCs. As such, the QAPI CfC is being
updated to reflect the current standards
of practice in the ASC facility setting.
We support the ASC accrediting
organizations that have adopted
proactive quality improvement
programs as current standards of
practice. The consistency in philosophy
between the Medicare ASC program and
those of the accrediting organizations
should be comforting to patients and
families. Moreover, the specifics of the
proposed ASC program are similar to
the quality improvement programs that
have been included in the Medicare
rules governing hospices, and that are
being developed for other Medicare
facilities. However, we did not
intentionally duplicate material from
any specific accrediting organization.
Because each ASC will determine the
specifics of its program, any similarity
between it and other QAPI programs,
intentional or not, is irrelevant.
Comment: Many commenters
expressed enthusiastic support for the
updated and expanded QAPI CfC.
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Response: We appreciate the overall
support for data collection and QAPI.
We note that the new regulation does
not require ASCs to use electronic
health records or any specific software
for data collection. ASCs are free to
choose the data collection methods and
tools that best suit their needs. We do
not believe that this new regulation
imposes an undue burden on ASCs
because it does not require them to
obtain sophisticated data collection and
analysis computer programs.
Comment: A few commenters
expressed concerns as to whether State
surveyors would receive adequate
training on the new QAPI program, and
wondered whether it would be enforced
in a consistent manner.
Response: A newly designed surveyor
training program is expected to be
available online in 2010, thus making
uniform training accessible to State
surveyors. Once every surveyor is
exposed to the same training program,
we expect the decisions surveyors make,
based on the findings, will be more
consistent.
Comment: Several commenters
submitted topic areas they would like to
include in a QAPI program, such as
evaluation and documentation of
surgical and anesthesia risk, surgical
infection prevention via prophylactic
antibiotic administration, utilization of
proper medications at admission, and
reporting of the number of cases
requiring transfer to hospitals due to
complications.
Response: ASCs may choose from
these and other topic areas when
developing their QAPI programs, but
not to the exclusion of those topics set
out at § 416.43(c).
Comment: One commenter expressed
concern that the QAPI CfCs could limit
the effectiveness of efforts to ensure
safety because, if adopted, the new
regulations would allow ASCs to
develop and implement their own
standards. In addition, the commenter
argued, State agencies would have the
option to enforce such standards
differently among States. Another
commenter questioned how CMS would
monitor the quality of care being
provided across ASCs.
Response: The proposed QAPI
standards would serve as an outline to
the ASC industry and will aid each ASC
in developing, implementing and
maintaining its own QAPI program.
State survey agencies will be receiving
standardized surveyor training to assist
in decreasing or eliminating surveyor
inconsistency. In addition to training
surveyors, we will address any surveyor
inconsistency through interpretive
guidelines. We note that the QAPI
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standards do not in any way replace the
other substantive standards that ASCs
must meet.
We will monitor the quality of care
through the results from State survey
agencies and deemed national
accreditation organizations. The QAPI
CfC reflects current industry standards
for evaluating quality of care and will
help ASCs adopt the universal approach
of a proactive program that encourages
facilities to make improvements that
will prevent patients from being
adversely affected. In the near future,
we will require ASCs to report quality
measures. These quality measures will
be utilized to calculate whether ASCs
receive full payment updates and as
comparative tools for the industry.
Comment: One commenter suggested
that CMS include language that would
require the ASC governing body to
appoint in writing an appropriately
trained individual to be responsible for
the implementation and oversight of the
facility’s QAPI program.
Response: While some ASCs may
desire to assign a single individual the
responsibility of managing the QAPI
program, others may find alternate ways
that are appropriate to meet this
responsibility. ASCs, like other health
entities, operate in ways that are
advantageous to their own needs. In
keeping with this philosophy, we are
not requiring that an ASC follow a
specific template related to the
development and management of its
QAPI program. We believe each ASC
should have the flexibility to determine
how that program should be
implemented.
Comment: One commenter suggested
that the QAPI program require a
leadership component and that the
program include activities dealing with
high-risk patients, adverse events, and
staff resources.
Response: We agree. The QAPI
oversight and accountability
requirements are part of the Governing
body and management CfC; therefore,
leadership would be held responsible
for direct involvement in the QAPI
program. Within the revised QAPI CfC,
the ASC QAPI program would be
required to set priorities for program
activities, focus on high-risk, highvolume, and problem-prone areas,
maintain an effective program that
includes leadership involvement, and
ensure that appropriate resources are
allocated for an effective program.
Comment: One commenter expressed
concern with the use of the word
‘‘annually’’ in proposed § 416.43(d)(1)
when referencing ‘‘distinct’’
improvement projects and questioned
whether this would require a set of
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separate and distinct projects every
year. In addition, the commenter
requested that the word ‘‘number’’ be
removed, to keep the focus on the scope.
Response: We stated in the preamble
of the 2007 ASC CfCs proposed rule that
we recognize that ASCs serve different
populations and provide different
services. The words ‘‘distinct,’’
‘‘annually,’’ and ‘‘number’’ are not new
terms for the QAPI Medicare regulations
and simply mean that when the ASC
conducts its projects, those projects
need to take into consideration the types
of services it furnishes and any other
aspect of its operation so that the effort
is meaningful. While we would expect
that ASCs will engage in specific
projects on an annual basis, there may
be a detailed project that will require a
long range approach and could be the
project that consumes available ASC
resources for a period of time, thus
making it difficult to undertake more
than one project in a particular year.
Comment: One commenter stated that
the word ‘‘resources’’ in the QAPI CfC
should be enhanced by including
specific references to staff, time,
information systems and training.
Response: We agree that the term
‘‘resources’’ should be clarified, and
therefore, in this final rule we have
revised proposed § 416.43(e)(5) to refer
instead to staff, time, information
systems and training.
After consideration of the public
comments received, and with the
exception of § 416.43(e)(5) and some
minor nonsubstantive revisions, we are
adopting the proposed revisions to
§ 416.43 as final, without modification.
In § 416.43(e)(5), we have modified the
proposed requirement to specify that the
governing body must allocate adequate
‘‘staff, time, information systems, and
training’’ to the QAPI program, instead
of ‘‘resources,’’ as proposed.
(3) Condition for Coverage: Laboratory
and Radiologic Services (§ 416.49)
The existing laboratory and radiologic
requirement is located at § 416.49. We
proposed to divide the condition into a
laboratory standard and a radiologic
standard. We also proposed to modify
the radiology services standard
requiring that an ASC meet the
Conditions for Coverage for Portable XRay Services.
Comment: A few commenters
expressed concern that the proposed
changes to the radiologic services
standard could severely restrict the
ability of ASCs to perform procedures
requiring imaging guidance. One
commenter stated the proposed changes
would also impose impractical
physician ordering criteria and other
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requirements that are not applicable in
the ASC setting. In general, while
understanding CMS’ rationale for
presenting the proposed change,
commenters believed that this change
would disrupt ASC operations on a
continuing scale.
Response: The proposed change to the
radiologic services requirement was
intended to parallel the requirement in
the current laboratory standard. That is,
an ASC would be required to obtain
both laboratory and radiology services
from entities that were already certified
in accordance with Medicare
requirements. We believed this change
would establish a higher level of patient
safety. We proposed to replace the
current requirement that requires ASCs
to meet the hospital radiology
department requirement (Condition of
Participation for Hospitals at § 482.26—
Radiologic Services) with the
requirement for ASCs to meet the
Conditions for Coverage for Portable XRay Suppliers (Conditions for Coverage
of Portable X-Ray Services at §§ 486.100
through 486.110). These requirements
are detailed, thorough, and provide a
good foundation for the protection of
Medicare beneficiaries. However, it has
been pointed out by many of the
commenters that the proposed
requirements are better suited and more
practical for ASCs that perform
diagnostic as opposed to imaging
services, and that the training
requirement for technicians was
problematic. The portable x-ray
conditions are geared toward the
technicians that perform the technical
component of diagnostic radiology
services without the physician being
present, in contrast to ASCs, where the
imaging guidance is provided under the
direct, personal supervision of the
surgeon performing the procedure.
After consideration of the public
comments and the impact of the
proposed change on an ASC’s daily
operation, we believe that the change
we proposed may be overly restrictive.
Therefore, we are not adopting the
requirement in proposed § 416.49(b)(2).
Instead, we are retaining the existing
radiology services requirement
applicable to ASCs, at § 482.26 (Hospital
Conditions of Participation—Radiologic
services). These conditions include the
requirements for the safety of patients
and personnel, maintenance of
equipment, and qualifications for
personnel as they relate to radiologic
services. However, we have maintained
in this final rule the proposed
formatting change that separates the
laboratory and radiology portion of the
existing § 416.49 into two standards.
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(4) Condition for Coverage: Patient
Rights (§ 416.50)
The proposed patient rights CfC was
divided into four standards. Under the
first standard, § 416.50(a), ‘‘Notice of
rights,’’ the ASC would be required to
provide the patient or the patient’s
representative with notice of the
patient’s rights in advance of the date of
the procedure, in a language and
manner that the patient or patient
representative understands. We
proposed the following: An ASC would
have to post the written notice of patient
rights in a place or places within the
ASC where patients or their
representatives are likely to notice it;
and the notice of rights would have to
include (1) the name, address, and
telephone number for a representative
in the State agency to whom patients
could report complaints about an ASC;
and (2) the Web site for the Medicare
Beneficiary Ombudsman. We also
proposed that the ASC would be
responsible for the following: Providing
the patient (or his or her representative)
with verbal and written information
concerning its policies on advance
directives; establishing procedures for
documenting the existence, submission,
investigation and disposition of a
patient’s written or verbal grievance to
the ASC; fully documenting all alleged
violations/grievances; and specifying
timeframes for the grievance process
regarding review of the grievance and
provision of a response.
The second proposed standard at
§ 416.50(b), ‘‘Exercise of rights and
respect for property and person,’’
specifies the patient’s right to exercise
his or her rights without being subject
to discrimination or reprisal. It also
specifies the patient’s right to voice
grievances regarding treatment or care
that is (or fails to be) furnished by the
ASC; the patient’s right to be fully
informed about a treatment or procedure
and about the expected outcome; the
patient’s right, if adjudged incompetent
under State law by a court of proper
jurisdiction, to have his or her rights
exercised by the person appointed
under State law to act on the patient’s
behalf; and the patient’s right, if a State
court has not adjudged a patient
incompetent, to any legal representative
designated by the patient in accordance
with State law to exercise the patient’s
rights to the extent allowed by State
law.
The third proposed standard at
§ 416.50(c), ‘‘Privacy and safety,’’ would
require the ASC to acknowledge the
patient has the right to personal privacy,
the right to receive care in a safe setting,
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and the right to be free from all forms
of abuse or harassment.
The fourth proposed standard at
§ 416.50(d), ‘‘Confidentiality of clinical
records,’’ would require the ASC to
acknowledge the patient’s right expect
that his or her clinical records
maintained by the ASC will be held in
strict confidentiality. We also proposed
that access to or release of patient
information and clinical records is
permitted only with written consent of
the patient or the patient’s
representative or as authorized by law.
Comment: Some commenters believed
CMS should allow more flexibility for
ASCs to develop their own process for
apprising patients of their rights.
Several of the commenters referred CMS
to the Title VI, Prohibition Against
National Origin Discrimination—
Persons with Limited-English
Proficiency (42 U.S.C. 2000d et seq.).
One commenter referred CMS to the
Hospital conditions of participation.
Both laws permit facility flexibility in
informing the patient, or when
appropriate, the patient’s representative,
about the patient’s rights. These
commenters pointed out that Title VI
specifies that the extent of the facility’s
obligation to provide written translation
of documents should be determined by
the recipient on a case-by-case basis.
They also believed that ASCs’ flexible
options could include such methods as
posting signs and providing information
in patient brochures.
Response: We agree that facilities
should have flexibility in informing
patients of their rights. We also believe
that when a patient undergoes a surgical
procedure at an ASC that has some
physical risk, even a slight risk, the
patient needs to be able to have
information at hand that explains the
procedure(s) at least in a general way.
Therefore, we are retaining the proposed
requirement that the ASC must post the
written notice of patient rights in a
place or places within the ASC likely to
be noticed by patients (or their
representatives, if applicable) waiting
for treatment. We also are retaining the
proposed requirement that the patient
be informed verbally and in writing.
The written portion may be a printed
information sheet or other more
sophisticated documents. The document
needs to include basic information as
required by § 416.50. It may not be
practical for an ASC to have available a
printed patient rights information
document in the language that every
patient can understand. However, it is
expected that where, a written
document is not practical the ASC
would make certain that its verbal
explanation is clear and thorough. HHS
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has published guidance on serving
individuals with limited English
proficiency in the Federal Register at 67
FR 4968 (February 1, 2002).
Comment: Several commenters
believed that the Patient rights
condition for coverage is too
prescriptive and could create
administrative burdens which would
negatively affect the delivery of care.
These commenters suggested CMS
delete the phrase ‘‘post the written
notice.’’ They also recommended that
CMS adopt a broader interpretation of
the phrase ‘‘informing the patient or
patient representative.’’
Response: Patient rights and the
explanation of patient rights are
important elements in this and other
Medicare health and safety rules. We
agree that procedures that ASCs must
follow should be the least prescriptive
possible. That is why we have not been
explicit in detailing the specifics of the
verbal and written information that
needs to be included when informing
patients of their rights. Regarding the
commenters’ suggestion to broaden the
interpretation of ‘‘informing the patient
or patient representative,’’ we believe
the proposed language is appropriate
and we are retaining the language in this
final rule.
Comment: Several commenters agreed
that disclosure of a physician’s
ownership interest in a facility is
critical, but believe patients should be
notified of this financial interest at the
point of physician referral and not
burden the ASC. The commenters
expressed concern that if a beneficiary
is not told of a physician’s financial
interest until a procedure is scheduled,
the beneficiary may feel uncomfortable
requesting an alternative physician or
alternative facility for fear of offending
the surgeon. They also asserted that
seeking an alternative physician or
facility could delay the procedure.
Response: While it may be
advantageous to patients to know as
early as possible if their physician has
an ownership interest in the ASC, we
are unable to require physicians to
impart that information because we do
not regulate physician offices.
Comment: Several commenters
suggested that the requirement to
propose written ownership disclosure
information to patients prior to the first
visit embodies the potential to
needlessly disrupt patient care, and
inconvenience patients. Commenters
recommended that CMS adopt the
requirement that ownership information
be made available to patients upon
request or that it be posted in the
facility.
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Response: Our proposal to require
ASCs to be responsible for physician
disclosure of financial interests in or
ownership of an ASC is based on our
existing rules set out at 42 CFR Part
420—Program Integrity. Our goal is to
assist Medicare beneficiaries in their
efforts to make informed health care
decisions through disclosure of all
pertinent treatment information, and to
achieve a basic level of knowledge
across provider settings.
We did not propose to specify in the
2007 ASC CfCs proposed rule how the
ownership disclosure information
would be provided to the patient, only
that it would be provided in writing
prior to the first visit to the ASC. To
respond to commenters’ concerns, we
have revised the proposed regulation
text to require that the ASC must notify
the patient in advance of the date of the
procedure regarding physician
ownership (for example, it could be at
the same time that the ASC provides the
package of information regarding presurgical testing for the planned ASC
surgical procedure). Patients scheduled
for a surgical procedure at an ASC
almost always receive a package of
information containing pre-surgical
testing and physical examination
requirements to which patients need to
adhere. We believe that a simple ‘‘check
box’’ form could be included in this
information packet, for example,
specifying whether the referring
physician has a financial interest in the
facility.
Comment: Several commenters
suggested that ASCs should not be
required to comply with an advance
directive requirement because ASCs
perform elective surgeries and because
ASC staff are dedicated to doing
everything within their power and
training to ensure a patient survives the
procedure. These commenters further
stated that because Medicare does not
pay for surgical procedures in the ASC
that pose a significant risk to
beneficiaries, it is not necessary to
require an advance directives policy for
ASCs.
The commenters also expressed
concern that a patient arriving only 90
minutes in advance of an ASC
procedure would not have sufficient
time within which to complete an
advance directive in addition to the
other forms that he or she may be
required to complete. Instead, the
commenters suggested that advance
directives could be made available by
the ASC for the patients to obtain and
read at their leisure prior to the
procedure. The commenters further
stated that the proposed requirements
would be financially burdensome.
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Response: Virtually all Medicare
providers and suppliers have an
advance directive requirement, with the
exception of ASCs and rural health
clinics. We agree that explaining an
advance directive to patients prior to
surgery could be cumbersome
depending upon the patient’s level of
understanding and other circumstances.
However, we also believe that patient
health and safety must be the primary
consideration in determining whether to
have ASCs assume some responsibility
for an advance directive requirement.
We considered the policies behind the
Consumer Bill of Rights and
Responsibilities (CBRR), which
recommended measures to promote and
assure health care quality and value and
to protect consumers and workers in the
health care system. We were interested
in whether ASC patients should be
treated differently than other patients by
virtue of the fact that the surgical
procedures they undergo are voluntary
and are provided exclusively on an
ambulatory basis. CBRR is very specific
in stating that consumers must be able
to discuss advance directives with their
health care provider. We concur.
Although surgical procedures performed
at ASCs are elective, in the event that
any unforeseen complications arise that
require transferring the patient to a
hospital, an advance directive could be
important upon the patient’s arrival at
the hospital. To ensure consumers’
rights and ability to participate in
treatment decisions, we believe that
ASC health care personnel should
discuss the use of advance directives
with patients and their designated
family members. Discussing advance
directives with patients, regardless of
the health care setting, is becoming the
standard of practice. To actively
participate in decisionmaking about
their care, consumers must have
complete information about their
treatment options, including the
alternative of no intervention, as well as
the risks, benefits, and consequences of
any options. Conversely, a health care
provider may indicate that it is against
its policy to comply with certain
advance directives. When such
conscience objections are expected to
occur, patients should be made aware of
it in advance of the date of the
procedure. As is the case with patient
rights information, advance directive
forms can be mailed in the same packet
to patients.
Comment: Several commenters were
critical of the proposed requirement that
ASCs report substantiated and
unsubstantiated complaints to State and
local authorities. The commenters
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argued that unsubstantiated complaints
should not be reported, as this might
cause inappropriate disclosure of
confidential information. Commenters
recommended revising this provision to
require that all allegations of neglect be
promptly reported to a person in
authority at the ASC. The commenters
indicated that if the ASC determined
that the grievance constituted a
violation of applicable laws, regulations,
or health care program requirements,
the ASC would then report the
allegation(s) to appropriate State and/or
local authorities.
Response: We agree with the
commenters. In this final rule, we have
revised the proposed ‘‘Submission and
investigation of grievances’’ requirement
at § 416.50(a)(3)(iv) to specify that only
substantiated allegations must be
reported to State and/or local
authorities.
Comment: Commenters believed that
confidentiality of clinical records
creates unnecessary confusion with the
more comprehensive HIPAA privacy
standards applicable to ASCs. They
believed that permitting access to or
release of patient records only with the
patient’s written consent is more
stringent than the HIPAA standards,
which permit routine disclosures
without patient consent for purposes of
payment, treatment, and health care
operations. These commenters
recommended instead that CMS develop
a new standard which cross-references
the HIPAA standard for confidentiality
of clinical records.
Response: We agree with these
commenters and in this final rule have
revised the proposed regulation at
§ 416.50(d) to reflect a cross-reference to
the HIPAA standards at 45 CFR Parts
160 and 164.
After consideration of the public
comments received, we are finalizing
the proposed revisions to § 416.50 with
modifications to the following
provisions.
In § 416.50(a)(1), we have made
editorial revisions, using the phrase ‘‘in
advance of the date of the procedure’’
instead of the proposed phrase ‘‘prior to
furnishing care to the patient and’’.
We have made two editorial revisions
to § 416.50(a)(1)(i): First, to refer to the
‘‘The ASC’s’’ notice of rights; and
second, to refer to the correct name of
the Office of the Medicare Beneficiary
Ombudsman.
In § 416.50(a)(1)(ii), we have made a
minor editorial revision to the proposed
first sentence, using the phrase ‘‘where
applicable,’’ instead of the proposed
phrase ‘‘if applicable’’.
In §§ 416.50(a)(2)(i) and (b)(2), we
have changed references to ‘‘applicable
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State law’’ to specify ‘‘applicable State
health and safety laws’’.
In § 416.50(a)(3)(iv), we added the
words ‘‘Only substantiated’’ to specify
the types of allegations that must be
reported to ‘‘State or local authorities, or
both’’.
In § 416.50(d), we have revised the
paragraph to reflect a cross-reference to
the HIPAA standards at 45 CFR Parts
160 and 164.
(5) Condition for Coverage: Infection
Control. (§ 416.51)
The proposed infection control CfC
was divided into two standards. Under
standard § 416.51(a), ‘‘Sanitary
environment,’’ we would require the
ASC to provide a functional and
sanitary environment for the provision
of surgical services by adhering to
professionally acceptable standards of
practice. We proposed to allow the
ASCs to have flexibility in designing
their own infection control program that
would meet CMS regulations and also
meet the needs of their particular
facility. The second proposed standard
at § 416.51(b), ‘‘Infection control,’’
would require the ASC to maintain an
ongoing program designed to prevent,
control, and investigate infections and
communicable diseases. The program
would be required to designate a
qualified professional who has training
in infection control, integrate the
infection control program into the ASC’s
QAPI program and be responsible for
providing a plan of action for
preventing, identifying and managing
infections and communicable diseases
and for immediately implementing
corrective and preventive measures that
result in improvement. Because the
prevention and control of infection is so
critically important to overall patient
and staff health and safety, we have
proposed to elevate the current
standard-level requirement to a
condition-level requirement and expand
the requirements to include the
designation of a qualified professional
to direct the infection control program.
Comment: One commenter
recommended that CMS include
language that requires the ASC to base
its policies for its infection control
program on nationally recognized
guidelines and standards. Another
commenter also suggested the use of
nationally recognized guidelines as the
basis for ASC selection of approved and
scientifically based methods and
equipment for cleaning, disinfection
and sterilization as outlined in
nationally recognized guidelines.
Response: In this final rule, we have
revised proposed § 416.51(b) to add a
provision to read, ‘‘In addition, the
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infection control and prevention
program must include documentation
that the ASC has considered, selected,
and implemented nationally recognized
infection control guidelines.’’ As stated
in the preamble to the 2007 ASC CFCs
proposed rule (72 FR 50477), we expect
ASCs to utilize nationally recognized
and approved standards and guidelines
for their infection control procedures.
We stated that we did not want to
restrict an ASC’s flexibility in utilizing
the guidelines that best suited its
method of operation and, therefore,
have chosen not to accept the comment
that we select specific infection control
methods as requirements.
Comment: A few commenters asked
for clarification regarding the
requirement that the designated
professional have training in infection
control. One commenter suggested the
inclusion of examples of nationally
recognized organizations that ASCs may
seek out for guidance and continuing
education. Other commenters suggested
the designated infection control
individual be identified as an infection
control professional rather than
infection control officer.
Response: We are not mandating one
specific set of guidelines or infection
and control standards that an ASC must
employ but rather, it must consider,
select and implement from nationally
recognized guidelines. The preeminent
organization that addresses infection
issues is the Centers for Disease Control
and Prevention. Hospitals and hospital
organizations as well as national health
care organizations also would have
information regarding infection control.
Training in infection control is available
through a variety of services such as
health care organizations, professional
associations, and government entities.
For example, an ASC could obtain
information from the Healthcare
Infection Control Practice Advisory
Committee (HICPAC), Occupational
Safety and Health Administration
(OSHA), Association for Professionals in
Infection Control and Epidemiology
(APIC), Society for Healthcare
Epidemiology of America (SHEA),
Association of PeriOperative Registered
Nurses (AORN) and/or the Association
for the Advancement of Medical
Instrumentation (AAMI). At this time,
we will continue to allow the ASCs the
flexibility in setting up the infection
control program in a manner which best
meets the organization’s needs.
Moreover, we expect that the ASC will
be able to provide verification of staff
training and current competency related
to infection control standards of
practice.
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We do not find that it is necessary to
associate a title with the qualified
professional who directs the program.
Comment: Several commenters
requested flexibility in designating an
infection control professional to serve
multiple facilities that are under
common ownership.
Response: There may be rationale for
those ASC facilities that are under
common ownership to utilize a single
infection control professional to direct
more than one facility program
concurrently. However, we believe that
this type of arrangement would
potentially hinge on the proximity of
the ASCs to each other, the frequency of
onsite visits by the designated
individual, and the ability of each
facility to respond to an infection
control issue in a timely manner. We
will address these and other issues in
more detail in subregulatory guidance.
Comment: One commenter questioned
the rationale for elevating infection
control to the condition level. A
commenter noted that requiring the
program to be under the direction of a
designated professional who has
training in infection control, should not
be necessary in the smaller ASC setting.
Response: The infection control
requirement located at § 416.44(a)(3)
currently requires both large and small
ASC organizations to establish a
program for identifying and preventing
infections, maintaining a sanitary
environment, and reporting the results
to appropriate authorities. Considering
the huge growth in the ASC industry
since we issued the current ASC
regulations in 1982, we believe that
infection control in a surgical facility
should be a high priority. All ASCs,
regardless of size, must therefore have
an infection control program where the
person in charge is knowledgeable and
is aware of current advances in the field.
After consideration of the public
comments received, we are finalizing
the proposed revisions to § 416.51, with
some modification.
In the introductory test of § 416.51,
we have revised an editorial change to
the proposed language, using the phrase
‘‘The ASC,’’ instead of the proposed
phrase ‘‘The Ambulatory Surgical
Center (ASC).’’ We are not adopting the
proposed ending phrase ‘‘for patients
and ASC staff’’. Thus, the final language
of the introductory text reads: ‘‘The ASC
must maintain an infection control
program that seeks to minimize
infections and communicable diseases.’’
In § 416.51(b), we have added a
sentence to the proposed requirements
for infection control which states, ‘‘In
addition, the infection control and
prevention program must include
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documentation that the ASC has
considered, selected, and implemented
nationally recognized infection control
guidelines.’’
(6) Condition for Coverage—Patient
Admission, Assessment, and Discharge
(§ 416.52)
The proposed admission, assessment
and discharge requirement identified
the three general areas that would be
applicable to a surgical procedure and
the timeframes for completing the
assessments to help ASCs ensure they
are identifying patient issues and needs
in a timely and safe manner.
The proposed patient admission,
assessment and discharge condition was
divided into three standards. The first
standard, § 416.52(a), ‘‘Admission and
pre-surgical assessment,’’ would require
the patient to have a comprehensive
medical history and physical
assessment completed by a physician or
other qualified practitioner in
accordance with State law and ASC
policy not more than 30 days before the
date of the scheduled surgery. The
purpose of this medical history and
physical assessment not more than 30
days before the date of the scheduled
surgery is to ensure the medical
professionals at the ASC have up-to-date
and pertinent patient information
available to perform safe and effective
surgical procedures. In the second
standard, § 416.52(b), ‘‘Post-surgical
assessment,’’ we proposed that a
thorough assessment of the patient’s
post-surgical condition must be
completed and documented, and that
any post-surgical needs are addressed
and included in the discharge notes. In
the third standard, § 416.52(c),
‘‘Discharge,’’ we proposed that the ASC
must provide each patient with written
discharge instructions; ensure the
patient has a safe transition to home;
ensure post-surgical needs are met;
ensure each patient has a discharge
order; and ensure the discharge order
indicates the patient has been evaluated
for proper anesthesia and medical
recovery.
Comment: The majority of
commenters supported the overall goals
of the proposed patient admission,
assessment, and discharge requirement.
Several commenters suggested the
removal of the specific language, ‘‘who
performed the surgery or procedures
unless otherwise specified by State law’’
found in proposed § 416.52(c)(3).
Several other commenters questioned
the rationale for the addition of the
condition itself and believed the
requirement is more stringent than that
developed by accrediting bodies.
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Response: After consideration of the
public comments received and further
review of the existing standards for
assessment, anesthesia evaluation, and
discharge, we have modified some of
our proposed requirements in this final
rule. We are not adopting that portion
of proposed § 416.52(a)(2) that would
require the pre-surgical assessment to
include a determination of the patient’s
mental ability to undergo surgery. This
may be beyond the scope of a surgical
team.
Comment: Several commenters argued
that CMS should not require ASCs to
assess a patient’s subjective ‘‘mental
ability’’ to undergo surgery, especially
where such an assessment conflicts with
the legal right of a patient to make his
or her own health care decisions or to
have those decisions made by his or her
designated representatives rather than
by health care providers. One
commenter had two suggestions. The
first was that CMS change the language
at proposed § 416.52(a)(1) to include the
requirement that the physician who will
be performing the procedure complete
the comprehensive history and physical
assessment, and that if the physician
delegates this responsibility to another
physician, such as the primary care
physician, the operating physician
review and authenticate the assessment
prior to the date of surgery. Secondly,
the commenter requested that CMS
change the language at proposed
§ 416.52(a)(3) to state that ‘‘the patient’s
medical history and physical
assessment must be placed in the
patient’s medical record prior to the
patient being taken to the operating
room,’’ rather than ‘‘before the surgical
procedure is started.’’
Response: It is customary for the
patient’s primary care physician to
perform the patient’s comprehensive
history and physical assessment, and it
is also customary for the operating
physician to determine from the presurgical assessment that is based on the
required history and physical
assessment requirement at § 416.52(a)(2)
of the final rule that the patient will be
able to tolerate surgery. We believe the
second suggestion of the commenter for
changes to § 416.52(a)(3) is a reiteration
of what was proposed. However, in the
final rule we have changed the language
from ‘‘before the surgical procedure is
started’’ to ‘‘prior to the surgical
procedure.’’
Comment: Some commenters
suggested alternative language to the
post-surgical assessment located at
§ 416.52(b)(1). Commenters stated that a
thorough assessment would require a
review of all body systems and that it is
not standard practice to do full body
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assessments post-operatively and there
is no evidence-based clinical rationale
for such a broad requirement. One
commenter suggested that well-trained
professional nurses are capable of
performing patient monitoring and
assessment for anesthesia recovery.
Response: We agree and in this final
rule have revised the requirement to
allow for sufficient flexibility based on
ASC policy to determine the assessment
appropriate to the nature and scope of
the procedure performed as well as the
specific medical condition of the
individual patient. The final regulation
text at § 416.52(b)(1) reads, ‘‘The
patient’s post-surgical condition must
be assessed and documented in the
medical record by a physician, other
qualified practitioner, or a registered
nurse with, at a minimum, postoperative care experience, in accordance
with applicable State health and safety
laws, standards of practice, and ASC
policy.’’
Comment: Some commenters
indicated the requirement in the
proposed Discharge standard at
§ 416.52(c)(2) that the ASC ensure that
the patient have a safe transition to
home was overly broad and opposed the
language. Commenters were concerned
that the language could be interpreted to
mean the ASCs would be obligated to
assume full responsibility for
transporting patients to their homes
using ambulances or other extraordinary
precautions. They stated that there was
no way for ASCs to ‘‘ensure’’ against car
accidents or other events outside of
their control that could interfere with a
patient’s safe transition to home.
Response: We agree that the proposed
language could be construed too broadly
and that there would be room for
interpretation about the ASC’s
responsibility for patients after they had
left the facility enroute to their home.
Therefore, in this final rule we have
removed that proposed requirement to
limit ASC responsibility.
Comment: Many commenters
suggested CMS move the discharge
language located in the existing Surgical
services requirement at § 416.42(c) to
the new Patient admission, assessment,
and discharge requirement at proposed
§ 416.52. Commenters also
recommended that CMS expand the
requirement currently set out at
§ 416.42(a) to specify that other
qualified anesthesia providers, in
addition to a physician, may evaluate
each patient’s proper anesthesia
recovery before discharge from the ASC.
In addition, commenters suggested that
CMS group all the discharge
requirements together in one section.
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Response: As noted previously, we
have clarified and amended the
language at proposed § 416.52(b)(1) in
this final rule to state that the patient’s
post-surgical condition must be assessed
and documented in the medical record
by a physician, other qualified
practitioner, or a registered nurse with,
at a minimum, post-operative care
experience, in accordance with
applicable State health and safety laws,
standards of practice, and ASC policy.
In addition, it is customary for the
operating physician to write a discharge
order indicating ‘‘the patient may be
discharged when stable.’’ Thus, in this
final rule we are retaining, with some
modification, the proposed language at
§ 416.52(c)(2) which now states:
‘‘Ensure each patient has a discharge
order signed by the physician who
performed the surgery or procedure in
accordance with applicable State health
and safety laws, standards of practice,
and ASC policy.’’ These modifications
to our proposal do not detract from the
intent or value of the requirement.
Based on the public comments we
received regarding proposed
§ 416.52(b)(1) and our corresponding
changes, we believe a companion
change can be made to § 416.42. We
believe that discharged patients should
be free of the effects of anesthesia to the
greatest extent possible. Because we are
permitting a physician, other qualified
practitioner, or a registered nurse with
experience in post-operative care at a
minimum in § 416.52(b)(1) to assess and
document the patient’s post-surgical
condition, we believe that we should
permit a qualified practitioner, as
defined at § 410.69(b), to determine if
the lingering effects of anesthesia
adversely affect discharge as noted in
proposed § 416.42(a)(2). Therefore, in
this final rule, we are conforming the
existing regulation at § 416.42(a) (we
refer readers to Subpart C—Specific
Conditions for coverage—Surgical
services) to the policy proposed at
§ 416.52(c) of the proposed rule by
separating the existing two sentences
into § 416.42(a)(1) and § 416.42(a)(2),
and we are expanding the language
under paragraph (a)(2) to state that
‘‘before discharge from the ASC, each
patient must be evaluated by a
physician or by a practitioner qualified
to administer anesthesia as defined at
§ 410.69(b) of this chapter, in
accordance with applicable State health
and safety laws, standards of practice,
and ASC policy, for proper anesthesia
recovery.’’ These changes will provide
flexibility for an ASC and are reflective
of current practice.
We agree with the suggestion that we
group the discharge requirements
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together in one section and have moved
the requirement located at existing
§ 416.42(c), ‘‘Standard: Discharge,’’ to
the new patient admission, assessment
and discharge requirement at § 416.52
(c)(3). As adopted, this paragraph
requires the ASC to ‘‘Ensure all patients
are discharged in the company of a
responsible adult, except those patients
exempted by the attending physician.’’
After consideration of the public
comments received, we are adopting the
provisions of proposed § 416.52 as final
with modifications as discussed below.
As discussed earlier, we also are
adopting revisions to §§ 416.42(a) and
416.42(c) based on public comments
received regarding proposed changes to
§ 416.52(c) to conform them to the final
policy.
In § 416.52, we revised the proposed
introductory language to state that, ‘‘The
ASC must ensure each patient has the
appropriate pre-surgical and postsurgical assessments completed and that
all elements of the discharge
requirements are completed.’’
In § 416.52(a)(1), we have changed the
proposed language ‘‘State law and ASC
policy’’ to specify ‘‘applicable State
health and safety laws, standards of
practice, and ASC policy’’.
In § 416.52(a)(2), we added language
to state that the pre-surgical assessment
must be completed by a physician ‘‘or
other qualified practitioner in
accordance with applicable State health
and safety laws, standards of practice,
and ASC policy’’ and that the
documented medical history and
physical assessment includes
‘‘documentation of any allergies to
drugs and biologicals’’. We are not
adopting the proposed language that
would have required that ‘‘The
assessment must include documentation
to determine the patient’s mental ability
to undergo the surgical procedure.’’
In § 416.52(a)(3), we have changed the
language ‘‘before the surgical procedure
is started’’ to ‘‘prior to the surgical
procedure’’.
In § 416.52(b)(1), we have revised the
proposed language to state ‘‘The
patient’s post-surgical condition must
be assessed and documented in the
medical record by a physician, other
qualified practitioner, or a registered
nurse with post-operative care
experience at a minimum, in accordance
with applicable State health and safety
laws, standards of practice, and ASC
policy.’’
In § 416.52(c)(1), we have added
language to state that the ASC must,
‘‘Provide each patient with written
discharge instructions and overnight
supplies. When appropriate, make a
followup appointment with the
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physician, and ensure that all patients
are informed, either in advance of their
surgical procedure or prior to leaving
the ASC, of their prescriptions, postoperative instructions and physician
contact information for followup care.’’
In § 416.52(c)(2), we did not adopt the
proposed requirement that the ASC
must ensure ‘‘the patient has a safe
transition to home and that the postsurgical needs are met.’’
In § 416.52(c)(3), we have renumbered
the proposed section as § 416.52(c)(2)
and revised the proposed first sentence
to state that the ASC must, ‘‘Ensure each
patient has a discharge order, signed by
the physician who performed the
surgery or procedure in accordance with
applicable State health and safety laws,
standards of practice, and ASC policy.’’
We are not adopting as final the
proposed language of § 416.52(c)(3),
which would have required that ‘‘The
discharge order must indicate that the
patient has been evaluated for proper
anesthesia and medical recovery.’’ We
have moved the provision of existing
§ 416.42(c) to new final § 416.52(c)(3),
and made editorial revisions so that the
provision now reads, ‘‘Ensure all
patients are discharged in the company
of a responsible adult, except those
patients exempted by the attending
physician.’’
In § 416.42(a), we have separated the
two existing sentences into two
subsections and added language in the
newly designated § 416.42(a)(2) to
permit ‘‘a practitioner qualified to
administer anesthesia as defined at
§ 410.69(b) of this chapter, in
accordance with applicable State health
and safety laws, standards of practice,
and ASC policy’’ or a physician to
evaluate a patient for proper anesthesia
recovery before the patient is discharged
from the ASC.
In § 416.42(c), we have made minor
editorial revisions to the existing
requirement and moved the requirement
to new § 416.52(c)(3).
c. Comments Outside the Scope of the
Proposed Rule
Comment: One commenter requested
that CMS change emergency equipment
language to say ‘‘available in the ASC’’
instead of the current language
‘‘available to the operating rooms.’’
Other commenters suggested that CMS
allow surgeons to have consulting
privileges instead of admitting
privileges at local hospitals. Some
commenters suggested that CMS remove
the requirement that mandates all ASCs
have a mechanical ventilator, or exclude
ASCs not administering general
anesthesia from the requirement to have
a ventilator in the ASC. Some
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commenters expressed concern over the
variance in State licensing
requirements. One commenter
recommended that CMS establish an
‘‘ASC compare’’ site for comparison of
safety and quality of services. Other
commenters suggested that CMS add
language to allow other individuals
permitted by State law or regulation to
order drugs or biologicals. Finally, one
commenter requested that CMS amend
the waiting area requirement.
Response: These issues are outside
the scope of the 2007 ASC CfCs
proposed rule and are not addressed in
this final rule.
C. Updates to the Revised ASC Payment
System
1. Legislative Authority for the ASC
Payment System
Section 1832(a)(2)(F)(i) of the Act
provides that benefits under Medicare
Part B include payment for facility
services furnished in connection with
surgical procedures specified by the
Secretary that are performed in an ASC.
To participate in the Medicare program
as an ASC, a facility must meet the
standards specified in section
1832(a)(2)(F)(i) of the Act, which are set
forth in 42 CFR Part 416, Subpart B and
Subpart C of our regulations. The
regulations at 42 CFR Part 416, Subpart
B describe the general conditions and
requirements for ASCs, and the
regulations at Subpart C explain the
specific conditions for coverage for
ASCs.
Section 141(b) of the Social Security
Act Amendments of 1994, Public Law
103–432, requires us to establish a
process for reviewing the
appropriateness of the payment amount
provided under section 1833(i)(2)(A)(iii)
of the Act for intraocular lenses (IOLs)
that belong to a class of new technology
intraocular lenses (NTIOLs). That
process was the subject of a final rule
entitled ‘‘Adjustment in Payment
Amounts for New Technology
Intraocular Lenses Furnished by
Ambulatory Surgical Centers,’’
published on June 16, 1999, in the
Federal Register (64 FR 32198).
Section 626(b) of the Medicare
Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA),
Public Law 108–173, added section
1833(i)(2)(D) to the Act, which required
the Secretary to implement a revised
ASC payment system to be effective not
later than January 1, 2008. Section
626(c) of the MMA amended section
1833(a)(1) of the Act to require that,
beginning with implementation of the
revised ASC payment system, payment
for surgical procedures furnished in
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ASCs shall be 80 percent of the lesser
of the actual charge for the services or
the amount determined by the Secretary
under the revised payment system.
Section 5103 of the Deficit Reduction
Act of 2005 (DRA), Public Law 109–171,
amended section 1833(i)(2) of the Act by
adding a new subparagraph (E) to place
a limitation on payment amounts for
surgical procedures in ASCs. Section
1833(i)(2)(E) of the Act provides that if
the standard overhead amount under
section 1833(i)(2)(A) of the Act for an
ASC facility service for such surgical
procedures, without application of any
geographic adjustment, exceeds the
Medicare payment amount under the
hospital OPPS for the service for that
year, without application of any
geographic adjustment, the Secretary
shall substitute the OPPS payment
amount for the ASC standard overhead
amount. This provision applied to
surgical procedures furnished in ASCs
on or after January 1, 2007, but before
the effective date of the revised ASC
payment system (that is, January 1,
2008). Section 109(b) of the Medicare
Improvements and Extension Act of
2006 of the Tax Relief and Health Care
Act of 2006 (MIEA–TRHCA), Public
Law 109–432, amended section 1833(i)
of the Act, in part, by redesignating
clause (iv) as clause (v) and by adding
a new clause (iv) to paragraph (2)(D) and
adding paragraph (7)(A), which
authorize the Secretary to require ASCs
to submit data on quality measures and
to reduce the annual update by 2
percentage points for an ASC that fails
to submit data as required by the
Secretary on selected quality measures.
Section 109(b) of the MIEA–TRHCA also
amended section 1833(i) of the Act by
adding new paragraph (7)(B), which
requires that certain quality of care
reporting requirements mandated for
hospitals paid under the OPPS, under
section 109(a) of the MIEA–TRHCA, be
applied in a similar manner to ASCs
unless otherwise specified by the
Secretary.
For a detailed discussion of the
legislative history related to ASCs, we
refer readers to the June 12, 1998
proposed rule (63 FR 32291 through
32292).
2. Prior Rulemaking
On August 2, 2007, we published in
the Federal Register (72 FR 42470) the
final rule for the revised ASC payment
system, effective January 1, 2008. We
revised our criteria for identifying
surgical procedures that are eligible for
Medicare payment when furnished in
ASCs and adopted the method we
would use to set payment rates for ASC
covered surgical procedures and
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covered ancillary services furnished in
association with those covered surgical
procedures beginning in CY 2008. In
that final rule, we also established a
policy for updating on an annual
calendar year basis the ASC conversion
factor, the relative payment weights and
APC assignments, the ASC payment
rates, and the list of procedures for
which Medicare would not make an
ASC payment. We also established a
policy for treating new and revised
HCPCS and CPT codes under the ASC
payment system. This policy is
consistent with the OPPS to the extent
possible (72 FR 42533).
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66827), we
updated and finalized the CY 2008 ASC
rates and lists of covered surgical
procedures and covered ancillary
services. We also made regulatory
changes to 42 CFR Parts 411, 414, and
416 related to our final policies to
provide payments to physicians who
perform noncovered ASC procedures in
ASCs based on the facility practice
expense (PE) relative value units
(RVUs), to exclude covered ancillary
radiology services and covered ancillary
drugs and biologicals from the
categories of designated health services
(DHS) that are subject to the physician
self-referral prohibition, and to reduce
ASC payments for surgical procedures
when the ASC receives full or partial
credit toward the cost of the implantable
device.
3. Policies Governing Changes to the
Lists of Codes and Payment Rates for
ASC Covered Surgical Procedures and
Covered Ancillary Services
The August 2, 2007 final rule
established our policies for determining
which procedures are ASC covered
surgical procedures and covered
ancillary services. Under §§ 416.2 and
416.166, subject to certain exclusions,
covered surgical procedures are surgical
procedures that are separately paid
under the OPPS, that would not be
expected to pose a significant risk to
beneficiary safety when performed in an
ASC, and that would not be expected to
require active medical monitoring and
care at midnight following the
procedure (‘‘overnight stay’’). We
adopted this standard for defining
which surgical procedures are covered
surgical procedures under the ASC
payment system as an indicator of the
complexity of the procedure and its
appropriateness for Medicare payment
in ASCs. We use this standard only for
purposes of evaluating procedures to
determine whether or not they are
appropriate for Medicare beneficiaries
in ASCs. Prior to the revised ASC
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payment system, procedures were
excluded from the ASC list of covered
surgical procedures based on whether
they were expected to require more than
four hours of recovery time. Both the
previous 4-hour limit on the expected
length of recovery time and the current
criterion related to the expected need
for active medical monitoring at
midnight following the procedure were
based on our longstanding requirement
that procedures on the Medicare ASC
list of covered surgical procedures do
not require an extended recovery time
and do not require an ‘‘overnight’’ stay.
We defined surgical procedures as
those described by Category I CPT codes
in the surgical range from 10000
through 69999, as well as those Category
III CPT codes and Level II HCPCS codes
that crosswalk or are clinically similar
to ASC covered surgical procedures (72
FR 42478). We note that we added over
800 surgical provedures to the list of
covered surgical procedures for ASC
payment in CY 2008, the first year of the
revised ASC payment system, based on
the criteria for payment that we adopted
in the August 2, 2007 revised ASC
payment system final rule as described
above in this section. Patient safety and
health outcomes continue to be
important to us as more health care
moves to the ambulatory care setting.
Therefore, as we gain additional
experience with the revised ASC
payment system, we are interested in
any information the public may have
regarding the comparative patient
outcomes of surgical care provided in
ambulatory settings, including HOPDs,
ASCs, and physicians’ offices,
particularly with regard to the Medicare
population.
In the August 2, 2007 final rule, we
also established our policy to make
separate ASC payments for the
following ancillary services, for which
separate payment is made under the
OPPS, when they are provided integral
to ASC covered surgical procedures:
Brachytherapy sources; certain
implantable items that have passthrough status under the OPPS; certain
items and services that we designate as
contractor-priced, including, but not
limited to, procurement of corneal
tissue; certain drugs and biologicals;
and certain radiology services. These
covered ancillary services are specified
in § 416.164(b) and are eligible for
separate ASC payment (72 FR 42495).
Payment for ancillary services that are
not paid separately under the ASC
payment system is packaged into the
ASC payment for the covered surgical
procedure.
The full CY 2008 lists of ASC covered
surgical procedures and covered
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68723
ancillary services are included in
Addenda AA and BB, respectively, to
the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66945 through
66993 and 67165 through 67188).
We update the lists of, and payment
rates for, covered surgical procedures
and covered ancillary services, in
conjunction with the annual proposed
and final rulemaking process to update
the OPPS and ASC payment systems
(§ 416.173; 72 FR 42535). In addition,
because we base ASC payment policies
for covered surgical procedures, drugs,
biologicals, and certain other covered
ancillary services on the OPPS payment
policies, we also provide quarterly
updates for ASC services throughout the
year (January, April, July, and October),
just as we do for the OPPS. The updates
are to implement newly created Level II
HCPCS codes and Category III CPT
codes for ASC payment and to update
the payment rates for separately paid
drugs and biologicals based on the most
recently submitted ASP data.
In our annual updates to the ASC list
of, and payment rates for, covered
surgical procedures and covered
ancillary services, we undertake a
review of excluded surgical procedures,
new procedures, and procedures for
which there is revised coding, to
identify any that we believe meet the
criteria for designation as ASC covered
surgical procedures or covered ancillary
services. Updating the lists of covered
surgical procedures and covered
ancillary services, as well as their
payment rates, in association with the
annual OPPS rulemaking cycle is
particularly important because the
OPPS relative payment weights and, in
some cases, payment rates, are used as
the basis for the payment of covered
surgical procedures and covered
ancillary services under the revised ASC
payment system. This joint update
process ensures that the ASC updates
occur in a regular, predictable, and
timely manner.
Comment: Commenters provided a
number of general suggestions related to
the ASC list of covered surgical
procedures. They contended that CMS
should not restrict which procedures are
payable in ASCs any more than CMS
restricts which procedures are payable
in HOPDs. The commenters also
enumerated more specific modifications
that they said would make the ASC
payment system more equitable. They
suggested that CMS allow payment for
procedures reported by unlisted codes
when the only possible procedures
reported by the unlisted code are from
anatomic sites that could not possibly
pose a potential risk to beneficiary
safety. They gave as an example of such
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an unlisted code, CPT code 67999
(Unlisted procedure, eyelids). In
addition, the commenters recommended
that CMS automatically evaluate, for
addition to the ASC list of covered
surgical procedures, all procedures that
are removed from the OPPS inpatient
list and that, in all cases, CMS should
provide specific reasons that procedures
are excluded from the ASC list of
covered surgical procedures. The
commenters questioned why there are
instances in which all but one or two of
the procedures in a given APC are
included on the ASC list. They stated
that the APCs are clinically
homogeneous and that as such, all of the
procedures in an APC should be
determined either to be excluded from
or included on the ASC list. Finally,
some commenters requested that ASCs
be paid for certain services outside the
CPT surgical code range, including
certain Category III CPT codes and
radiology services when packaged
surgical procedures would also be
performed.
Response: We appreciate the
commenters’ suggestions regarding the
consistency of the decisions about
which procedures are excluded from the
ASC list. However, as we explained in
the August 2, 2007 revised ASC
payment system final rule (72 FR
42479), we do not believe that all
procedures that are appropriate for
performance in HOPDs are appropriate
in ASCs. HOPDs are able to provide
much higher acuity care than ASCs.
ASCs have neither patient safety
standards consistent with those in place
for hospitals, nor are they required to
have the trained staff and equipment
needed to provide the breadth and
intensity of care that hospitals are
required to maintain. Therefore, we will
not modify our policy to exclude from
the ASC list of covered surgical
procedures only those procedures for
which no payment is made in HOPDs.
We do not agree with the commenters’
recommendation that we include certain
unlisted codes on the list of covered
procedures. Even though it may be
highly unlikely that any procedures that
would be expected to pose a risk to
beneficiary safety or to require an
overnight stay would be reported by an
unlisted code from certain anatomic
sites, we cannot know what surgical
procedure is being reported by an
unlisted code, and because we cannot
evaluate any such procedure, we believe
that we must exclude unlisted codes
from the list of covered surgical
procedures.
Each year in the annual OPPS/ASC
proposed rule, we present the
procedures we are proposing to remove
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from the OPPS inpatient list for the
upcoming calendar year. In the past, we
have not consistently reviewed
procedures removed from the OPPS
inpatient list to evaluate their
appropriateness for payment under the
ASC payment system. Because our
policy under the revised ASC payment
system is to annually evaluate all
surgical procedures that are excluded
from the ASC list for potential inclusion
in the following year, we believe it is
appropriate to include a review of
surgical procedures that are proposed
for removal from the OPPS inpatient list
as part of our annual review of
procedures excluded from the ASC list
of covered surgical procedures.
Therefore, we are adopting the
commenters’ suggestion to evaluate for
appropriateness of ASC payment
surgical procedures removed from the
OPPS inpatient list. We will include in
the annual OPPS/ASC proposed rule,
our proposals to include or not include
on the ASC list of covered surgical
procedures those procedures proposed
for removal from the OPPS inpatient
list. We will include our final decisions
in the OPPS/ASC final rule with
comment period.
We do not agree with the commenters’
request that we provide specific reasons
for our decisions to exclude procedures
from the ASC list other than that we
believe a procedure is expected to pose
a significant risk to beneficiary safety or
to require an overnight stay. We believe
that these reasons are sufficiently
specific. Our decisions to exclude
procedures from the ASC list are based
on a number of the criteria listed at
§ 416.166, and we believe that it would
be unnecessary and overly burdensome
to list each and every reason for those
decisions.
For each of the specific examples that
the commenters provided of
inconsistent ASC treatment of
procedures assigned to a single APC
under the OPPS, we have evaluated the
individual procedures for inclusion on
the ASC list and each is discussed in
section XV.E.1.a. of this final rule with
comment period. During our
development of the proposed CY 2010
update to the ASC payment system, we
will perform a comprehensive review of
the APCs to address other potential
inconsistencies.
Finally, currently the revised ASC
payment system provides payment only
for surgical procedures within the
surgical code range of CPT and for those
Category III CPT codes and Level II
HCPCS codes that directly crosswalk or
are clinically similar to surgical
procedures that are on the ASC list of
covered surgical procedures (72 FR
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42478). Furthermore, radiology services
are only separately paid when they are
provided integral to the performance of
covered surgical procedures (72 FR
42498). Therefore, we will not provide
ASC payment in CY 2009 for services
that do not meet these criteria. However,
we note that while section 1832(a)(2)(F)
of the Act defines the ASC benefit as
‘‘facility services furnished in
connection with surgical procedures
specified by the Secretary,’’ some
stakeholders have raised the possibility
of ASCs providing a broader range of
services in the future, including services
such as cardiac catheterization and
hyperbaric oxygen therapy (which are
included in the medicine range of CPT
codes). While we are not making any
changes to the existing criteria for ASC
services for CY 2009, we may consider
proposing changes in the future.
After consideration of the public
comments received, we are accepting
the commenters’ recommendation to
include in our annual evaluation of
excluded surgical procedures all
procedures proposed for removal from
the OPPS inpatient list, and agree to
evaluate the OPPS APCs for potential
inconsistencies related to exclusion
from the ASC list of covered surgical
procedures. We are not accepting the
commenters’ recommendations to not
exclude all procedures reported by
unlisted codes and procedures that we
determine would be expected to pose a
significant risk to beneficiary safety or
require an overnight stay. Further, we
also are not accepting the commenters’
recommendation that CMS provide
more specific reasons for its decisions
regarding exclusion of specific
procedures from the ASC list of covered
surgical procedures or their
recommendation that we pay ASCs for
services in CY 2009 that do not meet the
current criteria for ASC services.
D. Treatment of New Codes
1. Treatment of New Category I and III
CPT Codes and Level II HCPCS Codes
We finalized a policy in the August 2,
2007 final rule to evaluate each year all
new Category I and Category III CPT
codes and Level II HCPCS codes that
describe surgical procedures, to make
preliminary determinations in the
annual OPPS/ASC final rule with
comment period regarding whether or
not they meet the criteria for payment
in the ASC setting and, if so, whether
they are office-based procedures (72 FR
42533). In addition, we identify new
codes as ASC covered ancillary services
based upon the final payment policies
of the revised ASC payment system.
New HCPCS codes that are released in
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the summer through the fall of each
year, to be effective January 1, are
included in the final rule with comment
period updating the ASC payment
system for the following calendar year.
These new codes are flagged with
comment indicator ‘‘NI’’ in Addenda
AA and BB to the OPPS/ASC final rule
with comment period to indicate that
we are assigning them an interim status.
The interim payment indicators
assigned to the new codes under the
revised ASC payment system are subject
to public comment in that final rule
with comment period. These interim
determinations must be made in the
OPPS/ASC final rule with comment
period because, in general, the new
HCPCS codes and their descriptors for
the upcoming calendar year are not
available at the time of development of
the OPPS/ASC proposed rule. We will
respond to those comments in the
OPPS/ASC final rule with comment
period for the following calendar year.
We proposed to continue this
recognition process for CY 2009 (73 FR
41525).
We did not receive any public
comments regarding this proposal. For
CY 2009, we are continuing our
established policy for recognizing new
Category I and Category III CPT codes
and Level II HCPCS codes.
In addition, we proposed to continue
our policy of implementing through the
ASC quarterly update process new midyear CPT codes, generally Category III
CPT codes, that the AMA releases in
January to become effective the
following July (73 FR 41525). Therefore,
we proposed to include in Addenda AA
or BB, as appropriate, to the CY 2009
OPPS/ASC final rule with comment
period the new Category III CPT codes
released in January 2008 for
implementation on July 1, 2008
(through the ASC quarterly update
process) that we identify as ASC
covered services. Similarly, we
proposed to include in Addenda AA
and BB to this final rule with comment
period any new Category III CPT codes
that the AMA releases in July 2008 to be
effective on January 1, 2009 that we
identify as ASC covered services.
However, only those new Category III
CPT codes implemented effective
January 1, 2009 are designated by
comment indicator ‘‘NI’’ in the Addenda
to this CY 2009 OPPS/ASC final rule
with comment period, to indicate that
we have assigned them an interim
payment status which is subject to
public comment. The Category III CPT
codes implemented in July 2008 for
ASC payment, which appeared in Table
36 of the CY 2009 OPPS/ASC proposed
68725
rule (73 FR 41525), were subject to
comment on the CY 2009 OPPS/ASC
proposed rule, and we proposed to
finalize their payment indicators in this
CY 2009 OPPS/ASC final rule with
comment period. We proposed to assign
payment indicator ‘‘G2’’ (Non officebased surgical procedure added in CY
2008 or later; payment based on OPPS
relative payment weight) to each of the
three new codes. Because new Category
III CPT codes that become effective for
July are not available to CMS in time for
incorporation into the Addenda to the
OPPS/ASC proposed rule, our policy is
to include the codes, their proposed
payment indicators, and proposed
payment rates in the preamble to the
proposed rule but not in the Addenda
to the proposed rule. These codes and
their final payment indicators and rates
are included in the appropriate
Addenda to the OPPS/ASC final rule
with comment period.
We did not receive any public
comments regarding this proposal. We
are continuing our established policy for
recognizing new mid-year CPT codes,
and the new mid-year codes
implemented in July 2008 are displayed
in Table 40 below, as well as in
Addendum AA to this final rule with
comment period.
TABLE 40—NEW CATEGORY III CPT CODES IMPLEMENTED IN JULY 2008 FOR ASC PAYMENT
Final CY
2009 ASC
payment
indicator
CY 2009 HCPCS code
CY 2009 Long descriptor
0190T .......................................................................
0191T .......................................................................
Placement of intraocular radiation source applicator .......................................
Insertion of anterior segment aqueous drainage device, without extraocular
reservoir; internal approach.
Insertion of anterior segment aqueous drainage device, without extraocular
reservoir; external approach.
0192T .......................................................................
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2. Treatment of New Level II HCPCS
Codes Implemented in April and July
2008
New Level II HCPCS codes may
describe covered surgical procedures or
covered ancillary services. All new
Level II HCPCS codes implemented in
April and July 2008 for ASCs describe
covered ancillary services. During the
second quarter of CY 2008, we added to
the list of covered ancillary services a
total of four new Level II HCPCS codes
for drugs and biologicals because they
are eligible for separate payment under
the OPPS. Those HCPCS codes are:
C9241 (Injection, doripenem, 10 mg);
Q4096 (Injection, von willebrand factor
complex, human, ristocetin cofactor (not
otherwise specified), per i.u.
VWF.RCO); Q4097 (Injection, immune
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globulin (Privigen), intravenous, nonlyophilized (e.g., liquid), 500 mg); and
Q4098 (Injection, iron dextran, 50 mg).
Similarly, for the third quarter of CY
2008, we added a total of four new Level
II HCPCS codes to the list of ASC
covered ancillary services for drugs and
biologicals because they are eligible for
separate payment under the OPPS.
Those HCPCS codes are: C9242
(Injection, fosaprepitant, 1 mg); C9356
(Tendon, porous matrix of cross-linked
collagen and glycosaminoglycan matrix
(TenoGlide Tendon Protector Sheet), per
square centimeter); C9357 (Dermal
substitute, granulated cross-linked
collagen and glycosaminoglycan matrix
(Flowable Wound Matrix), 1 cc); and
C9358 (Dermal substitute, native, nondenatured collagen (SurgiMend
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G2
G2
G2
Collagen Matrix), per 0.5 square
centimeters).
We assigned the payment indicator
‘‘K2’’ (Drugs and biologicals paid
separately when provided integral to a
surgical procedure on ASC list; payment
based on OPPS rate) for all of these new
Level II HCPCS codes and added them
to the list of covered ancillary services
either through the April update
(Transmittal 1488, Change Request
5994, dated April 9, 2008) or the July
update (Transmittal 1540, Change
Request 6095, dated June 20, 2008) of
the CY 2008 ASC payment system. In
the CY 2009 OPPS/ASC proposed rule
(73 FR 41526), we solicited public
comment on the proposed ASC payment
indicators and payment rates for these
codes, as listed in Tables 37 and 38 of
the proposed rule. The codes listed in
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Table 37 also were included in
Addendum BB to the CY 2009 OPPS/
ASC proposed rule. Those HCPCS codes
are paid in ASCs, beginning in either
April or July 2008, based on the ASC
rates posted for the appropriate calendar
quarter on the CMS Web site at:
http:
//www.cms.hhs.gov/ASCPayment/.
However, because HCPCS codes that
become effective for July are not
available to CMS in time for
incorporation into the Addenda to the
OPPS/ASC proposed rule, our policy is
to include the HCPCS codes, their
proposed payment indicators, and
proposed payments rates in the
preamble to the proposed rule but not
in the Addenda to the proposed rule.
The HCPCS codes and their final
payment indicators and rates are
included in the appropriate Addenda to
the OPPS/ASC final rule with comment
period. Thus, the codes implemented by
the July 2008 ASC update and their
proposed CY 2009 payment rates (based
on July 2008 ASP data) that were
displayed in Table 38 of the CY 2009
OPPS/ASC proposed rule were not
included in Addendum BB to the CY
2009 OPPS/ASC proposed rule. We
proposed to include the new HCPCS
codes displayed in Tables 37 and 38
and, for the codes in Table 37, in
Addendum BB to the list of covered
ancillary services and to incorporate all
of them into Addendum BB to this CY
2009 OPPS/ASC final rule with
comment period, consistent with our
annual update policy.
For CY 2009, the CMS HCPCS
Workgroup created permanent HCPCS Jcodes for the four codes that were
implemented in April 2008 and one of
the codes that was implemented in July
2008, and we will be recognizing these
HCPCS J-codes for payment of these
drugs and biologicals under the CY 2009
ASC payment system, consistent with
our general policy to use permanent
HCPCS codes, if appropriate, for the
reporting of drugs. Tables 41 and 42
show the new permanent HCPCS Jcodes that replace several HCPCS Ccodes and Q-codes that will be deleted,
effective December 31, 2008. The
HCPCS J-codes, effective January 1,
2009, describe the same drugs and the
same dosages as the HCPCS codes they
are replacing. Because the new HCPCS
codes describe the same drugs and the
same dosages as do the current codes,
there is no effect on the payment
indicators.
In addition, a new HCPCS Q-code,
Q4114, that is effective January 1, 2009,
was created to replace HCPCS code
C9357. Although the long descriptor is
changed, the new code describes the
same biological and dosage as did
HCPCS code C9357. Therefore, we will
recognize HCPCS code Q4114 for
payment under the CY 2009 ASC
payment system, and no change to the
payment indicator of the HCPCS code is
warranted.
We did not receive any public
comments regarding our proposal. We
are adopting the ASC payment
indicators for the new Level II HCPCS
codes implemented in April and July
2008 as shown in Tables 41 and 42,
respectively. Moreover, we are adopting
as final the replacement HCPCS codes,
specifically J1267, J7186, J1459, J1750,
and J1453, as well as HCPCS codes
C9356, Q4114, and C9358, as show in
Tables 41 and 42 below, and in
Addendum BB to this final rule with
comment period.
TABLE 41—LEVEL II HCPCS CODES IMPLEMENTED IN APRIL 2008
CY 2009
HCPCS code
CY 2008 HCPCS code
C9241 ..............................................
Q4096 ..............................................
J1267
J7186
Q4097 ..............................................
J1459
Q4098 ..............................................
J1750
Final CY 2009
ASC payment
indicator
CY 2009 Long descriptor
Injection, doripenem, 10 mg ......................................................................
Injection, antihemophilic factor viii/von willebrand factor complex
(human), per factor viii i.u.
Injection, immune globulin (Privigen), intravenous, non-lyophilized (e.g.
liquid), 500 mg.
Injection, iron dextran, 50 mg ...................................................................
K2
K2
K2
K2
TABLE 42—LEVEL II HCPCS CODES IMPLEMENTED IN JULY 2008
CY 2009
HCPCS code
CY 2008 HCPCS code
C9242 ..............................................
C9356 ..............................................
J1453
C9356
C9357 ..............................................
C9358 ..............................................
Q4114
C9358
E. Update to the Lists of ASC Covered
Surgical Procedures and Covered
Ancillary Services
dwashington3 on PRODPC61 with RULES2
1. Covered Surgical Procedures
a. Additions to the List of ASC Covered
Surgical Procedures
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41526), we proposed to
update the ASC list of covered surgical
procedures by adding nine procedures
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Injection, fosaprepitant, 1 mg ....................................................................
Tendon, porous matrix of cross-linked collagen and glycosaminoglycan
matrix (TenoGlide Tendon Protector Sheet), per square centimeter.
Allograft, Integra Flowable Wound Matrix, injectible, 1 cc ........................
Dermal substitute, native, non-denatured collagen (SurgiMend Collagen
Matrix), per 0.5 square centimeters.
to the list. Three of the nine procedures,
specifically CPT code 0190T (Placement
of intraocular radiation source
applicator), CPT code 0191T (Insertion
of anterior segment aqueous drainage
device, without extraocular reservoir;
internal approach), and CPT code 0192T
(Insertion of anterior segment aqueous
drainage device, without extraocular
reservoir; external approach) are new
Category III CPT codes that became
effective July 1, 2008 and were
PO 00000
Final CY 2009
ASC payment
indicator
CY 2009 Long descriptor
Frm 00226
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K2
K2
K2
K2
implemented in the July 2008 ASC
update. The other six procedures were
among those excluded from the ASC list
for CY 2008 because we believed they
did not meet the definition of a covered
surgical procedure based on our
expectation that they would pose a
significant safety risk to Medicare
beneficiaries or would require an
overnight stay if performed in ASCs.
During our annual review of excluded
codes in which we used the most recent
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available utilization data, we identified
the following six procedures that we
believed should no longer be excluded
from the ASC list: CPT code 31293
(Nasal/sinus endoscopy, surgical; with
medial orbital wall and inferior orbital
wall decompression); CPT code 34490
(Thrombectomy, direct or with catheter;
axillary and subclavian vein, by arm
incision); CPT code 36455 (Exchange
transfusion, blood; other than newborn);
CPT code 49324 (Laparoscopy, surgical;
with drainage of lymphocele to
peritoneal cavity); CPT code 49325
(Laparoscopy, surgical; with revision of
previously placed intraperitoneal
cannula or catheter, with removal of
intraluminal obstructive material if
performed); and CPT code 49326
(Laparoscopy, surgical; with
omentopexy (omental tacking
procedure)). The nine codes that we
proposed to add to the ASC list of
covered surgical procedures and their
proposed CY 2009 payment indicator
‘‘G2’’ (Non office-based surgical
procedure added in CY 2008 or later;
payment based on OPPS relative
payment weight) were displayed in
Table 39 of the CY 2009 OPPS/ASC
proposed rule (73 FR 41527).
Comment: Commenters requested
that CMS add a number of additional
procedures to the ASC list of covered
surgical procedures. Some commenters
requested that CMS add CPT codes
15170 (Acellular dermal replacement,
trunk, arms, legs; first 100 sq cm or less,
or 1% of body area of infants and
children); 15171 (Acellular dermal
replacement, trunk, arms, legs; each
additional 100 sq cm, or each additional
1% of body area of infants and children,
or part thereof); 15175 (Acellular dermal
replacement, face scalp, eyelids, mouth,
neck, ears, orbits, genitalia, hands, feet,
and/or multiple digits; first 100 sq cm
or less, or 1% of body area of infants
and children); and 15176 (Acellular
dermal replacement, face scalp, eyelids,
mouth, neck, ears, orbits, genitalia,
hands, feet, and/or multiple digits; each
additional 100 sq cm or each additional
1% of body area of infants and children,
or part thereof) because they believed
that those procedures met the criteria
CMS has established for ASC payment
and are comparable to surgical
procedures already included on the list
of covered surgical procedures.
Response: We reviewed these codes
and agree with the commenters that the
procedures would not be expected to
pose a significant risk to beneficiary
safety and to require an overnight stay.
Therefore, we are adding these
procedures to the ASC list of covered
surgical procedures, and we have
assigned payment indicator ‘‘G2’’ to
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CPT codes 15170, 15171, 15175 and
15176 in Addendum AA to this final
rule with comment period.
Comment: Several commenters
requested that CMS add to the ASC list
the procedures reported by CPT codes
21385 (Open treatment of orbital floor
blowout fracture; transantral approach
(Caldwell-Luc type operation); 21386
(Open treatment of orbital floor blowout
fracture; periorbital approach); and
21387 (Open treatment of orbital floor
blowout fracture; combined approach).
The commenters stated that although
the majority of these cases result from
trauma and, therefore, present in the
hospital emergency department, delayed
presentation occasionally occurs. In
those cases, they argued that the ASC
setting would be an appropriate site for
the procedures because blood loss is
minimal and patients do not require an
overnight stay. They also noted that
CMS had proposed to remove CPT
codes 21386 and 21387 from the OPPS
inpatient list for CY 2009 and that
because these procedures would be
payable in the hospital outpatient
setting, they requested that CMS
provide a reason for its decision to
continue to exclude the procedures from
the ASC list.
Response: Although we agree with
the commenters that these procedures
rarely would be performed in ASCs
because of the typically urgent nature of
their presentation, our medical advisors
found that the typical post-operative
course for the procedures includes a
need for active medical monitoring for
at least 24 hours following surgery.
Based on our review of the three
procedures, we will continue to exclude
them from the list of covered surgical
procedures for CY 2009 because we
expect that they would pose a
significant risk to beneficiary safety or
require an overnight stay following
surgery, even on those rare occasions
that the beneficiary presents in the ASC
after a delay in seeking treatment.
Comment: Commenters requested the
addition of CPT codes 29867
(Arthroscopy, knee, surgical;
osteochondral allograft (eg,
mosaicplasty)) and 29868 (Arthroscopy,
knee, surgical; meniscal transplantation
(includes arthrotomy for meniscal
insertion), medial or lateral) to the ASC
list of covered surgical procedures
because they would not be expected to
require overnight care and are
comparable to procedures such as CPT
code 29880 (Arthroscopy, knee,
surgical; with meniscectomy (medial
AND lateral, including any meniscal
shaving)) that are included on the ASC
list.
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Response: We reviewed the utilization
and clinical information for the two
procedures discussed. We continue to
believe that the post-operative care that
is likely to be required for the
procedures includes inpatient hospital
care in many cases, and we expect
would at least require active medical
monitoring and care at midnight
following the procedure. Therefore, we
will continue to exclude CPT codes
29867 and 29868 from the ASC list of
covered surgical procedures for CY
2009.
Comment: Commenters requested that
CMS add CPT codes 31292 (Nasal/sinus
endoscopy, surgical; with medial or
inferior orbital wall decompression) and
31294 (Nasal/sinus endoscopy, surgical;
with optic nerve decompression) to the
ASC list. Commenters contended that
because CMS proposed to add CPT code
31293 (Nasal/sinus endoscopy, surgical;
with medial orbital wall and inferior
wall decompression) to the list for CY
2009, CMS should also add these two
closely related procedures. The three
procedures were proposed for
assignment to APC 0075 (Level V
Endoscopy Upper Airway) under the
OPPS, and the commenters indicated
that CPT codes 31292 and 31294 were
the only procedures assigned to that
APC that are not on the ASC list. They
stated their belief that the clinical
homogeneity of the APC provides
supporting evidence that these two
procedures should also be included for
payment in ASCs.
Response: In response to the public
comments, we reexamined CPT codes
31292 and 31294 and continue to expect
that these procedures would pose a
significant safety risk to beneficiaries in
ASCs or require monitoring at midnight
following the surgery. In addition, in
reviewing those procedures, we
reevaluated our proposed addition of
CPT code 31293 to the ASC list and
determined that it should remain
excluded from the ASC list. Our
medical advisors agreed with the
commenters that the procedure reported
by CPT code 31293 is closely related to
those procedures reported using CPT
codes 31292 and 31294 and determined
that it, too, would be expected to pose
a significant risk to beneficiary safety
and require an overnight stay.
Therefore, we will not add CPT codes
31292 and 31294 to the ASC list, and we
also are not finalizing our proposal to
add CPT code 31293 to the ASC list of
covered surgical procedures for CY
2009.
Comment: One commenter requested
that CMS add CPT code 37205
(Transcatheter placement of an
intravascular stent(s) (except coronary,
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carotid, and vertebral vessel),
percutaneous; initial vessel) to the ASC
list of covered surgical procedures for
CY 2009. The commenter said that one
of the procedures described by CPT
code 37205 is increasingly employed by
surgeons in attempts to extend the
patency of a fistula or graft for
hemodialysis longer than may be
accomplished by angioplasty alone. The
commenter believed that continued
exclusion of CPT code 37205 from the
ASC list would interfere with the
physician-patient decision-making
process related to the most appropriate
site for the service to be provided.
Further, the commenter noted that CPT
code 37205 is used to report other
surgeries, some of which may not be
appropriately provided in ASCs, and
strongly encouraged CMS to consider
creating a separate code(s) for the
placement of dialysis vascular access
stents, similar to the hemodialysis
access angioplasty HCPCS G-codes
(G0392 (Transluminal balloon
angioplasty, percutaneous; for
maintenance of hemodialysis access,
arteriovenous fistula or graft; arterial)
and G0393 (Transluminal balloon
angioplasty, percutaneous; for
maintenance of hemodialysis access,
arteriovenous fistula or graft; venous))
created for CY 2007.
Response: We continue to find that
many of the procedures that could be
reported by CPT code 37205 would be
expected to present significant risks to
beneficiary safety if they were to be
performed in ASCs. Therefore, we will
continue to exclude this procedure from
the ASC list for CY 2009. However, we
understand the commenter’s points that
the procedure, when performed
peripherally, may be valuable for
maintaining vascular access for dialysis
patients and that the clinical
characteristics of stenting to maintain
hemodialysis access may differ from the
features of other surgical procedures
that could also be described by CPT
code 37205. As we develop the
proposals to update the OPPS and ASC
payment system for CY 2010, we will
consider the commenter’s
recommendation regarding the creation
of a HCPCS G-code to describe the
insertion of vascular stents for the
purpose of extending the patency of
fistulae or grafts for dialysis patients.
Comment: One commenter requested
that CMS add CPT code 50593
(Ablation, renal tumor(s), unilateral,
percutaneous, cryotherapy) to the ASC
list of covered surgical procedures. The
commenter noted that the procedure is
assigned to APC 0423 (Level II
Percutaneous Abdominal and Biliary
Procedures) under the OPPS and is the
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only procedure in that APC that is
excluded from the ASC list. The
commenter believed that, because APCs
are clinically homogeneous, CPT code
50593 should also be included for ASC
payment.
Response: Our medical advisors
reviewed the procedure described by
CPT code 50593. We have no physician
claims data to indicate in which sitesof-service the procedure was performed
because the Category I CPT code was
new for CY 2008, and physician data are
not available for the predecessor
Category III CPT code. Based on the
judgment of our medical advisors, we
continue to expect that the procedure
would pose a significant safety risk to
beneficiaries if performed in an ASC.
When we prepare the CY 2010 OPPS/
ASC proposed rule, we will review
utilization data that have become
available for the procedure.
Comment: Commenters on the CY
2008 OPPS/ASC final rule with
comment period and commenters on the
CY 2009 OPPS/ASC proposed rule
requested that CMS add CPT code
52649 (Laser enucleation of the prostate
with morcellation, including control of
postoperative bleeding, complete
(vasectomy, meatotomy,
cystourethroscopy, urethral calibration
and/or dilation, internal urethrotomy
and transurethral resection of prostate
are included if performed)), a new code
for CY 2008, to the ASC list of covered
surgical procedures. The commenters
asserted that the procedure is
comparable to those reported by CPT
codes 52647 (Laser coagulation of
prostate, including control of
postoperative bleeding, complete
(vasectomy, meatotomy,
cystourethroscopy, urethral calibration
and/or dilation, and internal
urethrotomy are included if performed))
and 52648 (Laser vaporization of
prostate, including control of
postoperative bleeding, complete
(vasectomy, meatotomy,
cystourethroscopy, urethral calibration
and/or dilation, internal urethrotomy
and transurethral resection of prostate
are included if performed)). They
believed that, like CPT codes 52647 and
52648, CPT code 52649 could be safely
performed in an ASC and does not
require an overnight stay. One
commenter explained that the primary
difference between CPT codes 52648
and 52649 is the additional amount of
physician time involved for the
enucleation technique.
Response: CPT code 52649 was new
for CY 2008, so it was assigned interim
treatment under the ASC payment
system and its status was, therefore,
open to comment on the CY 2008 OPPS/
PO 00000
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ASC final rule with comment period.
Because CPT code 52649 was new for
CY 2008, we have no physician
utilization data regarding the
procedure’s sites-of-service. Our
medical advisors continue to expect that
CPT code 52649 would pose a
significant risk to beneficiary safety or
require an overnight stay and should be
excluded from the ASC list for CY 2009.
Therefore, we are excluding it from the
ASC list of covered surgical procedures.
However, we will reevaluate this
procedure as part of our annual review
of procedures that are excluded from the
ASC list during development of the CY
2010 OPPS/ASC proposed rule.
Comment: One commenter requested
that CMS add CPT code 57310 (Closure
of urethrovaginal fistula) to the ASC list
of covered surgical procedures. The
commenter contended that the
procedure is less complex than the
procedure reported by CPT code 57320
(Closure of vesicovaginal fistula; vaginal
approach), which is on the ASC list, and
that the procedure would be safe for
performance in ASCs and would not
require an overnight stay.
Response: The utilization data for
CPT code 57310 show that the
procedure is performed roughly half of
the time on an inpatient basis and that
there is no utilization in physicians’
offices or ASCs. Based on those data, in
addition to the clinical judgment of our
medical advisors that the procedure
would be expected to pose a significant
risk to beneficiary safety and require an
overnight stay when performed in an
ASC, we believe that CPT code 57310
should continue to be excluded from the
ASC list of covered procedures for CY
2009.
Comment: One commenter, on behalf
of many ASCs, requested the addition of
CPT codes 64448 (Injection, anesthetic
agent; femoral nerve, continuous
infusion by catheter (including catheter
placement) including daily management
for anesthetic agent administration) and
64449 (Injection, anesthetic agent;
lumbar plexus, posterior approach,
continuous infusion by catheter
(including catheter placement)
including daily management for
anesthetic agent administration) to the
ASC list of covered surgical procedures
for CY 2009. The commenter stated that
these procedures are provided to nonMedicare patients in ASCs on a regular
basis and that patients would not
require care overnight.
Response: Our medical advisors
examined the utilization data and
available clinical information for these
procedures and determined that they are
appropriate for Medicare payment as
covered surgical procedures in ASCs.
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Although the utilization data show that
the procedures are usually provided to
inpatients as a component of anesthesia
for an inpatient surgical procedure, such
as total knee replacement, we realize
that both CPT code 64448 and 64449
also may be provided as independent,
primary procedures. When the
procedures are the primary procedures
provided to the beneficiary, we agree
with the commenter that the ASC is an
appropriate site-of-service. Therefore,
we will assign payment indicator ‘‘G2’’
to CPT codes 64448 and 64449 for CY
2009.
Comment: As discussed further in
section XI. of this final rule with
comment period, commenters requested
that CPT code 0184T (Excision of rectal
tumor, transanal endoscopic
microsurgical approach (i.e., TEMS)) be
removed from the OPPS inpatient list.
They also recommended that once the
procedure was removed from the
inpatient list, it should be added to the
ASC list of covered surgical procedures
because the procedure is minimally
invasive and is clinically comparable to
CPT code 45170 (Excision of rectal
tumor, transanal approach), which is
not excluded from the ASC list.
Response: As discussed in section XI.
of this final rule with comment period,
we consulted with our medical advisors
in reevaluating CPT code 0184T for
removal from the inpatient list and
determined that the procedure should
remain on the inpatient list. Therefore,
the procedure will continue to be
excluded from the ASC list.
Comment: Several commenters asked
that CMS remove a number of
procedures from the list of covered
surgical procedures. They expressed
their concern that CMS has not
excluded these procedures and strongly
urged CMS to remove the procedures
from the list because they are not safely
performed in ASCs. Specifically, one
commenter asserted that CPT codes
21215 (Graft, bone; mandible (includes
obtaining graft)); 40700 (Plastic repair of
cleft lip/nasal deformity; primary,
partial or complete, unilateral); 40701
(Plastic repair of cleft lip/nasal
deformity, primary bilateral, one stage
procedure); 42200 (Palatoplasty for cleft
palate, soft and/or hard palate only);
42205 (Palatoplasty for cleft palate, with
closure of alveolar ridge; soft tissue
only); 42210 (Palatoplasty for cleft
palate, with closure of alveolar ridge;
with bone graft to alveolar ridge
includes obtaining graft)), 42215
(Palatoplasty for cleft palate; major
revision); and 42220 (Palatoplasty for
cleft palate; secondary lengthening
procedure) require general anesthesia
and close postoperative monitoring and
are often performed in the inpatient
setting.
The commenters would like the
procedures removed from the ASC list
for a number of reasons. First, they
asserted that the eight procedures are
unsafe for performance in ASCs due to
the need for general anesthesia and
postoperative airway monitoring and
reminded CMS that most of the patients
who undergo these procedures are
children and that very few are Medicare
beneficiaries. They believed that the
close monitoring of the airway
postoperatively is beyond the typical
ASC scope of observation. They also
requested that the procedures be
68729
excluded from ASC payment because
they are concerned that private insurers
may misinterpret the procedures’
inclusion on the ASC list as a Medicare
policy that means the procedures
should never be provided in the
inpatient setting.
Response: We do not see a basis for
removing these procedures from the
ASC list. All eight of these procedures
were on the list of covered surgical
procedures even before CY 2007 and, to
our knowledge, have been safely
performed in ASCs all of that time. Our
policy to not exclude a procedure from
the ASC list is not an indication that a
procedure should no longer be provided
in other settings, including the hospital
inpatient setting. We take this
opportunity to reiterate two points
relative to the ASC list: we make
decisions regarding procedures
excluded from the ASC list based on our
assessments of the needs of Medicare
beneficiaries; and we include on the
ASC list all procedures we believe are
appropriate in order to provide
physicians and patients with the most
choices possible for sites-of-service. We
expect that physicians will consider for
each individual patient which site-ofservice is most appropriate. We
understand that the procedures on the
ASC list are sometimes more
appropriately performed on an inpatient
basis due to the individual’s age or other
clinical considerations.
After consideration of the public
comments received, as discussed above,
we are adopting for CY 2009 the 14 ASC
covered surgical procedures and
payment indicators as set out in Table
43 below.
TABLE 43—ASC COVERED SURGICAL PROCEDURES ADDED FOR CY 2009
CY 2009 HCPCS code
dwashington3 on PRODPC61 with RULES2
15170
15171
15175
15176
34490
36455
49324
49325
49326
64448
64449
0190T
0191T
0192T
...............................
...............................
...............................
...............................
...............................
...............................
...............................
...............................
...............................
...............................
...............................
...............................
...............................
...............................
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ASC payment
indicator
CY 2009 Short descriptor
Acell graft trunk/arms/legs .....................................................................................................................
Acell graft t/arm/leg add-on ...................................................................................................................
Acellular graft, f/n/hf/g ...........................................................................................................................
Acell graft, f/n/hf/g add-on .....................................................................................................................
Removal of vein clot ..............................................................................................................................
Bl exchange/transfuse non-nb ..............................................................................................................
Lap insertion perm ip cath ....................................................................................................................
Lap insertion perm ip cath ....................................................................................................................
Lap w/omentopexy add-on ....................................................................................................................
N block inj fem, cont inf ........................................................................................................................
N block inj, lumbar plexus .....................................................................................................................
Place intraoc radiation src .....................................................................................................................
Insert ant segment drain int ..................................................................................................................
Insert ant segment drain ext .................................................................................................................
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G2
G2
G2
G2
G2
G2
G2
G2
G2
G2
G2
G2
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b. Covered Surgical Procedures
Designated as Office-Based
(1) Background
In the August 2, 2007 final rule, we
finalized our policy to designate as
‘‘office-based’’ those procedures that are
added to the ASC list of covered
surgical procedures in CY 2008 or later
years that we determine are performed
more than 50 percent of the time in
physicians’ offices based on
consideration of the most recent
available volume and utilization data for
each individual procedure code and/or,
if appropriate, the clinical
characteristics, utilization, and volume
of related codes. In that rule, we also
finalized our policy to exempt all
procedures on the CY 2007 ASC list
from application of the office-based
classification (72 FR 42512).
In the August 2, 2007 final rule, we
identified a list of procedures as officebased after taking into account the most
recently available CY 2005 volume and
utilization data for each individual
procedure or group of related
procedures. We believed that the
resulting list accurately reflected
Medicare practice patterns and that the
procedures were of similar complexity.
In Addendum AA to that final rule, each
of the office-based procedures was
identified by payment indicator ‘‘P2’’
(Office-based surgical procedure added
to ASC list in CY 2008 or later with
MPFS nonfacility PE RVUs; payment
based on OPPS relative payment
weight); ‘‘P3’’ (Office-based surgical
procedure added to ASC list in CY 2008
or later with MPFS nonfacility PE RVUs;
payment based on MPFS nonfacility PE
RVUs); or ‘‘R2’’ (Office-based surgical
procedure added to ASC list in CY 2008
or later without MPFS nonfacility PE
RVUs; payment based on OPPS relative
payment weight), depending on whether
we estimated it would be paid according
to the standard ASC payment
methodology based on its OPPS relative
payment weight or at the MPFS
nonfacility PE RVU amount.
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66840
through 66841), we finalized the
temporary office-based designations of 4
procedures, while newly designating 19
procedures as permanently office-based,
In addition, we designated 3 procedures
reported by CPT codes 21073
(Manipulation of temporomandibular
joint(s) (TMJ), therapeutic, requiring an
anesthesia service (ie, general or
monitored anesthesia care); 67229
(Treatment of extensive or progressive
retinopathy, one or more sessions;
preterm infant (less than 37 weeks
gestation at birth), performed from birth
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up to 1 year of age (eg, retinopathy of
prematurity), photocoagulation or
cryotherapy); and 68816 (Probing of
nasolacrimal duct, with or without
irrigation; with transluminal balloon
catheter dilation) that were new for CY
2008 as temporarily office-based on an
interim basis. Those 3 temporary
designations for the new CY 2008 CPT
codes were open to comment during the
60-day comment period for the CY 2008
OPPS/ASC final rule with comment
period. We indicated that we would
respond to public comments on those
designations in the CY 2009 OPPS/ASC
final rule with comment period, which
we do in the discussion in section
XV.E.1.b.(2) of this final rule with
comment period.
(2) Changes to Covered Surgical
Procedures Designated as Office-Based
for CY 2009
In developing the CY 2009 OPPS/ASC
proposed rule, we followed our final
policy to annually review and update
the surgical procedures for which ASC
payment is made and to identify new
procedures that may be appropriate for
ASC payment, including their potential
designation as office-based. We
reviewed the CY 2007 utilization data
and clinical characteristics for all those
surgical procedures newly added for
ASC payment in CY 2008 that were
assigned payment indicator ‘‘G2’’ in the
CY 2008 OPPS/ASC final rule with
comment period.
As a result of that review, we
identified the following 5 procedures
that we proposed to newly designate as
office-based procedures for CY 2009:
CPT code 0084T (Insertion of a
temporary prostatic urethral stent); CPT
code 36515 (Therapeutic apheresis; with
extracorporeal immunoadsorption and
plasma reinfusion); CPT code 36516
(Therapeutic apheresis; with
extracorporeal selective adsorption or
selective filtration and plasma
reinfusion); CPT code 65436 (Removal
of corneal epithelium; with application
of chelating agent (e.g., EDTA)); and
CPT code 67505 (Retrobulbar injection;
alcohol) (73 FR 41527). We proposed to
make the office-based designation of
CPT code 0084T temporary because we
did not have adequate data upon which
to base a permanent designation. We
proposed to make permanent officebased designations for the remaining
four procedures. The codes that we
newly proposed as office-based were
displayed in Table 40 of the CY 2009
OPPS/ASC proposed rule (73 FR 41527–
8).
Comment: Commenters stated that
CMS should not finalize any of its
proposed new designations of
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Fmt 4701
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procedures as office-based, in order to
limit the exposure of the ASC payment
system to the vulnerabilities of the
MPFS. Further, they asserted that CMS
did not provide publicly accessible data
to validate the agency’s assertions that
the procedures proposed for temporary
or permanent assignment as office-based
procedures were commonly performed
in physicians’ offices in CY 2007. They
also shared their belief that, as more
procedures are designated office-based,
the linkage between the ASC and OPPS
ratesetting methodology would be
eroded and relative weight scaling based
on changes in OPPS median costs
would be confounded.
Response: We continue to believe that
our policy to identify low complexity
procedures that are usually provided in
physicians’ offices is necessary and
valid. We believe this is the most
appropriate approach to preventing the
creation of payment incentives for
services to move from physicians’
offices to ASCs for the many newlycovered low complexity procedures on
the ASC list. Moreover, we are confident
that the CY 2007 claims data, the most
recent full year of volume and
utilization data, is an appropriate source
to inform our decisions regarding the
site-of-service for procedures. Our
office-based designations are based on
our medical advisors’ clinical
judgments, utilization data for
procedures that are closely related to the
procedures being evaluated, and any
other information that is available to us,
in addition to the claims data. We post
a number of supporting data files on the
CMS Web site for each proposed and
final rule for the annual OPPS/ASC
update. Although we do not post all
relevant Medicare data on the CMS Web
site, Medicare claims data are available
to any member of the public who
chooses to purchase and use these data.
Therefore, we believe that commenters
have access to relevant Medicare claims
and utilization data in order to conduct
analyses that would assist them in
evaluating all of our ASC proposals.
Regarding the commenters’ assertions
that increasing the number of
procedures designated as office-based
further erodes the linkage between the
OPPS and ASC ratesetting
methodologies and increases the
exposure of the ASC payment system to
the ‘‘vulnerabilities of the MFPS,’’ it is
unclear to what vulnerabilities of MPFS
the commenters are referring. However,
we continue to believe that it is
appropriate that ASCs be paid no more
for performing office-based procedures
than those procedures would be paid
when performed in physicians’ offices,
in order to deter inappropriate
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migration of these surgical procedures
to ASCs based on financial
considerations rather than clinical
needs. Therefore, we believe it is
necessary to update the office-based list
of ASC covered surgical procedures
annually, to account for changes in
medical practice and new surgical
procedures that may result in additional
surgical procedures that are
predominantly performed in physicians’
offices.
Comment: One commenter supported
the designation of CPT codes 0084T
(Insertion of a temporary prostatic
urethral stent) and 55876 (Placement of
interstitial device(s) for radiation
therapy guidance (e.g., fiducial markers,
dosimeter), prostate (via needle, any
approach), single or multiple) as officebased procedures. The commenter
stated that the procedure reported by
CPT code 0084T is minimally invasive
and can be safely performed in the
physician’s office setting. The
commenter also requested that CMS
make permanent the office-based
designation of CPT code 55876. The
commenter stated that the procedure is
being performed safely in the physician
office setting and believed that officebased utilization is increasing.
Response: We thank the commenter
for the support. However, we will
maintain the temporary office-based
designations for CPT codes 0084T and
68731
55876 until we are able to evaluate more
complete utilization and clinical
information for those procedures. CPT
Code 55876 is discussed below in more
detail.
The utilization data for the
procedures listed in Table 44 did not
change between the proposed rule and
this final rule with comment period.
Therefore, after consideration of the
public comments received, we are
finalizing our CY 2009 proposal,
without modification, to designate the
procedures displayed in Table 44 as
office-based for CY 2009. The officebased designation of CPT code 0084T
remains temporary.
TABLE 44—CY 2009 FINAL DESIGNATIONS OF ASC COVERED SURGICAL PROCEDURES NEWLY DESIGNATED AS OFFICEBASED
CY 2009 HCPCS
code
0084T
36515
36516
65436
67505
......................
......................
......................
......................
......................
CY 2008
ASC
payment
indicator
CY 2009 short descriptor
Temp prostate urethral stent ..............................................................................
Apheresis, adsorp/reinfuse .................................................................................
Apheresis, selective ...........................................................................................
Curette/treat cornea ...........................................................................................
Inject/treat eye socket ........................................................................................
G2
G2
G2
G2
G2
Proposed
CY 2009
ASC
payment
indicator
R2*
P2
P2
P3
P3
Final CY
2009 ASC
payment
indicator
R2*
P2
P2
P3
P3
dwashington3 on PRODPC61 with RULES2
* If designation is temporary.
Furthermore, during the development
of the CY 2009 OPPS/ASC proposed
rule, we reviewed CY 2007 utilization
and other information for the seven
procedures with temporary office-based
designations for CY 2008. Of those
procedures, in the CY 2009 OPPS/ASC
proposed rule, we proposed to make
permanent the office-based designation
for CPT code 28890 (Extracorporeal
shock wave, high energy, performed by
a physician, requiring anesthesia other
than local, including ultrasound
guidance, involving the plantar fascia)
(73 FR 41528). In response to comments
on the CY 2008 OPPS/ASC proposed
rule, in the CY 2008 OPPS/ASC final
rule with comment period, we made the
office-based designation for CPT code
28890 temporary rather than permanent
as was proposed (72 FR 66839 through
66840). Although the CY 2006
utilization data available for
development of the CY 2008 OPPS/ASC
final rule with comment period showed
that the service was provided more than
70 percent of the time in the physician’s
office setting, we were persuaded by
commenters that providers may have
been using CPT code 28890, which was
new for CY 2006, erroneously to report
less intensive extracorporeal shock
wave procedures that would be more
frequently performed in the physician’s
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office. Our review of the CY 2007 data
continues to support our designation of
this procedure as office-based and thus,
we believed it was appropriate to
propose to make that designation
permanent for CY 2009.
In the CY 2009 OPPS/ASC proposed
rule, we proposed to not make
permanent the office-based designations
for the 6 other procedures for which the
CY 2008 designations are temporary (73
FR 41528). For those procedures, we did
not believe that the currently available
utilization data provided an adequate
basis for proposing permanent officebased designations. In our review of
these six codes, we determined that it
would be consistent for the office-based
assignment of HCPCS code C9728
(Placement of interstitial device(s) for
radiation therapy/surgery guidance (e.g.,
fiducial markers, dosimeter), other than
prostate (any approach), single or
multiple) also to be temporary. This
procedure is paid under the CY 2008
ASC payment system as an office-based
procedure but is analogous to CPT code
55876 (Placement of interstitial
device(s) for radiation therapy guidance
(e.g., fiducial markers, dosimeter),
prostate (via needle, any approach),
single or multiple), for which we
proposed to maintain the temporary
office-based payment indicator for CY
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2009. Therefore, we also proposed to
assign a temporary office-based payment
indicator to HCPCS code C9728 for CY
2009. The procedures with temporary
office-based status for the CY 2008 ASC
payment system that we proposed to
continue to temporarily designate as
office-based procedures for CY 2009
were displayed in Table 40A of the CY
2009 OPPS/ASC proposed rule (73 FR
41528).
Those procedures and their CY 2009
proposed and final payment indicators
are displayed in Table 45 below. All
procedures for which the proposed
office-based designation for CY 2009
was temporary also were indicated by
an asterisk in Addendum AA to the CY
2009 OPPS/ASC proposed rule.
Comment: Commenters on the CY
2008 OPPS/ASC final rule with
comment period and commenters on the
CY 2009 OPPS/ASC proposed rule
objected to the temporarily office-based
designation for CPT code 21073
(Manipulation of temporomandibular
joint(s) (TMJ), therapeutic, requiring an
anesthesia service (i.e., general or
monitored anesthesia care). They
asserted that, because CPT code 21073
is new for CY 2008 and is not
analogous, or essentially equivalent, to
any previously existing code, CMS has
no data upon which to base its
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designation of CPT code 21073 as officebased. One commenter said that CMS
bears the burden of proof in categorizing
a service as office-based, especially
because that categorization is
permanent. Further, the commenters
noted that, by definition, the procedure
requires anesthesia services and they
believe it is unlikely that physicians’
offices would be the primary site for this
service.
Response: We reexamined the
utilization and clinical information
available to us for this procedure. As
noted by the commenters, CPT code
21073 is new for CY 2008 and,
therefore, we do not have physician
utilization data upon which to base
designation of the procedure as officebased. However, our medical advisors
continue to believe that CPT code 21073
describes a surgical procedure that they
expect will be performed in physician’s
offices. In support of their clinical
perspective are the clinical example and
description of the procedure included in
CPT 2008 Changes: An Insider’s View.
In that description, the patient
undergoes the procedure under general
anesthesia in the physician’s office.
However, because we have no Medicare
utilization data for this service, we
believe that a temporary office-based
designation is most appropriate.
Comment: A commenter requested
that CMS reconsider the designation of
CPT code 67229 (Treatment of extensive
or progressive retinopathy, one or more
sessions; preterm infant (less than 37
weeks gestation at birth), performed
from birth up to 1 year of age (e.g.,
retinopathy of prematurity),
photocoagulation or cryotherapy) as
temporarily office-based. The
commenter said that, by its very nature,
it is clear that the procedure is
performed on premature newborns and
that it would never be done in the office
setting. Further, the commenter stated
that, because the procedure is not as
likely to be done in ASCs as in the
HOPD or hospital neonatal intensive
care unit, CMS should not preclude its
performance in ASCs by setting a
payment that is too low to cover the
costs of the treatment.
Response: We reviewed our
temporary designation for this code as
office-based. Although we do not have
data indicating physicians’ office
utilization, according to the clinical
example published in CPT 2008
Changes: An Insider’s View, the
procedure requires only topical
anesthesia and we continue to believe
that, in the circumstances that the
procedure is being performed on a child
outside of the hospital setting, it would
most likely be performed in the
physicians’ office. We would also point
out that, at this time, the procedure has
not been priced in the office and, as a
result, the temporary assignment of
payment indicator R2 results in
payment at the fully implemented ASC
rate. Therefore, we are maintaining for
CY 2009 our designation of CPT code
67229 as temporarily office-based.
Comment: Commenters on the CY
2008 OPPS/ASC final rule with
comment period and commenters on the
CY 2009 OPPS/ASC proposed rule
strongly opposed the interim
designation of new CPT code 68816
(Probing of nasolacrimal duct, with or
without irrigation; with transluminal
balloon catheter dilation) as officebased. They stated that the procedure is
not furnished in physicians’ offices
more than 50 percent of the time. They
explained that because the typical
patient is a 14-month old infant the
surgical procedure reported by CPT
code 68816 usually requires general
anesthesia and absolutely requires the
use of either the hospital outpatient or
ASC setting.
Response: CPT code 68816 is a new
code for CY 2008 and, as such, we do
not have utilization data for review. We
are persuaded by the commenters,
however, that there is a need for a
facility setting to perform most of these
procedures and believe that it would be
appropriate not to finalize our proposal
to designate the procedure as officebased, even temporarily. Therefore, we
are assigning payment indicator ‘‘G2’’ to
CPT code 68816 for CY 2009.
After consideration of the public
comments received, as displayed in
Table 45, we are adopting for CY 2009
the following payment indicators for
those procedures that were designated
temporarily office-based for CY 2008
and for which we proposed to maintain
their CY 2009 designation as
temporarily office-based.
TABLE 45—FINAL CY 2009 PAYMENT INDICATORS FOR CY 2008 OFFFICE-BASED PROCEDURES FOR WHICH THEIR
PROPOSED CY 2009 DESIGNATION WAS TEMPORARILY OFFICE-BASED*
CY 2009 HCPCS
code
0099T
0124T
21073
55876
67229
68816
C9728
......................
......................
......................
......................
......................
......................
.....................
CY 2008
ASC payment
indicator
CY 2009 short descriptor
Implant corneal ring ............................................................................................
Conjunctival drug placement ..............................................................................
Mnpj of tmj w/anesthesia ...................................................................................
Place rt device/marker, pros ..............................................................................
Tr retinal les preterm inf .....................................................................................
Probe nl duct w/balloon ......................................................................................
Place device/marker, non pro ............................................................................
R2*
R2*
P3*
P3*
R2*
P3*
R2*
Proposed
CY 2009
ASC payment
indicator
R2*
R2*
P3*
P3*
R2*
P3*
R2*
Final CY
2009 ASC
payment
indicator
R2*
R2*
P3*
P3*
R2*
G2
R2*
dwashington3 on PRODPC61 with RULES2
* If designation is temporary.
Displayed in Table 46 are new CY
2009 HCPCS codes (excluding
renumbered codes) to which we have
assigned temporary office-based
payment indicators. As explained in
section XV.D.1. of this final rule with
comment period, we reviewed all of the
newly created HCPCS codes that
became available after the issuance of
the CY 2009 OPPS/ASC proposed rule
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that will be used to report surgical
procedures in CY 2009 to evaluate their
appropriateness for the ASC list of
covered surgical procedures. Of the 16
new CY 2009 HCPCS codes that we
determined should not be excluded
from the ASC list based on our clinical
review, including assessment of
available utilization and volume data for
any closely related procedures and
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consideration of other available
information, we determined that three
of the procedures would usually be
performed in physicians’ offices.
However, because we had no utilization
data for the procedures described by
these new HCPCS codes, we made the
office-based designations temporary
rather than permanent and will
reevaluate the procedures when data
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become available. The temporary
payment indicators for the three officebased procedures displayed in Table 46
are interim designations and are open to
public comment during the 60-day
comment period for this final rule with
comment period. HCPCS codes that are
new for CY 2009 are designated with an
‘‘NI’’ comment indicator in Addenda
AA. We will respond to public
68733
comments on the interim designations
in the CY 2010 OPPS/ASC final rule
with comment period.
TABLE 46—CY 2009 PAYMENT INDICATORS FOR NEW CY 2009 HCPCS CODES FOR ASC COVERED SURGICAL
PROCEDURES ASSIGNED TEMPORARY OFFICE-BASED PAYMENT INDICATORS ON AN INTERIM BASIS
CY 2009
Interim ASC
payment
indicator
CY 2009 HCPCS code
CY 2009 long descriptor
46930 ...............................
Destruction of internal hemorrhoid(s) by thermal energy (eg, infrared coagulation, cautery, radiofrequency).
Injection(s), anesthetic agent and/or steroid, plantar common digital nerve(s) (eg, Morton’s
neuroma).
Destruction by neurolytic agent; plantar common digital nerve ............................................................
64455 ...............................
64632 ...............................
P3*
P3*
P3*
* If designation is temporary.
c. Covered Surgical Procedures
Designated as Device-Intensive
dwashington3 on PRODPC61 with RULES2
(1) Background
As discussed in the August 2, 2007
ASC final rule (72 FR 42503 through
42508), we adopted a modified payment
methodology for calculating the ASC
payment rates for covered surgical
procedures that are assigned to the
subset of OPPS device-dependent APCs
with a device offset percentage greater
than 50 percent under the OPPS, in
order to ensure that payment for the
procedure is adequate to provide
packaged payment for the high-cost
implantable devices used in those
procedures. We assigned payment
indicators ‘‘H8’’ (Device-intensive
procedure on ASC list in CY 2007; paid
at adjusted rate) and ‘‘J8’’ (Deviceintensive procedure added to ASC list
in CY 2008 or later; paid at adjusted
rate) to identify the procedures that
were eligible for ASC payment
calculated according to the modified
methodology, depending on whether the
procedure was included on the ASC list
of covered surgical procedures prior to
CY 2008 and therefore, subject to
transitional payment as discussed in the
CY 2009 OPPS/ASC proposed rule (73
FR 41530). The 45 ‘‘device-intensive’’
procedures for which the modified rate
calculation methodology applies in CY
2008 were displayed in Table 56 and in
Addendum AA to the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66843 and 66945 through 66993).
(2) Changes to List of Covered Surgical
Procedures Designated as DeviceIntensive for CY 2009
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41528 through 41529), we
proposed to update the ASC list of
covered surgical procedures that are
eligible for payment according to the
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device-intensive procedure payment
methodology for CY 2009, consistent
with the proposed OPPS devicedependent APC update, reflecting the
proposed APC assignments of
procedures, designation of APCs as
device-dependent, and APC device
offset percentages based on CY 2007
claims data. OPPS device-dependent
APCs are discussed further in section
II.A.2.d.(1) of this final rule with
comment period. The ASC covered
surgical procedures that we proposed to
designate as device-intensive and that
would be subject to the device-intensive
procedure payment methodology were
listed in Table 41 of the CY 2009 OPPS/
ASC proposed rule (73 FR 41529
through 41530). The HCPCS code, the
HCPCS code short descriptor, the
proposed payment indicator, the
proposed CY 2009 OPPS APC
assignment, and the proposed CY 2009
OPPS APC device offset percentage
were also listed in Table 41 of the
proposed rule. Each proposed deviceintensive procedure was assigned
payment indicator ‘‘H8’’ or ‘‘J8,’’
depending on whether it is subject to
transitional payment, and all of these
codes were included in Addendum AA
to the CY 2009 OPPS/ASC proposed
rule.
Comment: The commenters generally
supported the continuation of a
modified payment methodology for ASC
covered surgical procedures designated
as device-intensive. However, several
commenters stated that many of the
procedures CMS identifies as devicedependent under the OPPS are not
treated as device-intensive under the
revised ASC payment system, and that
the resulting ASC payment rates
proposed for these procedures are too
low to ensure patient access to these
procedures in the ASC setting.
According to these commenters, the
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placement of an APC on the OPPS
device-dependent list means that a
significant portion of the procedure cost
is not influenced by factors such as
labor costs. They argued that ASC
procedures that are device-dependent
under the OPPS should likewise be
protected from the full application of
the ASC conversion factor, in order to
properly account for the fixed cost of
the device or implant, and
recommended that CMS treat as deviceintensive all ASC procedures that are
assigned to an OPPS device-dependent
APC.
The commenters expressed general
concerns about the payment adequacy
of procedures mapping to OPPS devicedependent APC 0083 (Coronary or NonCoronary Angioplasty and Percutaneous
Valvuloplasty); APC 0115 (Cannula/
Access Device Procedures); APC 0202
(Level VII Female Reproductive
Procedures); and APC 0623 (Level III
Vascular Access Procedures). Some
commenters asked that CMS reconsider
the criteria for recognizing procedures
as device-intensive for ASC payment
purposes to include procedures where
the OPPS device offset percentage is
lower than 50 percent, while others
requested that CMS add to the ASC list
of device-intensive procedures those
procedures that require items that
would have been separately payable
under the Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies
(DMEPOS) fee schedule prior to the
implementation of the revised ASC
payment system on January 1, 2008.
Several commenters did not request
that CMS modify the methodology for
designating ASC covered surgical
procedures as device-intensive, but
requested that specific procedures that
were not included in Table 41 of the CY
2009 OPPS/ASC proposed rule (73 FR
41529 through 41530) be recognized as
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device-intensive in CY 2009. Some
commenters argued that the procedures
described by the following codes always
require the use of an auditory
osseointegrated device and should be
considered device-intensive for ASC
payment purposes: CPT code 69714
(Implantation, osseointegrated implant,
temporal bone, with percutaneous
attachment to external speech
processor/cochlear stimulator; without
mastoidectomy); CPT code 69715
(Implantation, osseointegrated implant,
temporal bone, with percutaneous
attachment to external speech
processor/cochlear stimulator; with
mastoidectomy); CPT code 69717
(Replacement (including removal of
existing device), osseointegrated
implant, temporal bone, with
percutaneous attachment to external
speech processor/cochlear stimulator;
without mastoidectomy); and CPT code
69718 (Replacement (including removal
of existing device), osseointegrated
implant, temporal bone, with
percutaneous attachment to external
speech processor/cochlear stimulator;
with mastoidectomy). According to
these commenters, the proposed ASC
payment rate of approximately $3,086
would be inadequate to cover the device
costs associated with these procedures
and, therefore, would prevent ASCs
from providing these services. The
commenters added that these CPT codes
map to device-dependent APC 0425
(Level II Arthroplasty or Implantation
with Prosthesis), and that it is
inconsistent for a procedure to be
considered device-driven in one setting
of care and not another setting of care.
Several commenters also pointed out
that CPT code 19296 (Placement of
radiotherapy afterloading balloon
catheter into the breast for interstitial
radioelement application following
partial mastectomy, includes imaging
guidance; on date separate from partial
mastectomy) and CPT code 19297
(Placement of radiotherapy afterloading
balloon catheter into the breast for
interstitial radioelement application
following partial mastectomy, includes
imaging guidance; concurrent with
partial mastectomy), which map to
OPPS device-dependent APC 0648
(Level IV Breast Surgery), require the
use of a device that has a list price that
clearly exceeds 50 percent of the
median costs calculated for those CPT
codes and, therefore, concluded that
these procedures should be added to the
ASC list of device-intensive procedures.
Response: We appreciate commenters’
recommendations on how we should
designate procedures as deviceintensive under the revised ASC
payment system. In the August 2, 2007
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revised ASC payment system final rule
(72 FR 42508), we established that the
modified payment methodology for
calculating ASC payment rates for
device-intensive procedures shall apply
to ASC covered surgical procedures that
are assigned to device-dependent APCs
under the OPPS for the same calendar
year, where those APCs have a device
cost of greater than 50 percent of the
APC cost (that is, the device offset
percentage is greater than 50). We
believe these criteria ensure that ASC
payment rates are adequate to provide
packaged payment for high cost
implantable devices and ensure
beneficiaries have access to these
procedures in all appropriate care
settings. We do not agree that we should
change our criteria and treat as deviceintensive all ASC services that map to
OPPS device-dependent APCs, or the
subset of procedures that are assigned to
OPPS device-dependent APCs with
device offset percentages less than 50
percent, regardless of whether those
procedures require items that would
have been separately payable under the
DMEPOS fee schedule prior to the
implementation of the revised ASC
payment system on January 1, 2008.
Under the modified payment
methodology for ASC covered surgical
procedures designated as deviceintensive, we separately determine both
the device payment and service
payment portions of the ASC payment
rate, and apply the ASC conversion
factor only to the specially calculated
OPPS relative payment weight for the
service portion, while providing the
same packaged payment for the device
portion as would be made under the
OPPS. The 50-percent device offset
threshold is established to ensure that
the ASC conversion factor is not applied
to the costs of high cost implantable
devices, which likely do not vary
between ASCs and OPPS hospitals in
the same manner service costs have
been shown to vary. We believe that
when device costs comprise less than 50
percent of total procedure costs, those
costs are less likely to be as predictable
across sites-of-service. Accordingly, we
believe that it is possible for ASCs to
achieve efficiencies relative to OPPS
hospitals when providing those
procedures, and that the application of
the ASC conversion factor to the entire
ASC payment weight is appropriate.
We note that, due to additional claims
and revised cost report data that have
become available since we issued the
CY 2009 OPPS/ASC proposed rule, the
OPPS device offset percentage for
device-dependent APC 0425 is now
greater than 50 percent. Therefore, the
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procedures that are on the list of ASC
covered surgical procedures and
assigned to this APC, including auditory
osseointegrated device implantation
procedures, are designated as deviceintensive for ASC payment purposes for
CY 2009, as shown in Table 47 below.
However, the device offset percentages
for APC 0083, APC 0115, APC 0202,
APC 0623, and APC 0648 remain below
50 percent based on the CY 2007 claims
data available for this final rule with
comment period. Therefore, the surgical
procedures that are assigned to these
APCs under the OPPS and that are on
the ASC list of covered surgical
procedures are not considered to be
device-intensive procedures for CY 2009
and they are not subject to the modified
ASC payment methodology.
Comment: Some commenters urged
CMS to move to the fully implemented
transitional payment rate in CY 2009 for
procedures that require implantable
devices but are not designated as
device-intensive. According to
commenters, ASCs cannot afford to
perform procedures with significant
device costs for which no payment for
the device is made during the transition.
Commenters offered as an example the
procedure described by CPT code 26535
(Arthroplasty, interphalangeal joint;
each joint), which requires implantation
of a prosthetic joint. Commenters noted
that because the procedure does not
map to a device-dependent APC and is
not considered device-intensive for ASC
payment purposes, the procedure would
not be economically feasible to perform
in the ASC setting until full
implementation of the revised ASC
payment rates in CY 2011. Some
commenters stated that the payment
rates calculated for ASC deviceintensive procedures that are subject to
transitional payment also are too low.
One commenter recommended that
CMS exempt CPT code 51715
(Endoscopic injection of implant
material into the submucosal tissues of
the urethra and/or bladder neck) from
the 4-year transition and immediately
adopt the ‘‘fully implemented’’ ASC
payment rate in order to recognize more
appropriately the procedure’s device
costs. The commenter calculated the
OPPS device offset percentage of CPT
code 51715 and found that it equals 29
percent of the CY 2009 OPPS proposed
payment rate for CPT code 51715, but
68 percent of the CY 2009 ASC
proposed payment rate. According to
the commenter, prior to implementation
of the revised ASC payment system on
January 1, 2008, ASCs would have
received payment for these high device
costs under the DMEPOS fee schedule
rather than through the ASC facility
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payment for CPT code 51715. The
commenter reasoned that since the
devices are no longer paid separately,
the procedure described by CPT code
51715 is in the same situation as a
procedure code that is newly assigned
to payment in the ASC setting (that is,
there is no longer a relevant payment
within the prior ASC system upon
which to base the transition). The
commenter concluded that this was an
analogous case warranting the same
remedy of full implementation of the
ASC rate without phase-in.
Several commenters argued that CMS
should not subject procedures that were
on the ASC list of covered surgical
procedures in CY 2007 but were rarely
performed in ASCs prior to 2008 to the
transitional adjustment. One commenter
provided its data analysis demonstrating
that CPT code 55873 (Cryosurgical
ablation of the prostate (includes
ultrasonic guidance for interstitial
cryosurgical probe placement)) was
present on three ASC claims in CY
2007, on one claim in CY 2006, and was
not billed at all by ASCs in CY 2005.
According to the commenters, the
transitional payment for CPT code
55873 is inadequate to cover ASCs’
costs of providing the procedure and
will prevent beneficiaries from
accessing this procedure in the ASC
setting.
Response: We do not agree that we
should move to the full revised ASC
payment rates in CY 2009 for all ASC
covered surgical procedures that may
require implantable devices but are not
designated as device-intensive for ASC
payment purposes. As we stated in the
August 2, 2007 revised ASC payment
system final rule (72 FR 42520), the
transition to the fully implemented
revised ASC payment system should not
be asymmetrical, meaning that
procedures with decreasing payments
under the revised payment system
should not be transitioned differently
from those with increasing payments.
We also do not agree that procedures
not designated as device-intensive that
require items that would have been
separately payable under the DMEPOS
fee schedule prior to the
implementation of the revised ASC
payment system on January 1, 2008, are
in the same situation as a procedure
code that is newly covered in the ASC
setting, and thus not subject to the
transition.
As stated above, only those ASC
covered surgical procedures that are
assigned to OPPS device-dependent
APCs and have OPPS device offset
percentages greater than 50 percent are
designated as device-intensive for ASC
payment purposes. CPT code 26535 and
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CPT code 51715 are not assigned to
OPPS device-dependent APCs, and thus
do not meet the criteria established for
designating ASC covered surgical
procedures as device-intensive.
Accordingly, we do not distinguish
between the device and service portions
of ASC payment for these procedures,
and the transitional adjustment is
applied to the total ASC payment rates.
As established in regulation at
§ 416.171(c), the transitional adjustment
applies to all services on the CY 2007
ASC list of covered services. We cannot
make an exception for procedures, such
as the one described by CPT code
55873, that were on the CY 2007 ASC
list of covered services but were rarely
performed in ASCs according to
commenters.
We disagree with commenters that
payment rates for ASC device-intensive
procedures that are subject to
transitional payment also are too low.
Consistent with the approach under the
modified payment methodology for ASC
covered surgical procedures designated
as device-intensive whereby we only
apply the ASC conversion factor to the
service payment portion of the ASC
payment rate and not the device
payment portion, we also apply the
transition policy differentially to the
device and service payment portions of
the total ASC payment. While we do not
subject the device payment portion of
the total ASC payment for the procedure
to the transition policy, we do transition
the service payment portion of the total
ASC payment for the procedure over the
4-year phase-in period. As described in
the August 2, 2007 revised ASC
payment system final rule (72 FR
42521), during each of the transition
years, when the CY 2007 ASC payment
rate for a device-intensive procedure
that did not previously include
packaged ASC payment for the
implantable device itself is blended
with the payment developed under the
methodology of the revised ASC
payment system that would otherwise
package the device payment, the full
device payment amount is paid to ASCs
in the transition year, with blended
payment determined only for the service
portion of the ASC payment, for which
a corresponding CY 2007 ASC payment
rate exists. This specific transition
approach helps ensure that ASCs
receive appropriate packaged payment
for implantable devices during the
transition years, even though payment
for such devices is generally not
included in their base CY 2007 ASC
payment rate.
Comment: Some commenters urged
CMS not to adjust the device-or
implant-related portion of ASC payment
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68735
by the Medicare wage index. According
to commenters, the acquisition of
devices and implants occurs on a
national market, and ASCs in rural areas
pay approximately the same for medical
devices and equipment as are facilities
in more expensive labor markets. The
commenters stated that CMS is
underpaying device costs in markets
where the wage index is low, and
overpaying in markets where the wage
index is high. The commenters
recommended CMS use the OPPS
device offset percentage where
calculated for OPPS device-dependent
procedures to determine what portion of
the ASC payment should be excluded
from wage index adjustment. For other
services that are not device-dependent
under the OPPS, commenters
recommended CMS calculate the
amount of the payment attributable to
the median device cost and apply the
wage index to the remainder of the
payment.
Response: We do not believe it is
appropriate to vary the percentage of the
national payment that is wage adjusted
for different services. Under the revised
ASC payment system, we utilize 50
percent as the labor-related share to
adjust national ASC payment rates for
geographic wage differences. We apply
to ASC payments the IPPS pre-floor,
pre-reclassification wage index values
associated with the June 2003 OMB
geographic localities, as recognized
under the IPPS and OPPS, in order to
adjust the labor-related portion of the
national ASC payment rates for
geographic wage differences. Consistent
with the OPPS, we apply the ASC
geographic wage adjustment to the
entire ASC payment rate for deviceintensive procedures. MedPAC has
indicated its intent to evaluate CMS’
method for adjusting payments for
variations in labor costs in light of
differences in labor-related costs for
device-implantation services. We look
forward to reviewing the results of its
evaluation, as well as any
recommendations it may provide,
regarding the OPPS or ASC wage
adjustment policy.
Comment: Commenters expressed
concern that the payment increase
proposed for cochlear implant
procedures would be insufficient to
cover the true costs associated with the
cochlear implant device, described by
HCPCS code L8614 (Cochlear device,
includes all internal and external
components), and related surgical
procedure, described by CPT code
69930 (Cochlear device implantation,
with or without mastoidectomy), which
is assigned to OPPS device-dependent
APC 0259 (Level VII ENT Procedures).
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In order to preserve access to this
service in the ASC setting, commenters
urged CMS to reconsider the CY 2009
proposed ASC payment rate of
approximately $22,744 based on
estimates of the selling price of the
cochlear implant device as calculated
using hospital invoice data supplied
separately by the two leading cochlear
implant manufacturers. Other
commenters encouraged CMS to
continue to monitor and adjust
payments for cochlear implant claims
including CPT code 69930 paired with
HCPCS code L8614.
Response: We calculate the ASC
relative payment weights using the
OPPS relative weights, which are based
on hospitals’ costs as reported on claims
and in cost reports. As discussed in
section II.A.2.d.(1). of this final rule
with comment period, we disagree with
the commenters that it would be
appropriate to use external pricing
information in place of the costs derived
from the claims and Medicare cost
report data for APC 0259 because we
believe that to do so would distort the
relativity that is fundamental to the
integrity of the OPPS. We do not believe
it would be appropriate to deviate from
our standard ratesetting methodologies,
either for OPPS device-dependent APCs
or ASC device-intensive procedures,
based on manufacturer estimates of a
particular device’s selling price relative
to the OPPS or ASC payment rate.
Comment: One commenter requested
CMS adjust the OPPS device offset
percentages for ASC device-intensive
payment purposes to account for the
effects of charge compression.
According to the commenter, CMS
should ‘‘decompress’’ the supply
median costs to minimize any artificial
reductions that charge compression
causes in the estimate of the OPPS
device offset percentages.
Response: As discussed in section
II.A.1.c.(2) of this final rule with
comment period, for CY 2009, we are
not adopting any short-term statistical
regression-based adjustments under the
OPPS that would serve to ‘‘decompress’’
the median costs for procedures
involving devices, or for any other
procedures. Rather, we are focusing on
long-term changes to Medicare cost
reporting to address the effects of charge
compression, including the creation of
two new cost centers, Medical Supplies
Charged to Patients and Implantable
Devices Charged to Patients, to replace
the current cost center called Supplies
Charged to Patient as discussed in
section II.A.1.c.(2) of this final rule with
comment period. We believe that this
change to how hospitals report costs for
devices and supplies will improve our
future estimates of costs related to high
cost implantable devices, including the
device offset percentages upon which
we base the device portion of ASC
payment rates for device-intensive
procedures.
Comment: One commenter
recommended that CMS adopt the OPPS
concepts of pass-through payments and
New Technology APCs into the ASC
payment system. According to the
commenter, adequate payment for
newer advanced technologies in the
most appropriate setting will ensure
optimum care for Medicare
beneficiaries.
Response: Under the revised ASC
payment system, we provide separate
payment at contractor-priced rates for
devices that are included in device
categories with pass-through status
under the OPPS when the devices are an
integral part of a covered surgical
procedure. As discussed in section IV.A.
of this final rule with comment period,
new pass-through device categories may
be established on a quarterly basis, but
currently there are no OPPS device
pass-through categories that would
continue for OPPS pass-through
payment (and, correspondingly,
separate ASC payment) in CY 2009.
New technology surgical procedures
described by Category III CPT codes or
Level II HCPCS codes that crosswalk
directly or are clinically similar to
established procedures already on the
ASC list of covered surgical procedures,
including those assigned to New
Technology APCs under the OPPS, are
eligible for ASC payment if we believe
they would not be expected to pose a
significant risk to the safety of Medicare
beneficiaries and to require an overnight
stay when provided in an ASC.
Under the OPPS, new technology
procedures that are not eligible for passthrough payment may be assigned
temporarily to a New Technology APC.
Those APCs are designated by cost
bands, with payment under the OPPS at
the midpoint of the cost band, and were
created to allow CMS to make
appropriate and consistent payment for
new procedures, based on their
estimated costs, that are not yet
reflected in OPPS claims data. This
OPPS methodology provides a
mechanism for timely Medicare
payment for some new technologies.
ASC payment for procedures assigned to
New Technology APCs under the OPPS
and included on the ASC list of covered
surgical procedures is made at the ASC
rate calculated according to the standard
methodology for the ASC payment
system. Thus, ASCs have the same
timely access to payment for any new
technology procedure that is a covered
ASC surgical procedure assigned to a
New Technology APC under the OPPS.
We do not believe it is necessary to
implement any additional ASC-specific
policies to ensure adequate payment for
newer advanced technologies in the
ASC setting. As discussed in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66843), we
believe these policies serve to
appropriately incorporate payment for
new technologies under the revised ASC
payment system. After consideration of
the public comments received, we are
designating the ASC covered surgical
procedures displayed in Table 47 below
as device-intensive for CY 2009.
TABLE 47—ASC COVERED SURGICAL PROCEDURES DESIGNATED AS DEVICE-INTENSIVE FOR CY 2009
CY 2009
HCPCS
code
Final CY 2009
OPPS APC
24361 ........
dwashington3 on PRODPC61 with RULES2
CY 2009 short descriptor
Final CY 2009 ASC
payment indicator
Reconstruct elbow joint ..................
H8 ..........................
0425
24363 ........
Replace elbow joint ........................
H8 ..........................
0425
24366 ........
Reconstruct head of radius ............
H8 ..........................
0425
25441 ........
Reconstruct wrist joint ....................
H8 ..........................
0425
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CY 2009 OPPS APC title
Level II Arthroplasty
with Prosthesis.
Level II Arthroplasty
with Prosthesis.
Level II Arthroplasty
with Prosthesis.
Level II Arthroplasty
with Prosthesis.
E:\FR\FM\18NOR2.SGM
Final CY 2009
devicedependent
APC offset
percentage
or Implantation
59
or Implantation
59
or Implantation
59
or Implantation
59
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68737
TABLE 47—ASC COVERED SURGICAL PROCEDURES DESIGNATED AS DEVICE-INTENSIVE FOR CY 2009—Continued
CY 2009
HCPCS
code
Final CY 2009
OPPS APC
25442 ........
Reconstruct wrist joint ....................
H8 ..........................
0425
25446 ........
Wrist replacement ...........................
H8 ..........................
0425
27446 ........
33206 ........
Revision of knee joint .....................
Insertion of heart pacemaker ..........
J8 ...........................
J8 ...........................
0681
0089
33207 ........
Insertion of heart pacemaker ..........
J8 ...........................
0089
33208 ........
Insertion of heart pacemaker ..........
J8 ...........................
0655
33212 ........
Insertion of pulse generator ............
H8 ..........................
0090
33213 ........
Insertion of pulse generator ............
H8 ..........................
0654
33214 ........
Upgrade of pacemaker system ......
J8 ...........................
0655
33224 ........
Insert pacing lead & connect ..........
J8 ...........................
0418
33225 ........
Lventric pacing lead add-on ...........
J8 ...........................
0418
33240 ........
Insert pulse generator .....................
J8 ...........................
0107
33249 ........
Eltrd/insert pace-defib .....................
J8 ...........................
0108
33282 ........
Implant pat-active ht record ............
J8 ...........................
0680
53440 ........
Male sling procedure ......................
H8 ..........................
0385
53444 ........
Insert tandem cuff ...........................
H8 ..........................
0385
53445 ........
Insert uro/ves nck sphincter ...........
H8 ..........................
0386
53447 ........
Remove/replace ur sphincter ..........
H8 ..........................
0386
54400 ........
Insert semi-rigid prosthesis .............
H8 ..........................
0385
54401 ........
Insert self-contd prosthesis .............
H8 ..........................
0386
54405 ........
Insert multi-comp penis pros ..........
H8 ..........................
0386
54410 ........
Remove/replace penis prosth .........
H8 ..........................
0386
54416 ........
Remv/repl penis contain pros .........
H8 ..........................
0386
55873 ........
61885 ........
Cryoablate prostate ........................
Insrt/redo neurostim 1 array ...........
H8 ..........................
H8 ..........................
0674
0039
61886 ........
Implant neurostim arrays ................
H8 ..........................
0315
62361 ........
Implant spine infusion pump ...........
H8 ..........................
0227
62362 ........
Implant spine infusion pump ...........
H8 ..........................
0227
63650 ........
Implant neuroelectrodes .................
H8 ..........................
0040
63655 ........
dwashington3 on PRODPC61 with RULES2
CY 2009 short descriptor
Final CY 2009 ASC
payment indicator
Implant neuroelectrodes .................
J8 ...........................
0061
63685 ........
Insrt/redo spine n generator ...........
H8 ..........................
0222
64553 ........
Implant neuroelectrodes .................
H8 ..........................
0040
64555 ........
Implant neuroelectrodes .................
J8 ...........................
0040
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CY 2009 OPPS APC title
Level II Arthroplasty or Implantation
with Prosthesis.
Level II Arthroplasty or Implantation
with Prosthesis.
Knee Arthroplasty ...........................
Insertion/Replacement of Permanent Pacemaker and Electrodes.
Insertion/Replacement of Permanent Pacemaker and Electrodes.
Insertion/Replacement/Conversion
of a permanent dual chamber
pacemaker.
Insertion/Replacement of Pacemaker Pulse Generator.
Insertion/Replacement of a permanent dual chamber pacemaker.
Insertion/Replacement/Conversion
of a permanent dual chamber
pacemaker.
Insertion of Left Ventricular Pacing
Elect..
Insertion of Left Ventricular Pacing
Elect..
Insertion
of
CardioverterDefibrillator.
Insertion/Replacement/Repair
of
Cardioverter-Defibrillator Leads.
Insertion of Patient Activated Event
Recorders.
Level I Prosthetic Urological Procedures.
Level I Prosthetic Urological Procedures.
Level II Prosthetic Urological Procedures.
Level II Prosthetic Urological Procedures.
Level I Prosthetic Urological Procedures.
Level II Prosthetic Urological Procedures.
Level II Prosthetic Urological Procedures.
Level II Prosthetic Urological Procedures.
Level II Prosthetic Urological Procedures.
Prostate Cryoablation .....................
Level
I
Implantation
of
Neurostimulator.
Level
III
Implantation
of
Neurostimulator.
Implantation of Drug Infusion Device.
Implantation of Drug Infusion Device.
Percutaneous
Implantation
of
Neurostimulator Electrodes.
Laminectomy, Laparoscopy, or Incision
for
Implantation
of
Neurostimulator Electr.
Level
II
Implantation
of
Neurostimulator.
Percutaneous
Implantation
of
Neurostimulator Electrodes.
Percutaneous
Implantation
of
Neurostimulator Electrodes.
E:\FR\FM\18NOR2.SGM
18NOR2
Final CY 2009
devicedependent
APC offset
percentage
59
59
71
72
72
76
74
77
76
71
71
89
88
71
59
59
69
69
59
69
69
69
69
59
84
88
82
82
57
62
85
57
57
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TABLE 47—ASC COVERED SURGICAL PROCEDURES DESIGNATED AS DEVICE-INTENSIVE FOR CY 2009—Continued
CY 2009
HCPCS
code
CY 2009 short descriptor
Final CY 2009 ASC
payment indicator
Final CY 2009
OPPS APC
64560 ........
Implant neuroelectrodes .................
J8 ...........................
0040
64561 ........
Implant neuroelectrodes .................
H8 ..........................
0040
64565 ........
Implant neuroelectrodes .................
J8 ...........................
0040
64573 ........
Implant neuroelectrodes .................
H8 ..........................
0225
64575 ........
Implant neuroelectrodes .................
H8 ..........................
0061
64577 ........
Implant neuroelectrodes .................
H8 ..........................
0061
64580 ........
Implant neuroelectrodes .................
H8 ..........................
0061
64581 ........
Implant neuroelectrodes .................
H8 ..........................
0061
64590 ........
Insrt/redo pn/gastr stimul ................
H8 ..........................
0039
65770 ........
Revise cornea with implant ............
H8 ..........................
0293
69714 ........
Implant temple bone w/stimul .........
H8 ..........................
0425
69715 ........
Temple bne implnt w/stimulat .........
H8 ..........................
0425
69717 ........
Temple bone implant revision ........
H8 ..........................
0425
69718 ........
Revise temple bone implant ...........
H8 ..........................
0425
69930 ........
Implant cochlear device ..................
H8 ..........................
0259
dwashington3 on PRODPC61 with RULES2
d. Surgical Procedures Removed From
the OPPS Inpatient List for CY 2009
As discussed in section XV.C.3. of
this final rule with comment period, we
will evaluate all procedures at the time
they are removed from the OPPS
inpatient list for inclusion on the ASC
list of covered surgical procedures. The
final list of procedures removed from
the inpatient list for CY 2009 may be
found in section XI.B. of this final rule
with comment period.
We evaluated each of the 12
procedures removed from the OPPS
inpatient list for CY 2009. We
determined that all of these procedures
will be excluded from the ASC list of
covered surgical procedures for CY 2009
because they may be expected to pose
a significant risk to beneficiary safety in
ASCs or require an overnight stay. The
procedures will be evaluated again as
part of our annual review of excluded
surgical procedures in preparation for
the CY 2010 update to the ASC payment
system.
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CY 2009 OPPS APC title
Percutaneous
Implantation
of
Neurostimulator Electrodes.
Percutaneous
Implantation
of
Neurostimulator Electrodes.
Percutaneous
Implantation
of
Neurostimulator Electrodes.
Implantation of Neurostimulator
Electrodes, Cranial Nerve.
Laminectomy, Laparoscopy, or Incision
for
Implantation
of
Neurostimulator Electr.
Laminectomy, Laparoscopy, or Incision
for
Implantation
of
Neurostimulator Electr.
Laminectomy, Laparoscopy, or Incision
for
Implantation
of
Neurostimulator Electr.
Laminectomy, Laparoscopy, or Incision
for
Implantation
of
Neurostimulator Electr.
Level
I
Implantation
of
Neurostimulator.
Level V Anterior Segment Eye Procedures.
Level II Arthroplasty or Implantation
with Prosthesis.
Level II Arthroplasty or Implantation
with Prosthesis.
Level II Arthroplasty or Implantation
with Prosthesis.
Level II Arthroplasty or Implantation
with Prosthesis.
Level VII ENT Procedures ..............
2. Covered Ancillary Services
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41530), we proposed to
update the ASC list of covered ancillary
services to reflect the services’ proposed
separate payment status under the CY
2009 OPPS. Maintaining consistency
with the OPPS resulted in proposed
changes to ASC payment indicators
because some covered ancillary services
that are paid separately under the
revised ASC payment system in CY
2008 were proposed for packaged status
under the OPPS for CY 2009. Comment
indicator ‘‘CH,’’ as discussed in section
XV.F. of the CY 2009 OPPS/ASC
proposed rule (73 FR 41537), was used
in Addendum BB to that proposed rule
to indicate covered ancillary services for
which we proposed a change in the ASC
payment indicator to reflect, for
example, our proposal to package
payment for the service under the CY
2009 ASC payment system consistent
with its proposed treatment under the
CY 2009 OPPS.
Comment: Several commenters
requested that CMS remove CPT codes
77520 (Proton treatment delivery;
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Final CY 2009
devicedependent
APC offset
percentage
57
57
57
62
62
62
62
62
84
65
59
59
59
59
84
simple, without compensation); 77522
(Proton treatment delivery; simple, with
compensation); 77523 (Proton treatment
delivery; intermediate); and 77525
(Proton treatment delivery; complex)
from the list of covered ancillary
services. The reasons the commenters
provided for this request are that proton
beam therapy is never provided integral
to a surgical procedure and, as such,
would never be eligible for payment in
ASCs and providing proton beam
therapy requires a much larger capital
investment than would be feasible for
ASCs. The commenters believed that
because the services would not be
provided in ASCs, including them on
the list of covered ancillary services was
unnecessary, and that having ASC rates
published for the services could result
in confusion on the part of other payers
who mistakenly believe that the
published Medicare ASC rates for
proton beam therapy are actually used
by Medicare to pay for those services
when they are performed alone.
Response: While we understand the
commenters’ concerns, our policy is to
include as covered ancillary services all
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procedures with CPT codes in the
radiology range of CPT, specifically CPT
codes 70000 through 79999 (72 FR
42497). We do not evaluate those
services to determine whether or not
they would ever be provided in ASCs
integral to covered surgical procedures.
By definition, CPT codes 77520, 77522,
77523 and 77525 are included as
covered ancillary services and,
therefore, we are not removing proton
beam therapy codes from that list for CY
2009.
Comment: Several commenters
requested that HCPCS codes G0339
(Image guided robotic linear acceleratorbased stereotactic radiosurgery,
complete course of therapy in one
session, or first session of fractionated
treatment) and G0340 (Image guided
robotic linear accelerator-based
stereotactic radiosurgery, delivery
including collimator changes and
custom plugging, fractionated treatment,
all lesions, per session, second through
fifth sessions, maximum five sessions
per course of treatment); and CPT codes
0071T (Focused ultrasound ablation of
uterine leiomyomata, including MR
guidance; total leiomyomata volume
less than 200 cc of tissue) and 0072T
(Focused ultrasound ablation of uterine
leiomyomata, including MR guidance;
total leiomyomata volume greater or
equal to 200 cc of tissue) be removed
from the ASC list of covered ancillary
services and instead be included on the
ASC list of covered surgical procedures.
The commenters stated that these
services are surgical procedures.
One commenter asserted that the
procedures described by HCPCS codes
G0339 and G0340 require joint
participation of a surgeon and a
radiation oncologist and treat tumors
that have not responded to traditional
radiation therapy. As procedures that
can be provided without a covered
surgical procedure, the commenter
requested that CMS allow the
procedures to be eligible for separate
payment in ASCs as covered surgical
procedures. Similarly, the commenter
contended that the procedures reported
by CPT codes 0071T and 0072T also are
noninvasive surgical procedures that
should be payable as covered surgical
procedures in ASCs. The commenter
noted that CMS defined those two
procedures as noninvasive surgical
procedures in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66710).
Response: While we originally
included the services described by CPT
codes 0071T and 0072T on the list of
covered ancillary services because of the
similarities between these services and
stereotactic radiosurgery services and,
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although they are assigned to the same
APCs under the OPPS as stereotactic
radiosurgery services, we agree with the
commenter that they are not sufficiently
similar to services in the radiology range
of CPT codes to be placed on the list of
covered ancillary services. Therefore,
we are not including them in
Addendum BB to this final rule with
comment period.
We define surgical procedures as
those described by Category I CPT codes
in the surgical range from 10000
through 69999, as well as those Category
III CPT codes and Level II HCPCS codes
that directly crosswalk or are clinically
similar to ASC covered surgical
procedures (72 FR 42478). Because
Category III CPT codes 0071T and
0072T do not directly crosswalk and are
not clinically similar to any ASC
covered surgical procedures, we are not
placing them on the list of ASC covered
surgical procedures. Therefore, we are
not including them in Addendum AA to
this final rule with comment period.
We do not agree with the commenters
that G0339 and G0340 represent surgical
procedures. These HCPCS codes were
developed for reporting stereotactic
radiosurgery services under the OPPS
and crosswalk directly to CPT codes in
the radiology range of CPT. As such, we
are not removing HCPCS codes G0339
and G0340 from the ASC list of covered
ancillary services and we are not adding
them to the list of covered surgical
procedures. These HCPCS codes are
included in Addendum BB to this final
rule with comment period.
All CY 2009 ASC covered ancillary
services and their payment indicators
for CY 2009 are included in Addendum
BB to this final rule with comment
period.
F. ASC Payment for Covered Surgical
Procedures and Covered Ancillary
Services
1. Payment for Covered Surgical
Procedures
a. Background
Our final payment policy for covered
surgical procedures under the revised
ASC payment system is described in the
CY 2008 OPPS/ASC final rule with
comment period (72 FR 66828 through
66831). In that rule, we updated the CY
2008 rates for covered surgical
procedures with payment indicators of
‘‘A2,’’ ‘‘G2,’’ ‘‘H8,’’and ‘‘J8’’ using CY
2006 data, consistent with the CY 2008
OPPS update. We also updated the
payment amounts for office-based
procedures (payment indicators ‘‘P2,’’
‘‘P3,’’ and ‘‘R2’’) using the most recent
available MPFS and OPPS data. We
compared the estimated CY 2008 rate
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for each of the office-based procedures,
calculated according to the standard
methodology of the revised ASC
payment system to the MPFS nonfacility
PE RVU amount, to determine which
was the lower payment amount that,
therefore, would be the payment for the
procedure according to the final policy
of the revised ASC payment system (see
§ 416.171(d)).
Subsequent to publication of that rule,
the Congress enacted the Medicare,
Medicaid, and SCHIP Extension Act of
2007, Public Law 110–173. That law
required changes to the rates paid under
the MPFS for the first 6 months of CY
2008, and therefore, the ASC rates for
some office-based procedures were also
affected. We revised the CY 2008 ASC
payment rates and made them available
by posting them to the CMS Web site at:
https://www.cms.hhs.gov/ASCPayment/.
Subsequent to publication of the CY
2009 OPPS/ASC proposed rule, section
131 of the MIPPA, Public Law 110–275,
restored MPFS payments to the levels in
effect prior to July 1, 2008 for the
remainder of CY 2008 and increased the
update to the conversion factor for the
MPFS to 1.1 percent for CY 2009.
Therefore, the ASC rates for some officebased procedures and covered ancillary
radiology services for the second half of
CY 2008 were affected, and the CY 2009
conversion factor increase for the MPFS
also affects CY 2009 ASC payments for
certain of these services.
b. Update to ASC Covered Surgical
Procedure Payment Rates for CY 2009
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41530), we proposed CY
2009 payment rates for procedures with
payment indicator ‘‘G2’’ that were
calculated according to the standard
methodology of multiplying the
proposed CY 2009 ASC relative
payment weight for the procedure by
the proposed CY 2009 ASC conversion
factor (72 FR 42492 through 42493).
Also, according to our established
policy, we proposed CY 2009 payments
for procedures subject to the transitional
payment methodology (payment
indicators ‘‘A2’’ and ‘‘H8’’) using a
blend of 50 percent of the proposed CY
2009 ASC rate calculated according to
the standard or device-intensive
methodology, respectively, and 50
percent of the CY 2007 ASC payment
rate (72 FR 42520 through 42521).
We proposed payment rates for officebased procedures (payment indicators
‘‘P2,’’ ‘‘P3,’’ and ‘‘R2’’) and deviceintensive procedures not subject to
transitional payment (payment indicator
‘‘J8’’) calculated according to our
established policies (72 FR 42504 and
42511). Thus, we proposed to update
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the payment amounts for deviceintensive procedures based on the CY
2009 OPPS proposal that reflected
updated OPPS claims data and to make
payment for office-based procedures at
the lesser of the proposed CY 2009
MPFS nonfacility PE RVU amount or
the CY 2009 ASC payment amount
calculated according to the standard
methodology.
Comment: Several commenters
requested that CMS provide a higher
ASC payment for the procedure
reported by CPT code 0192T (Insertion
of anterior segment aqueous drainage
device, without extraocular reservoir;
external approach). Commenters stated
that the proposed ASC payment rate
was inadequate to cover the cost of the
device and, therefore, ASCs would not
be able to provide the procedures.
Response: As discussed fully in
section III.A.2. of this final rule with
comment period, we are reassigning
CPT code 0192T to APC 0673 (Level IV
Anterior Segment Eye Procedures) from
APC 0234 (Level III Anterior Segment
Eye Procedures), where it was proposed
for assignment under the CY 2009
OPPS. This code was first implemented
in July 2008, so is not subject to the
transition under the ASC payment
system. APC 0673 has a higher OPPS
payment rate for CY 2009 than the
proposed OPPS payment and, therefore,
the final CY 2009 ASC payment is also
higher than the proposed ASC rate. We
believe that the CY 2009 ASC payment
is appropriate and ensures access to this
procedure for Medicare beneficiaries in
ASCs.
Comment: One commenter was
concerned about the proposed payment
for HCPCS code G0393 (Transluminal
balloon angioplasty, percutaneous; for
maintenance of hemodialysis access,
arteriovenous fistula or graft; venous).
The commenter requested that CMS
correct the payment rate for G0393
because the commenter believed it
should be equal to the ASC payment for
CPT code 35476 (Transluminal balloon
angioplasty, percutaneous; venous). The
commenter noted that in past
regulations CMS crosswalked HCPCS
code G0393 to that CPT code.
Response: As discussed in the CY
2007 OPPS/ASC final rule with
comment period (71 FR 68168), we
created HCPCS codes G0392
(Transluminal balloon angioplasty,
percutaneous; for maintenance of
hemodialysis access, Arteriovenous
fistula or graft; arterial) and G0393 in
order to make those angioplasty
procedures for arteriovenous fistulae
maintenance available for Medicare
payment in ASCs. At that time, the only
codes available to report the procedures
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were CPT codes 35475 (Transluminal
balloon angioplasty, percutaneous;
brachiocephalic trunk or branches, each
vessel) and 35476, which were excluded
from the ASC list at that time. The two
new HCPCS G-codes specifically
described arterial and venous
angioplasty procedures to maintain
hemodialysis access through
arteriovenous fistulae or grafts for
dialysis patients.
Subsequently, in response to
comments, we added CPT code 35476 to
the ASC list of covered surgical
procedures in our CY 2008 final rule
with comment period (72 FR 66838).
HCPCS code G0393 and CPT code
35476 have the same CY 2009 OPPS
payment because they are both assigned
to the same APC, APC 0083 (Coronary
or Non-Coronary Angioplasty and
Percutaneous Valvuloplasty).
Although HCPCS code G0393 was
created as an alternative to CPT code
35476 for some clinical situations, it
was added to the ASC list in CY 2007
and is, therefore, subject to the ASC
transitional payment methodology. In
contrast, CPT code 35476 was added to
the ASC list CY 2008 and is paid
according to the standard ASC revised
rate calculation methodology.
Consequently, the ASC payment rates
for the two procedures cannot be the
same in CY 2009.
Comment: Commenters suggested that
CMS abandon the office-based
procedure payment policy. Their
reasons for making this suggestion
include a belief that CMS does not need
the policy to avoid creating a payment
incentive for procedures often furnished
in physicians’ offices to migrate to
ASCs. They also believed that
implementation of the payment caps is,
in fact, creating payment incentives for
the affected procedures to migrate to
more expensive and less efficient
HOPDs. They contended that CMS has
overestimated the likelihood that
procedures usually furnished in
physicians’ offices would migrate to
ASCs if there are no payment limits in
place. They asserted that physicians
should be able to make the decision
about the site-of-service based on the
individual beneficiary’s circumstances
and that the payment limits instituted
by CMS for office-based procedures
interfere with that patient-physician
decision-making because the rates for
procedures that are capped at the
nonfacility PE RVU amount are often
too low to support performance of the
procedure in an ASC. Thus, they argued
that the policy to cap payment for some
procedures effectively removes the ASC
as an option for the beneficiary’s care.
The commenters were concerned that
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Medicare has not fully considered the
consequences of this payment policy.
They believed that in addition to
limiting beneficiary access to ASCs as a
site for service, this policy will result in
higher Medicare costs due to the
‘‘reverse migration’’ of cases that could
have been performed in efficient and
lower cost ASCs migrating to more
costly HOPDs.
Response: As noted by the
commenters, we implemented the
payment policy for office-based
procedures to mitigate potentially
inappropriate migration of services from
the physicians’ office setting to the ASC.
Contrary to the commenters’ beliefs that
the CMS actuarial estimates for
expected migration of procedures from
physicians’ offices to ASCs are
exaggerated, our experience indicates
that payment differentials do have a
significant effect on practice patterns.
We continue to believe the policy is
appropriate in light of the many low
complexity procedures we have added
to the ASC list under the revised
payment system. Further, we note that,
prior to the revised payment system,
procedures that were commonly
performed in physicians’ offices were
excluded from the ASC list. Our policy
under the revised payment system
results in Medicare payment for many of
those previously-excluded procedures at
the full revised ASC payment rate,
without a transition. We view our policy
to make payment to ASCs for many of
these procedures that were previously
excluded as an important step in
expanding the choices of sites for care
available to physicians and
beneficiaries. In addition, we do not
view our policy to limit payment for the
least complex procedures that are
commonly provided in physicians’
offices as a loss for ASCs. In contrast to
the prior ASC payment system, our
current policy provides an ASC
payment for the procedures and we
believe that amount is appropriate.
As discussed fully in the August 2,
2007 final rule for the revised ASC
payment system (72 FR 42521 through
42535), we believe we gave full
consideration to all aspects of our final
payment policies for the revised ASC
payment system. Our policies related to
office-based procedures were adopted to
avoid creating incentives for migration
of surgical procedures from physicians’
offices to ASCs. The low complexity
procedures that were on the CY 2007
ASC list of covered surgical procedures
are performed, on average, 17 percent of
the time in ASCs. We expected that with
the payment limits on office-based
procedures, the newly added low
complexity procedures would have
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similar utilization patterns. Each year as
we develop our proposed and final
updates to the payment system, we will
continue to evaluate the effects of our
payment policies on ASCs, including
the utilization patterns of low
complexity procedures paid under the
revised ASC poayment system.
Comment: Several commenters
recommended that if CMS chooses not
to abandon the policy to designate
certain procedures as office-based and
subject to payment limits, that it should
modify its policy. Included in the
recommended modifications to the
policy related to office-based
procedures, commenters suggested the
following:
• Increase the utilization threshold to
some level greater than 50 percent to
identify office-based procedures.
Although no commenters recommended
an alternate threshold as a criterion for
determining that a procedure is officebased, they did suggest that the
threshold should be higher than 50
percent and that it should be
reevaluated periodically.
• Consider utilization variation over
multiple years and across geographic
areas. The commenters recommended
that CMS consider utilization data from
multiple years and from different
geographic regions to account for
variability in physicians’ office
utilization across states for procedures.
One commenter asserted that CMS’
reliance on national averages to gauge
practice patterns was a weakness of the
policy and that the variations the
commenter found across States are an
indication that the payment caps might
not be an effective tool for influencing
site selection for surgery because many
factors, such as the number of ASCs in
the area, influence the site-of-service
decision. With regard to fluctuations in
site-of-service utilization over time, the
commenter believed that the year-toyear variation reflects significant
volatility and CMS’ policy to make the
office-based designation permanent
ignores that finding. Further, the
commenter asserted that the Medicare
Part B claims data that CMS uses to
evaluate site-of-service utilization is not
a sound approach because the data are
flawed.
• Discontinue use of temporary
office-based designations. Commenters
suggested that CMS discontinue use of
temporary office-based designations
because they believed that CMS usually
assigns temporary designations to
procedures for which there is no
utilization data and that CMS should
not make a determination for those
procedures until some data become
available. In addition, some commenters
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expressed frustration that the temporary
designations may remain in place for
years and, as such, are not really
temporary. Further, payment for the
procedures with temporary status is
subject to the payment limits.
• Reevaluate the office-based
procedures periodically so that the
designation as office-based is not
permanent. Several commenters did not
believe it was fair to make office-based
designations permanent because the
policy may compromise physicians’
ability to make appropriate changes in
their practices as new technology and
other advances become available. They
urged CMS to reevaluate the procedures
periodically to ensure that the
designations as office-based reflect
practice patterns over time.
• Limit the reduction in payment for
office-based procedures and do not base
payment limit on the MPFS. A few
commenters asserted that CMS’ policy
to cap payment for office-based ASC
procedures at the MPFS amount is
flawed because the policy results in
fluctuations in the ASC relative weights
for those procedures based both on the
PE RVU values and the MPFS
conversion factor, both of which may
vary from year to year. Rather, they
believed that all ASC relative payment
weights should be based on OPPS
relative payment weights.
Response: We selected 50 percent as
the physicians’ office utilization
threshold because we intended to make
new ASC procedures that are usually
(greater than 50 percent of the time)
provided in physicians’ offices subject
to the payment limits. However, our
decisions regarding office-based status
are not entirely based on the utilization
data. Physicians’ office utilization is an
important aspect of our evaluation but
so are the volume of procedures, the
clinical characteristics of procedures,
and the characteristics and utilization of
related and similar procedures. We
continue to believe that a threshold of
50 percent is the most appropriate
threshold to identify those surgical
procedures that are commonly
performed in physicians’ offices,
specifically more than half of the time.
We believe that adoption of a threshold
higher than 50 percent would result in
ASC payment for low complexity
procedures at ASC rates that could
encourage migration of these procedures
from physicians’ offices to ASCs, even
in cases where the less costly office
setting was clinically appropriate.
We do not agree with the commenters’
recommendations that we should
consider multiple years of utilization
data and variation in utilization across
geographic areas to determine office-
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68741
based status for each procedure. There
are cases in which we do look at
multiple years of utilization data in
determining whether or not a procedure
is office-based, such as for very low
volume procedures, but that is not
necessary for most procedures.
Although the commenters asserted that
there is significant volatility in the yearto-year utilization data for surgical
procedures, we do not agree that is the
case. Generally, Medicare Part B claims
data reflect relatively stable site-ofservice utilization across years, and we
continue to see increasing physician’s
office utilization of new low complexity
procedures rather than decreasing
levels.
We believe that our national policy
should be guided by national data and
not subject to the uncertainties of local
practice patterns that may depend more
on the availability of certain types of
providers or suppliers in communities
than the care needs of Medicare
beneficiaries. Medicare is a national
program and our policies are designed
to ensure that all Medicare beneficiaries
receive the same benefits and the same
high quality care regardless of where
they reside or travel in the United
States. It would be inappropriate to
institute different policies related to
covered services by geographic area.
As stated above, we use physicians’
claims data, the clinical judgments of
our medical advisors, and any other
relevant information that is available to
make our determination that a
procedure is office-based. We believe
that our data are reliable, and we will
continue to rely on the claims data as
one source of information to evaluate
the sites-of-service for surgical
procedures.
We apply the temporary designation
when our clinical evaluation suggests
that the procedure is of a complexity
level such that performance in the
physician’s office is the most
appropriate and likely site for care, but
there are little or no data or experience
so we are not certain that the procedure
will be provided most of the time in
physicians’ offices. We also handle the
designation of office-based status,
including temporary status, through the
annual notice and comment rulemaking
process to allow for public input into
those determinations.
Once we have completed the process
and designated ASC covered surgical
procedures as office-based, we are
confident that our permanent officebased designations are appropriate and
that the resulting payment amounts are
appropriate for providing the service in
ASCs if a facility site is required for a
particular beneficiary. We expect that it
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would be extremely rare for procedures
that were usually provided in
physicians’ offices to become more
complex procedures that require facility
settings due to new technology or other
advances, while the CPT coding for
such procedures is unchanged. In
general, advances in technology and
medical practice have historically led to
less-invasive surgical methods and
allowed for less-intensive sites-ofservice. We do not see a need for the
periodic reevaluation of all office-based
designations.
Finally, there are several instances in
which Medicare payment systems use
values and relative weights that are
external, or from other systems, to make
payment. We believe that making
payment to ASCs at the nonfacility PE
RVU amount for procedures that have
been priced specifically for the
physicians’ office setting is entirely
appropriate given our intention to not
create an incentive for those procedures
to migrate to another setting. Further,
we believe that limiting the ASC
payment for office-based procedures to
the physician’s office rate provides
appropriate payment to the ASC for
those procedures when an ASC setting
is necessary for the beneficiary’s care.
Comment: One commenter requested
that the CY 2009 ASC payment rate for
CPT code 55876 (Placement of
interstitial device(s) for radiation
therapy guidance (eg, fiducial markers,
dosimeter), prostate (via needle, any
approach), single or multiple) be revised
to be consistent with the payment for
HCPCS code C9728 (Placement of
interstitial devices(s) for radiation
therapy/surgery guidance (eg, fiducial
markers, dosimeter), other than prostate
(any approach), single or multiple)
because the procedures are analogous to
one another.
Response: We proposed to continue
the temporary office-based designation
for CPT code 55876 and to designate
HCPCS code C9728 as temporarily
office-based because the codes are
clinically similar, but correspond to
different anatomic regions of the body.
However, HCPCS code C9728 has not
been priced for performance in
physicians’ offices and, therefore, is
assigned temporary office-based
payment indicator ‘‘R2,’’ resulting in
ASC payment at the rate calculated
according to the standard ASC
ratesetting methodology. Conversely,
CPT code 55876 does have a nonfacility
PE RVU amount and, because that
amount is less than the ASC rate,
payment for CPT code 55876 is made at
the nonfacility PE RVU amount for the
procedure.
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We understand the commenter’s
desire for consistency, but we believe
that our designation of the procedures
as temporarily office-based is
appropriate and we do not assign
nonfacility PE RVUs to HCPCS C-codes
which are not recognized for payment
under the MPFS. We do not believe the
payment differential between the two
procedures provides sufficient
justification for changing the payment
indicator for CPT code 55876 so that its
CY 2009 payment amount would be
equal to that for HCPCS code C9728.
c. Adjustment to ASC Payments for No
Cost/Full Credit and Partial Credit
Devices
Under § 416.179, our ASC policy with
regard to payment for costly devices
implanted in ASCs at no cost or with
full or partial credit is consistent with
the OPPS policy. The CY 2009 OPPS
APCs and devices subject to the
adjustment policy are discussed in
section IV.B.2. of this final rule with
comment period. The ASC policy
includes adoption of the OPPS policy
for reduced payment to providers when
a specified device is furnished without
cost or with full credit for the cost of the
device for those ASC covered surgical
procedures that are assigned to APCs
under the OPPS to which this policy
applies. Specifically, as we described in
the CY 2008 OPPS/ASC final rule with
comment period, when a procedure
provided in CY 2008 that was listed in
Table 58 of the CY 2008 OPPS/ASC
final rule with comment period was
performed in an ASC and the case
involved implantation of a no cost or
full credit device listed in Table 59 of
the final rule with comment period, the
ASC must report the HCPCS ‘‘FB’’
modifier on the line with the covered
surgical procedure code to indicate that
an implantable device in Table 59 was
furnished without cost. The contractor
reduces payment to the ASC by the
device offset amount that we estimate
represents the cost of the device when
the necessary device is furnished
without cost to the ASC or with a full
credit (72 FR 66845). We provide the
same amount of payment reduction
based on the device offset amount in
ASCs that would apply under the OPPS
under the same circumstances. The
reduction of ASC payment in this
circumstance was necessary to pay
appropriately for the covered surgical
procedure being furnished by the ASC.
Consistent with the OPPS policy, we
also adopted an ASC payment policy for
certain procedures involving partial
credit for a specified device.
Specifically, as we explained in the CY
2008 OPPS/ASC final rule with
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comment period, we reduce the
payment for implantation procedures
listed in Table 58 of the CY 2008 OPPS/
ASC final rule with comment period by
one half of the device offset amount that
would be applied if a device were
provided at no cost or with full credit,
if the credit to the ASC is 50 percent or
more of the cost of the new device (72
FR 66846). In CY 2008, ASCs must
append the modifier ‘‘FC’’ to the HCPCS
code for a surgical procedure listed in
Table 58 of the CY 2008 OPPS/ASC
final rule with comment period when
the facility received a partial credit of 50
percent or more of the cost of a device
listed in Table 59. In order to report that
they received a partial credit of 50
percent or more of the cost of a new
device, ASCs had the option of either:
(1) Submitting the claim for the device
replacement procedure to their
Medicare contractor after the
procedure’s performance but prior to
manufacturer acknowledgment of credit
for the device, and subsequently
contacting the contractor regarding a
claim adjustment once the credit
determination is made; or (2) holding
the claim for the device implantation
procedure until a determination is made
by the manufacturer on the partial credit
and submitting the claim with the ‘‘FC’’
modifier appended to the implantation
procedure HCPCS code if the partial
credit was 50 percent or more of the cost
of the replacement device. Beneficiary
coinsurance was based on the reduced
payment amount.
Consistent with the OPPS, we
proposed to update the list of ASC
device-intensive procedures that would
be subject to the no cost/full credit and
partial credit device adjustment policy
for CY 2009. Table 42 of the CY 2009
OPPS/ASC proposed rule displayed the
ASC covered implantation procedures
and their payment indicators that we
proposed would be subject to the no
cost/full credit and partial credit device
adjustment policy for CY 2009.
Specifically, when a procedure that was
listed in Table 42 of the proposed rule
is performed in an ASC and the case
involves implantation of a no cost/full
credit device, or a partial credit device
for which the ASC received at least a 50
percent partial credit, and the device
was listed in Table 43 of the proposed
rule, the ASC would report the HCPCS
‘‘FB’’ or ‘‘FC’’ modifier, as appropriate,
on the line with the covered surgical
procedure code. The procedures listed
in Table 42 were those ASC covered
device-intensive procedures assigned to
APCs under the OPPS to which the
policy would apply. We did not propose
to apply this policy to the procedures
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and devices associated with APCs 0425
(Level II Arthroplasty or Implantation
with Prosthesis) and 0648 (Level IV
Breast Surgery), which were proposed
for inclusion in the OPPS no cost/full
credit and partial credit device
adjustment policy for CY 2009, because
ASC covered procedures assigned to
these two APCs under the OPPS did not
qualify for payment as ASC covered
device-intensive surgical procedures
(that is, their estimated device offset
percentages were less than 50 percent
based on partial year data available for
the proposed rule).
Comment: One commenter expressed
support for the continuation of the no
cost/full credit and partial credit device
adjustment policy for ASCs in CY 2009.
Response: We appreciate the
commenter’s support of the no cost/full
credit and partial credit device
adjustment policy.
For CY 2009, we will reduce the
payment for device implantation
procedures listed in Table 48 below by
the full device offset amount for no cost/
full credit cases. ASCs must append the
modifier ‘‘FB’’ to the HCPCS procedure
code when the device furnished without
cost or with full credit is listed in Table
49, below, and the associated
implantation procedure code is listed in
Table 48. In addition, for CY 2009, we
will reduce the payment for
implantation procedures listed in Table
48 by one half of the device offset
amount that would be applied if a
68743
device were provided at no cost or with
full credit, if the credit to the ASC is 50
percent or more of the device cost. If the
ASC receives a partial credit of 50
percent or more of the cost of a device
listed in Table 49, the ASC must append
the modifier ‘‘FC’’ to the associated
implantation procedure code if the
procedure is listed in Table 48. We are
adding procedures assigned to APC
0425 and their associated devices to
Tables 48 and 49, respectively, because
these procedures now qualify for ASC
payment as device-intensive procedures
based on updated claims and cost report
data, as described in section XV.E.1.c. of
this final rule with comment period.
TABLE 48—CY 2009 PROCEDURES TO WHICH THE NO COST/FULL CREDIT AND PARTIAL CREDIT DEVICE ADJUSTMENT
POLICY APPLIES
CY 2009 HCPCS
code
CY 2009 Short
descriptor
Final CY 2009
ASC payment
indicator
24361 ................
Reconstruct elbow
joint.
Replace elbow
joint.
Reconstruct head
of radius.
Reconstruct wrist
joint.
Reconstruct wrist
joint.
Wrist replacement
H8 ....................
0425
H8 ....................
0425
H8 ....................
0425
H8 ....................
0425
H8 ....................
0425
H8 ....................
0425
J8 .....................
0681
33206 ................
Revision of knee
joint.
Insertion of heart
pacemaker.
J8 .....................
0089
33207 ................
Insertion of heart
pacemaker.
J8 .....................
0089
33208 ................
Insertion of heart
pacemaker.
J8 .....................
0655
33212 ................
H8 ....................
0090
33213 ................
Insertion of pulse
generator.
Insertion of pulse
generator.
H8 ....................
0654
33214 ................
Upgrade of pacemaker system.
J8 .....................
0655
33224 ................
Insert pacing lead
& connect.
Lventric pacing
lead add-on.
Insert pulse generator.
Eltrd/insert pacedefib.
J8 .....................
0418
J8 .....................
0418
J8 .....................
0107
J8 .....................
0108
Implant pat-active
ht record.
Male sling procedure.
Insert tandem cuff
J8 .....................
0680
H8 ....................
0385
H8 ....................
0385
24363 ................
24366 ................
25441 ................
25442 ................
25446 ................
27446 ................
33225 ................
33240 ................
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33249 ................
33282 ................
53440 ................
53444 ................
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OPPS full offset percentage
Final CY 2009
OPPS partial
offset percentage
Level II Arthroplasty or Implantation with Prosthesis.
Level II Arthroplasty or Implantation with Prosthesis.
Level II Arthroplasty or Implantation with Prosthesis.
Level II Arthroplasty or Implantation with Prosthesis.
Level II Arthroplasty or Implantation with Prosthesis.
Level II Arthroplasty or Implantation with Prosthesis.
Knee Arthroplasty .......................
59
29
59
29
59
29
59
29
59
29
59
29
71
35
Insertion/Replacement of Permanent Pacemaker and Electrodes.
Insertion/Replacement of Permanent Pacemaker and Electrodes.
Insertion/Replacement/Conversion of a permanent dual
chamber pacemaker.
Insertion/Replacement of Pacemaker Pulse Generator.
Insertion/Replacement of a permanent dual chamber pacemaker.
Insertion/Replacement/Conversion of a permanent dual
chamber pacemaker.
Insertion of Left Ventricular Pacing Elect.
Insertion of Left Ventricular Pacing Elect.
Insertion
of
CardioverterDefibrillator.
Insertion/Replacement/Repair of
Cardioverter-Defibrillator
Leads.
Insertion of Patient Activated
Event Recorders.
Level I Prosthetic Urological Procedures.
Level I Prosthetic Urological Procedures.
72
36
72
36
76
38
74
37
77
38
76
38
71
36
71
36
89
45
88
44
71
36
59
29
59
29
CY 2009 OPPS APC Title
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TABLE 48—CY 2009 PROCEDURES TO WHICH THE NO COST/FULL CREDIT AND PARTIAL CREDIT DEVICE ADJUSTMENT
POLICY APPLIES—Continued
CY 2009 HCPCS
code
CY 2009 Short
descriptor
Final CY 2009
ASC payment
indicator
53445 ................
Insert uro/ves nck
sphincter.
Remove/replace ur
sphincter.
Insert semi-rigid
prosthesis.
Insert self-contd
prosthesis.
Insert multi-comp
penis pros.
Remove/replace
penis prosth.
Remv/repl penis
contain pros.
Insrt/redo
neurostim 1
array.
Implant neurostim
arrays.
Implant spine infusion pump.
Implant spine infusion pump.
Implant
neuroelectrodes.
H8 ....................
0386
H8 ....................
0386
H8 ....................
0385
H8 ....................
0386
H8 ....................
0386
H8 ....................
0386
H8 ....................
0386
H8 ....................
0039
H8 ....................
0315
H8 ....................
0227
H8 ....................
0227
H8 ....................
0040
63655 ................
Implant
neuroelectrodes.
J8 .....................
0061
63685 ................
Insrt/redo spine n
generator.
Implant
neuroelectrodes.
Implant
neuroelectrodes.
H8 ....................
0222
H8 ....................
0040
J8 .....................
0040
64560 ................
Implant
neuroelectrodes.
J8 .....................
0040
64561 ................
Implant
neuroelectrodes.
H8 ....................
0040
64565 ................
Implant
neuroelectrodes.
J8 .....................
0040
64573 ................
H8 ....................
0225
64575 ................
Implant
neuroelectrodes.
Implant
neuroelectrodes.
H8 ....................
0061
64577 ................
Implant
neuroelectrodes.
H8 ....................
0061
64580 ................
Implant
neuroelectrodes.
H8 ....................
0061
64581 ................
Implant
neuroelectrodes.
H8 ....................
0061
64590 ................
Insrt/redo pn/gastr
stimul.
Implant temple
bone w/stimul.
Temple bne implnt
w/stimulat.
Temple bone implant revision.
H8 ....................
0039
H8 ....................
0425
H8 ....................
0425
H8 ....................
0425
53447 ................
54400 ................
54401 ................
54405 ................
54410 ................
54416 ................
61885 ................
61886 ................
62361 ................
62362 ................
63650 ................
64553 ................
dwashington3 on PRODPC61 with RULES2
64555 ................
69714 ................
69715 ................
69717 ................
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OPPS full offset percentage
Final CY 2009
OPPS partial
offset percentage
Level II Prosthetic Urological
Procedures.
Level II Prosthetic Urological
Procedures.
Level I Prosthetic Urological Procedures.
Level II Prosthetic Urological
Procedures.
Level II Prosthetic Urological
Procedures.
Level II Prosthetic Urological
Procedures.
Level II Prosthetic Urological
Procedures.
Level
I
Implantation
of
Neurostimulator.
69
34
69
34
59
29
69
34
69
34
69
34
69
34
84
42
Level
III
Implantation
of
Neurostimulator.
Implantation of Drug Infusion
Device.
Implantation of Drug Infusion
Device.
Percutaneous Implantation of
Neurostimulator
Electrodes,
Excluding Cranial Nerve.
Laminectomy, Laparoscopy, or
Incision for Implantation of
Neurostimulator Electr.
Level
II
Implantation
of
Neurostimulator.
Implantation of Neurostimulator
Electrodes, Cranial Nerve.
Percutaneous Implantation of
Neurostimulator
Electrodes,
Excluding Cranial Nerve.
Percutaneous Implantation of
Neurostimulator
Electrodes,
Excluding Cranial Nerve.
Percutaneous Implantation of
Neurostimulator
Electrodes,
Excluding Cranial Nerve.
Percutaneous Implantation of
Neurostimulator
Electrodes,
Excluding Cranial Nerve.
Implantation of Neurostimulator
Electrodes, Cranial Nerve.
Laminectomy, Laparoscopy, or
Incision for Implantation of
Neurostimulator Electr.
Laminectomy, Laparoscopy, or
Incision for Implantation of
Neurostimulator Electr.
Laminectomy, Laparoscopy, or
Incision for Implantation of
Neurostimulator Electr.
Laminectomy, Laparoscopy, or
Incision for Implantation of
Neurostimulator Electr.
Level
I
Implantation
of
Neurostimulator.
Level II Arthroplasty or Implantation with Prosthesis.
Level II Arthroplasty or Implantation with Prosthesis.
Level II Arthroplasty or Implantation with Prosthesis.
88
44
82
41
82
41
57
29
62
31
85
42
57
29
57
29
57
29
57
29
57
29
62
31
62
31
62
31
62
31
62
31
84
42
59
29
59
29
59
29
CY 2009 OPPS APC Title
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68745
TABLE 48—CY 2009 PROCEDURES TO WHICH THE NO COST/FULL CREDIT AND PARTIAL CREDIT DEVICE ADJUSTMENT
POLICY APPLIES—Continued
CY 2009 HCPCS
code
69718 ................
Revise temple
bone implant.
Implant cochlear
device.
Final CY 2009
ASC payment
indicator
CY 2009 Short
descriptor
69930 ................
H8 ....................
0425
H8 ....................
0259
TABLE 49—DEVICES FOR WHICH THE
‘‘FB’’ OR ‘‘FC’’ MODIFIER MUST BE
REPORTED WITH THE PROCEDURE
CODE WHEN FURNISHED AT NO
COST OR WITH FULL OR PARTIAL
CREDIT
CY 2009 Device HCPCS
code
C1721
C1722
C1764
C1767
C1771
C1772
C1776
C1778
C1779
..........
..........
..........
..........
..........
..........
..........
..........
..........
C1785
C1786
C1813
C1815
C1820
..........
..........
..........
..........
..........
C1881 ..........
C1882 ..........
C1891 ..........
C1897
C1898
C1900
C2619
C2620
C2621
C2622
C2626
..........
..........
..........
..........
..........
..........
..........
..........
C2631 ..........
L8614 ..........
L8690 ..........
CY 2009 Short descriptor
AICD, dual chamber.
AICD, single chamber.
Event recorder, cardiac.
Generator, neurostim, imp.
Rep dev, urinary, w/sling.
Infusion pump, programmable.
Joint device (implantable).
Lead, neurostimulator.
Lead, pmkr, transvenous
VDD.
Pmkr, dual, rate-resp.
Pmkr, single, rate-resp.
Prosthesis, penile, inflatab.
Pros, urinary sph, imp.
Generator, neuro rechg bat
sys.
Dialysis access system.
AICD, other than sing/dual.
Infusion pump, non-prog,
perm.
Lead, neurostim, test kit.
Lead, pmkr, other than trans.
Lead coronary venous.
Pmkr, dual, non rate-resp.
Pmkr, single, non rate-resp.
Pmkr, other than sing/dual.
Prosthesis, penile, non-inf.
Infusion pump, non-prog,
temp.
Rep dev, urinary, w/o sling.
Cochlear device/system.
Aud osseo dev, int/ext comp.
dwashington3 on PRODPC61 with RULES2
2. Payment for Covered Ancillary
Services
a. Background
Our final CY 2008 payment policies
under the revised ASC payment system
for covered ancillary services vary
according to the particular type of
service and its payment policy under
the OPPS. Our overall policy provides
separate ASC payment for certain
ancillary services integrally related to
the provision of ASC covered surgical
procedures that are paid separately
under the OPPS and provides packaged
ASC payment for other ancillary
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OPPS APC
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59
29
84
42
Level II Arthroplasty or Implantation with Prosthesis.
Level VII ENT Procedures .........
services that are packaged under the
OPPS. Thus, we established a final
policy to align ASC payment bundles
with those under the OPPS (72 FR
42495).
Our ASC payment policies provide
separate payment for drugs and
biologicals that are separately paid
under the OPPS at the OPPS rates, while
we pay for separately payable radiology
services at the lower of the MPFS
nonfacility PE RVU (or technical
component) amount or the rate
calculated according to the standard
ASC payment methodology (72 FR
42497). In all cases, ancillary services
must be provided integral to the
performance of ASC covered surgical
procedures for which the ASC bills
Medicare. As noted in section XV.D.1.a.
of the CY 2009 OPPS/ASC proposed
rule (73 FR 41530), changes were made
to the MPFS payment rates for the
period of January 1, 2008 through June
30, 2008 as a result of the enactment of
the Medicare, Medicaid, and SCHIP
Extension Act of 2007. In addition to
changing the ASC payment rates for
some office-based procedures, those
changes also affected the ASC rates for
some covered ancillary radiology
services for the first 6 months of CY
2008.
ASC payment policy for
brachytherapy sources generally mirrors
the payment policy under the OPPS. We
finalized our policy to pay for
brachytherapy sources applied in ASCs
at the same prospective rates that were
adopted under the OPPS or, if OPPS
rates were unavailable, at contractorpriced rates in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
42499). Subsequent to publication of
that rule, section 106 of the Medicare,
Medicaid, and SCHIP Extension Act of
2007 mandated that, for the period
January 1, 2008 through June 30, 2008,
brachytherapy sources be paid under
the OPPS at charges adjusted to cost.
Therefore, consistent with our final
overall ASC payment policy, we paid
ASCs at contractor-priced rates for
brachytherapy sources provided in
ASCs during that period of time.
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OPPS full offset percentage
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Beginning July 1, 2008, brachytherapy
sources applied in ASCs were to be paid
at the same prospectively set rates that
were finalized in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 67165 through 67188). Immediately
prior to the publication of the CY 2009
OPPS/ASC proposed rule, section 142 of
the MIPPA amended section
1833(t)(16)(C) of the Act (as amended by
section 106 of the Medicare, Medicaid,
and SCHIP Extension Act of 2007) to
extend the requirement that
brachytherapy sources be paid under
the OPPS at charges adjusted to cost
through December 31, 2009. Therefore,
consistent with final ASC payment
policy, ASCs will continue to be paid at
contractor-priced rates for
brachytherapy sources provided in
ASCs during that period of time.
Other separately paid covered
ancillary services in ASCs, specifically
corneal tissue acquisition and device
categories with OPPS pass-through
status, do not have prospectively
established ASC payment rates
according to the final policies of the
revised ASC payment system (72 FR
42502 and 42509). Under the revised
ASC payment system, corneal tissue
acquisition is paid based on the
invoiced costs for acquiring the corneal
tissue for transplantation. As discussed
in section IV.A.1. of this CY 2009 OPPS/
ASC final rule with comment period,
new pass-through device categories may
be established on a quarterly basis, but
currently there are no OPPS device
pass-through categories that would
continue for OPPS pass-through
payment (and, correspondingly,
separate ASC payment) in CY 2009.
b. Payment for Covered Ancillary
Services for CY 2009
In the CY 2009 OPPS/ASC proposed
rule, for CY 2009, we proposed to
update the ASC payment rates and make
changes to payment indicators as
necessary in order to maintain
consistency between the OPPS and ASC
payment systems regarding the
packaged or separately payable status of
services and the proposed CY 2009
OPPS and ASC payment rates (73 FR
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41530). The proposed CY 2009 OPPS
payment methodologies for separately
payable drugs and biologicals and
brachytherapy sources were discussed
in sections V. and VII. of the CY 2009
OPPS/ASC proposed rule, respectively
(73 FR 41480 and 41500), and the CY
2009 ASC payment rates for those
services were proposed to equal the
proposed CY 2009 OPPS rates. In
Addendum BB to the CY 2009 OPPS/
ASC proposed rule, we indicated
whether the proposed CY 2009 payment
rate for radiology services was based on
the MPFS PE RVU amount or the
standard ASC payment calculation.
Thus, the proposed CY 2009 payment
indicator for a covered radiology service
could differ from its CY 2008 payment
indicator based on packaging changes
under the OPPS or the comparison of
the CY 2009 proposed MPFS nonfacility
PE RVU amount to the CY 2009 ASC
payment rate calculated according to the
standard methodology. Services that we
proposed to pay based on the standard
ASC rate methodology were assigned
payment indicator ‘‘Z2’’ (Radiology
service paid separately when provided
integral to a surgical procedure on ASC
list; payment based on OPPS relative
payment weight) and those for which
payment is based on the MPFS PE RVU
amount were assigned payment
indicator ‘‘Z3’’ (Radiology service paid
separately when provided integral to a
surgical procedure on ASC list; payment
based on MPFS nonfacility PE RVUs).
Covered ancillary services and their
proposed payment indicators were
listed in Addendum BB to the CY 2009
OPPS/ASC proposed rule.
Comment: One commenter expressed
concern that payments for certain
radiological services commonly
provided to patients with end-stage
renal disease (ESRD) are packaged into
payment for surgical procedures under
the ASC payment system. They
requested that 11 of those services be
paid separately in ASCs and asked CMS
to reexamine the packaging for the
radiological services displayed below.
Proposed CY 2009
OPPS status
indicator
HCPCS code
Long descriptor
75710 .......................
75790 .......................
Angiography, extremity, unilateral, radiological supervision and interpretation ....
Angiography, arteriovenous shunt (e.g., dialysis patient), radiological supervision and interpretation.
Not a valid CPT code ............................................................................................
Venography, extremity, unilateral, radiological supervision and interpretation .....
Angiography through existing catheter for follow-up study for transcatheter therapy, embolization or infusion.
Mechanical removal of intraluminal (intracatheter) obstructive material from central venous device through device lumen, radiologic supervision and interpretation.
Transluminal balloon angioplasty, peripheral artery, radiological supervision and
interpretation.
Change of percutaneous tube or drainage catheter with contrast monitoring
(e.g., genitourinary system, abscess), radiological supervision and interpretation.
Ultrasound guidance for vascular access requiring ultrasound evaluation of potential access sites, documentation of selected vessel patency, concurrent
realtime ultrasound visualization of vascular needle entry, with permanent recording and reporting.
Computed tomography guidance for stereotactic localization ...............................
Not a valid CPT code ............................................................................................
75798 .......................
75820 .......................
75898 .......................
75902 .......................
75962 .......................
75984 .......................
76937 .......................
dwashington3 on PRODPC61 with RULES2
77011 .......................
78827 .......................
The commenter expressed concern
that packaging payment for these
services limits full access to services for
ESRD patients for the repair and
maintenance of vascular access. The
commenter recommended that CMS
give particular attention to the packaged
status of CPT codes 75710, 75790, 75962
and 75798 because they are commonly
used for vascular access procedures and
are critical to beneficiaries living with
ESRD.
The commenter also expressed
support for an APC Panel
recommendation to delay packaging
under the OPPS until analyses can be
performed to determine the impact on
beneficiaries and the viability of ASCs
providing these services.
Response: We continue to believe that
packaging payment for those ancillary
radiology services integral to surgical
procedures that would be packaged
under the OPPS in an HOPD is
appropriate under the revised ASC
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payment system. This policy is aligned
with the recommendation of the
Practicing Physicians Advisory Council
(PPAC) to apply payment policies
uniformly in the ASC and HOPD
settings. It also maintains comparable
payment bundles under the OPPS and
the revised ASC payment system,
consistent with the recommendation of
MedPAC to maintain consistent
payment bundles under both payment
systems. Our ASC payment policy
would not permit separate payment for
the radiology procedures discussed by
the commenter when they are provided
integral to covered surgical procedures
(the only case in which they would be
covered and paid to the ASC), just as
these same radiology services would not
be paid separately under the OPPS if
they accompanied a surgical procedure.
The APC Panel did make a
recommendation during its August 2008
meeting for the OPPS regarding
packaging for radiation therapy
PO 00000
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Proposed CY
2009 ASC payment indicator
Q2 ..........................
Q2 ..........................
N1.
N1.
N/A .........................
Q2 ..........................
Q1 ..........................
N/A.
N1.
N1.
N ............................
N1.
Q2 ..........................
N1.
N ............................
N1.
N ............................
N1.
N ............................
N/A .........................
N1.
N/A.
guidance services. The APC Panel
recommended that CMS pay separately
for radiation therapy guidance for 2
years and then reevaluate packaging on
the basis of claims data. The Panel
further recommended that CMS evaluate
possible models for threshold levels for
packaging radiation therapy guidance
and other new technologies.
ASCs are not within the purview of
the APC Panel. The APC Panel’s
advisory role includes specific areas of
focus related to the OPPS. We would
not expect the APC Panel to make any
recommendations related to ASCs and,
in fact, there was no APC Panel
recommendation related to the impact
of packaging for radiation therapy
guidance services on the viability of
ASCs providing the services as was
reported by the commenter. A full
discussion of the final OPPS policy
related to packaging of radiation therapy
guidance services for CY 2009 may be
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found in section II.A.4. of this final rule
with comment period.
Comment: Many commenters
requested that CMS modify the
packaging policy to provide separate
payment for some services that are not
reported by any of the codes within the
CPT surgical code range. The
commenters stated their belief that as a
result of CMS’ packaging policy,
procedural services that they believe
would meet the criteria for performance
in ASCs and thereby, would be eligible
for payment as covered surgical
procedures in ASCs, are being
inappropriately excluded from
eligibility for payment. More
specifically, the commenters disagreed
with the ASC packaging policy under
which a minor surgical procedure
(reported by a code within the CPT
surgical code range) is packaged into
payment for a radiology service. The
commenters argued that the result of the
packaging policy is that the surgical
procedure is not eligible for separate
payment. Because the radiology service
is only eligible for separate payment
when it is provided integral to a covered
surgical procedure, the radiology service
is not separately payable when it is the
only service being provided.
The commenters expressed particular
concern regarding discography services.
Packaged into the CPT codes 72285
(Discography, cervical or thoracic,
radiological supervision and
interpretation) and 72295 (Discography,
lumbar, radiological supervision and
interpretation) are CPT codes 62290
(Injection procedure for discography,
each level; lumbar) and 62291 (Injection
procedure for discography, each level;
cervical or thoracic). The injection
procedures are, by definition, surgical
procedures because they are reported by
CPT codes in the surgical range.
Commenters noted that packaging the
surgical code into the radiology service
means that the radiology service is
included on the ASC list of covered
ancillary services and that, therefore,
separate payment is only made to an
ASC when the radiology service is
provided integral to a covered surgical
procedure. They believe the radiology
service should be separately payable
when it is performed alone. The
commenters argued that discography
services would migrate to HOPDs as a
result of this packaging policy. They
contended that CMS should provide
ASC payment for both the traditional
forms of surgery and other invasive
procedures appropriate to the outpatient
surgical setting.
Response: Packaged surgical services
are minor procedures and are usually
reported with a more comprehensive
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procedure that may be nonsurgical and,
therefore, excluded from payment under
the revised ASC payment system. In the
circumstances referred to by the
commenters, the minor surgical
procedures are performed in support of
comprehensive nonsurgical services and
payment for the minor surgical
procedures is packaged into payment for
the nonsurgical services under the
OPPS. We do not agree that we should
define surgical procedures under the
revised ASC payment system to include
other types of services, such as
radiology services, even though some
minor component(s) of the service may
be defined as surgical. Instead, we
continue to believe that the other types
of services, including radiology services,
are not appropriate for performance and
separate payment in ASCs unless they
are integral to covered surgical
procedures.
After consideration of the public
comments received, we are providing
CY 2009 payment for covered ancillary
services in accordance with the final
policies of the revised ASC payment
system as described in the CY 2008
OPPS/ASC final rule with comment
period. Covered ancillary services and
their final CY 2009 payment indicators
are listed in Addendum BB to this final
rule with comment period.
G. New Technology Intraocular Lenses
1. Background
In the CY 2007 OPPS/ASC final rule
with comment period, we finalized our
current process for reviewing
applications to establish new active
classes of new technology intraocular
lenses (NTIOLs) and for recognizing
new candidate intraocular lenses (IOLs)
inserted during or subsequent to
cataract extraction as belonging to a
NTIOL class that is qualified for a
payment adjustment (71 FR 67960 and
68176). Specifically, we established the
following process:
• We will announce annually in the
Federal Register document that
proposes the update of ASC payment
rates for the following calendar year, a
list of all requests to establish new
NTIOL classes accepted for review
during the calendar year in which the
proposal is published and the deadline
for submission of public comments
regarding those requests. Pursuant to
Section 141(b)(3) of P.L. 103–432 and
our regulations at 42 CFR 416.185(b),
the deadline for receipt of public
comments will be 30 days following
publication of the list of requests.
• In the Federal Register document
that finalizes the update of ASC
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68747
payment rates for the following calendar
year, we will—
+ Provide a list of determinations
made as a result of our review of all new
class requests and public comments;
and
+ Announce the deadline for
submitting requests for review of an
application for a new NTIOL class for
the following calendar year.
In determining whether a lens belongs
to a new class of NTIOLs and whether
the ASC payment amount for insertion
of that lens in conjunction with cataract
surgery is appropriate, we expect that
the insertion of the candidate IOL
would result in significantly improved
clinical outcomes compared to currently
available IOLs. In addition, to establish
a new NTIOL class, the candidate lens
must be distinguishable from lenses
already approved as members of active
or expired classes of NTIOLs that share
a predominant characteristic associated
with improved clinical outcomes that
was identified for each class.
Furthermore, in the CY 2007 OPPS/ASC
final rule with comment period, we
finalized our proposal to base our
determinations on consideration of the
following factors set out at 42 CFR
416.195 (71 FR 67960 and 68227):
• The IOL must have been approved
by the FDA and claims of specific
clinical benefits and/or lens
characteristics with established clinical
relevance in comparison with currently
available IOLs must have been approved
by the FDA for use in labeling and
advertising.
• The IOL is not described by an
active or expired NTIOL class; that is, it
does not share the predominant, classdefining characteristic associated with
improved clinical outcomes with
designated members of an active or
expired NTIOL class.
• Evidence demonstrates that use of
the IOL results in measurable, clinically
meaningful, improved outcomes in
comparison with use of currently
available IOLs. According to the statute,
and consistent with previous examples
provided by CMS, superior outcomes
that would be considered include the
following:
+ Reduced risk of intraoperative or
postoperative complication or trauma;
+ Accelerated postoperative recovery;
+ Reduced induced astigmatism;
+ Improved postoperative visual
acuity;
+ More stable postoperative vision;
+ Other comparable clinical
advantages, such as—
++ Reduced dependence on other
eyewear (for example, spectacles,
contact lenses, and reading glasses);
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++ Decreased rate of subsequent
diagnostic or therapeutic interventions,
such as the need for YAG laser
treatment;
++ Decreased incidence of
subsequent IOL exchange;
++ Decreased blurred vision, glare,
other quantifiable symptom or vision
deficiency.
For a request to be considered
complete, we require submission of the
information that is found in the
guidance document entitled
‘‘Application Process and Information
Requirements for Requests for a New
Class of New Technology Intraocular
Lens (NTIOL)’’ posted on the CMS Web
site at: https://www.cms.hhs.gov/ASC
Payment/08_NTIOLs.asp#TopOfPage.
As we stated in the CY 2007 OPPS/
ASC final rule with comment period (71
FR 68180), there are three possible
outcomes from our review of a request
for establishment of a new NTIOL class.
As appropriate, for each completed
request for consideration of a candidate
IOL into a new class that is received by
the established deadline, one of the
following determinations would be
announced annually in the final rule
updating the ASC payment rates for the
next calendar year:
• The request for a payment
adjustment is approved for the
candidate IOL for 5 full years as a
member of a new NTIOL class described
by a new HCPCS code.
• The request for a payment
adjustment is approved for the
candidate IOL for the balance of time
remaining as a member of an active
NTIOL class.
• The request for a payment
adjustment is not approved.
We also discussed our plan to
summarize briefly in the final rule with
NTIOL
class
HCPCS
code
Q1001
2 ................
Q1002
3 ................
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1 ................
Q1003
2. NTIOL Application Process for
Payment Adjustment
In CY 2007, we posted an updated
guidance document to the CMS Web site
to provide process and information
requirements for applications requesting
a review of the appropriateness of the
payment amount for insertion of an IOL
to ensure that the ASC payment for
covered surgical procedures includes
payment that is reasonable and related
to the cost of acquiring a lens that is
approved as belonging to a new class of
NTIOLs. This guidance document can
be accessed on the CMS Web site at:
https://www.cms.hhs.gov/ASCPayment/
08_NTIOLs.asp#TopOfPage.
We note that we have also issued a
guidance document entitled ‘‘Revised
Process for Recognizing Intraocular
Lenses Furnished by Ambulatory
Surgery Centers (ASCs) as Belonging to
an Active Subset of New Technology
$50 Approved for
services furnished on
or after
May 18, 2000,
through May 18,
2005.
May 18, 2000,
through May 18,
2005.
February 27, 2006,
through February
26, 2011.
b. Request To Establish New NTIOL
Class for CY 2009
As discussed below and explained in
the guidance document on the CMS
Web site, a request for review for a new
VerDate Aug<31>2005
comment period the evidence that was
reviewed, the public comments, and the
basis for our determinations in
consideration of applications for
establishment of a new NTIOL class. We
established that when a new NTIOL
class is created, we would identify the
predominant characteristic of NTIOLs in
that class that sets them apart from other
IOLs (including those previously
approved as members of other expired
or active NTIOL classes) and that is
associated with improved clinical
outcomes. The date of implementation
of a payment adjustment in the case of
approval of an IOL as a member of a
new NTIOL class would be set
prospectively as of 30 days after
publication of the ASC payment update
final rule, consistent with the statutory
requirement.
15:50 Nov 17, 2008
Jkt 217001
NTIOL characteristic
Intraocular Lenses (NTIOLs).’’ This
guidance document can be accessed on
the CMS Web site at: https://www.cms.
hhs.gov/ASCPayment/Downloads/
Request_for_inclusion_in_current_
NTIOL_subset.pdf.
This second guidance document
provides specific details regarding
requests for recognition of IOLs as
belonging to an existing, active NTIOL
class, the review process, and
information required for a request to
review. Currently, there is one active
NTIOL class whose defining
characteristic is the reduction of
spherical aberration. CMS accepts
requests throughout the year to review
the appropriateness of recognizing an
IOL as a member of an active class of
NTIOLs. That is, review of candidate
lenses for membership in an existing,
active NTIOL class is ongoing and not
limited to the annual review process
that applies to the establishment of new
NTIOL classes. We ordinarily complete
the review of such a request within 90
days of receipt, and upon completion of
our review, we notify the requestor of
our determination and post on the CMS
Web site notification of a lens newly
approved for a payment adjustment as
an NTIOL belonging to an active NTIOL
class when furnished in an ASC.
3. Classes of NTIOLs Approved and
New Requests for Payment Adjustment
a. Background
Since implementation of the process
for adjustment of payment amounts for
NTIOLs that was established in the June
16, 1999 Federal Register, we have
approved three classes of NTIOLs, as
shown in the following table, with the
associated qualifying IOLs to date:
IOLs eligible for adjustment
Multifocal ...................
Allergan AMO Array Multifocal lens, model SA40N.
Reduction in Preexisting Astigmatism.
Reduced Spherical
Aberration.
STAAR Surgical Elastic Ultraviolet-Absorbing Silicone Posterior
Chamber IOL with Toric Optic, models AA4203T, AA4203TF,
and AA4203TL.
Advanced Medical Optics (AMO) Tecnis IOL models Z9000,
Z9001, Z9002, ZA9003, AR40xEM and Tecnis 1-Piece model
ZCB00; Alcon Acrysof IQ Model SN60WF and Acrysert Delivery System model SN60WS; Bausch & Lomb Sofport AO models LI61AOV, and LI61AOV; STAAR Affinity Collamer model
CQ2015A, CC4204A, and Elastimide AQ2015A.
class of NTIOLs for CY 2009 must have
been submitted to CMS by March 14,
2008, the due date published in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66855). We
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received one request for review of the
appropriateness of the ASC payment
amount for insertion of a candidate IOL
as a member of a new class of NTIOLs
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for CY 2009 by the March 14, 2008 due
date. A summary of this request follows.
Requestor: Rayner Surgical, Inc.
Manufacturer: Rayner Intraocular
Lenses Limited
Lens Model Number: C-Flex IOL,
Model Number 570C
Summary of the Request: Rayner
Surgical, Inc. (Rayner) submitted a
request for CMS to determine that its CFlex Model 570C intraocular lens meets
the criteria for recognition as an NTIOL
and to concurrently establish a new
class of NTIOLs, with this lens as a
member. As part of its request, Rayner
submitted descriptive information about
the candidate IOL as outlined in the
guidance document that we make
available on the CMS Web site for the
establishment of a new class of NTIOLs,
as well as information regarding
approval of the candidate IOL by the
U.S. Food and Drug Administration
(FDA). This information included the
approved labeling for the candidate
lens, a summary of the IOL’s safety and
effectiveness, a copy of the FDA’s
approval notification, and instructions
for its use. In addition, Rayner also
submitted several peer-reviewed articles
in support of its claim that the design
features and hydrophilic properties of
the candidate lens would reduce
silicone oil adhesion and silicone oilinduced opacification. We note that we
have previously considered other
candidate IOLs for which ASC payment
review was requested on the basis of
their hydrophilic characteristics or their
associated reduction in cellular
deposits. We discussed these types of
lenses in the December 20, 1999 and
May 3, 2000 NTIOL proposed and final
rules published in the Federal Register
(64 FR 71148 through 71149 and 65 FR
25738 through 25740, respectively).
In its CY 2009 request, Rayner
asserted that the design features and
hydrophilic properties of the candidate
lens would reduce silicone oil adhesion
and silicone oil-induced opacification
problems associated with FDAapproved IOL materials currently
marketed in the United States. Rayner
stated that silicone oil is widely used as
a tamponade in vitreoretinal surgery,
and that silicone oil-induced
opacification of an IOL, through
adherence of the oil to the IOL surface,
is a well-known surgical complication.
Rayner also stated that at present, there
are no active or expired NTIOL classes
that describe IOLs similar to its IOL.
We established in the CY 2007 OPPS/
ASC final rule with comment period
that when reviewing a request for
recognition of an IOL as an NTIOL and
a concurrent request to establish a new
class of NTIOLs, we would base our
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15:50 Nov 17, 2008
Jkt 217001
determination on consideration of the
three major criteria that are outlined in
the discussion above. In the CY 2009
OPPS/ASC proposed rule, we noted that
we had begun our review of Rayner’s
request to recognize its C-Flex IOL as an
NTIOL and concurrently establish a new
class of NTIOLs. In the CY 2009 OPPS/
ASC proposed rule, we solicited
comments on this candidate IOL with
respect to the established NTIOL criteria
as discussed above (73 FR 41536).
First, for an IOL to be recognized as
an NTIOL we require that the IOL must
have been approved by the FDA and
claims of specific clinical benefits
and/or lens characteristics with
established clinical relevance in
comparison with currently available
IOLs must have been approved by the
FDA for use in labeling and advertising.
We noted in the CY 2009 OPPS/ASC
proposed rule that FDA approval for the
candidate lens was granted in May of
2007 and in its request, Rayner provided
FDA approval documentation, including
a copy of the FDA’s approval
notification, the FDA’s summary of the
IOL’s safety and effectiveness, and the
labeling approved by the FDA. The
approved label for the Rayner C-Flex
stated, ‘‘The hydrophilic nature of the
Rayacryl material and the design
features of the Rayner C-Flex lens
reduce the problems of silicone oil
adhesion and silicone oil opacification.’’
The FDA label did not otherwise
reference specific clinical benefits or
lens characteristics with established
clinical relevance in comparison with
currently available IOLs. Although the
labeling reference to reduced
‘‘problems’’ could imply clinical
relevance and clinical benefits of the
lens, the label did not indicate the
specific clinical benefits associated with
the lens. In the CY 2009 OPPS/ASC
proposed rule (73 FR 41536), we noted
that we were interested in public
comments on the specific clinical
benefits and/or lens characteristics with
established clinical relevance in
comparison with currently available
IOLs that may be associated with the
silicone adherence and silicone oilinduced opacification reducing
characteristics of this candidate lens.
Second, we also require that the
candidate IOL not be described by an
active or expired NTIOL class, that is, it
does not share the predominant, classdefining characteristic associated with
improved clinical outcomes with
designated members of an active or
expired NTIOL class. As noted in the
table above regarding active and expired
NTIOL classes, since implementation of
the NTIOL review process that was
established in the June 16, 1999 Federal
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68749
Register, we have approved three
classes of NTIOLs: Multifocal and
Reduction in Preexisting Astigmatism
classes, both of which were created in
2000 and expired in 2005, and the
currently active Reduced Spherical
Aberration class, which was created in
2006 and will expire in 2011. The classdefining characteristic specific to IOLs
that are members of these classes is
evident in the name assigned to the
class. For example, IOLs recognized as
members of the reduced spherical
aberration class are characterized by
their aspheric design that results in
reduced spherical aberration. Please
refer to the table above for information
about the NTIOL classes that have been
created since the implementation of the
review process. Based on this
information, the candidate lens may not
be described by an active or expired
NTIOL class. Its proposed class-defining
characteristic and associated clinical
benefits that were described in the
submitted request, specifically the
hydrophilic nature of the Rayacryl
material and the design features of the
C-Flex lens to reduce problems with
silicone oil adhesion and silicone oilinduced opacification, may not be
similar to the class-defining
characteristics and associated benefits of
the two expired NTIOL classes, the
Multifocal and Reduction in Preexisting
Astigmatism classes, or to the classdefining characteristic and associated
benefits of the currently active Reduced
Spherical Aberration class. In the CY
2009 OPPS/ASC proposed rule (73 FR
41536), we noted that we welcomed
public comments that address whether
the proposed class-defining
characteristic and associated clinical
benefits of the candidate Rayner IOL are
described by the expired or currently
active NTIOL classes.
Third, our NTIOL evaluation criteria
also require that an applicant submit
evidence that demonstrates use of the
IOL results in measurable, clinically
meaningful, improved outcomes in
comparison with use of currently
available IOLs. We note that in the CY
2007 OPPS/ASC final rule with
comment period, we sought comments
as to what constitutes currently
available IOLs for purposes of such
comparisons, and we received several
comments in response to our
solicitation (71 FR 68178). We agreed
with commenters that we should remain
flexible with respect to our view of
‘‘currently available lenses’’ for
purposes of reviewing NTIOL requests,
in order to allow for consideration of
technological advances in lenses over
time. For purposes of reviewing this
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request to establish a new NTIOL class
for CY 2009, we stated our belief that
foldable, spherical, monofocal IOLs
made of acrylic, silicone, or
polymethylmethacrylate materials
represented the currently available
lenses against which the candidate
NTIOL to establish a new class should
be compared. The Rayner request
asserted that the hydrophilic material of
the candidate lens with respect to
silicone oil adhesion made the lens a
novel IOL in the U.S. market. In the CY
2009 OPPS/ASC proposed rule (73 FR
41536), we sought public comment on
our view of ‘‘currently available lenses’’
for the purposes of this CY 2009 review.
We reviewed the four peer-reviewed
articles submitted by Rayner with the
request, specifically three bench studies
of silicone oil coverage of various IOL
materials and a single series of three
clinical case histories where silicone oil
adhesion was documented. The
literature did not clearly provide
information regarding the clinical
benefit to patients who received the
candidate lens in conjunction with
cataract removal surgery compared to
patients receiving currently available
IOLs. As stated in the Rayner request,
the potential benefits of the candidate
lens would apply only to individuals
undergoing vitreoretinal surgery, in
which silicone oil was used as a
tamponade at some time after insertion
of the intraocular lens. The size and
composition of this population that
could potentially benefit was unclear,
and it was also unclear how often and
what other alternative tamponade
materials may be employed in the U.S
relative to silicone oil. In the CY 2009
OPPS/ASC proposed rule (73 FR 41536),
we welcomed public comments and
relevant data specifically addressing
whether use of the Rayner C-Flex IOL
resulted in measurable, clinically
meaningful, improved outcomes in
comparison with use of currently
available IOLs.
In accordance with our established
NTIOL review process, we sought
public comments on all of the review
criteria for establishing a new NTIOL
class with the characteristic of reduced
silicone oil-induced opacification based
on the request for the Rayner C-Flex IOL
Model 570C lens. All comments on this
request must have been received by
August 18, 2008. We stated that the
announcement of CMS’ determination
regarding this request would appear in
this CY 2009 OPPS/ASC final rule with
comment period. If a determination of
membership of the candidate lens in a
new or currently active NTIOL class is
made, this determination would be
effective 30 days following the date that
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15:50 Nov 17, 2008
Jkt 217001
this final rule with comment period is
published in the Federal Register.
We thank the public for their
comments concerning our review of the
request from Rayner Surgical, Inc. to
establish a new class of NTIOLs based
on the characteristics of its C-Flex IOL
Model 570C. Some of the comments we
received raised additional questions
about the proven effectiveness of the
Rayner C-Flex lens, especially when
compared to other currently available
lenses. These public comments and our
responses to them are summarized
below.
Comment: One commenter expressed
general support for CMS’ integration of
the new NTIOL notice and comment
process into the annual OPPS/ASC
rulemaking cycle. The commenter
cautioned that the process should be
monitored to ensure that the
consideration of these new technologies
is not impeded or slowed by the
rulemaking process. Additionally, the
commenter requested that for
consistency the NTIOL comment period
should coincide with the comment
period for the remainder of the issues
included in the annual OPPS/ASC
proposed rule.
Response: We thank the commenter
for the support of our integration of the
new NTIOL notice and comment
process into the annual OPPS/ASC
rulemaking cycle. However, in response
to the request that the comment period
regarding requests to establish new
classes of NTIOLs should coincide with
the comment period for all other issues
included in the annual OPPS/ASC
proposed rule, we note that section
141(b)(3) of the Social Security Act
Amendments of 1994, Public Law 103–
432, clearly requires us to provide a 30day comment period on lenses that are
the subject of requests for recognition as
belonging to a new class of NTIOLs.
Therefore, we will continue to provide
a 30-day comment period on lenses that
are the subject of requests for
recognition as members of a new class
of NTIOLs.
Comment: One commenter responded
to CMS’ view of the present definition
of currently available lenses. The
commenter believed that the definition
of ‘‘currently available IOLs’’ should
take into account the most recent
preceding level of technological
advancement and corresponding patient
benefit that has been or is rapidly
becoming accepted by the
ophthalmologic medical community.
The commenter suggested that in order
to identify the latest technological
advancement, CMS should consider
market shares and/or growth rates of
various classes of currently available
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IOLs. The commenter further stated that
IOLs that reduce spherical aberration
have become the technology of choice
for most cataract surgeons because of
the greater quality of vision they
provide. The commenter concluded that
CMS should be reluctant to establish a
new NTIOL class for a future candidate
IOL that does not reduce spherical
aberration.
Response: We will consider and
evaluate this particular concept of
‘‘currently available lenses’’ for its
applicability to our future reviews of
NTIOL applications. While we would
expect that use of IOLs seeking NTIOL
recognition would result in improved
clinical outcomes when compared to
currently available lenses, which
includes lenses with the characteristic
of reducing spherical aberration, we do
not require that lenses seeking NTIOL
recognition also share the same
characteristics as other lenses that are in
currently active NTIOL classes. As
discussed in the CY 2007 OPPS/ASC
final rule with comment period (71 FR
68178), we continue to believe that
flexibility is critical when identifying
what the public considers ‘‘currently
available lenses,’’ in order to allow for
consideration of technological advances
in lenses over time.
Comment: One commenter questioned
how CMS could expect a comparison
reference to be included in an FDAapproved label, as the FDA’s legal
authority is only to determine if a
product is safe and effective.
Furthermore, the commenter stated that
to expect a device label to contain
language remarking about the device’s
performance in relation to other similar
devices makes meeting the NTIOL
criteria impossible. The commenter did
not believe that the labels of the IOLs
that have received NTIOL status
contained such language.
Response: In response to the comment
regarding the FDA’s legal authority to
make comparative decisions, we note
that it was not our intent to suggest that
the FDA makes comparative decisions,
but rather that the FDA-approved label,
submitted by an applicant, may include
benchmark studies that have compared
the performance of the applicant’s lens
against the performance of other lenses.
We have reviewed requests for NTIOL
class recognition where the FDAapproved label has included such
comparative bench studies, and we do
use this information in our review
process.
Comment: One commenter claimed
that the C-Flex lens application to
establish a new NTIOL category meets
the specific NTIOL review criteria and
that the applicant lens is not described
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by current or prior classes of NTIOLs.
This commenter asserted that the C-Flex
IOL offers patients who go on to require
vitreoretinal surgery clinically
meaningful improvements, such as a
decreased rate of subsequent therapeutic
interventions and a decreased incidence
of subsequent IOL exchange. The
commenter also argued that the C-Flex
IOL provides beneficiaries who go on to
require vitreoretinal surgery with more
stable postoperative vision because
patients who suffer from silicone oil
adhesion to their implanted IOL lose
visual acuity and either must live with
impaired vision or undergo another
surgical procedure to remove the
damaged lens and have a new IOL
inserted. The commenter pointed out
that silicone oil used as a tamponade
agent during vitreoretinal surgery may
need to be left in the vitreal space for
many months following surgery,
resulting in silicone adherence to a vast
majority of the currently available IOLs
identified by CMS. The commenter
concluded that silicone oil adherence to
the IOL creates both immediate and
long-term problems for patients, as well
as the retinal surgeon. Such problems
include decreased visualization of the
operative area by the surgeon and
reoperation on the eye, which exposes
the patient to significant surgical risks.
The commenter claimed that 15,000
to 30,000 of the approximately 1.5
million cataract surgery patients per
year in the United States go on to
require vitreoretinal surgery, and not an
insignificant number of these
individuals face surgical risks
associated with silicone oil adherence.
The commenter stated that the benefit
from the C-Flex IOL is not dependent on
the number of patients who might be
impacted but rather the clinical
outcomes at issue.
Another commenter explained that
problems of silicone oil adhesion and
silicone oil opacification have been
primarily attributed to silicone IOLs,
and some experts advise that silicone
IOLs not be implanted in patients at risk
for vitreoretinal surgery. This
commenter asserted that published
peer-reviewed articles in the medical
literature conclude that either a
hydrophobic or a hydrophilic acrylic
IOL is preferable (for greater visibility)
to a silicone IOL in patients at risk for
future vitreoretinal surgery. The
commenter further stated that silicone
IOLs have been replaced in the United
States to a large extent by hydrophobic
acrylic IOLs based on surgeon
preferences and common clinical
scenarios. In addition, the commenter
explained that many studies have
documented postoperative optic
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opacification due to calcification in
hydrophilic acrylic IOLs and that
postoperative opacification of these
lenses is of concern, given that the
supposed additional benefit of the
hydrophilic C-Flex IOL is superior
clarity in eyes exposed to silicone oil.
The commenter further claimed that
recent publications identify ‘‘secondary
calcification’’ with hydrophilic acrylic
IOLs as a phenomenon seen in eyes
with complicated pathology (such as
vitreoretinal surgery). The commenter
questioned the bench studies cited in
the C-Flex IOL FDA label, stating that
there is no evidence that relatively small
differences in silicone oil coverage (as
measured in the bench tests) translates
into any clinically meaningful benefit.
Two commenters responded to the
question as to whether surgeons have
alternatives to silicone oil. One
commenter stated that retinal surgeons
could opt to use gas or air for their
tamponade effect, but that use of these
substitutes during vitreoretinal surgery
did not avoid visual problems. This
commenter believed that while there are
some options to address certain aspects
of the silicone oil adherence problem,
none of these options completely
resolves the problem and therefore the
C-Flex lens provides a clinical benefit as
compared to each of these alternatives.
The other commenter asserted that
choices of retinal tamponades include
silicone oil, gases, and perfluorocarbon
liquids, all of which are indicated for
use in treating retinal detachments. This
commenter further stated that the choice
of tamponade is based on each patient’s
presentation and specific pathology, and
that the alternatives are generally not
interchangeable. The commenter also
explained that silicone oil is not used in
every retinal detachment procedure and
that in some cases of retinal
detachment, surgeons use a scleral
buckle procedure that does not utilize a
retinal tamponade. Another commenter
did not offer alternative materials that
could be used as a tamponade but stated
that published peer-reviewed articles in
the medical literature conclude that
either a hydrophobic or a hydrophilic
acrylic IOL is preferable (for greater
visibility) to a silicone IOL in patients
at risk for retinal surgery.
Response: As we have stated in prior
rulemaking, we fully expect that to be
recognized as an NTIOL and to
subsequently establish a new NTIOL
class, the insertion of the candidate IOL
would result in significantly improved
clinical outcomes compared to currently
available IOLs, and the candidate lens
must be distinguishable from lenses
already approved as members of active
or expired classes of NTIOLs that share
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68751
a predominant characteristic associated
with improved clinical outcomes that
were identified for each class. We agree
that the applicant lens is not described
by current or prior classes of NTIOLs.
We also agree that clinical outcomes
rather than number of patients that may
be impacted should be the focus of our
decision. However, we note that with
respect to the applicant lens, there are
no published comparable clinical data
available or presented by the applicant
which demonstrate that use of the CFlex IOL results in measurable,
clinically meaningful, improved
outcomes in comparison with use of
currently available IOLs. The applicant
submitted studies that evaluated the
adhesion of silicone oil to various IOL
materials and these studies conclude, to
varying degrees, that lenses made of
hydrophilic material exhibit lower
silicone oil adhesion than lenses made
of hydrophobic materials. However, the
clinical relevance of these bench studies
submitted by the applicant has not been
established. We agree with the comment
that several studies have documented
postoperative opacification of
hydrophilic lenses. In our review of the
studies submitted by the applicant and
other available data and studies, we
encountered information, similar to the
peer-reviewed journal articles submitted
by one commenter that suggested that
hydrophilic lenses may be susceptible
to other forms of opacification. If this
were the case, any potential visual
benefit from reduced silicone oil
opacification might not be realized.
After consideration of the public
comments received, we conclude that
the Rayner C-Flex IOL does not
demonstrate substantial clinical benefit
in comparison with currently available
IOLs. Therefore, we are disapproving
Rayner’s request to recognize its C-Flex
(model 570) IOL as an NTIOL and,
therefore, we are not establishing a new
class of NTIOL for payment as a result
of this CY 2009 review cycle.
4. Payment Adjustment
The current payment adjustment for a
5-year period from the implementation
date of a new NTIOL class is $50. In the
CY 2007 OPPS/ASC final rule with
comment period, we revised
§ 416.200(a) through (c) to clarify how
the IOL payment adjustment will be
made and how an NTIOL will be paid
after expiration of the payment
adjustment, and made minor editorial
changes to § 416.200(d). For CY 2008,
we did not revise the current payment
adjustment amount, and we did not
propose to revise the payment
adjustment amount for CY 2009 in light
of our very short experience with the
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revised ASC payment system,
implemented initially on January 1,
2008. Therefore, the final ASC payment
adjustment amount for NTIOLs in CY
2009 is $50.
5. ASC Payment for Insertion of IOLs
In accordance with the final policies
of the revised ASC payment system, for
CY 2009, payment for IOL insertion
procedures is established according to
the standard payment methodology of
the revised payment system, which
multiplies the ASC conversion factor by
the ASC payment weight for the surgical
procedure to implant the IOL. CY 2009
ASC payment for the cost of a
conventional lens is packaged into the
payment for the associated covered
surgical procedures performed by the
ASC. The proposed CY 2009 ASC
payment rates for IOL insertion
procedures were included in Table 44 of
the CY 2009 OPPS/ASC proposed rule
(73 FR 41537).
We did not receive any public
comments concerning the proposed CY
2009 payment rates for the insertion of
IOL procedures. Therefore, we are
finalizing the payment rates for the
insertion of IOL procedures, calculated
according to the standard methodology
of the revised ASC payment system, as
shown in Table 50 below for CY 2009.
TABLE 50—INSERTION OF IOL PROCEDURES AND THEIR CY 2009 ASC PAYMENT RATES
CY 2009
HCPCS code
CY 2009 Long descriptor
66983 ..........
66984 ..........
Intracapsular cataract extraction with insertion of intraocular lens prosthesis (one stage procedure) .....................
Extracapsular cataract removal with insertion of intraocular lens prosthesis (one stage procedure), manual or
mechanical technique (e.g., irrigation and aspiration or phacoemulsification).
Insertion of intraocular lens prosthesis (secondary implant), not associated with concurrent cataract removal ......
Exchange of intraocular lens .....................................................................................................................................
66985 ..........
66986 ..........
6. Announcement of CY 2009 Deadline
for Submitting Requests for CMS
Review of Appropriateness of ASC
Payment for Insertion of an NTIOL
Following Cataract Surgery
In accordance with § 416.185(a) of our
regulations as revised by the CY 2007
OPPS/ASC final rule with comment
period, CMS announces that in order to
be considered for payment effective
January 1, 2010, requests for review of
applications for a new class of new
technology IOLs must be received at
CMS by 5 p.m. EST, on March 2, 2009.
Send requests to ASC/NTIOL, Division
of Outpatient Care, Mailstop C4–05–17,
Centers for Medicare and Medicaid,
7500 Security Boulevard, Baltimore, MD
21244–1850.
To be considered, requests for NTIOL
reviews must include the information
on the CMS Web site at: https://
www.cms.hhs.gov/ASCPayment/
08_NTIOLs.asp#TopOfPage.
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H. ASC Payment and Comment
Indicators
1. Background
In addition to the payment indicators
that we introduced in the August 2,
2007 final rule for the revised ASC
payment system, we also created final
comment indicators for the ASC
payment system in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66855). We created Addendum DD1
to define ASC payment indicators that
we use in Addenda AA and BB to
provide payment information regarding
covered surgical procedures and
covered ancillary services, respectively,
under the revised ASC payment system.
The ASC payment indicators in
Addendum DD1 are intended to capture
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ASC payment
policy-relevant characteristics of HCPCS
codes that may receive packaged or
separate payment in ASCs, including:
Their ASC payment status prior to CY
2008; their designation as deviceintensive or office-based and the
corresponding ASC payment
methodology; and their classification as
separately payable radiology services,
brachytherapy sources, OPPS passthrough devices, corneal tissue
acquisition services, drugs or
biologicals, or NTIOLs.
We also created Addendum DD2 that
lists the ASC comment indicators. The
ASC comment indicators used in
Addenda AA and BB to this final rule
with comment period serve to identify,
for the revised ASC payment system, the
status of a specific HCPCS code and its
payment indicator with respect to the
timeframe when comments will be
accepted. The comment indicator ‘‘NI’’
is used in the final rule to indicate new
HCPCS codes for which the interim
payment indicator assigned is subject to
comment on this final rule with
comment period.
The ‘‘CH’’ comment indicator was
used in Addenda AA and BB to the CY
2009 OPPS/ASC proposed rule to
indicate that: A new payment indicator
(in comparison with the indicator for
the CY 2008 ASC April quarterly
update) was proposed for assignment to
an active HCPCS code for the next
calendar year; an active HCPCS code
was proposed for addition to the list of
procedures or services payable in ASCs;
or an active HCPCS code was proposed
for deletion at the end of the current
calendar year. The ‘‘CH’’ comment
indicators that are published in this
final rule with comment period are
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964.70
893.03
893.03
provided to alert readers that a change
has been made from one calendar year
to the next, but do not indicate that the
change is subject to comment.
The full definitions of the payment
indicators and comment indicators are
provided in Addenda DD1 and DD2,
respectively, to this final rule with
comment period.
2. ASC Payment and Comment
Indicators
In the CY 2009 OPPS/ASC proposed
rule, we proposed to revise the
definition of one ASC payment
indicator for CY 2009 (73 FR 41537). We
proposed that the definition of payment
indicator ‘‘F4’’ would be changed from
‘‘Corneal tissue acquisition; paid at
reasonable cost’’ to ‘‘Corneal tissue
acquisition, hepatitis B vaccine; paid at
reasonable cost’’ for CY 2009. The
revised definition was displayed in
Addendum DD1 to the CY 2009 OPPS/
ASC proposed rule.
We did not receive any public
comments that addressed our proposal
related to implementation of a revised
definition for payment indicator ‘‘F4’’.
We are finalizing our proposal, without
modification, to adopt the payment
indicators as defined in Addendum DD1
to this final rule with comment period.
I. Calculation of the ASC Conversion
Factor and ASC Payment Rates
1. Background
In the August 2, 2007 final rule, we
made final our proposal to base ASC
relative payment weights and payment
rates under the revised ASC payment
system on APC groups and relative
payment weights (72 FR 42493).
Consistent with that policy and the
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requirement at section 1833(i)(2)(D)(ii)
of the Act that the revised payment
system be implemented so that it would
be budget neutral, the initial ASC
conversion factor (CY 2008) was
calculated so that estimated total
Medicare payments under the revised
ASC payment system in the first year
would be budget neutral to estimated
total Medicare payments under the
existing (CY 2007) ASC payment
system. That is, application of the ASC
conversion factor was designed to result
in aggregate expenditures under the
revised ASC payment system in CY
2008 equal to aggregate expenditures
that would have occurred in CY 2008 in
the absence of the revised system, taking
into consideration the cap on payments
in CY 2007 as required under section
1833(i)(2)(E) of the Act (72 FR 42521
through 42522).
We note that we consider the term
‘‘expenditures’’ in the context of the
budget neutrality requirement under
section 1833(i)(2)(D)(ii) of the Act to
mean expenditures from the Medicare
Part B Trust Fund. We do not consider
expenditures to include beneficiary
coinsurance and copayments. This
distinction was important for the CY
2008 ASC budget neutrality model that
considered payments across hospital
outpatient, ASC, and MPFS payment
systems. However, because coinsurance
is almost always 20 percent for ASC
services, this interpretation of
expenditures has minimal impact for
subsequent budget neutrality
adjustments calculated within the
revised ASC payment system.
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66857
through 66858), we set out a step-bystep illustration of the final budget
neutrality adjustment calculation based
on the methodology finalized in the
August 2, 2007 final rule (72 FR 42521
through 42531) and as applied to
updated data available for the CY 2008
OPPS/ASC final rule with comment
period. The application of that
methodology to the data available for
the CY 2008 OPPS/ASC final rule with
comment period resulted in a budget
neutrality adjustment of 0.65.
For CY 2008, we adopted the OPPS
relative payment weights for most
services as the ASC relative payment
weights and, consistent with the final
policy, we calculated the CY 2008 ASC
payment rates by multiplying the ASC
relative payment weights by the CY
2008 ASC conversion factor of $41.401.
For covered office-based surgical
procedures and covered ancillary
radiology services, the final policy is to
set the relative payment weights so that
the national unadjusted ASC payment
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rate does not exceed the MPFS
unadjusted nonfacility PE RVU amount.
Further, as discussed in section XV. of
the CY 2009 OPPS/ASC proposed rule,
in addition to the standard payment
methodology, we also adopted several
other alternative payment methods for
specific types of services (for example,
device-intensive procedures) (73 FR
41523 through 41539).
Beginning in CY 2008, Medicare
accounts for geographic wage variation
in labor cost when calculating
individual ASC payments by applying
the pre-floor and pre-reclassified
hospital wage index values that CMS
calculates for payment, using updated
Core Based Statistical Areas (CBSAs)
issued by the Office of Management and
Budget in June 2003. The
reclassification provision provided at
section 1886(d)(10) of the Act is specific
to hospitals. We believe the use of the
most recent available raw pre-floor and
pre-reclassified hospital wage index
results in the most appropriate
adjustment to the labor portion of ASC
costs. In addition, use of the unadjusted
hospital wage data avoids further
reductions in certain rural statewide
wage index values that result from
reclassification. We continue to believe
that the unadjusted hospital wage index,
which is updated yearly and is used by
many other Medicare payment systems,
appropriately accounts for geographic
variances in labor costs for ASCs.
As discussed in the August 2, 2007
revised ASC payment system final rule
(72 FR 42518), the revised ASC payment
system accounts for geographic wage
variation when calculating individual
ASC payments by applying the pre-floor
and pre-reclassified hospital wage index
to the labor-related portion, which is 50
percent of the ASC payment amount.
In the CY 2009 OPPS/ASC proposed
rule, we noted that as part of our review
of the hospital wage index, in
accordance with section 106(b)(2) of the
MIEA–TRHCA, CMS has initiated a
research contract that will include
analysis and recommendations on
alternatives to the current method for
computing the IPPS wage index for FY
2009. We received an interim report on
this analysis in August 2008 that is
available on the Web site at https://
www.acumenllc.com/reports/cms/
RevisedImpactAnalysisfor2009Final
Rule.pdf. We anticipate a final report in
the winter of 2009. While the majority
of that final report will address the
impact of changes on the IPPS wage
index, report recommendations should
provide some information about how
proposals to refine the IPPS wage index,
including modification or elimination of
the reclassification process and
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adoption of Bureau of Labor Statistics
data, may result in a more appropriate
wage index for non-IPPS providers (73
FR 48564).
2. Policy Regarding Calculation of the
ASC Payment Rates
a. Updating the ASC Relative Payment
Weights for CY 2009 and Future Years
We update the ASC relative payment
weights in the revised ASC payment
system each year using the national
OPPS relative payment weights (and
MPFS nonfacility PE RVU amounts, as
applicable) for that same calendar year
and uniformly scale the ASC relative
payment weights for each update year to
make them budget neutral (72 FR 42531
through 42532). Consistent with our
established policy, in the CY 2009
OPPS/ASC proposed rule (73 FR 41538),
we proposed to scale the CY 2009
relative payment weights for ASCs
according to the following method.
Holding ASC utilization and the mix of
services constant from CY 2007, for CY
2009, we would compare the total
payment weight using the CY 2008 ASC
relative payment weights under the 75/
25 blend (of the CY 2007 payment rate
and the revised ASC payment rate) with
the total payment weight using the CY
2009 ASC relative payment weights
under the 50/50 blend (of the CY 2007
ASC payment rate and the revised ASC
payment rate) to take into account the
changes in the OPPS relative payment
weights between CY 2008 and CY 2009.
We would use the ratio of CY 2008 to
CY 2009 total payment weight (the
weight scaler) to scale the ASC relative
payment weights for CY 2009. The
proposed CY 2009 ASC scaler was
0.9753 and scaling of ASC relative
payment weights would apply to
covered surgical procedures and
covered ancillary radiology services
whose ASC payment rates are based on
OPPS relative payment weights.
Scaling would not apply in the case
of ASC payment for separately payable
covered ancillary services that have a
predetermined national payment
amount (that is, their national ASC
payment amounts are not based on
OPPS relative payment weights), such
as drugs and biologicals that are
separately paid under the OPPS or
services that are contractor-priced or
paid at reasonable cost in ASCs. Any
service with a predetermined national
payment amount would be included in
the ASC budget neutrality comparison,
but scaling of the ASC relative payment
weights would not apply to those
services. The ASC payment weights for
those services without predetermined
national payment amounts (that is,
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those services with national payment
amounts that would be based on OPPS
relative payment weights if a payment
limitation did not apply) would be
scaled to eliminate any difference in the
total payment weight between the
current year and the update year.
The proposed weight scaler used to
model ASC fully implemented rates in
order to reflect our estimate of rates if
there was no transition for CY 2009 was
equal to 0.9412. This scaler was applied
to all payment weights subject to
scaling, in order to estimate the fully
implemented payment rates for CY 2009
without the transition, for purposes of
the ASC impact analysis discussed in
section XXI.C. of the CY 2009 OPPS/
ASC proposed rule (73 FR 41562).
For any given year’s ratesetting, we
typically use the most recent full
calendar year of claims data to model
budget neutrality adjustments. When we
developed the CY 2009 OPPS/ASC
proposed rule, we had available 95
percent of CY 2007 ASC claims data.
These claims did not include new
covered surgical procedures and
covered ancillary services under the
revised ASC payment system that were
first payable in ASCs in CY 2008 and
only contained data for ASC services
billed in CY 2007 that were eligible to
receive payment under the previous
ASC payment system. We did not have
sufficiently robust CY 2008 ASC claims
data upon which to base the CY 2009
ASC payment system update. Therefore,
for CY 2009 budget neutrality
adjustments, we assumed that there
would be no significant change in the
weight scaler or wage adjustment
attributable to new covered surgical and
covered ancillary services.
To create an analytic file to support
calculation of the weight scaler and
budget neutrality adjustment for the
wage index (discussed below), we
summarized available CY 2007 ASC
claims by provider and by HCPCS code.
We created a unique supplier identifier
solely for the purpose of identifying
unique providers within the CY 2007
claims data. We used the provider zip
code reported on the claim to associate
state, county, and CBSA with each ASC.
This file, available to the public as a
supporting data file for the CY 2009
OPPS/ASC proposed rule, is posted on
the CMS Web site at: https://
www.cms.hhs.gov/ASCPayment/
01_Overview.asp#TopOfPage.
Comment: Many commenters opposed
scaling the ASC relative payment
weights, expressing similar opinions to
those public comments that were
summarized when CMS finalized the
CY 2009 scaling policy in the August 2,
2007 revised ASC payment system final
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rule. These commenters expressed many
concerns, including that scaling is
inappropriate and will continue to
erode the relationship between the ASC
payment system and the OPPS.
Numerous commenters asserted that
CMS is not required to scale the ASC
relative weights and that it should use
its administrative authority and not
apply the ‘‘secondary’’ scaler to ASC
relative weights in CY 2009. They noted
that CMS established at § 416.171(e)(2)
a process by which it may (emphasis
added) make annual adjustment to the
relative payment weights, as needed
(emphasis added).
Most commenters believed that the
scaling would result in decreased ASC
expenditures in CY 2009. On the other
hand, some commenters contended that
suspending application of the scaler
would result in an aggregate increase in
spending in the ASC setting in CY 2009,
although the commenters believed this
increase in spending would be
appropriate. In addition, many of the
commenters indicated that the fact that
the weights are already scaled to ensure
budget neutrality under the OPPS
means that they should not be scaled
(‘‘secondary rescaling’’) to ensure
budget neutrality under the ASC system.
Many commenters expressed concern
that other payment adjustments are
already depressing the ASC payments
for many procedures, including the
freeze on the ASC payment update and
the transition policy and that scaling
further reduces rates to inappropriately
low levels. Further, the commenters
stated that scaling has a
disproportionate impact on some types
of covered surgical procedures and that
the differences in the mix of services
between the OPPS (where lower cost
primary care and diagnostic services are
included in relative weight scaling) and
ASCs, as well as the ‘‘secondary
rescaling’’ of the relative weights for
ASC procedures effectively resulted in
penalizing ASCs for performing only
surgical procedures.
The commenters also expressed their
belief that the lack of ASC volume data
for 40 percent of the covered surgical
procedures raises substantial
methodological issues. They stated that
perhaps CMS should put off scaling the
ASC weights until there are ASC data
that reflect actual experience under the
revised payment system.
Finally, the commenters asserted that
the scaling would lead to access to care
problems for Medicare beneficiaries.
Response: Many of these comments
are similar to public comments on the
proposal for the revised ASC payment
system that we responded to in the
August 2, 2007 revised ASC payment
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system final rule. For example, we
noted in that August 2, 2007 final rule
that commenters ‘‘were concerned that
annual rescaling would cause
divergence of the relative weights
between the OPPS and the revised ASC
payment system for individual
procedures.’’ (72 FR 42532) While we
continue to appreciate the commenters’
concerns, we refer the commenters to
the discussion in the August 2, 2007
revised ASC payment system final rule
for our detailed response in
promulgating the final CY 2009 scaling
policy (72 FR 42531 through 42533).
Below, we address new issues raised by
the commenters and provide a general
summary of some of the relevant
responses from the August 2, 2007 final
rule.
With respect to the use of ‘‘as needed’’
in the text of § 416.171(e)(2), we note
that this section says ‘‘* * * CMS
adjusts the ASC relative payment
weights under 416.167(b)(2) as needed
so that any updates and adjustments
made under 419.50(a) of this subchapter
are budget neutral as estimated by
CMS.’’ This does not mean that CMS
will determine whether or not to adjust
for budget neutrality. Rather, it means
that CMS adjusts the relative payment
weights as needed to ensure budget
neutrality. If we were not to scale the
ASC relative payment weights, we
estimate that the CY 2009 updates and
adjustments would not be budget
neutral. This result would be counter to
the rationale for the scaling policy
described in the August 2, 2007 revised
ASC payment system final rule (72 FR
42532).
We agree with the commenters who
indicated that suspending application of
the scaler would result in an aggregate
increase in spending in the ASC setting
in CY 2009. However, we disagree with
the commenters that this increase in
spending would be appropriate because,
as we discussed in the August 2, 2007
revised ASC payment system final rule,
we continue to believe that it is
inappropriate for ASC expenditures to
increase or decrease as a result of
changes in the relative payment weights
or the wage index. Changes in aggregate
ASC expenditures related to payment
rates should be determined by the
update to the ASC conversion factor.
Specifically, we stated that, ‘‘Rescaling
of relative weights or the application of
a budget neutrality adjustment is a
common feature of Medicare payment
systems, designed to ensure that
estimated aggregate payments under a
payment system for an upcoming year
would be neither greater nor less than
the aggregate payments that would be
made in the prior year, taking into
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consideration any changes or
recalibrations for the upcoming year.
* * * We continue to believe that this
principle should apply as well in the
revised ASC payment system.’’ (72 FR
42532)
The ASC weight scaling methodology
is entirely consistent with the OPPS
methodology for scaling the relative
payment weights. Establishing budget
neutrality under the OPPS does not
result in budget neutrality under the
revised ASC payment system. Scaling
the ASC relative payment weights is not
a ‘‘secondary rescaling’’ of the OPPS
relative payment weights; there are two
separate processes for the two separate
payment systems.
In order to maintain budget neutrality
of the ASC payment system, CMS needs
to adjust for the effects of wage index
changes and relative weight changes
even though there are other factors
affecting ASC payment rates. However,
the use of a uniform scaling factor does
not alter the relativity of the OPPS
payment weights as used in the ASC
payment system. Differences in the
relativity between the ASC relative
payment weights and the OPPS relative
payment weights are not driven by the
application of the uniform scaling
factor. To the extent that commenters
objected to the effects of other payment
policies of the revised ASC payment
system, the uniform scaling factor is not
the driver of the effects of those
payment policies. Our ASC weight
scaling methodology is entirely
consistent with the OPPS weight scaling
methodology.
Regarding commenters’ concern that
scaling has a disproportionate effect on
some types of covered surgical
procedures, we note that, as explained
in the August 2, 2007 revised ASC
payment system final rule (72 FR
42542), a major effect of the revised ASC
payment system is redistribution of
payments across all ASC procedures.
Historically, the highest volume ASC
procedures had payment rates that were
close to the payments in HOPDs and, as
such, accounted for most of the total
Medicare payments to ASCs. As a result,
payments for many of those high
volume services are the most adversely
affected under the revised payment
system as the relative weights across all
ASC procedures become more closely
aligned with those under the OPPS.
With respect to the use of CY 2007
ASC claims data, we typically use the
most recent full calendar year of claims
data to model budget neutrality
adjustments. For CY 2009, the most
recent full year of data available is CY
2007 ASC claims data. On the other
hand, we recognize that partial 2008
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ASC claims data do contain at least
some utilization for the new covered
surgical procedures and covered
ancillary services under the revised ASC
payment system. We considered trying
to use CY 2008 ASC data in developing
the CY 2009 OPPS/ASC proposed rule
and, on balance, concluded that given
the newness of the revised ASC
payment system, we continue to believe
that it is more appropriate to use full CY
2007 data in the development of the CY
2009 ASC payment rates, rather than
incomplete CY 2008 claims data. We
expect to use the full, complete CY 2008
claims data in the development of the
CY 2010 ASC payment rates.
We do not believe that the application
of the scaler will lead to beneficiary
access problems. We believe that the
fully implemented relative weights will
be representative of relative costs across
all ASC services and that payments will
support the continued provision of high
quality surgical procedures to Medicare
beneficiaries. We also expect that over
time ASCs will provide an increased
breadth of services. However,
appropriate beneficiary access to
services in appropriate care settings is
always an important concern and we
will continue to monitor access under
the revised ASC payment system.
Comment: Commenters also criticized
the relative weight scaler and
transitional payment methodologies for
resulting in relatively larger ASC
payment decreases for the highest
volume ASC procedures than for other
ASC procedures. They estimated that
payment decreases for the seven highest
volume ASC procedures are responsible
for financing 50 percent of the payment
increases for other procedures that have
payment rates that have historically
lagged far below the OPPS rates. They
asserted that this represented a
disproportionate and inappropriate
effect on the highest volume ASC
services. They argued that it was not fair
for CMS to attempt to balance budget
neutrality for the revised ASC payment
system on reduced payment for only a
few ASC services.
Response: The GAO found that OPPS
relative payment weights were reflective
of the relative costs among the same
procedures in ASCs. As we explained in
the August 2, 2007 revised ASC
payment system final rule (72 FR
42542), a major effect of the use of the
OPPS relativity in the revised ASC
payment system is a redistribution of
payments across all ASC procedures.
We noted that many procedures for
which the relativity under the OPPS
was higher than the relativity under the
old ASC payment system would
experience significant payment
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increases as payments under the revised
ASC payment system would be made
based on the relativity found under the
OPPS. Many of those procedures were
historically lower volume ASC services.
Conversely, however, procedures for
which the relativity under the old ASC
payment system was higher than the
relativity under the OPPS, like many of
the high volume ASC procedures
mentioned by the commenters, would
see payment decreases under the
revised ASC payment system. As
described in the August 2, 2007 revised
ASC payment system final rule, we are
transitioning these payment changes
over 4 years to allow time for ASCs to
adjust to the new payment structure (72
FR 42521).
As stated earlier, the use of a uniform
scaling factor does not alter the
relativity of the OPPS payment weights
as used in the ASC payment system.
Differences in the relativity between the
ASC relative payment weights and the
OPPS relative payment weights are not
driven by application of the uniform
scaling factor. For a further discussion
of the transition policy and the effect of
scaling on the relativity of the ASC
payment weights, we refer readers to the
August 2, 2007 revised ASC payment
system final rule (72 FR 42519 through
42521 and 42531 through 42533).
Comment: A number of commenters
requested that CMS recalculate the
payment rate for CPT code 66984
(Extracapsular cataract removal with
insertion of intraocular lens prosthesis
(one stage procedure), manual or
mechanical technique (e.g., irrigation
and aspiration or phacoemulsification),
the highest volume ASC procedure.
Some commenters stated that they could
not calculate the payment amount that
CMS published as the national
unadjusted rate in the CY 2009 OPPS/
ASC proposed rule. Other commenters
noted that the ASC payment rate for
CPT code 66984 should have increased
slightly for CY 2009 because the OPPS
rate increased. They argued that if the
payment system was functioning as it
was described in the August 2, 2007
revised ASC payment system final rule,
the CY 2009 payment for CPT code
66984 should have increased by $1.13,
but instead, due to rescaling, the
proposed CY 2009 ASC payment for the
procedure decreased.
Other commenters understood the
method for calculation and indicated
their belief that CMS should not apply
the scaler to the CY 2007-based portion
of the CY 2009 payment rate for this or
other HCPCS codes subject to the
transition. They noted that, in the
August 2, 2007 revised ASC payment
system final rule, the final policy called
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for a CY 2009 transitional blend of 50
percent of the CY 2007 payment rate for
a covered surgical procedure on the CY
2007 ASC list of covered surgical
procedures and 50 percent of the CY
2009 payment rate for the procedure
calculated under the ASC standard
methodology. Thus, these commenters
believed that CMS’ scaling of the entire
blended CY 2009 ASC payment weight
was not appropriate because this
methodology decreased the CY 2007
payment amount contributing to the
procedure’s lower CY 2009 proposed
transitional ASC payment rate.
Response: To calculate the
transitional rate for CY 2009 for CPT
code 66984, the CY 2007 payment rate
portion of the blended rate must be
adjusted by the relative weight scaling
factor. The commmenters who could not
calculate a CY 2009 payment rate for
CPT code 66984 that matched the rate
included in the CY 2009 OPPS/ASC
proposed rule likely did not scale the
ASC transitional payment weight
associated with the blended CY 2009
payment rate for CPT code 66984.
The issue of the inclusion of the
transition in the calculation of the CY
2009 scaling factor was clearly
addressed in the August 2, 2007 revised
ASC payment system final rule where
we specifically indicated that ‘‘holding
ASC utilization and the mix of services
constant, for CY 2009, we will compare
the total weight using the CY 2008 ASC
relative payment weights under the 75/
25 blend (of the CY 2007 payment rate
and the revised payment rate) with the
total weight using CY 2009 relative
payment weights under the 50/50 blend
(of the CY 2007 payment rate and the
revised payment rate), taking into
account the changes in the OPPS
relative payment weights between CY
2008 and CY 2009. We will use the ratio
of CY 2008 to CY 2009 total weight to
scale the ASC relative payment weights
for CY 2009.’’ (72 FR 42533)
In addition to explicitly stating in the
August 2, 2007 revised ASC payment
system final rule how we would
incorporate the transition into the CY
2009 scaling calculation, we indicated
in the methodology describing our
calculation of the final estimated CY
2008 budget neutrality adjustment that
‘‘the budget neutrality calculation is
calibrated to take into account the CY
2008 transitional payment rates for
procedures on the CY 2007 list of
covered surgical procedures.’’ (72 FR
42531) In other words, the CY 2008
budget neutrality adjustment took into
account the transition and was not
based on the fully implemented system.
It would be inconsistent with the final
policies established in the August 2,
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2007 revised ASC payment system final
rule and the calculation of the CY 2008
ASC conversion factor for us to
calculate the CY 2009 budget neutrality
adjustment without taking the transition
into account and base it only on the
fully implemented system, as was
suggested by some commenters.
After consideration of the public
comments received, we are finalizing,
without modification, our CY 2009 ASC
relative payment weight scaling
methodology. The final CY 2009 ASC
payment weight scaler is 0.9751.
b. Updating the ASC Conversion Factor
Under the OPPS, we typically apply
a budget neutrality adjustment for
provider-level changes, most notably a
change in the wage index for the
upcoming year, to the conversion factor.
For the CY 2009 ASC payment system,
we proposed to calculate and apply the
pre-floor and pre-reclassified hospital
wage index that is used for ASC
payment adjustment to the ASC
conversion factor, just as the OPPS wage
index adjustment is calculated and
applied to the OPPS conversion factor
(73 FR 41539). For CY 2009, we
calculated this proposed adjustment for
the revised ASC payment system by
using the most recent CY 2007 claims
data available and estimating the
difference in total payment that would
be created by introducing the CY 2009
pre-floor and pre-reclassified hospital
wage index. Specifically, holding CY
2007 ASC utilization and service-mix
and CY 2009 national payment rates
after application of the weight scaler
constant, we calculated the total
adjusted payment using the CY 2008
pre-floor and pre-reclassified hospital
wage index and a total adjusted
payment using the proposed CY 2009
pre-floor and pre-reclassified hospital
wage index. We used the 50-percent
labor-related share that we finalized for
the revised ASC payment system in CY
2008 for both total adjusted payment
calculations. We then compared the
total adjusted payment calculated with
the CY 2008 pre-floor and prereclassified hospital wage index to the
total adjusted payment calculated with
the proposed CY 2009 pre-floor and prereclassified hospital wage index and
applied the proposed rule resulting ratio
of 0.9996 (the ASC wage index budget
neutrality adjustment) to the CY 2008
ASC conversion factor to calculate the
proposed CY 2009 ASC conversion
factor.
Section 1833(i)(2)(C) of the Act
requires that, if the Secretary has not
updated the ASC payment amounts in a
calendar year after CY 2009, the
payment amounts shall be increased by
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the percentage increase in the Consumer
Price Index for All Urban Consumer
(CPI–U) as estimated by the Secretary
for the 12-month period ending with the
midpoint of the year involved.
Therefore, as discussed in the August 2,
2007 revised ASC payment system final
rule, we adopted a final policy to update
the ASC conversion factor using the
CPI–U in order to adjust ASC payment
rates for inflation (72 FR 42518 through
42519). We will implement the annual
updates through an adjustment to the
conversion factor under the revised ASC
payment system beginning in CY 2010
when the statutory requirement for a
zero update no longer applies.
Therefore, for CY 2009, we only
proposed to update the ASC conversion
factor with the budget neutrality
adjustment due to the revised CY 2009
pre-floor and pre-reclassified hospital
wage index, resulting in a proposed CY
2009 ASC conversion factor of $41.384,
which was the product of $41.401
multiplied by 0.9996.
Comment: One commenter questioned
CMS’ determination of the CY 2008
wage index as finalized in the CY 2008
OPPS/ASC final rule with comment
period. The commenter inquired as to
how local wage index assignments were
determined and, more specifically, how
a facility was determined to be rural.
Response: In June 2003, the Office of
Management and Budget (OMB)
announced revised standards for
designating the geographic statistical
areas that CMS uses to define labor
market areas for purposes of assigning
the wage index. Specifically, the OMB
announced that labor market areas
would no longer be defined as
Metropolitan Statistical areas (MSAs),
but instead as Core Based Statistical
Areas (CBSA). OMB further divided
these CBSAs into metropolitan
statistical areas and micropolitan
statistical areas, which, in accordance
with established policy, CMS treats as
urban and rural, respectively (69 FR
49026 through 49034). Areas not located
in any CBSA also are considered rural.
Since June 2003, CMS has
transitioned from MSA designations to
the CBSA designations. As a result of
this change, some facilities that were
previously located in urban areas might
now be located in areas deemed as rural
under the revised standards. The same
would also apply to facilities that were
previously located in rural areas and are
now located in urban areas. In the
August 2, 2007 revised ASC payment
system final rule (72 FR 42517 through
42518), we finalized the policy of
assigning the wage index to ASCs based
on their CBSA designation, instead of
MSAs, under the revised ASC payment
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system. Therefore, the wage index that
is assigned to an ASC is based on the
CBSA in which the facility is physically
located. The OMB periodically updates
the CBSA designations using census
data, and we reflect those updates in
assignment of the wage index each year.
A crosswalk that maps the prior MSA
labor market area designations to the
revised CBSA designations is available
on the CMS Web site and can be
accessed at: https://www.cms.hhs.gov/
AcuteInpatientPPS/WIFN.
Comment: Many commenters
requested that CMS adopt the same
wage index for ASCs as CMS uses to
adjust payment under the OPPS.
Commenters contended that because
ASCs offer services that are very similar
to those provided in HOPDs and,
therefore, the facilities are competing for
the same type of staff, the same wage
adjustments should apply.
Response: We believe that the prefloor, pre-reclassification hospital wage
index that we use for our other nonacute
care hospital payment systems is
appropriate for the ASC payment
system. However, as noted in the CY
2009 OPPS/ASC proposed rule (73 FR
41538), in accordance with section
106(b)(1) of the MIEA–TRCHA, CMS has
initiated a research contract that will
evaluate the application of the hospital
wage index in noninpatient settings. We
may reconsider our wage policies in
light of the findings from that study
when they become available.
Comment: Many commenters
contended that payment for services
provided in ASCs should be made based
on a fixed percentage of the OPPS rates.
Several commenters indicated that two
bills have been introduced in Congress
to set and keep ASC payment rates at 75
percent of HOPD payments. These
commenters expressed support for the
legislation and their belief that 75
percent would balance Medicare’s need
for savings with an ASC payment rate
that could promote growth and
development of ASCs and ultimately
lead to greater long-term savings for
Medicare as procedures shift from more
costly HOPDs. These commenters
reiterated their belief that CMS’ method
for establishing budget neutrality for the
revised ASC payment system was
flawed and has resulted in payments
that are too low to sustain ASC services
for Medicare beneficiaries.
Commenters were also concerned that
updating the conversion factor for the
revised ASC payment system using the
CPI–U instead of the hospital market
basket used to update the OPPS would
cause divergence in the relationship
between payment to HOPDs and ASCs
over time that would not be based on
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growing differences between the costs of
providing procedures in those two
different settings. The commenters
asserted that hospitals and ASCs
experience similar inflationary
pressures. Therefore, they
recommended that CMS use the hospital
market basket as the update for inflation
under the revised ASC payment system
because that update would more
appropriately reflect inflation in the
costs of providing surgical services. In
addition, the commenters believed that
the same update under the two payment
systems would allow for a consistent
relationship between their payments for
the same surgical procedures.
Response: Many of these comments
are similar to comments we responded
to in the August 2, 2007 revised ASC
payment system final rule. For example,
we noted in that final rule that
‘‘[s]everal commenters specifically
recommended that CMS adopt 75
percent as the multiplier to the OPPS
conversion factor, so that payment rates
under the revised ASC payment system
would be 75 percent of the OPPS rates.
They cited legislation that was
introduced in the U.S. Senate in 2003 in
which payments to ASCs were to have
been provided at 75 percent of the OPPS
rates.’’ (72 FR 42526) We also stated in
the final rule (72 FR 42518) that
commenters ‘‘expressed concern that
the use of two different factors to update
payments for ASCs and HOPDs would
further increase the discrepancies
between payments in the two settings.’’
While we continue to appreciate the
commenters’ concerns, to the extent that
the commenters are addressing the
methodology for calculating the CY
2008 conversion factor, we refer them to
the discussion of the methodology in
the August 2, 2007 revised ASC
payment system final rule (72 FR 42521
through 42531). To the extent
commenters are concerned about the CY
2009 update to the conversion factor,
ASCs are not eligible for an update in
CY 2009, as required by statute. Finally,
to the extent commenters are concerned
about updates to the ASC conversion
factor for years after CY 2009, we note
that we did not propose to change the
conversion factor update methodology
and we refer readers to the discussion
in the August 2, 2007 revised ASC
payment system final rule on this issue
(72 FR 42518 through 42519).
After consideration of the public
comments received, we are finalizing
our proposed methodology for
determining the final CY 2009 ASC
conversion factor. Using more complete
CY 2007 data for this final rule with
comment period, we calculated a wage
index budget neutrality adjustment of
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68757
0.9998 for this final rule with comment
period. The final ASC conversion factor
of $41.393 is the product of the CY 2008
conversion factor of $41.401 multiplied
by 0.9998.
3. Display of ASC Payment Rates
Addenda AA and BB to this CY 2009
OPPS/ASC final rule with comment
period display the updated ASC
payment rates for CY 2009 for covered
surgical procedures and covered
ancillary services, respectively. These
addenda contain several types of
information related to the CY 2009
payment rates. Specifically, in
Addendum AA, the column titled
‘‘Subject to Multiple Procedure
Discounting’’ indicates whether a
surgical procedure would be subject to
the multiple procedure payment
reduction policy. As discussed in the
CY 2008 OPPS/ASC final rule with
comment period (72 FR 66829 through
66830), most covered surgical
procedures are subject to a 50-percent
reduction in the ASC payment for the
lower-paying procedure when more
than one procedure is performed in a
single operative session. Display of the
comment indicator ‘‘CH’’ in the column
titled ‘‘Comment Indicator’’ indicates a
change in payment policy for the item
or service from CY 2008 to CY 2009,
including identifying new or
discontinued HCPCS codes, designating
items or services new for payment
under the ASC payment system, and
identifying items or services with
changes in the ASC payment indicator
for CY 2009.
The column titled ‘‘CY 2009 Second
Year Transition Payment Weight’’ is the
relative transition payment weight for
the service. CY 2009 is the second year
of a 4-year transition to ASC payment
rates calculated according to the
standard methodology of the revised
ASC payment system. The CY 2009 ASC
payment rates for the covered surgical
procedures subject to transitional
payment (payment indicators ‘‘A2’’ and
‘‘H8’’ in Addendum AA) are based on a
blend of 50 percent of the CY 2007 ASC
payment weight for the procedure and
50 percent of the CY 2009 fully
implemented ASC weight before scaling
for budget neutrality, calculated
according to the standard methodology.
The payment weights for all covered
surgical procedures and covered
ancillary services whose ASC payment
rates are based on OPPS relative
payment weights are scaled for budget
neutrality. Thus, scaling was not
applied for the device portion of the
device-intensive procedures, services
that are paid at the MPFS nonfacility PE
RVU amount, separately payable
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covered ancillary services that have a
predetermined national payment
amount, such as drugs and biologicals
that are separately paid under the OPPS
or services that are contractor-priced or
paid at reasonable cost in ASCs.
To derive the CY 2009 payment rate
displayed in the ‘‘CY 2009 Second Year
Transition Payment’’ column, each ASC
payment weight in the ‘‘CY 2009
Second Year Transition Payment
Weight’’ column was multiplied by the
CY 2009 ASC conversion factor of
$41.393. The conversion factor includes
a budget neutrality adjustment for
changes in the wage index. Items and
services with a predetermined national
payment amount, such as separately
payable drugs and biologicals which are
displayed in Addendum BB, may not
show a relative payment weight. The
‘‘CY 2009 Second Year Transition
Payment’’ column displays the CY 2009
national unadjusted ASC payment rates
for all items and services. The CY 2009
ASC payment rates for separately
payable drugs and biologicals are based
on ASP data used for payment in
physicians’ offices in October 2008.
Comment: Several commenters
requested that CMS display in
Addendum AA the fully implemented
ASC payment rates. They stated that it
would be helpful to them to see what
ASC payment rates would be expected
to look like once the transitional period
is over.
Response: The fully transitioned ASC
payment rates do not represent what the
payment rates would be once the
transitional period is over. They
represent what the payment rates would
be in CY 2009 in the absence of a
transition. However, in response to
these requests by these commenters, we
will make the fully transitioned CY
2009 ASC payment weights available on
the CMS Web site at https://
www.cms.hhs.gov/ASCPayment/ shortly
after the publication of this final rule
with comment period.
After consideration of the public
comments received, we are finalizing
our CY 2009 proposal to display the
updated CY 2009 ASC payment rates for
covered surgical procedures and
covered ancillary services in Addenda
AA and BB, respectively, to this final
rule with comment period. We also will
make available on the CMS Web site
what the ASC payment weights would
be in CY 2009 without the transition.
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XVI. Reporting Quality Data for Annual
Payment Rate Updates
A. Background
1. Reporting Hospital Outpatient
Quality Data for Annual Payment
Update
Section 109(a) of the MIEA–TRHCA
(Pub. L. 109–432) amended section
1833(t) of the Act by adding a new
subsection (17) that affects the payment
rate update applicable to OPPS
payments for services furnished by
hospitals in outpatient settings on or
after January 1, 2009. Section
1833(t)(17)(A) of the Act, which applies
to hospitals as defined under section
1886(d)(1)(B) of the Act, requires that
hospitals that fail to report data required
for the quality measures selected by the
Secretary in the form and manner
required by the Secretary under section
1833(t)(17)(B) of the Act will incur a
reduction in their annual payment
update factor by 2.0 percentage points.
Section 1833(t)(17)(B) of the Act
requires that hospitals submit quality
data in a form and manner, and at a time
that the Secretary specifies. Sections
1833(t)(17)(C)(i) and (ii) of the Act
require the Secretary to develop
measures appropriate for the
measurement of the quality of care
(including medication errors) furnished
by hospitals in outpatient settings and
that these measures reflect consensus
among affected parties and, to the extent
feasible and practicable, include
measures set forth by one or more
national consensus building entities.
The Secretary is not prevented from
selecting measures that are the same as
(or a subset of) the measures for which
data are required to be submitted under
section 1886(b)(3)(B)(viii) of the Act for
the IPPS Reporting Hospital Quality
Data for Annual Payment Update
(RHQDAPU) program. Section
1833(t)(17)(D) of the Act gives the
Secretary the authority to replace
measures or indicators as appropriate,
such as when all hospitals are
effectively in compliance or when the
measures or indicators have been
subsequently shown not to represent the
best clinical practice. Section
1833(t)(17)(E) of the Act requires the
Secretary to establish procedures for
making data submitted available to the
public. Such procedures must give
hospitals the opportunity to review data
before these data are released to the
public.
In the CY 2007 OPPS/ASC final rule
with comment period (71 FR 68189), we
indicated our intent to establish an
OPPS payment program modeled after
the current IPPS RHQDAPU program.
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We stated our belief that the quality of
hospital outpatient services would be
most appropriately and fairly rewarded
through the reporting of quality
measures developed specifically for
application in the hospital outpatient
setting. We agreed that assessment of
hospital outpatient performance would
ultimately be most appropriately based
on reporting of hospital outpatient
measures developed specifically for this
purpose. We stated our intent to
implement the full OPPS payment rate
update beginning in CY 2009 based
upon hospital reporting of quality data
beginning in CY 2008, using effective
measures of the quality of hospital
outpatient care that have been carefully
developed and evaluated, and endorsed
as appropriate, with significant input
from stakeholders.
The amendments to the Act made by
section 109(a) of the MIEA–TRHCA are
consistent with our intent and direction
outlined in the CY 2007 OPPS/ASC
final rule with comment period. Under
these amendments, we were statutorily
required to establish a program under
which hospitals would report data on
the quality of hospital outpatient care
using standardized measures of care in
order to receive the full annual update
to the OPPS payment rate, effective for
payments beginning in CY 2009. We
refer to the program established under
these amendments as the Hospital
Outpatient Quality Data Reporting
Program (HOP QDRP). In the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66860), we established a
separate reporting program, and adopted
quality measures that were deemed
appropriate for measuring hospital
outpatient quality of care that reflected
consensus among affected parties, and
were set forth by one or more national
consensus building entities. Validation,
as discussed in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66871), is intended to provide assurance
of the accuracy of the hospital
abstracted data. A data validation
requirement was not implemented for
purposes of the CY 2009 annual
payment update. In the CY 2009 OPPS/
ASC proposed rule (73 FR 41546), we
proposed to implement validation
requirements that will apply beginning
with the CY 2010 payment
determinations. As discussed in section
XVI.E.3.a. of this preamble, we are not
adopting our validation proposal, but
instead are adopting a voluntary test
validation process for CY 2010.
In reviewing the measures currently
available for care in the hospital
outpatient settings, we continue to
believe that it would be most
appropriate and desirable to use
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measures that specifically apply to the
hospital outpatient setting. In other
words, we do not believe that we should
simply, without further analysis, adopt
the IPPS RHQDAPU program measures
as the measures for the HOP QDRP.
Nonetheless, we note that section
1833(t)(17)(C)(ii) of the Act allows the
Secretary to ‘‘[select] measures that are
the same as (or a subset of) the measures
for which data are required to be
submitted’’ under the IPPS RHQDAPU
program. In the CY 2009 OPPS/ASC
proposed rule (73 FR 41540), we invited
public comment on whether we should
select for the HOP QDRP some or all
measures from the current RHQDAPU
program measure set that apply to the
outpatient setting.
Comment: One commenter
recommended that CMS move beyond
pay-for-reporting toward pay-forperformance so that payment updates
depend on empirical results from
quality data, not on whether the data are
submitted, and encouraged CMS to
request this authority from Congress.
Response: We thank the commenter
for sharing this suggestion for future
program directions.
Comment: One commenter requested
that CMS not penalize hospitals by
cutting their payment update if
hospitals can demonstrate that they are
currently working to comply with the
reporting requirements, but do not yet
have the infrastructure to fully comply.
Response: We understand that setting
up a new reporting program has
challenges. We recognize that, unlike
the RHQDAPU program, the reporting of
hospital outpatient data did not have
the benefit of existing reporting systems.
However, section 109(a) of MIEA–
TRHCA requires that the reporting
system apply to payment for services
furnished on or after January 1, 2009. In
order to assist hospitals in meeting this
requirement, we have provided support
to hospitals with the provision of a data
reporting tool, known as the CMS
Abstraction and Reporting Tool for
Outpatient Department measures
(CART–OPD), which is available at the
QualityNet Web site (https://
www.qualitynet.org). We also have
delayed the submission of data as much
as possible. As required by statute,
hospitals failing to report the required
data will be subject to a reduction in
their annual payment update.
Comment: One commenter questioned
the intent of the quality data reporting
program, how fairness for all providers
is achievable, and how payment and
quality are linked with respect to
hospitals and physicians. The
commenter stated that hospitals have
been singled out and unfairly penalized
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for services and care they have limited
ability to control.
Response: We are required to
implement the amendments made to the
Act by section 109(a) of the MIEA–
TRHCA regarding data for measures
appropriate for the measurement of the
quality of care (including medication
errors) furnished by hospitals in
outpatient settings. The HOP QDRP
program provides an incentive to
hospitals to report quality data. Under
the statute, there is no penalty applied
to hospitals based on the quality of the
services provided.
Comment: Several commenters
suggested that critical access hospitals
(CAHs) be allowed to voluntarily report
outpatient hospital data. Some of these
commenters expressed the desire that
CMS address this issue formally in some
manner, including suggesting
addressing this issue in OPPS
rulemaking.
Response: We thank the commenters
for their support of having CAHs
voluntarily report outpatient data.
However, because CAHs are not subject
to the OPPS or the revised ASC payment
system, we do not, at this time, plan to
address this issue in the OPPS/ASC
rulemaking process.
Comment: Several commenters
suggested that CMS evaluate RHQDAPU
program measures for their suitability
for outpatient setting. The commenters
recommended re-specification and
refinement for the outpatient setting of
inpatient measures determined suitable
upon testing. The commenters suggested
that the following specific RHQDAPU
program measures were potentially
appropriate for use in the outpatient
setting: [Acute Myocardial Infarction]
AMI–2 (Aspirin prescribed at
discharge); AMI–6 (Beta blocker at
arrival); AMI–5 (Beta blocker prescribed
at discharge); HF–1 (Discharge
instructions); and PN–3b (Blood culture
performed before first antibiotic
received in hospital).
Response: We welcome these
suggestions. We support the use of
similar measures in different settings to
promote broader and more consistent
attention to specific processes of care.
We also agree that such efforts of
aligning inpatient and outpatient
measures can allow for greater
efficiencies in data collection and
submission by hospitals across health
care settings. We note that some of the
existing OPPS measures focus on the
same processes of care included in
similar IPPS measures. We will
investigate the suitability of the IPPS
measures suggested and other measures
currently in use in CMS reporting
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68759
programs for future use in the outpatient
setting.
After consideration of the public
comments received, we are finalizing
measures that specifically apply to
services furnished in the hospital
outpatient setting. In the future, we will
consider adapting more measures from
the current IPPS RHQDAPU program
measure set for use in the OPPS
measures set.
2. Reporting ASC Quality Data for
Annual Payment Update
Section 109(b) of the MIEA–TRHCA
amended section 1833(i) of the Act by
redesignating clause (iv) to clause (v)
and adding new sections
1833(i)(2)(D)(iv) and 1833(i)(7) to the
Act. These amendments may affect ASC
payments for services furnished in ASC
settings on or after January 1, 2009.
Section 1833(i)(2)(D)(iv) of the Act
authorizes the Secretary to implement
the revised payment system for services
furnished in ASCs (established under
section 1833(i)(2)(D) of the Act), ‘‘so as
to provide for a reduction in any annual
update for failure to report on quality
measures. * * *’’
Section 1833(i)(7)(A) of the Act
authorizes the Secretary to provide that
any ASC that fails to report data
required for the quality measures
selected by the Secretary in the form
and manner required by the Secretary
under section 1833(i)(7) of the Act will
incur a reduction in any annual
payment update of 2.0 percentage
points. Section 1833(i)(7)(A) of the Act
also specifies that a reduction for one
year cannot be taken into account in
computing the ASC update for a
subsequent calendar year.
Section 1833(i)(7)(B) of the Act
provides that, ‘‘[e]xcept as the Secretary
may otherwise provide,’’ the hospital
outpatient quality data provisions of
sections 1833(t)(17)(B) through (E) of the
Act, summarized above, shall apply to
ASCs. We did not implement an ASC
quality reporting program for CY 2008
(72 FR 66875).
We refer readers to section XVI.H. of
this final rule with comment period for
a discussion of our decision to
implement ASC quality data reporting
in a later rulemaking.
3. Reporting Hospital Inpatient Quality
Data for Annual Payment Update
Section 5001(a) of Public Law 109–
171 (DRA) set out the current
requirements for the IPPS RHQDAPU
program. We established the RHQDAPU
program in order to implement section
501(b) of Public Law 108–173 (MMA).
The program builds on our ongoing
voluntary Hospital Quality Initiative.
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The Initiative is intended to empower
consumers with quality of care
information so that they can make more
informed decisions about their health
care while also encouraging hospitals
and clinicians to improve the quality of
their care. Under the current statutory
provisions found in section
1886(b)(3)(B)(viii) of the Act, the IPPS
annual payment update for ‘‘subsection
(d)’’ hospitals that do not submit
inpatient quality data in a form and
manner, and at a time specified by the
Secretary is reduced by 2.0 percentage
points.
We used an initial ‘‘starter set’’ of 10
quality measures for the IPPS
RHQDAPU program under section
501(b) of Public Law 108–173 and have
expanded the measures as required
under section 1886(b)(3)(B)(viii)(III),
(IV) and (V) of the Act, as added by
section 5001(a) of Public Law 109–171.
We initially added measures as a part of
the annual IPPS rulemaking process. In
response to public comments asking
that we issue IPPS RHQDAPU program
quality measures and other
requirements as far in advance as
possible, we also have used the OPPS
annual payment update rulemaking
process to adopt IPPS RHQDAPU
program measures and requirements. In
the CY 2007 OPPS final rule (71 FR
68201), we included six additional IPPS
RHQDAPU program quality measures
for the FY 2008 update. In the CY 2008
OPPS/ASC final rule with comment
period, we added two additional
National Quality Forum (NQF)-endorsed
quality measures to the IPPS RHQDAPU
program (72 FR 66875–66876).
In the FY 2009 IPPS proposed rule (73
FR 23642), we proposed to retire one of
the existing 30 quality measures and to
add 43 additional quality measures for
the FY 2010 payment update (73 FR
23647, 23651). In the FY 2009 IPPS final
rule (73 FR 48604), we retired one
existing measure, but only adopted 13 of
the proposed additional 43 measures (73
FR 48609). We indicated that we
intended to adopt two additional
measures in this CY 2009 OPPS/ASC
final rule with comment period, but
only if the measures were endorsed by
a national consensus-based entity such
as the NQF (73 FR 48611). The NQF is
a voluntary consensus-based standard-
calculation of the inpatient AMI
measures because of the limitation of
the RHQDAPU program measures to
inpatients.
In addition to the five ED–AMI
measures, we required reporting of two
measures related to surgical care
improvement. These two surgical care
improvement measures derived from the
Physician Quality Reporting Initiative
(PQRI) are directly related to
interventions provided in the outpatient
setting and address selection and timely
administration of prophylactic
antibiotics for surgical infection
prevention, similar to measures in the
IPPS RHQDAPU program.
Specifically, in order for hospitals to
B. Hospital Outpatient Quality Measures
receive the full OPPS payment update
for CY 2009
for services furnished in CY 2009, in the
For the CY 2009 annual payment
CY 2008 OPPS/ASC final rule with
update, we required HOP QDRP
comment period (72 FR 66860), we
reporting using seven quality
required that subsection (d) hospitals
measures—five Emergency Department
paid under the OPPS submit data on the
(ED) AMI measures plus two
following seven measures as designated
Perioperative Care measures. These
below, effective for hospital outpatient
measures address care provided to a
services furnished on or after April 1,
large number of adult patients in
2008:
hospital outpatient settings, across a
diverse set of conditions, and were
CY 2009 HOP QDRP QUALITY
selected for the initial set of HOP QDRP
MEASURES
measures based on their relevance as a
set to all HOPDs.
ED–AMI–1—Aspirin at Arrival.
The five ED–AMI measures capture
ED–AMI–2—Median Time to Fibrinolysis.
the quality of care for acute myocardial
ED–AMI–3—Fibrinolytic Therapy Received
infarction in the outpatient setting in
within 30 Minutes of Arrival.
hospital EDs, specifically for those adult
ED–AMI–4—Median Time to Electrocardiopatients with AMI who are treated and
gram (ECG).
then transferred to another facility for
ED–AMI–5—Median Time to Transfer for Prifurther care. Outpatients treated for AMI
mary PCI.
receive many of the same interventions
PQRI #20: Perioperative Care: Timing of Anas patients who are evaluated and
tibiotic Prophylaxis.
PQRI #21: Perioperative Care: Selection of
admitted at the same facility. Three
Perioperative Antibiotic.
(ED–AMI–1 [OP–4], ED–AMI–3 [OP–2]
and ED–AMI–5 [OP–3]) of these five
C. Quality Measures for CY 2010 and
measures, except for their limitation to
Subsequent Calendar Years and the
outpatients (transferred patients), are
Process To Update Measures
equivalent to those currently reported
under the IPPS RHQDAPU program for
1. Quality Measures for CY 2010
admitted patients, and are published on Payment Determinations
the Hospital Compare Web site at:
In the CY 2009 OPPS/ASC proposed
https://www.HospitalCompare.hhs.gov.
rule (73 FR 41541), for CY 2010, we
The other two ED–AMI measures
proposed to require continued
encompass timely delivery of care and
submission of data on the existing seven
transfer for patients presenting to a
measures discussed above and to adopt
hospital with an AMI who are not
four imaging measures. We proposed to
admitted but transferred to another
designate the existing seven measures as
facility. Transferred AMI patients are
follows:
currently not included in the
setting organization established to
standardize health care quality
measurement and reporting through its
consensus development process. Under
section 1886(b)(3)(B)(viii)(V) of the Act,
we are required to add measures that
reflect consensus among affected parties
and, to the extent feasible and
practicable, include measures set forth
by one or more national consensus
building entities. As discussed in
section XVI.I. of this CY 2009 OPPS/
ASC final rule with comment period, we
are adding two additional quality
measures to the IPPS RHQDAPU
program for FY 2010 because the NQF
has endorsed these measures.
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CY 2009 QUALITY MEASURES WITH PROPOSED CY 2010 DESIGNATIONS
Current designation
ED–AMI–2
ED–AMI–3
ED–AMI–5
ED–AMI–1
ED–AMI–4
Proposed quality measure designation
.......................................
.......................................
.......................................
.......................................
.......................................
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OP–1:
OP–2:
OP–3:
OP–4:
OP–5:
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Median Time to Fibrinolysis.
Fibrinolytic Therapy Received Within 30 Minutes.
Median Time to Transfer to Another Facility for Acute Coronary Intervention.
Aspirin at Arrival.
Median Time to ECG.
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68761
CY 2009 QUALITY MEASURES WITH PROPOSED CY 2010 DESIGNATIONS—Continued
Current designation
Proposed quality measure designation
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PQRI #20 ........................................
PQRI #21 ........................................
OP–6: Timing of Antibiotic Prophylaxis.
OP–7: Prophylactic Antibiotic Selection for Surgical Patients.
Comment: Commenters supported the
current HOP QDRP measures, which
were seen as having a positive impact
on quality of care. One commenter
recommended limiting the measures for
2009 to those seven that are currently
implemented.
Response: We agree that the current
HOP measures are important to the
quality of care patients receive in the
HOPD and will continue their
collection. We also are committed to
broadening the scope of measurement
for the HOP QDRP and, therefore, have
proposed additional measures for the
CY 2010 annual payment update and
have solicited comments on measures
being considered for implementation in
future years.
Comment: One commenter did not
support the proposed quality measure
OP–3: Median Time to Transfer to
Another Facility for Acute Coronary
Intervention (formerly, ED–AMI–5). The
commenter stated that this measure
would result in additional burden to
hospitals without an increase in
meaningful quality data.
Response: We believe that, when
percutaneous intervention (PCI) is
indicated, timely transfer of patients is
an important aspect of quality of care in
the hospital outpatient setting; hence
our inclusion of this measure in the
HOP QDRP measure set. National
guidelines recommend the prompt
initiation of PCI in patients presenting
with ST-segment elevation myocardial
infarction. The early use of primary PCI
in patients with acute myocardial
infarction who present to the ED with
ST-segment elevation or LBBB results in
a significant reduction in mortality and
morbidity. Despite these
recommendations, few eligible older
patients hospitalized with AMI receive
primary angioplasty in a timely manner.
Patients transferred for primary PCI
rarely meet recommended guidelines for
door-to-balloon time, which under
current American College of Cardiology/
American Hospital Association
recommendations is 90 minutes or less.
Therefore, we believe that reporting on
this measure will increase meaningful
quality of care data.
Comment: One commenter did not
support the current HOP QDRP measure
set and perceived the set as not
adequately measuring the breadth of
coverage in the ED or the HOPD. The
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commenter suggested that CMS adopt
cross-cutting measures, outcomes
measures, and process measures that are
correlated to outcomes.
Response: Because CY 2008 was the
first year of the OPPS reporting
program, we decided to limit the
number of HOP QDRP reporting
requirements. In future years, we
anticipate that the scope of outpatient
services covered by measures will
increase. For HOP QDRP reporting for
CY 2009, we are adding four imaging
efficiency measures, which add another
topic to the HOP QDRP measure set. We
support the development and
implementation of cross-cutting,
outcome, and process measures that are
correlated to outcomes and intend to
consider such measures for future
rulemaking.
Comment: Several commenters
expressed concern that the current HOP
QDRP measure set (OP–1 to OP–7) was
not fully field-tested for its use in HOP
QDRP. They urged CMS to fully test in
order to identify and correct operational
issues before data validation on the CY
2009 measures begin. One commenter
expressed concern over frequent
changes in the consensus base, citing
the reversal of consensus on whether
prophylaxis is necessary for bunion
surgery, and recommended that new
quality measures be based in valid
clinical studies.
Response: The HOP QDRP measures
were selected and implemented as
required under section 1833(t)(17) of the
Act. While the short timeframe available
to implement the program as required
by statute did not permit extensive field
testing prior to implementation in CY
2008, we did conduct limited pilot
testing on a small convenience sample.
Specifically, the measure specifications
were used to collect data from 189
medical records in Oklahoma and
Illinois. Additionally, these seven HOP
QDRP measures are NQF-endorsed and
are supported by clinical evidence. The
measures have been in effect for services
furnished on or after April 1, 2008 and
hospitals have been submitting data
successfully to the OPPS Clinical
Warehouse. We plan to analyze the data
collected under the HOP QDRP to
evaluate the seven initial HOP QDRP
measures and to address operational
issues in data collection for these
already implemented measures before
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CY 2009 validation. We also believe that
our plan to conduct a voluntary test
validation on these measures as
outlined in section XVI.E.3.a. of this
preamble will provide sufficient time to
assess the relevant issues for these
measures, and will provide both CMS
and the sampled hospitals with valuable
feedback for measure maintenance
purposes during this voluntary
validation test period. We have a
measures development contractor
working to maintain and refine the
measures specifications as needed. In
terms of the comment on consensus
base of the measures, we intend to
utilize our measure maintenance
processes and, as appropriate,
consensus building entities such as the
NQF to address changes in the clinical
evidence base that may require changes
to measure specifications that will be
described in the CMS Hospital
Outpatient Quality Measures
Specifications Manual (Specifications
Manual). CMS believes that, while this
may result in changes that occur more
frequently than the usual 3 year reevaluation intervals, such flexibility is
necessary to accommodate changes in
the clinical evidence base informing
these measures.
After consideration of the public
comments received, we are finalizing for
continued data collection in CY 2009 for
the CY 2010 annual payment update the
following seven current HOP QDRP
measures, redesignated as discussed
above: (1) OP–1: Median Time to
Fibrinolysis; (2) OP–2: Fibrinolytic
Therapy Received Within 30 Minutes;
(3) OP–3: Median Time to Transfer to
Another Facility for Acute Coronary
Intervention; (4) OP–4: Aspirin at
Arrival; (5) OP–5: Median Time to ECG;
(6) OP–6: Timing of Antibiotic
Prophylaxis; and (7) OP–7: Prophylactic
Antibiotic Selection for Surgical
Patients.
The four imaging measures that we
proposed to adopt beginning with the
CY 2010 payment determination are
claims-based measures that CMS would
calculate using Medicare Part B claims
data without imposing on hospitals the
burden of additional chart abstraction.
For purposes of the CY 2010 payment
determination, CMS would calculate
these measures using CY 2008 Medicare
administrative claims data.
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The proposed imaging measures are
based on clinical evidence that they
promote efficient and high quality
patient care. Efficient healthcare is that
which neither underutilizes nor over
utilizes healthcare resources. This
approach to defining efficiency is
supported by the observation of
widespread process variation in
healthcare that is not associated with
variation in outcome. The Institute of
Medicine has identified efficiency as an
important quality aim. However, despite
the identification of efficiency as an
important factor in the provision health
care, there currently are few healthcare
efficiency quality measures available.
MedPAC’s description of the rapid
growth in the volume of imaging
services in 2000 as compared to 2006,
coupled with the significant level of
these services rendered under the OPPS
suggests that imaging is an area to
investigate with regard to efficiency. In
the CY 2009 OPPS/ASC proposed rule
(73 FR 41541), we proposed four
imaging measures that measure high
quality, efficient use of services for the
hospital outpatient setting.
PROPOSED ADDITIONAL QUALITY MEASURES FOR CY 2010
Measure
Imaging Efficiency ...........................
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Topic
OP–8: MRI Lumbar Spine for Low Back Pain.
OP–9: Mammography Follow-up Rates.
OP–10: Abdomen CT—Use of Contrast Material:
• OP–10: CT Abdomen—Use of Contrast Material.
• OP–10a: CT Abdomen—Use of Contrast Material excluding calculi of the kidneys, ureter, and/or urinary tract.
• OP–10b: CT Abdomen—Use of Contrast Material for diagnosis of calculi in the kidneys, ureter, and/
or urinary tract.
OP–11: Thorax CT—Use of Contrast Material.
We invited public comment on these
four proposed imaging measures, which
had been submitted to the NQF for
consideration.
Comment: Several commenters
supported the proposed imaging
efficiency measures. The commenters
agreed that these claims-based imaging
efficiency measures avoid increased
data collection burden. One commenter
was pleased that the proposed rule
includes cancer related quality
measures, in particular the
mammography follow-up rates. One
commenter agreed that ‘‘combined
studies with and without contrast’’ in
thorax CT should be ordered
infrequently and that this is an area
where cost could possibly be reduced.
One commenter was supportive of the
use of claims data to gather information
on OP–8: MRI Lumbar Spine for Low
Back Pain, as the information is not
available using chart abstraction. This
commenter was also pleased that
measure OP–8 is harmonized with the
NCQA low back pain measure. One
commenter, in support of measure OP–
9: Mammography Follow-up Rates,
stated that the measure has the potential
to positively affect the quality of life and
health of Medicare patients, and also
believed that the measure supports the
work of organizations such as the
American Cancer Society Cancer Action
Network.
Response: We thank these
commenters for their supportive
statements, and are adopting the four
imaging efficiency measures in this final
rule with comment period.
Comment: Several other commenters
believed that the four new imaging
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efficiency measures are still in the
developmental phase and have not yet
received NQF endorsement nor have
they been considered for adoption by
the Hospital Quality Alliance (HQA).
They urged CMS to not adopt the four
imaging efficiency measures at this time
and to reevaluate the measures at such
time as essential measure specifications,
NQF endorsement and AQA–HQA
collaboration can be accomplished. One
commenter stated that data
specifications should be available when
public comment is requested.
Response: We believe that the four
new imaging efficiency measures meet
the requirements of section
1833(t)(17)(C)(i) of the Act, as added by
section 109(a) of MIEA–TRHCA, and we
are adopting them in this final rule with
comment period. Section
1833(t)(17)(C)(i) of the Act requires the
Secretary to ‘‘develop measures that the
Secretary determines to be appropriate
for the measurement of the quality of
care (including medication errors)
furnished by hospitals in outpatient
settings and that reflect consensus
among affected parties and, to the extent
feasible and practicable, shall include
measures set forth by one or more
national consensus building entities.’’
We believe that these imaging efficiency
measures are appropriate for the
measurement of the quality of care
furnished by hospitals in outpatient
settings. The proposed imaging
efficiency measures have gone through
an extensive development process with
broad stakeholder input incorporated
throughout the development process.
Specifically, the measures development
process for the imaging efficiency
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measures included the convening of a
Technical Expert Panel (TEP) by a
contractor comprised of affected parties
affiliated with hospitals, payers,
practitioners from various medical
specialties, consumers, as well as
clinical, scientific, and performance
measurement experts. The TEP was
convened multiple times to identify,
develop, and refine measures associated
with an area requiring quality
measurement. The TEP did not move
forward measures for development upon
which the TEP did not agree.
The measure development process
also included a public comment period.
The measures development contractor
publicly posted the measure
specifications during this time. In the
future, we also will make relevant
measure specifications available during
public comment periods following
proposed rulemakings. Comments
during the measure development public
comment period included supportive
comments from many affected parties,
including comments indicating that
these measures are a timely and much
needed addition to imaging efficiency
measurement given the scarcity of such
measures that have been set forth by a
national consensus building entity, that
they address areas of great
epidemiologic relevance, and that they
address the needs of affected parties for
accountability and transparency for an
area of increasing waste and
inefficiency. These measures were
modified based upon public comments
received during the public comment
period. Given this process, we believe
that these measures are no longer in the
development phase and are appropriate
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for the measurement of quality of care
furnished by hospitals in outpatient
settings.
These measures also reflect consensus
among affected parties, as required by
section 1833(t)(17)(C)(i) of the Act. The
proposed measures have been
developed by the Secretary through a
consensus-building process that
included a broadly representative TEP
and a public comment period, as
discussed above. We believe that this
statutory requirement is met when the
development process for the completed
measures reflects consensus of a broad
representation of affected parties.
Finally, we believe the requirement
that the measures developed by the
Secretary, to the extent feasible and
practicable, include measures set forth
by one or more national consensus
building entities is met, as required by
section 1833(t)(17)(C)(i) of the Act. Two
of the four imaging efficiency measures
(OP–8 and OP–11) have been endorsed
by NQF, a national consensus building
entity. We note, however, that the
statute does not require that each
measure be endorsed by NQF or other
national consensus building entities.
Further, the statute does not require that
the Secretary limit measures to those
adopted by stakeholder organizations
not meeting the requirements of
voluntary consensus organizations
under the National Technology Transfer
and Advancement Act (NTTAA), such
as the HQA or AQA. Moreover, we
believe it is not feasible and practicable
to adopt only imaging efficiency
measures that have been endorsed by a
national consensus building entity.
The measurement area of efficiency is
currently in its infancy, and there are
few measures available for adoption that
have been set forth by a national
consensus building entity, such as NQF.
We have given consideration to
measures that have been endorsed by
NQF. However, except for the two
efficiency measures included in this
final rule with comment period, we did
not find that these other measures meet
program needs because other NQFendorsed measures are not measures at
the facility level or do not sufficiently
address the quality aim of efficiency.
For example, other NQF-endorsed
measures may focus on documentation
requirements and not efficiency. As the
area of efficiency measurement matures,
it will become more feasible and
practicable to adopt additional measures
that have been set forth by a national
consensus building entity.
With respect to the proposed imaging
efficiency measures, we believe that
there are important factors involving
patient safety weighing in favor of
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including these measures in the HOP
QDRP, even if they have not been set
forth by a national consensus building
entity. Specifically, these measures
address the unnecessary administration
of contrast materials and the
unnecessary radiation exposure
resulting from unnecessary imaging
studies. These measures fill a significant
gap given the few existing imaging
efficiency measures available at the
outpatient facility level. Therefore, we
are adopting these measures in this final
rule with comment period.
Comment: Several commenters
opposed the use of CY 2008 claims to
calculate compliance with the imaging
efficiency measures for the CY 2010
payment determination. The
commenters also stated that the use of
claims data assesses a facility’s
utilization of imaging services as
opposed to assessing the practice of the
ordering physician. Numerous
commenters stated that all of the
imaging efficiency measures seemed to
be more appropriately used in assessing
physician quality rather than that for the
HOPD, because, the commenters argued,
the four measures are all physiciandriven. One commenter stated that it
was unclear whether compliance is
based on ‘‘reporting’’ through claims
submission or whether compliance is
based on an unknown performance rate.
Response: We use CY 2008 claims to
calculate the imaging efficiency
measures for the CY 2010 payment
determination because the CY 2008
claims are the most current existing
claims data available to us. We do not
require any additional data submission
from hospitals for these measures to
satisfy the requirements of the HOP
QDRP.
The four imaging efficiency measures
that we proposed are for the HOP QDRP
and measurement is at the facility level,
not at the physician level. We believe
that, because HOPDs are receiving
payment for these imaging services
under the OPPS, these data are
appropriate for use in measuring HOPD
quality of care. There is no requirement
that hospitals must meet a particular
performance score in order to satisfy the
requirements of the HOP QDRP in
regard to the imaging efficiency
measures, just that the hospitals report
the required information.
Comment: Several commenters stated
that the collection of imaging efficiency
measures was inappropriately named
and that the measures were unadjusted
utilization rates. One commenter stated
that the selection of the MRI and CT
measures has raised suspicion with
imaging services staff that CMS’ motive
is cost reduction only.
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68763
Response: We disagree with the
characterization of the measures as
utilization rates. These measures were
constructed using the definition of
efficiency adopted by the IOM, and are
intended to address waste and promote
the efficient beneficial use of services.
We received input from affected parties,
such as hospitals and consumers, and
received agreement from such parties
that these are efficiency measures as
defined by the IOM criteria, and that
they measure imaging efficiency. We
select HOP QDRP measures in order to
provide hospitals with a greater
awareness of the quality of care they
provide and to provide actionable
information for consumers to make
more informed decisions about their
health care providers and treatments.
For the imaging measures, the focus is
on hospitals and consumers reducing
unnecessary exposure to radiation and
contrast materials as a result of
duplicative imaging services.
Comment: Several commenters were
concerned that the billing data proposed
for the imaging efficiency measures
would include Medicare patients only,
which they believed could distort the
true picture of the delivery of imaging
services.
Response: While the distribution of
the rates may be different when
calculated using Medicare claims only,
Medicare claims comprise a substantial
portion of total hospital outpatient
claims for these services therefore we
believe that the use of these claims data
would not provide a distorted view of
the delivery of imaging services in the
outpatient setting. We would be
interested in calculating measures based
on all-payer claims data and may
propose to collect such data in the
future. However, collection of all-payer
data presents additional infrastructure
issues.
Comment: One commenter asked
what administrative processes will be
implemented for claims-based measures
and whether the administrative claims
data will undergo reliability testing or
validation by CMS. The commenter was
concerned that if a hospital does not
submit a claim for payment, this could
result in the loss of 2 percentage points
of the OPPS annual payment update for
the hospital. The commenter asked if
there would be a review period for
hospitals of the administrative data
before it was released to the public.
Response: CMS employs a variety of
measures to ensure the accuracy of
coding for outpatient claims from the
provider to postpayment levels. All
Medicare providers are required to have
compliance programs in place. At the
claims processing level, edits are in
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place to ensure that claims are
completed in a manner consistent with
payment policy, and prepayment edits
may flag claims for review. At the
postpayment level, a variety of entities
are utilized to detect improper
payments. Prior to public reporting, we
will provide each hospital an
opportunity to review its data. Hospitals
should submit claims for services they
have furnished in order to receive
payment on the claims and to receive
the full annual payment update.
Comment: Several commenters did
not believe that the OP–8: MRI Lumbar
Spine for Low Back Pain measure is
ready for implementation, and even
with further testing and improvement,
this measure is more suitable for
physicians who order imaging tests than
to the HOPD that implement or furnish
physician orders. Some commenters
stated that the measure does not allow
for consideration of over-the-counter
(OTC) medications as an indicator of
antecedent therapy. Several commenters
stated that they were unclear as to what
steps they should take to improve their
performance on this measure. These
commenters were uncertain if CMS
believes that hospitals should refuse
access to MRIs for low back pain for
those patients and whether they should
provide proof of antecedent
conservative therapy. One commenter
stated that this measure is potentially a
dangerous incentive where it aims for
reductions without qualifiers because
there are cases of epidural abscesses as
well as abdominal aortic aneurisms that
present with low back pain. This
commenter believed that using a less
costly diagnostic approach will delay
diagnosis and potentially cause harm to
the patient. One commenter believed
that there are factors such as the lack of
provider documentation that may lead
to the appearance of inappropriate MRI
orders for low back pain, and believed
that this measure would be burdensome
for the hospital and should be directed
at the clinician. One commenter also
stated that it will be important to
communicate what OP–8 portrays, and
whether better quality is indicated by a
higher or lower efficiency score, and
whether there is an appropriate
benchmark or rate.
Response: This measure has
undergone a rigorous development
process and has been endorsed by NQF
for accountability at the facility level.
Although we believe that the basis for
the measure may be appropriately
applied at the ordering physician level,
it is also a facility measure as
considered by the NQF and we believe
that this measure is ready for
implementation at the facility level.
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There is evidence that a substantial
portion of MRIs for low back pain are
potentially not beneficial and do not
lead to any modification of therapy
based on the MRI results, especially
when performed on the first visit prior
to any attempt to diagnose or treat the
patient through more conservative
means. OP–8 measures the rate of usage
of MRI for low back pain and it accounts
for a 6-week window between the time
of presentation with low back pain and
the imaging service, during which time
it is expected that any OTC or other
antecedent therapy would have
occurred. This measure does not
establish absolute parameters for the use
of imaging services, but rather identifies
variations from norms for the efficient
use of imaging services. The focus of the
measure is not on increasing rates to 100
percent or reducing rates to 0 percent or
any other values; rather, the focus is on
promoting efficient use of imaging
services.
As for the role of the hospital, the
hospital has control over the use of the
MRI machine. HOPDs can improve their
efficiency because they are in a position
to promote consultation between
ordering physicians and the radiologists
engaged by the HOPD, to communicate
directly with the ordering physician as
needed, and otherwise to educate and
communicate with and engage the
hospital medical staff and community
physicians on the appropriate use of
MRI for low back pain. CMS does not
believe that hospital outpatient
departments should refuse access to
MRIs for low back pain. Further, we
disagree that this measure provides an
inappropriate incentive for reductions
in MRI for low back pain or it
encourages the inappropriate use of less
costly diagnostic approaches. The intent
of the measure is to assess the
appropriateness of the imaging study
and, if a less costly approach is equally
or more effective than the MRI, the
HOPD should employ the less costly
approach.
Finally, while provider
documentation is important, these
measures will be calculated by CMS
based solely on claims that have been
submitted to Medicare by HOPDs. Thus,
there would be no collection burden
associated with the calculation of these
measures at the hospital outpatient
level.
Comment: Several commenters stated
that they did not believe that the OP–
11: Thorax CT—Use of Contrast Material
measure should be implemented at this
time because preliminary calculations of
the measure rate found a relatively low
use of combined studies. They believed
it was unclear to what extent there is
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room for improvement on this measure.
One commenter was concerned that
undefined and nonstratified use of
administrative data may push
physicians to treat patients on
guidelines, not on how the patient
presents.
Response: Our claims-based evidence
indicates that there is significant
practice variation in the use of
combined studies, indicating room for
improvement, and in many instances, a
high level of use of combined studies in
outpatient settings. This measure seeks
to identify practice variation in the use
of combined Thorax CT, which may be
considered inefficient. The focus of this
measure is to help identify inefficient
use of imaging studies and it is
important because it addresses
important patient safety concerns
including the unnecessary
administration of contrast materials and
the unnecessary radiation exposure
resulting from unnecessary imaging
studies. The measure specifications and
administrative data are defined and
incorporate inclusion and exclusion
criteria to stratify the populations being
observed. Additionally, they have been
endorsed by a national consensus
building entity, the NQF, which reviews
the possible unintended consequences
of the measures on physician practice
patterns. Also, the imaging efficiency
measures are at a facility level and not
a physician level.
Comment: Numerous commenters
stated that OP–10: Abdomen CT—Use of
Contrast Material measure should not be
implemented as it is currently defined
because there is a lack of evidence in
the published literature to determine the
appropriate use of contrast material for
these patients. One commenter stated
that the order for use of contrast
material may be difficult to attribute to
a specific physician as one may order
contrast, but many rely on the
radiologist to determine whether
contrast is needed. One commenter
stated this would be difficult to
implement due to the vast exclusions
and, therefore, this was not a good
choice to introduce quality measures to
the imaging area.
Response: We disagree that evidence
does not exist in the published literature
concerning the appropriate use of
contrast material for these patients.
Regarding difficulty in implementing
this measure, we conducted an
extensive claims analysis during the
development and evaluation of this
measure. The results of this analysis
indicate that a significant pattern of
variation among providers exists in the
use of combination examinations in
conjunction with an abdomen CT. We
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are not attributing the measure to
individual physicians, as the furnishing
of the service and its measurement
occur at the facility level and the
measure will be calculated using
outpatient hospital claims. Any ‘‘vast
exclusions’’ would not impede
implementation of this measure because
it will be calculated by Medicare billing
data which is already submitted by
hospitals’ outpatient departments, thus,
not providing additional
implementation burden to HOPDs.
Comment: Numerous commenters
recommended that the imaging
efficiency measures be reviewed by the
AMA Physician Consortium for
Performance Improvement (PCPI)
because they believed this group was
best qualified to consider the
appropriateness of the measures for
numerous health conditions. They also
stated that OPPS measures that relate to
physician performance should be
aligned with physician measures
utilized in the PQRI.
Response: Although the AMA–PCPI is
an important and active developer of
physician level quality measures, the
AMA–PCPI is not a primary developer
of facility level measures. However, in
some instances, measures developed by
the AMA–PCPI can be adapted for
facility use as were the two surgical
infection measures included in the
current HOP QDRP set of measures.
Members of the AMA–PCPI frequently
contribute comments to other measures
developers, including comments on the
development of these facility level
measures. Harmonizing measures across
settings is desirable and we agree that it
may be useful to examine opportunities
to align measures in the future.
Comment: Several commenters
expressed concern that the
Mammography Follow-Up Rates
imaging efficiency measure (OP–9) was
not ready for implementation. These
commenters believed there was a lack of
consensus as to what the appropriate
recall rate should be, and thus, it was
unclear to them what rate the hospitals
should be striving to achieve. One
commenter stated that appropriate
follow-up for a normal screening
mammogram might be a phone call or
letter from the provider. The commenter
was concerned that existing claims data
are not adequate for this purpose, and
the state of the art of electronic health
records is not sufficiently developed to
allow a meaningful calculation of
follow-up without extensive manual
collection and reporting. One
commenter stated that this information
creates redundancy as the information is
already collected for the American
College of Radiologists and the
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commenter’s State. Another commenter
stated that this measure inappropriately
makes the hospital responsible for both
the provider and the patient. The
commenter stated that an educational
campaign through a public service
announcement would be just as
effective and would not require the
hospital to invest more money in
developing an automated method to
inform patients that their mammogram
is due.
Response: We believe that the
Mammography Follow-Up Rates
imaging efficiency measure is ready for
implementation because it underwent a
consensus-based development process
that meets the statutory requirement for
adoption of a measure, and includes
testing and public comment. The
imaging efficiency measure OP–9:
Mammography Follow-up Rates does
not seek to establish or identify a
specific range within which follow-up
rates must fall. There has been
considerable research done on
appropriate ranges and, during the
development process, we also found a
range of rates among hospitals. The
measure will identify differing relative
performance rates. We are not
attempting to determine whether followup occurred in terms of notification, but
rather seek to measure the degree to
which a facility must repeat
mammography imaging for its patients.
We appreciate the fact that hospitals
may be responding to a number of
reporting requests or requirements.
However, the HOP QDRP is a separate
reporting program for hospitals
receiving payment under the OPPS, and,
at this time, HOP QDRP requirements
cannot be met by reporting under other
programs. Because the imaging
efficiency measures are claims based,
hospitals will not need to collect and
submit additional data; they need only
to submit claims for services for which
they are to be paid under Medicare. We
performed extensive claims analysis for
this measure using Medicare claims and
also other claims databases available,
and our results indicate that it is
appropriate, valid and reliable to
calculate this measure using claims
data. The measure carries significant
epidemiologic relevance in that it is
aimed at optimizing the use of an
examination that carries a proven
benefit in terms of quality and longevity
of life. We agree that educational
campaigns and public service
announcements may be beneficial to
Medicare beneficiaries. We do not
believe that these programs would
replace or should supplant quality of
care measurement and public reporting
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68765
of the HOP QDRP measures because the
data collected for HOP QDRP includes
all OPPS hospitals and are not limited
to only certain States or voluntary
participation as other programs are, thus
making HOP QDRP a more
comprehensive quality reporting
program.
Comment: One commenter wanted to
know whether measure OP–11: Thorax
CT—Use of Contrast Material will
answer the question of what medical
benefit the administration of contrast
material provides.
Response: The measure is intended to
measure the efficient use of imaging
services and not answer specific clinical
questions.
Comment: One commenter wanted
CMS to specify a benchmark for
measure OP–8: MRI Lumbar Spine for
Low Back Pain to assess the percentage
of cases where MRI intervention altered
the course of patient management.
Response: We do not have a
predetermined benchmark for this
measure. However, the range of
performance, including national and
State averages, will become available as
we publicly report the information.
Comment: One commenter requested
that CMS risk-adjust the data for what
it believed to be a more accurate
representation of the patient population
of tertiary hospitals and academic
medical centers.
Response: In general, process of care
measures do not require the use of risk
adjustment. Process of care measures
reflect best practices and clinical
guidelines that apply independent of
the condition of the patient. When
certain conditions or circumstances for
which the particular intervention being
measured would not be appropriate,
these cases are removed from the
denominator of the process of care
measure.
Comment: One commenter stated that
in the field, hospitals find the issue of
overuse of imaging services is often
provider specific for the services
included in the four proposed imaging
efficiency measures and that these
measures, in the commenter’s opinion,
involve the hospital being the policing
entity for accepting an order for MRI
and CT scans. The commenter requested
that CMS consider making the overuse
of imaging services an issue for the
PQRI rather than one for the hospital
that receives the physician orders.
Another commenter argued that imaging
services are targeted for measures
because of the expense to CMS rather
than patient safety issues. The
commenter stated that its imaging
services providers voiced immediate
objections to these measures because
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these are revenue generating
examinations, ordered by physicians
that they have little control over, and
the proposed imaging efficiency
measures have little to do with quality
and all to do with cost.
Response: In our response to an
earlier commenter, we discussed the
role of the hospital with respect to the
use of imaging services it controls. We
believe that the commenters understate
considerably the effective roles
hospitals can play in promoting the
efficient use of imaging services.
Further, we disagree with the
commenters’ statements that these
measures are focused on cost or
expenses rather than on patient safety.
As discussed previously, the focus of
the four proposed imaging efficiency
measures is on reducing unnecessary
exposure to radiation and contrast
materials as a result of duplicative
imaging services.
Comment: One commenter stated that
CMS has inappropriately assumed that
hospitals fail to provide quality care due
to the number of imaging services they
perform, when, in fact, according to the
commenter, the hospitals are merely
working with their physicians and
following orders to provide high-quality
health care to Medicare beneficiaries.
Response: America’s Health Insurance
Plans (AHIP) estimates that a range of 20
percent to 50 percent of high-technology
diagnostic imaging for a variety of
conditions fails to provide information
that improves patient diagnosis and
treatment and may be considered
redundant or unnecessary (July 2008
monograph https://www.ahip.org/
content/default.aspx?docid=24057).
There is a growing interest in pursuing
strategies that promote the appropriate
use of imaging services, avoid
redundancy and unnecessary exposure
to radiation, reduce painful and
wasteful follow-up procedures, and
ensure that the patient is getting the
right service the first time. As discussed
above, hospitals can play a role in
promoting the efficient use of imaging
services.
Comment: One commenter stated that
none of these measures relates to
radiation oncology.
Response: We did not intend for these
measures to focus on radiation
oncology. These measures are intended
to measure imaging efficiency.
After consideration of the public
comments received and as discussed in
the above responses to those comments,
we are finalizing the following four
imaging efficiency measures for the CY
2010 payment determination: (1) OP–8:
MRI Lumbar Spine for Low Back Pain;
(2) OP–9: Mammography Follow-up
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Rate; (3) OP–10: Abdomen CT—Use of
Contrast Material; and (4) OP–11:
Thorax CT—Use of Contrast Material.
Adoption of these four measures into
the HOP QDRP meets the requirements
of section 1833(t)(17)(C)(i) of the Act
that the measures are appropriate for
measurement of quality of care
furnished by hospitals in outpatient
settings, reflect consensus among
affected parties and, to the extent
feasible and practicable, include
measures set forth by a national
consensus building entity. All four of
the proposed imaging efficiency
measures reflect consensus among
affected parties as meeting IOM criteria
of measuring efficiency in general, and
imaging efficiency in particular. In
addition, two of the imaging efficiency
measures we are finalizing (OP–8 and
OP–11) are NQF-endorsed. For program
purposes, the technical specifications
for these four new HOP QDRP measures
will be published in the January 2009
Specification Manual located at https://
www.qualitynet.org.
The measures for the 2009 HOP QDRP
measurement set to be used for the CY
2010 payment determination are as
follows:
consensus standards. We also recognize
that neither scientific advances nor
updates to measure specifications made
by a consensus building entity are
linked to the timing of regulatory
actions. An example of changes that
would prompt us to update a measure
would be a change in antibiotic
selection and/or timing (see measures
OP–6 and OP–7) based on updated
clinical guidelines or best practices.
Therefore, we proposed that when a
national consensus building entity
updates the measure specifications for a
measure that we have adopted for the
HOP QDRP program, we would update
our measure specifications for that
measure accordingly. We would provide
notification of the measure specification
updates on the QualityNet Web site,
https://www.qualitynet.org, and in the
Specifications Manual no less than 3
months before any changes become
effective for purposes of reporting under
the HOP QDRP. We invited public
comments on this proposal.
Comment: Several commenters
supported issuing measure specification
updates to reflect the current standard
of care based on scientific evidence and
in accordance with the latest
specifications endorsed by a national
2009 HOP QDRP MEASUREMENT SET consensus organization through a
subregulatory process. They stated that
TO BE USED FOR 2010 PAYMENT use of measures based on the most up
DETERMINATION
to date scientific evidence will best
ensure that patients receive high quality
OP–1: Median Time to Fibrinolysis.
and appropriate care.
OP–2: Fibrinolytic Therapy Received Within
Response: We appreciate these
30 Minutes.
supportive statements to our proposal
OP–3: Median Time to Transfer to Another
that when a national consensus building
Facility for Acute Coronary Intervention.
entity updates the measure
OP–4: Aspirin at Arrival.
specifications for a measure that we
OP–5: Median Time to ECG.
have adopted for the HOP QDRP
OP–6: Timing of Antibiotic Prophylaxis.
program, we would update our measure
OP–7: Prophylactic Antibiotic Selection for
Surgical Patients.
specifications for that measure
OP–8: MRI Lumbar Spine for Low Back Pain.
accordingly through a subregulatory
OP–9: Mammography Follow-up Rates.
process. National consensus building
OP–10: Abdomen CT—Use of Contrast Maentities issue changes of a substantive
terial.
nature to measures they have endorsed
OP–11: Thorax CT—Use of Contrast Matewhich may occur off-schedule from the
rial.
rulemaking cycle, but which
nonetheless carry clinical significance,
2. Process for Updating Measures
warranting updates to measures using a
Although we adopt measures through subregulatory process. This
the rulemaking process, in the CY 2009
subregulatory process is in addition to
OPPS/ASC proposed rule (73 FR 41541), the existing technical updates that are
we proposed to establish a
routinely made and posted to
subregulatory process that would allow
QualityNet and which constitute
us to update the technical specifications technical business requirements for data
that we use to calculate those measures
submission such as updates to ICD–9 or
when we believe such updates are
HCPCS codes.
warranted based on scientific evidence
For measures that are not endorsed by
and guidance from a national consensus a national consensus building entity, the
building entity. We believe that the
measures would be updated through the
establishment of a subregulatory process subregulatory process based on
is necessary so that the HOP QDRP
scientific advances as determined
measures are calculated based on the
necessary by CMS. Once measures have
most up-to-date scientific and
been adopted by the HOP QDRP
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program there is a measure maintenance
process that occurs where Technical
Expert Panels that represent consensus
among affected parties review the
measure specifications and take into
account changes in scientific evidence
as they evaluate the measure
specifications and make
recommendations to refine them.
Changes such as this have occurred
using this subregulatory mechanism to
date, and we believe that it should
continue to occur using this mechanism.
Changes made in this manner would
reflect current consensus resulting from
changes in science and clinical
evidence, and changes in consensus for
which public input is sought through a
national consensus process.
Comment: Many commenters also
agreed that 90 days notice prior to
implementation is sufficient. One
commenter recommended that CMS
consider issuing notification through
additional systems (such as CMS
listserv groups) as well as through
QualityNet notices and regularly
scheduled changes to the Specifications
Manual, and to consider providing
notification about such changes 6
months prior to implementation rather
than 3 months.
Response: We will update our
measure specifications for a measure
through a subregulatory process
providing at least 3 months advance
notice for changes. QualityNet and the
regularly scheduled Specifications
Manual updates are our primary
mechanisms for communicating changes
relating to technical aspects of the
measures as well as changes consistent
with those made as part of endorsement
status that reflect current science and
consensus. We will investigate
supplementing this communication
through other means as well. We agree
that if changes to measures result in
changes in the data elements to be
submitted and, therefore, require
significant system changes, hospitals
would require sufficient time to
accommodate such changes, which we
believe will be satisfied with 6-months
notice. However, if changes do not affect
data elements to be submitted, we
intend to provide no less than 3 months
notification for the change, which we
believe would be sufficient.
Comment: Numerous commenters
urged CMS to utilize the rulemaking
process to announce quality measure
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changes and make accompanying
measure specification changes. While
many commenters agreed that a
subregulatory process would be
appropriate for minor changes, the
commenters expressed concern that use
of a subregulatory process would not
afford hospitals sufficient time to
consider substantive changes or new
measures, and that the formal regulatory
process should be utilized in order to
provide an opportunity for public input
to such changes.
Response: We did not propose to
adopt new measures using a
subregulatory process. Rather, a
subregulatory process will be used in
order to maintain specifications for
existing quality measures to be
consistent with current science and
consensus among affected parties. This
measure maintenance process has
occurred using this subregulatory
mechanism to date, and we believe that
it should continue to occur using this
mechanism. Changes made in this
manner would reflect current consensus
resulting from changes in science and
clinical evidence, and changes in
consensus for which public input is
sought through a national consensus
process. The adoption of new outpatient
measures will continue to be through an
annual notice-and-comment rulemaking
process. However, we will provide a 6month notice for substantive changes to
data elements that will require
significant systems changes, such as the
addition of required new data elements.
Comment: One commenter stated that,
prior to linking measures to outpatient
payment, there should be evidence that
the measures have an impact on quality
and outcome for patients treated in the
outpatient setting, and that the services
measures should be reevaluated each
year so that areas that are no longer a
problem can be removed from the list.
Response: As part of the measure
development process, the HOP QDRP
measures have undergone rigorous
scrutiny for validity as indicators of
outpatient quality of care. Measures that
are implemented in this reporting
program will undergo regular
reevaluation every 3 years as part of the
measure maintenance and reevaluation
process. However, we also may decide
upon reviewing measures to suspend
measures from the reporting program,
and these decisions would be
announced during the annual
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68767
rulemaking process. While
improvability is an important criterion
for measure selection, we do not limit
measure selection solely to areas
perceived as problem areas.
After consideration of the public
comments received, we are finalizing
the use of the subregulatory process
described to ensure that the HOP QDRP
measures are calculated based on the
most up-to-date scientific and
consensus standards. We will continue
to release a HOPD Specification Manual
every 6 months and addenda as
necessary providing at least 3 months of
advance notice for non-substantive
changes such changes to ICD–9 and
HCPCS codes and at least 6 months
notice for substantive changes to data
elements that will require significant
systems changes.
3. Possible New Quality Measures for
CY 2011 and Subsequent Calendar
Years
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41542), we sought comment
on possible new quality measures for
CY 2011 and subsequent calendar years.
The following table contains a list of 18
measures included within 9 measure
sets from which additional quality
measures could be selected for inclusion
in the HOP QDRP. This table includes
measures and measure sets that are part
of clinical topics for which we currently
do not require quality measure data
reporting, such as cancer. We note that
we also sought comment on some of
these measures in the CY 2008 OPPS/
ASC proposed rule. We sought public
comment on the measures and measure
sets that are listed below as well as on
any possible critical gaps or missing
measures or measure sets. We
specifically requested input concerning
the following:
• Which of the measures or measure
sets should be included in the HOP
QDRP for CY 2011 or subsequent
calendar years?
• What challenges for data collection
and reporting are posed by the
identified measures and measure sets?
• What improvements could be made
to data collection or reporting that might
offset or otherwise address those
challenges?
We solicited public comment on the
following measure sets and measures for
consideration in CY 2011 and
subsequent calendar years.
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MEASURES UNDER CONSIDERATION FOR CY 2011 AND SUBSEQUENT CALENDAR YEARS
Topic
Measure
Cancer ..........................................
1
2
ED Throughput .............................
Diabetes ........................................
Falls ..............................................
Depression ....................................
Stroke & Rehabilitation .................
Osteoporosis .................................
Medication Reconciliation .............
Respiratory ...................................
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Radiation Therapy is Administered within 1 Year of Diagnosis for Women Under Age 70 Receiving
Breast Conserving Surgery for Breast Cancer.*
Adjuvant Chemotherapy is Considered or Administered within 4 Months of Surgery to Patients Under
Age 80 with AJCC III Colon Cancer.*
Adjuvant Hormonal Therapy for Patients with Breast Cancer.*
Needle Biopsy to Establish Diagnosis of Cancer Precedes Surgical Excision/Resection.*
Median Time from ED Arrival to ED Departure for Discharged ED Patients.
Low Density Lipoprotein Control in Type 1 or 2 Diabetes Mellitus.*
High Blood Pressure Control in Type 1 or 2 Diabetes Mellitus.*
Screening for Fall Risk.*
Antidepressant Medication During Acute Phase for Patients with New Episode of Major Depression.*
Computed Tomography (CT) or Magnetic Resonance Imaging (MRI) Reports.*
Carotid Imaging Reports.*
Communication with the Physician Managing Ongoing Care Post Fracture.*
Screening or Therapy for Women Aged 65 Years and Older.*
Pharmacologic Therapy.*
Management Following a Fracture.*
Medication Reconciliation.*
Asthma Pharmacological Therapy.*
Assessment of Mental Status for Community Acquired Pneumonia.*
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* One of the 30 measures included as ‘‘under consideration’’ in the CY 2008 OPPS/ASC proposed rule.
We welcomed suggestions regarding
other additional measures and topics
relevant to the hospital outpatient
setting that we could use to further
develop the measure set, and indicated
that we were particularly interested in
receiving comments on potential HOP
QDRP measures that could be used to
measure the quality of care in other
settings (such as hospital inpatient,
physician office, and emergency care
settings) and, thus, contribute to
improved coordination and
harmonization of high-quality patient
care.
Comment: One commenter strongly
supported inclusion of measure 5,
Median Time from ED Arrival to ED
Departure for Discharged ED Patients.
The commenter believed that this
measure is reasonable for assessing
patient delays in receiving ED care. The
commenter also recommended
inclusion of a companion measure,
Median Time from ED Arrival to ED
Departure for Admitted Patients,
because this measure assesses
‘‘boarding’’ time in the ED. This
measure was not included in the CY
2009 OPPS/ASC proposed rule. Further,
the commenter suggested that these
measures be stratified by psychiatric
population, ED observation, transferred
patients, and all others.
Response: We thank the commenter
for its support of the inclusion of
measure 5. The Median Time from ED
Arrival to ED Departure for Admitted
Patients was specified to collect data on
patients in the inpatient population and,
therefore, is not appropriate for the
outpatient setting. In the FY 2009 IPPS
proposed rule (73 FR 23652), we
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solicited comments on this measure as
a possible measure to be used in the
RHQDAPU program for FY 2011 and
subsequent years. We appreciate the
suggestion regarding the stratification of
the measure. We intend to stratify both
measures by psychiatric, observation,
and transferred patients, and those other
patients who do not meet the other
stratification criteria.
Comment: Several commenters
described the challenges for data
collection and reporting resulting from
the proposed measures, and stated CMS
should assess the amount of chart
review required for different
populations.
Response: We are interested in
minimizing the burden on hospitals
associated with data collection and
reporting. We have sought to address
this by using claims-based measures,
where appropriate, and we are
evaluating the use of data from clinical
data registries. In the case of the ED
timing measures, these data are
routinely collected by hospitals
currently. In addition, we are evaluating
the potential for such data to be
submitted electronically from hospital
information systems. We have assessed
collection burden for each measure as a
whole for the global population. There
is no additional burden of chart review
for the stratified populations, since
there is no requirement for an additional
or separate chart review for the stratified
populations.
Comment: One commenter stated that
some of the measures do not add value
for consumers, citing its belief that
measure 4, the percentage of time a
needle biopsy was used in diagnosis,
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has nothing to do with an accurate
diagnosis or appropriate treatment; and
that measure 16, the medication
reconciliation, does not measure
medication errors or avoidable harm.
Response: We believe that these
measures would be of use to consumers.
Literature indicates that needle biopsy
results in a lower incidence of reexcision, reduced number of total
operations, and a shorter time to
complete surgery compared with
surgical biopsy. Medication
reconciliation review promotes the
examination of inpatient and outpatient
differences in patient medication, which
helps reduce medical errors and
supports the provision of quality care to
patients.
Comment: One commenter stated that
future measures should be more specific
in terms of size, volume of services, type
and level of care, geographical regions,
and electronic health record (EHR)implementation status. The commenter
also stated that related measures should
be assessed for alignment across settings
or under different conditions.
Response: We appreciate these
suggestions for possible future
consideration. We agree that alignment
across settings is an important goal.
Comment: One commenter stated the
measures are too similar to measures
used in physician office setting and
should be setting specific. Other
commenters stated that several of the
measures are better suited for the
physician office rather than the HOPD,
and the measures should be thoroughly
field tested before implementation.
Response: We believe that these
measures are specific to the HOPD
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because HOP QDRP measures pertain to
services payable under the OPPS
system. These include a variety of
hospital services, including ED,
outpatient surgery, and imaging
services. While we understand that
hospital outpatient services, such as in
a hospital outpatient clinic, may appear
similar to the physician office setting,
these procedures and care are furnished
and paid for at the HOPD level;
therefore, accountability at this level is
appropriate. We agree that measures
should be field tested before
implementation, and strives to do so
during the measures development
process.
Comment: Several commenters were
concerned that the measures proposed
for use in CY 2011 or beyond did not
have full NQF endorsement.
Response: We previously discussed
the consensus requirements for the HOP
QDRP program under section
1833(t)(17)(C) of the Act. Although we
prefer measures that represent voluntary
consensus standards, such as provided
by NQF-endorsed measures, we also
take into account other considerations,
including the availability of adequate
NQF-endorsed measures, to meet
program requirements.
Comment: Several commenters
suggested additional measurement
topics and measures for future
implementation in the HOP QDRP.
These included:
• Healthcare-associated infections
• MRSA process of care measures
• Cross-cutting risk-adjusted
measures
• Surgical site infection
• Appropriate hair removal for
surgery patients
• Central line associated blood-stream
infections and central line bundle
compliance
• Claims based measures of infections
after outpatient hospital procedures
• Data and measures from national
data registries
• High-risk disease
• Post-fracture care
• Acute and chronic pain
management
• Anticoagulant therapy safety and
education
• PQRI CAD and osteoporosis
measures
• Coordination of care
• ED AMI mortality
• Severe sepsis and septic shock
management bundle
• Confirmation of endotracheal tube
placement
• Overall cardiac care
• Use and overuse of cardiac CT
• Inappropriate use of percutaneous
cardiac interventions
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• Measures that can be collected via
electronic health records (EHRs)
• ASC measures
Response: We appreciate these
suggestions and will consider these
topic areas for future implementation.
We agree with the importance of
actively working to move to a system of
data collection based on submission of
data from EHRs. To this end, we are
engaged with HIT standards setting
organizations to promote the adoption
of the necessary standards for the HOP
QDRP and for quality measures for other
settings.
Comment: Numerous commenters
stated that CMS should only select
NQF-endorsed measures for the HOP
QDRP, and should work with large
stakeholder organizations such as HQA,
PCPI, AHQA, AMA, QASC, and IHI to
prioritize measurement areas and
measure selection. Commenters
suggested other selection criteria, such
as national priority areas identified by
HHS, and called for CMS to develop a
framework for the selection of measures
that includes public input, priority
setting, consultation with other Federal
agencies, NQF endorsement, field
testing, and staggered implementation.
Commenters also suggested that hospital
inpatient measures adopted for the
RHQDAPU program should be reviewed
for applicability when selecting
measures for the hospital outpatient
setting, and that CMS should make
specifications for new hospital
outpatient measures available for review
through QualityNet at the time they are
proposed.
Response: We discussed above the
requirements of section 1833(t)(17)(C) of
the Act. We prefer to use measures that
have been adopted by national
consensus building entities when such
measures are available and adequately
meet program needs. Our measure
selection is generally guided by
Departmental and CMS priorities
supplemented by stakeholder input. For
example, we are examining measures
currently used in our reporting
programs in other settings for potential
applicability to the outpatient setting
and ways we can harmonize measures
across settings. We value stakeholder
input which we receive from a broad
range of stakeholders. However,
ultimately, measures are selected
through notice-and-comment
rulemaking reflecting input from the
public at large. The input we consider
is not limited to particular stakeholders
or groups of stakeholders. We will make
outpatient measure specifications
available to the public during the public
comment period for the proposed rule
on the CMS Web site. In future
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68769
proposed rules, we will provide the
Web site address at which the technical
specifications for future proposed
measures will be available during the
public comment period.
Comment: One commenter stated that
hospital-acquired condition (HAC)
measures are not ready for
implementation in the outpatient setting
because care in the outpatient setting is
much more varied and much less lifethreatening than in the inpatient setting
and because coding is more difficult.
The commenter believed that HAC
measures are difficult to establish and
prone to subjectivity.
Response: We have not proposed any
HAC measures for the HOP QDRP;
however, we will consider the
commenter’s concerns as we develop
proposed measures for CY 2011 and
subsequent years.
Based on the public comments
received, we will consider the
recommended topic areas as we develop
new quality measures for CY 2011 and
subsequent calendar years.
D. Payment Reduction for Hospitals
That Fail To Meet the HOP QDRP
Requirements for the CY 2009 Payment
Update
1. Background
Section 1833(t)(17)(A) of the Act,
which applies to hospitals as defined
under section 1886(d)(1)(B) of the Act,
requires that hospitals that fail to report
data required for the quality measures
selected by the Secretary, in the form
and manner required by the Secretary
under section 1833(t)(17)(B) of the Act,
incur a 2.0 percentage point reduction
to their OPD fee schedule increase
factor, that is, the annual payment
update factor. Section 1833(t)(17)(A)(ii)
of the Act specifies that any reduction
would apply only to the payment year
involved and would not be taken into
account in computing the applicable
OPD fee schedule increase factor for a
subsequent payment year.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41542), we discussed how
the proposed payment reduction for
failure to meet the administrative, data
collection, and data submission
requirements of the HOP QDRP will
affect the CY 2009 payment update
applicable to OPPS payments for HOPD
services furnished by the hospitals
defined under section 1886(d)(1)(B) of
the Act to which the program applies.
The application of a reduced OPD fee
schedule increase factor results in
reduced national unadjusted payment
rates that will apply to certain
outpatient items and services provided
by hospitals that are required to report
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outpatient quality data and that fail to
meet the HOP QDRP requirements. All
other hospitals paid under the CY 2009
OPPS will receive the full OPPS
payment update without the reduction.
2. 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
The national unadjusted payment
rates for many services paid under the
OPPS equal the product of the OPPS
conversion factor and the scaled relative
weight for the APC to which the service
is assigned. The OPPS conversion factor
is updated annually by the OPD fee
schedule increase factor. The
conversion factor is used to calculate
the OPPS payment rate for services with
the following status indicators (listed in
Addendum B to this final rule with
comment period): ‘‘P,’’ ‘‘Q1,’’ ‘‘Q2,’’
‘‘Q3,’’ ‘‘R,’’ ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X.’’ We
proposed that payment for all services
assigned these status indicators would
be subject to the reduction of the
national unadjusted payment rates for
applicable hospitals, with the exception
of services assigned to New Technology
APCs. While services assigned to New
Technology APCs, specifically APCs
1491 (New Technology-Level IA ($0–
$10)) through 1574 (New TechnologyLevel XXXVII ($9,500–$10,000)), are
assigned status indicator ‘‘S’’ or ‘‘T,’’ the
payment rates for New Technology
APCs are set at the midpoint of a costband increment, rather than based on
the product of the OPPS conversion
factor and the relative payment weight.
Therefore, in the CY 2009 OPPS/ASC
proposed rule (73 FR 41543), we
proposed to exclude services assigned to
New Technology APCs from the list of
services that are subject to the reduced
national unadjusted payment rates
because the OPD fee schedule increase
factor is not used to update the payment
rates for these APCs. We note that we
also proposed that the reduction would
apply to brachytherapy sources for
which we proposed to assign status
indicator ‘‘U’’ (Brachytherapy Sources.
Paid under OPPS; separate APC
payment). Subsequent to issuance of the
proposed rule, Congress enacted Public
Law 110–275 (MIPPA). Section 142 of
Public Law 110–275 specifically
requires that brachytherapy sources be
paid during CY 2009 on the basis of
charges adjusted to cost, rather than
under the standard OPPS methodology.
Therefore, the reduced conversion factor
would not be applicable to CY 2009
payment for brachytherapy sources
because payment would not be based on
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the OPPS conversion factor and,
consequently, the payment rates for
these services are not updated by the
OPD fee schedule increase factor. We
refer readers to section VII. of this CY
2009 OPPS/ASC final rule with
comment period for further discussion
of payment for brachytherapy sources.
Comment: One commenter supported
the CMS proposal to not apply payment
and copayment reductions to New
Technology APCs for hospitals that did
not meet the requirements of the HOP
QDRP.
Response: We appreciate the
commenter’s support. We believe that,
because New Technology APC
payments are set using the cost-band
methodology described above, the
statutory requirement would not apply
the reduction to these APCs.
The conversion factor is also not used
to calculate the OPPS payment rates for
separately payable services that are
assigned status indicators other than
status indicators ‘‘P,’’ ‘‘Q1,’’ ‘‘Q2,’’
‘‘Q3,’’ ‘‘R,’’ ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X.’’ These
services include separately payable
drugs and biologicals, separately
payable therapeutic
radiopharmaceuticals, pass-through
drugs and devices and brachytherapy
sources that are paid at charges adjusted
to cost, and a few other specific services
that receive cost-based payment. As a
result, in the CY 2009 OPPS/ASC
proposed rule (73 FR 41543), with the
exception of brachytherapy sources, we
also proposed that the OPPS payment
rates for these services would not be
reduced because the payment rates for
these services are not calculated using
the conversion factor and, therefore, the
payment rates for these services are not
updated by the OPD fee schedule
increase factor. In the CY 2009 OPPS/
ASC proposed rule (73 FR 41502), we
proposed prospective payment based on
median costs for brachytherapy sources
and proposed to assign brachytherapy
sources status indicator ‘‘U’’ but,
subsequent to the issuance of the CY
2009 OPPS/ASC proposed rule,
Congress enacted Public Law 110–275,
which further extended the payment
period for brachytherapy sources based
on a hospital’s charges adjusted to cost.
Comment: One commenter suggested
that reducing payment and copayment
for pharmacy services for hospitals that
fail to meet the requirements of the HOP
QDRP is excessively punitive.
Response: As described above, the
market basket reduction would not
apply to separately paid drugs and
biologicals that are assigned status
indicator ‘‘K’’ or to therapeutic
radiopharmaceuticals, assigned status
indicator ‘‘H’’ in this final rule with
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comment period, which are paid at
charges adjusted to cost for CY 2009
based on the provisions of section 142
of Public Law 110–275. The market
basket reduction for hospitals that fail to
meet the reporting requirements would
only apply to those services whose
payment rates are calculated using the
conversion factor.
The OPD fee schedule increase factor,
or market basket update, is an input into
the OPPS conversion factor, which is
used to calculate OPPS payment rates.
To implement the requirement to reduce
the market basket update for hospitals
that fail to meet reporting requirements,
in the CY 2009 OPPS/ASC proposed
rule, we proposed that, effective for
services paid under the CY 2009 OPPS,
CMS would calculate two conversion
factors: A full market basket conversion
factor (that is, the full conversion
factor), and a reduced market basket
conversion factor (that is, the reduced
conversion factor). It is necessary to
calculate a reduced market basket
conversion factor for hospitals that fail
to meet reporting requirements because
section 1833(t)(17)(A)(i) of the Act
requires a reduction of 2.0 percentage
points from the market basket update for
those hospitals. (We implemented this
statutory requirement in regulations at
42 CFR 419.43(h).) For a complete
discussion of the calculation of the
OPPS conversion factor, we refer
readers to section II.B. of this CY 2009
OPPS/ASC final rule with comment
period. Therefore, we proposed to
calculate a reduction ratio by dividing
the reduced conversion factor by the full
conversion factor. We refer to this
reduction ratio as the ‘‘reporting ratio’’
to indicate that it applies to payment for
hospitals that fail to meet their reporting
requirements. Beginning January 1,
2009, the PRICER will calculate reduced
national unadjusted payment rates that
will be used as a basis for paying
hospitals that fail to meet the
requirements of the HOP QDRP by
multiplying the national unadjusted
payment rates by the reporting ratio.
This will result in reduced national
unadjusted payment rates that are
mathematically equivalent to the
reduced national unadjusted payment
rates that would result if we multiplied
the scaled OPPS relative weights by the
reduced conversion factor. For CY 2009,
we proposed a reporting ratio of 0.981,
calculated by dividing the reduced
conversion factor of $64.409 by the full
conversion factor of $65.684. As stated
above, the use of the reporting ratio is
mathematically equivalent to the
creation and application of a reduced
conversion factor to the OPPS payment
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weights. The final CY 2009 reporting
ratio is 0.981, calculated by dividing the
reduced conversion factor of $64.784 by
the full conversion factor of $66.059.
To determine the reduced national
unadjusted payment rates that would
apply to hospitals that fail to meet their
quality reporting requirements for the
CY 2009 OPPS, we will multiply the
final full national unadjusted payment
rate in Addendum B to this CY 2009
OPPS/ASC final rule with comment
period by the final reporting ratio of
0.981. For example, CPT code 11401
(Excision, benign lesion including
margins, except skin tag (unless listed
elsewhere) trunk, arms or legs; excised
diameter 0.6 to 1.0 cm), is assigned to
APC 0019, with a final national
unadjusted payment rate of $295.69.
Where a hospital fails to meet the
reporting requirements of the HOP
QDRP for the CY 2009 payment update,
the reduced national unadjusted
payment rate for that hospital would be
$290.07 (the reporting ratio of 0.981
multiplied by the full national
unadjusted payment rate for CPT code
11401).
We did not receive any public
comments on our proposal for
determining the reduced national
unadjusted payment rates that would
apply to hospitals that fail to meet their
quality reporting requirements for the
CY 2009 OPPS.
After consideration of the public
comments received, we are finalizing
our proposal, without modification, to
apply the market basket update
reduction to payments for all services
calculated using a conversion factor
through application of the reporting
ratio. The final CY 2009 reporting ratio
is 0.981, calculated by dividing the
reduced market basket conversion factor
of $64.784 by the full market basket
conversion factor of $66.059.
b. Calculation of Reduced Minimum
Unadjusted and National Unadjusted
Beneficiary Copayments
Under the OPPS, we have two levels
of Medicare beneficiary copayment for
many services: the minimum
unadjusted copayment, and the national
unadjusted copayment. The minimum
unadjusted copayment is always 20
percent of the national unadjusted
payment rate for each separately
payable service. The national
unadjusted copayment is determined
based on the historic coinsurance rate
for the services assigned to the APC.
Where the national unadjusted
copayment is blank for an item or
service listed in Addendum B to this CY
2009 OPPS/ASC final rule with
comment period, the national
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unadjusted copayment is equal to the
minimum unadjusted copayment. In
general, under our longstanding
copayment policy, the coinsurance
percentage (the ratio of the copayment
to the service payment) for a particular
service may decline over time to a
minimum of 20 percent but will never
increase. This is consistent with the
statute’s intent that eventually all
services paid under the OPPS would be
subject to a 20-percent coinsurance
percentage. We refer readers to section
1833(t)(3)(B)(ii) of the Act for the
specific statutory language. For
additional background on the standard
OPPS copayment calculation, we refer
readers to the CY 2004 OPPS final rule
with comment period (68 FR 63458
through 63459).
For hospitals that receive the reduced
OPPS payment for failure to meet the
HOP QDRP requirements, we believe
that it is both equitable and appropriate
that a reduction in the payment for a
service should result in proportionately
reduced copayment liability for
Medicare beneficiaries. Similarly, we
believe that it would be inequitable to
the beneficiary and in conflict with the
intent of the law (section
1833(t)(3)(B)(ii) of the Act) and our
longstanding policy (68 FR 63458
through 63459) if the coinsurance
percentage of the total payment for
certain OPPS services to which reduced
national unadjusted payment rates
apply was to increase as a result of
using the reduced conversion factor to
calculate these reduced national
unadjusted payment rates. Therefore, in
the CY 2009 OPPS/ASC proposed rule
(73 FR 41544), we proposed that the
Medicare beneficiary’s minimum
unadjusted copayment and national
unadjusted copayment for a service to
which a reduced national unadjusted
payment rate applies would each equal
the product of the reporting ratio and
the national unadjusted copayment or
the minimum unadjusted copayment, as
applicable, for the service, under the
authority of section 1833(t)(2)(E) of the
Act, which authorizes the Secretary to
‘‘establish, in a budget neutral manner,
* * * adjustments as determined to be
necessary to ensure equitable
payments’’ under the OPPS.
We considered calculating the
national unadjusted copayments and the
minimum unadjusted copayments based
on the reduced national unadjusted
payment rates, using our standard
copayment methodology. We found
that, in many cases, the beneficiary’s
copayment amount would remain the
same as calculated based on the full
national unadjusted payment rate,
although the total reduced national
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68771
unadjusted payment rate would decline
because of the reduction to the
conversion factor. Therefore, in these
cases, the ratio of the copayment to the
total payment (the coinsurance
percentage) would increase rather than
decrease if we were to calculate
copayments based on the reduced
national unadjusted payment rates. For
example, in the case of APC 0019 (Level
I Excision/Biopsy), the full national
unadjusted payment rate for CY 2008 is
$274.13 and the national unadjusted
copayment is $71.87 or 26 percent of the
full national unadjusted payment rate
for the APC. If the reduction were in
effect for CY 2008, the reduced national
unadjusted payment rate would be
$268.65 but the national unadjusted
copayment, if calculated under the
standard rules, would continue to be
$71.87, which represents 27 percent of
the reduced national unadjusted
payment rate. We believe that the
increased coinsurance percentage that
results from this methodology is
contradictory to the intent of the statute
that the coinsurance percentage would
never increase and is also contradictory
to our copayment rules that are
intended to gradually reduce the
percentage of the payment attributed to
copayments until the national
unadjusted copayment is equal to the
minimum unadjusted copayment for all
services.
To avoid this inconsistent result, in
the CY 2009 OPPS/ASC proposed rule
(73 FR 41544), we proposed to apply the
reporting ratio to the national
unadjusted copayment and the
minimum unadjusted copayment to
calculate the national unadjusted
copayments that would apply to each
APC for hospitals that receive the
reduced CY 2009 OPPS payment
update. This application of the reporting
ratio would be to the national
unadjusted and minimum unadjusted
copayments as calculated according to
§ 419.41 of the regulations, prior to any
adjustment for hospitals’ failure to meet
the quality reporting standards
according to § 419.43(h). Beneficiaries
and secondary payers would thereby
share in the reduction of payments to
these hospitals. We believe that
applying this copayment calculation
methodology for those hospitals that fail
to meet the HOP QDRP requirements
would allow us to appropriately set the
national unadjusted copayments for the
reduced OPPS national unadjusted
payment rates and would be most
consistent with the eventual
establishment of 20 percent of the
payment rate as the uniform
coinsurance percentage for all services
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under the OPPS. In the CY 2009 OPPS/
ASC proposed rule, we proposed to
revise §§ 419.41, 419.42, and 419.43 to
reflect this policy.
Comment: Some commenters
supported the CMS proposal for
beneficiaries and secondary payers to
share in the payment reduction for
hospitals that fail to meet the HOP
QDRP requirements.
Response: We appreciate the support
for our proposed policy. In order to
ensure that beneficiaries and secondary
payers do not pay a higher share of the
reduced payment that results from a
hospital’s failure to meet the reporting
requirements, we believe that a
copayment calculation methodology
that applies the reporting ratio to the
national unadjusted copayment and the
minimum unadjusted copayment is
most appropriate.
After consideration of the public
comments received, we are finalizing
our proposal, without modification, for
beneficiaries and secondary payers to
share in the payment reduction for
hospitals that fail to meet the HOP
QDRP requirements. We also are
finalizing our revisions to §§ 419.41,
419.42, and 419.43 of the regulations,
without modification, to reflect this
policy.
c. Treatment of Other Payment
Adjustments
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41544), we proposed that all
other applicable adjustments to the
OPPS national unadjusted payment
rates would apply in those cases when
the OPD fee schedule increase factor is
reduced for hospitals that fail to meet
the requirements of the HOP QDRP. For
example, the following standard
adjustments would apply to the reduced
national unadjusted payment rates: The
wage index adjustment; the multiple
procedure adjustment; the interrupted
procedure adjustment; the rural sole
community hospital adjustment; and the
adjustment for devices furnished with
full or partial credit or without cost. We
believe that these adjustments continue
to be equally applicable to payments for
hospitals that do not meet the HOP
QDRP requirements.
Similarly, we proposed that outlier
payments would continue to be made
when the criteria are met. For hospitals
that fail to meet the quality data
reporting requirements, we proposed
that the hospitals’ costs would be
compared to the reduced payments for
purposes of outlier eligibility and
payment calculation. We believe no
changes in the regulation text would be
necessary to implement this policy
because using the reduced payment for
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these outlier eligibility and payment
calculations is contemplated in the
existing regulations at § 419.43(d). This
proposal conforms to current practice
under the IPPS in this regard.
Specifically, under the IPPS, for
purposes of determining the hospital’s
eligibility for outlier payments, the
hospital’s estimated operating costs for
a discharge are compared to the outlier
cost threshold based on the hospital’s
actual DRG payment for the case. For a
complete discussion of the OPPS outlier
calculation and eligibility criteria, we
refer readers to section II.F. of this CY
2009 OPPS/ASC final rule with
comment period.
We did not receive any public
comments on this proposal and,
therefore, are finalizing our proposal
without modification.
E. Requirements for HOPD Quality Data
Reporting for CY 2010 and Subsequent
Calendar Years
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66869), we
stated that in order to participate in the
HOP QDRP for CY 2009 and subsequent
calendar years, hospitals must meet
administrative, data collection and
submission, and data validation
requirements. Hospitals that do not
meet the requirements of the HOP
QDRP, as well as hospitals not
participating in the program and
hospitals that withdraw from the
program, will not receive the full OPPS
payment rate update. Instead, in
accordance with section 1833(t)(17)(A)
of the Act, those hospitals would
receive a reduction of 2.0 percentage
points in their updates for the affected
payment year.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41544), for payment
determinations affecting the CY 2010
payment update, we proposed to
implement the requirements listed
below. Most of these requirements are
the same as the requirements we
implemented for the CY 2009 payment
determination.
1. Administrative Requirements
To participate in the HOP QDRP,
several administrative steps must be
completed. These steps require the
hospital to:
• Identify a QualityNet administrator
who follows the registration process and
submits the information to the
appropriate CMS designated contractor.
All CMS designated contractors will be
identified on the QualityNet Web site.
The same person may be the QualityNet
administrator for both the IPPS
RHQDAPU program and the OPPS HOP
QDRP. This designation must be kept
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current and must be done, regardless of
whether the hospital submits data
directly to the CMS designated
contractor or uses a vendor for
transmission of data.
• Register with QualityNet regardless
of the method used for data submission.
• Complete the Notice of
Participation form if one has not been
completed or if a hospital has
previously submitted a withdrawal
form. We remind hospitals that they do
not need to submit another Notice of
Participation form if they have already
done so and they have not withdrawn
from participation. At this time, the
participation form for the HOP QDRP is
separate from the IPPS RHQDAPU
program and completing a Notice of
Participation form for each program is
required. Agreeing to participate
includes acknowledging that the data
submitted to the CMS designated
contractor will be submitted to CMS and
may also be shared with a different CMS
contractor or contractors supporting the
implementation of the HOP QDRP
program. For HOP QDRP decisions
affecting CY 2010 payment
determinations, hospitals that share the
same Medicare Provider Number (MPN),
now known as the CMS Certification
Number (CCN) must complete a single
Notice of Participation form.
Hospitals with a newly acquired CCN
and hospitals that are not participating
in the CY 2009 HOP QDRP must send
a completed paper copy of the Notice of
Participation form to the appropriate
CMS designated contractor in order to
participate in the CY 2010 HOP QDRP.
Hospitals with a newly acquired CCN
must submit a Notice of Participation
form no later than 30 days after
receiving their new provider CCN.
Hospitals that did not participate or
withdrew from participation in the CY
2009 HOP QDRP must submit a Notice
of Participation form by January 31,
2009 in order to participate in the CY
2010 HOP QDRP. We proposed for CY
2011 to implement an on-line
registration form and eliminate the
paper form. We invited public comment
on this proposed change.
Comment: Commenters supported the
use of an on-line registration form.
Response: We thank these
commenters for their support for our
proposal to use an on-line registration
form. We are finalizing the use of an online registration form with the
concomitant elimination of the paper
form for the Notice of Participation
requirement for CY 2011.
Hospitals with newly acquired CCNs,
as well as hospitals that are not
participating in the CY 2009 HOP
QDRP, that do not properly submit a
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Notice of Participation form for CY 2010
as described above will be deemed as
non-participatory, will not be able to
submit data to the OPPS Clinical
Warehouse, and will be deemed as not
meeting reporting requirements under
the HOP QDRP for CY 2010. Hospitals
that have previously completed a Notice
of Participation form and subsequently
wish to terminate participation in the
HOP QDRP must submit a withdrawal
form. We did not receive comments on
these proposed requirements.
After consideration of the public
comments received and as discussed
above, we are finalizing these
administrative requirements as
proposed.
2. Data Collection and Submission
Requirements
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41545), we proposed that, to
be eligible for the full OPPS payment
update in CY 2010, hospitals must:
• Collect data required for the CY
2010 measure set that are finalized in
this CY 2009 OPPS/ASC final rule with
comment period and that will be
published and maintained in the
Specifications Manual that can be found
at: https://www.qualitynet.org.We
proposed that it will not be necessary to
submit data for all eligible cases for
some measures if sufficient eligible case
thresholds are met. Instead, for those
measures where a hospital has a
sufficiently large number of cases, we
proposed that the hospital will be
allowed to sample cases and submit
data for these sampled cases rather than
submitting data from all eligible cases.
We proposed that this sampling scheme
will be set out in the Specifications
Manual at least four months in advance
of required data collection.
In addition, in order to reduce the
burden on hospitals that treat a low
number of patients who meet the
submission requirements for a particular
quality measure, we proposed that
beginning with services furnished on or
after January 1, 2009, hospitals that have
five or fewer claims (both Medicare and
non-Medicare) for any measure
included in a measure topic in a quarter
will not be required to submit patient
level data for the entire measure topic
for that quarter. However, hospitals
would still be required to submit
aggregate measure population and
sample size counts for the applicable
measure topic as part of their quarterly
data submissions.
• Submit the data according to the
data submission schedule that will be
available on the QualityNet Web site.
HOP QDRP data will continue to be
submitted through the QualityNet
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secure Web site (https://
www.qualitynet.org). This Web site
meets or exceeds all current Health
Insurance Portability and
Accountability Act requirements.
Submission deadlines will be 4 months
after the last day of each calendar
quarter for measures finalized in the CY
2009 OPPS/ASC final rule with
comment period. Thus, for example, the
submission deadline for data for
services occurring during the first
calendar quarter of 2009 (January-March
2009) will be August 1, 2009, and the
submission deadline for the second
calendar quarter of 2009 (April-June
2009) will be November 1, 2009.
• Submit data to the OPPS Clinical
Warehouse using either the CMS
Abstraction and Reporting Tool for
Outpatient Department measures
(CART-OPD) or the tool of a third-party
vendor that meets the measure
specification requirements for data
transmission to QualityNet. We
proposed that hospitals must submit
quality data through the QualityNet
Web site to the OPPS Clinical
Warehouse; a CMS-designated
contractor will submit OPPS Clinical
Warehouse data to CMS. Under current
implementation, OPPS Clinical
Warehouse data are not considered QIO
data. However, it is possible that the
information in the OPPS Clinical
Warehouse may at some point be
considered QIO information. If this
occurs, OPPS Clinical Warehouse data
may become subject to the stringent QIO
confidentiality regulations in 42 CFR
Part 480.
We proposed that hospitals are to
submit data under the HOP QDRP on
outpatient episodes of care to which the
required measures apply. For the
purposes of the HOP QDRP, an
outpatient episode-of-care is defined as
care provided to a patient who has not
been admitted as an inpatient but who
is registered on the hospital’s medical
records as an outpatient and receives
services (rather than supplies alone)
directly from the hospital. Every effort
will be made to assure that data
elements common to both inpatient and
outpatient settings are defined
consistently (such as ‘‘time of arrival’’).
To be accepted by the CMS
designated contractor, submissions
would, at a minimum, need to be
timely, complete, and accurate. Data
submissions are considered to have
been ‘‘timely’’ when data are submitted
prior to the reporting deadline and have
passed all CMS designated contractor
edits. A ‘‘complete’’ submission is
determined based on sampling criteria
that will be published and maintained
in the Specifications Manual to be
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found on the Web site at https://
www.qualitynet.org, and must
correspond to both the aggregate
number of cases submitted by a hospital
and the number of Medicare claims it
submits for payment. To be considered
‘‘accurate,’’ submissions must pass
validation, if applicable.
• Submit the aggregate numbers of
outpatient episodes of care which are
eligible for submission under the HOP
QDRP. These aggregated numbers of
outpatient episodes would represent the
number of outpatient episodes of care in
the universe of all possible cases eligible
for data reporting under the HOP QDRP.
We plan to use the aggregate population
and sample size data to assess data
submission completeness and
adherence to sampling requirements for
Medicare and non-Medicare patients.
Comment: One commenter asked
what authority or rationale CMS had to
require the submission of non-Medicare
population counts. Some commenters
questioned the requirement to submit
aggregate Medicare population figures
as CMS has this information from
submitted Medicare claims. Some
commenters stated that there was no
demonstrable reason that aggregate
population data are meaningful for
quality improvement. Several
commenters stated that the submitting
of aggregate numbers of outpatient
episodes of care is resource intensive.
One commenter stated that because
outpatient billing is not as standardized
and structured as inpatient billing,
without further field-testing to address
the problem with population
identification counts, unintended
consequences with the reporting of
incomplete and inaccurate data will
result. One commenter suggested that,
due to time required to recount cases
with information systems limitations, a
10-percent variance be considered.
Response: Our authority for proposing
that hospitals submit aggregate
population data is found in section
1833(t)(17)(A) of the Act, which applies
to hospitals as defined under section
1886(d)(1)(B) of the Act. That provision
states that subsection (d) hospitals that
do not report data required for the
quality measures selected by the
Secretary in the form and manner
required by the Secretary will not
receive the full payment rate update. We
have stated that we intended to model
the HOP QDRP after the RHQDAPU
program for hospital inpatient services.
The RHQDAPU program requires
hospitals to comply with CMS/Joint
Commission sampling requirements for
submitting data. These requirements
require hospitals to submit a random
sample or a population count of their
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caseloads for RHQDAPU program
measures for both Medicare and nonMedicare patients. We do not currently
have any patient population counts for
non-Medicare patients. Because we do
not have patient population counts for
non-Medicare patients, we believe that
this information would help us to better
assess the completeness of hospital
submitted HOP QDRP data for all
treated patients. It is important to know
how complete measurements are while
considering them for quality
improvement efforts or as results of
quality improvement interventions.
Further, the HOP QDRP measures are
intended to provide the public with
information on all patients treated in the
outpatient hospital setting, including
both Medicare and non-Medicare
patients. We proposed to have hospitals
report aggregate Medicare populations
and sampling figures in order to assess
whether hospitals are conducting
appropriate sampling to what they
believe their respective populations by
measure to be.
However, we understand that
outpatient data systems are more
disparate and varied than inpatient data
systems. We also realize that, in some
cases, considerable effort has been
required in order for a hospital to be
able to determine how many patients it
has who have received care meeting
specifications. We are aware that there
have been issues with translating HOP
QDRP measure specifications to some
hospital outpatient data systems. We
acknowledge that there are issues with
determining population counts based
upon some existing measure
specifications and share concerns
regarding unintended consequences due
to the reporting of incomplete and
inaccurate information. Therefore, we
are making the reporting of aggregate
population figures voluntary (Medicare
and non-Medicare) and not a
requirement for payment decisions
affecting the CY 2010 payment update.
We emphasize that we are making this
requirement voluntary only for data
reported for CY 2009 to be used for the
CY 2010 payment update. We intend to
check reporting of Medicare claims in
order to supply information to hospitals
on their efforts to fully collect quality
measure data on all eligible Medicare
cases, but will not make any payment
decisions affecting the CY 2010
payment update contingent on any
comparisons made of CMS and
population figures supplied voluntarily
by hospitals.
Comment: Several commenters
supported CMS’ proposal to allow
hospitals that have five or fewer claims
(both Medicare and non-Medicare) for
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any measure included in a measure
topic in a quarter to not be required to
submit patient level data for the entire
measure topic for that quarter. The
commenters believed that this approach
is a sensible way to reduce the reporting
burden on hospitals with a very small
number of cases. However, commenters
believed that hospitals should always be
able to voluntarily report on quality
measures if they want to do so.
Response: We appreciate the
commenters’ support. This proposal
strives to minimize the reporting burden
for hospitals with small patient
caseloads. We welcome voluntary data
submission by hospitals with smaller
than the minimum number of cases. As
we discussed above, the reporting of
population figures by all hospitals will
be voluntary.
Comment: One commenter suggested
that the minimum number of claims to
exempt a hospital from reporting be
raised to 10 claims per quarter because
10 is still a small sample and should not
be used to determine the annual
payment update, nor be publicly
reported when a statistical sample size
is greater than 25.
Response: We selected more than 5
cases per quarter (more than 20 cases
per year) as the minimum threshold to
ensure that the vast majority of hospitals
with sufficient caseload would be
required to submit data, while easing
the burden on hospitals whose patient
counts were too small to reliably predict
hospital performance. We have selected
a quarterly basis for the minimum
threshold as data reporting requirements
are on a quarterly basis. We
acknowledge that there may be some
hospitals that may have smaller,
fluctuating case number such that there
are less than five cases one quarter and
more than 5 another, but believe that
these hospitals will be few. We believe
that hospital level performance can be
reliably estimated with 20 to 30 cases
reported annually, consistent with
commonly used statistical sampling
practice (for reference, see Wilson Van
Voorhis, Carmen R. and Morgan, Betsey
L. (2007) Understanding Power and
Rules of Thumb for Determining Sample
Sizes, Tutorials in Quantitative Methods
for Psychology, volume 3(2), pages 43 to
50). We believe that the more than five
cases quarterly threshold is a fair,
consistent, and easily understandable
requirement that would not reduce the
amount of reliable data publicly
reported. It is likely that the vast
majority of hospitals affected by this
requirement would not have sufficient
annual caseload for us to publicly report
their data. We also chose the more than
five cases quarterly threshold to be
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consistent with the RHQDAPU program
for reporting hospital inpatient quality
measure data.
Comment: One commenter argued
that, if the proposed imaging measures
were adopted, these data should be
submitted at the patient level, regardless
of whether or not the hospital has five
or fewer claims for a measure within a
certain set.
Response: The proposed imaging
measures are Medicare claim-based
measures. Therefore, we anticipate that
hospitals (regardless of the number of
claims for a measure within a certain
measure set) will submit claims for
these services because they will want to
receive Medicare payment. Because we
proposed to calculate these measures
using CY 2008 Medicare claims data, we
would expect that most of such claims
have been submitted for payment.
Comment: Some commenters that
supported CMS’ proposal to allow
hospitals that have five or fewer claims
(both Medicare and non-Medicare) for
any measure included in a measure
topic in a quarter to not be required to
submit patient level data for the entire
measure topic for that quarter believed
that these hospitals should also be
exempt from reporting their aggregate
population numbers. The commenters
believed the administrative burden of
determining these numbers for
outpatient encounters was so difficult
that exempting hospitals due to low
volume did little to reduce burden if
efforts to prove small numbers were still
required and suggested methods for
CMS to deem hospitals as small volume,
for example, based upon Medicare
claims. Some of these commenters
suggested the criteria should be number
of cases per year rather than number of
cases per quarter. Several commenters
argued that these hospitals should be
exempt from reporting aggregate
population figures because hospitals
that may never report quality data
would still have to establish a
mechanism to identify their patient
populations every quarter.
Response: We thank these
commenters for expressing their
concerns regarding burden to small
hospitals. As discussed above, for the
CY 2010 payment update, we are not
requiring the submission of aggregate
population figures, either Medicare or
non-Medicare, in this final rule with
comment period, although hospitals
may voluntarily submit such data. We
may address this issue in a future
rulemaking as hospital outpatient data
systems and measure specifications
mature and improve.
Comment: One commenter expressed
the view that technical limitations of
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QualityNet require further evaluation
and review. The commenter also
recommended that the same processes
be used for both the inpatient and
outpatient programs rather than creating
a separate system and warehouse
because the commenter believed that
adding a second Web site and different
timelines will have negative
repercussions for the hospitals.
Response: We have made recent
improvements to the infrastructure to
process data submitted by hospitals,
such as procuring additional bandwidth
to accommodate increased data flow.
We believe that the processes for the
inpatient and outpatient programs are
consistent, and the official information
source for the two programs is a single
Web site: https://www.qualitynet.org.
There are circumstances that require
operational separation of the two
programs. It is necessary to have
separate data collection tools for the two
programs because the two programs are
on separate payment cycles with
corresponding data cycles. The
inpatient hospital payment system
operates on a fiscal year basis beginning
in October and the outpatient payment
system operates on a calendar year basis
beginning with January. In addition, due
to funding issues under initial
implementation, the inpatient and
outpatient data systems had to be kept
separate. We will consider these
comments in the future and thank the
commenter for its suggestion for
improving processes under the HOP–
QDRP.
Comment: Some commenters
expressed concerns regarding the
differing submission deadlines for
HOP–QDRP and RHQDAPU program
data. Some commenters objected to
what, in their view, was a submission
timeline that is 15 days earlier than the
current inpatient time line.
Response: It is necessary to separate
the data submission schedules to ease
the burden on the data warehouse
infrastructure, preventing data delays as
much as possible. The data collection
timeline under initial implementation of
the HOP–QDRP was set to allow as
much time as possible for hospitals to
comply with data reporting
requirements for any decisions
regarding whether or not a hospital
would receive the full CY 2009 payment
update. The HOP–QDRP quarterly data
reporting deadline of 4 months
following the last quarterly discharge
date is necessary to provide CMS with
more time to process the data and
provide hospitals with earlier feedback
about their quality measures for
improvement work. Based on previous
experience with the RHQDAPU
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program, CMS believes that this
timeframe provides hospitals with
sufficient time to identify and abstract
the data. November 1 is the latest date
that we can accept HOP–QDRP data and
still compile a list of reporting hospitals
to make payment decisions toward the
upcoming calendar year payment
update; the rest of the reporting
schedule follows from this date. For the
RHQDAPU program, the quarterly data
reporting deadline is 4.5 months after
the end of the preceding quarter (the
exact dates are posted on the QualityNet
Web site). The 4.5 month RHQDAPU
program time lag was chosen in order to
allow hospitals sufficient time to submit
data to The Joint Commission before
submitting data to CMS. The majority of
hospitals also submit data for many
RHQDAPU measures to The Joint
Commission, and their data submission
deadline is approximately 4 months
after the end of the preceding quarter.
After consideration of the public
comments received and as discussed in
the above responses to those comments,
we are adopting as final the proposed
data collection and submission
requirements with modifications. We
are finalizing that hospitals that have
five or fewer cases (both Medicare and
non-Medicare) for any measure
included in a measure topic will not be
required to submit patient level data for
that entire measure topic for that
quarter; however, these hospitals may
voluntarily submit these data. We are
not requiring the submission of
aggregate population figures, Medicare
or non-Medicare, for data reported for
CY 2009 in order to receive the full CY
2010 payment update, although
hospitals may voluntarily submit these
data.
3. HOP QDRP Validation Requirements
a. Data Validation Requirements for CY
2010
Validation, as discussed in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66871), is
intended to provide assurance of the
accuracy of the hospital abstracted data.
A data validation requirement was not
implemented for purposes of the CY
2009 annual payment update. In the CY
2009 OPPS/ASC proposed rule (73 FR
41546), we proposed to implement
validation requirements that would
apply beginning with the CY 2010
payment determinations.
Specifically, we proposed to
randomly select, per year, 50 patient
episodes of care that a hospital
successfully submitted to the OPPS
Clinical Warehouse for the relevant time
period and validate those data by
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requesting that the hospital send the
supporting medical record
documentation that corresponds to each
selected episode to a CMS contractor
within 30 calendar days of the date of
the request. The CMS contractor would
then independently reabstract quality
measure data elements from those
records, compare the reabstracted data
to the data originally submitted by the
hospital, and provide feedback to each
hospital on the results of the
reabstraction.
We proposed to validate data reported
beginning with January 2009 episodes of
care to be used for CY 2010 payment
determinations.
Unlike the IPPS RHQDAPU program,
where we validate data for each
participating hospital each quarter (for a
total of 20 cases per year), we proposed
to not validate data submitted by every
hospital participating in the HOP QDRP
every year. Instead, we proposed to
validate data from 800 randomly
selected hospitals (approximately 20
percent of all participating HOP QDRP
hospitals) each year. In other words,
only 800 participating HOP QDRP
hospitals will have their data validated
each year. However, we noted that,
because the 800 hospitals will be
selected randomly, every HOP QDRPparticipating hospital will be eligible
each year for validation selection. We
believe that the approach of validating
a larger number of cases per hospital
will produce a more reliable estimate of
whether that hospital’s data has been
submitted accurately and will provide
more reliable estimates of measure level
data.
For calculation of a hospital’s
validation score, we proposed that
percent agreement for each calculated
clinical measure rather than for the
individual data elements would be
calculated. Due to the contingent nature
of data elements comprising quality
measures, a mismatch of a few data
elements can result in the elimination of
subsequent data elements from the data
abstraction process. Thus, while the
quality measure calculation can match,
a low validation score based upon level
of data element match can occur.
Calculating match rates at the quality
measure level obviates the issue of low
validation scores at the data element
level and also validates the data as they
are publicly reported, that is, at the
measure level.
To receive the full OPPS payment rate
update, we proposed that hospitals must
pass our validation requirement of a
minimum of 80 percent reliability,
based upon our validation process, for
the designated time periods. In addition,
we proposed that an upper bound of 95
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percent confidence interval to measure
accuracy would be used.
The methodology we proposed to use
for calculating the confidence intervals
under the HOP QDRP is the
methodology currently utilized for the
IPPS RHQDAPU program. We anticipate
estimating the percent reliability based
upon a review of submitted
documentation and then calculating the
upper 95 percent confidence limit for
that estimate. If that upper limit is above
the required 80 percent reliability
threshold, we proposed to consider the
hospital’s data ‘‘validated’’ for payment
update purposes for CY 2010. We
proposed to use the design specific
estimate of the variance for the
confidence interval calculation, which,
in this case, is a single stage cluster
sample, with unequal cluster sizes. (For
reference, see Cochran, William G.
(1977) Sampling Techniques, John
Wiley & Sons, New York, chapter 3,
section 3.12.) Each sampled medical
record is considered as a cluster for
variance estimation purposes, as
documentation and abstraction errors
are believed to be clustered within
specific medical records.
We solicited comment on this
validation methodology, and stated our
belief that this approach is a reliable
process that is suitable for the HOP
QDRP. We also noted that we are
considering whether to propose a
similar approach for the RHQDAPU
program in future years. We also stated
that CMS continues to study approaches
to improve its quality data reporting
program, and aligning the RHQDAPU
program and HOP QDRP validation
approaches in the future is one possible
area of improvement.
After careful consideration of the
following comments received, and as
discussed more fully below, we are
adopting a voluntary test validation
program, the results of which will not
affect the CY 2010 payment update for
any hospital. Under this program, we
intend to conduct a test validation using
a random sample of approximately 800
hospitals, sampling 50 or less patient
episodes of care per hospital from data
submitted to the OPPS Clinical
Warehouse for the relevant time period.
Participation in the test validation for
CY 2010 is voluntary for hospitals, and
CMS encourages hospital participation
to learn about their data abstraction
accuracy.
Comment: Some commenters
supported the proposed validation
methodology contingent on the
incorporation of additional conditions.
Some commenters proposed that a test
validation be done for each hospital,
either for the first year of validation or
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prior to the first year using a smaller
sample, such as 5 patient episodes of
care per hospital, and done with
sufficient time so that hospitals could
learn from any mistakes. One
commenter suggested that this ‘‘test’’
validation be done using second quarter
2008 data. Other commenters
recommended that the first validation
done be considered a ‘‘test run,’’ tying
validation to payment determinations in
CY 2011.
Response: We thank the commenters
for these suggestions. We acknowledge
the need for hospitals to gain experience
with any validation process for HOP
QDRP data collection. After
consideration of the public comments
received, we are adopting a voluntary
test validation program, the results of
which will not affect the CY 2010
payment update for any hospital. Under
this program, we intend to conduct a
test validation using a random sample of
approximately 800 hospitals, sampling
50 or less patient episodes of care per
hospital from data submitted to the
OPPS Clinical Warehouse for the
relevant time period. We intend to
utilize data beginning with January 1,
2009 patient episodes of care. We will
validate those data by requesting that
the hospital voluntarily send the
supporting medical record
documentation that corresponds to each
selected episode-of-care to a CMS
contractor within 30 calendar days of
the date of the request. The CMS
contractor will independently reabstract
quality measure data elements from
those records, compare the reabstracted
data to the data originally submitted by
the hospital and provide feedback to
each sampled hospital on the results of
the reabstraction. We will utilize a
measure match approach. We intend to
calculate confidence intervals for data
validated for feedback purposed, but
will not require the passing of any
validation threshold for purposes of the
CY 2010 update. We intend to provide
additional feedback to all hospitals
participating in the HOP QDRP in a
manner that does not identify
individual hospitals or hospital
information in any way. Hospitals are
encouraged to participate in any
validation efforts undertaken so that the
information gleaned can be used toward
improving their and other hospitals’
data abstraction and collection
processes. We plan to propose a
validation program for the CY 2011
payment update in our CY 2010 OPPS/
ASC proposed rule.
Comment: Many commenters
supported the proposed validation
process and agreed with the approach of
validating the measure rates rather than
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the data element rate. The commenters
cited various reasons for supporting the
proposed validation process, stating that
it was a reasonable approach to ensure
accuracy, would provide a more
accurate picture of performance, and
was an improvement of the inpatient
validation process. One commenter
agreed with the proposed validation
approach using a sample of hospitals as
long as lessons learned are shared with
hospitals in a timely manner. Some
commenters expressed appreciation for
providing time for hospitals to
implement quality measures and work
on their performance data before
validation and public reporting occur.
Some commenters requested more
detail with regard to the selection
process for the sampled hospitals, the
notification process, or the actual
validation process. Some commenters
urged that the selection process be
totally random and unbiased. Another
commenter stated that hospitals should
also continue to validate their own data
for overall accuracy and for abstractor
accuracy because the integrity of the
data is critical. Several commenters
recommended that the timeframe to
provide the information for validation
be established as 60 days rather than 30
days to allow additional time to retrieve,
duplicate, and submit records. A few
commenters believed that hospitals
selected for validation in one year be
excluded from the validation pool for
some specified time, for example, 1 to
2 years, or should be selected no more
than twice in 5 years based upon a
criteria, such as there being no
identified errors or passing at the 80percent level with those not meeting the
criteria being subject to potential
selection again the following year. One
commenter believed that, for there to be
no bias in the selection methodology,
statistically speaking, a hospital should
not be selected 2 years in a row. Some
commenters asked that CMS indicate
how the proposed validation approach
would be applied for measures
calculated from claims data. Many
commenters recommended using a
similar validation approach for the
RHDQAPU program. Some commenters
recommended that the proposed HOP
QDRP approach be used for all Medicare
quality measure data reporting
programs, including the PQRI.
One commenter did not agree with
validation of a larger number of cases,
though all hospitals are eligible. The
commenter was concerned that if not all
hospitals are validated on a regular
basis, this could lead to lower
standards, that 50 charts would unduly
burden smaller hospitals, and supported
the first alternative approach for
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validation requiring 20 charts per year
for each hospital. Commenters
expressed concerns about current
factors that could adversely affect
validation. One concern was that CPT
and E&M codes were being required to
be part of documentation required for
submission for validation. Another
concern was that the criteria for
inclusion do not take into account
cancelled procedures, which the
commenters indicated was an issue
because HOP QDRP abstraction does not
allow for the collection of CPT coding
modifiers, resulting in these records
failing the measure criteria. Some
commenters expressed concern that
hospitals risk the potential to appear
worse at the quality measure related to
prophylactic antibiotic prior to incision
than actually exists and would lose their
full payment update. Commenters
expressed concerns regarding the 80percent reliability threshold from chart
validation. Some commenters stated
that the 80 percent threshold was too
stringent, urging a lower level set. Some
of these commenters stated that
statistical analysis of collected data
should be done to assess if 80 percent
is an objective number for passing the
validation process. Other commenters
asked that CMS include more
information about the methodology and
how it would be applied in this final
rule with comment period.
Response: We thank those
commenters that supported our
proposed validation method. As
discussed above, we are implementing a
voluntary test validation program in CY
2009, the results of which will not affect
the CY 2010 payment update for any
hospital. We will consider all of the
commenters’ suggestions and concerns
when we propose a HOP QDRP
validation program for the CY 2011
payment update in our CY 2010 OPPS/
ASC proposed rule and when we
propose RHQDAPU program validation
requirements in the FY 2010 IPPS
proposed rule.
After consideration of the public
comments received and as discussed
above, we are not finalizing the
proposed validation method to be used
toward CY 2010 payment decisions. We
acknowledge the need for hospitals to
gain experience with any validation
process for HOP QDRP data collection.
In light of the public comments
received, we are voluntary test
validation program in CY 2009, the
results of which will not affect the CY
2010 payment update for any hospital.
Under this program, we intend to
conduct a test validation using a sample
of approximately 800 hospitals,
sampling 50 or less patient episodes of
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care per hospital from data submitted to
the OPPS Clinical Warehouse for the
relevant time period. We intend to
utilize data beginning with January 1,
2009 patient episodes of care. We will
validate those data by requesting that
the hospital voluntarily send the
supporting medical record
documentation that corresponds to each
selected episode-of-care to a CMS
contractor within 30 calendar days of
the date of the request. The CMS
contractor will independently reabstract
quality measure data elements from
those records, compare the reabstracted
data to the data originally submitted by
the hospital and provide feedback to
each sampled hospital on the results of
the reabstraction. We will utilize a
measure match approach. We will not
require the passing of any validation
threshold for purposes of the CY 2010
update, but will calculate these values
as part of feedback supplied to hospitals
which participate in validation efforts.
We intend to provide feedback to all
hospitals participating in the HOP
QDRP in a manner that does not identify
individual hospitals or hospital
information in any way. Hospitals are
encouraged to participate in any
validation efforts undertaken so that the
information gleaned can be used toward
improving their and other hospitals’
data abstraction and collection
processes. We plan to propose a
validation program for the CY 2011
payment update in our CY 2010 OPPS/
ASC proposed rule.
b. Alternative Data Validation
Approaches for CY 2011
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41546), we also solicited
comments on three alternative
validation methodologies. We are
considering whether we could apply
one of these methodologies to validate
data as part of our CY 2011 payment
determination. The first alternative
approach would be to validate data from
all participating HOP QDRP hospitals,
as is currently done under the
RHQDAPU program. Under this
approach, data validation would be
done on a random sample of 5 records
per quarter (20 records per year) per
hospital.
A second alternative approach would
be to select targeted hospitals based on
criteria designed to measure whether
the data being reported by them raises
a concern regarding their accuracy. We
welcomed suggestions for criteria to be
used for targeting hospitals for
validation. Either percent agreement at
the clinical measure level or the data
element level (currently used for the
RHQDAPU program) could be
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calculated for the validation score.
Because few data have been collected
under the HOP QDRP at this point, we
are considering this approach for
possible use in future years.
A third alternative approach would
involve some combination of the two
approaches discussed above.
Comment: Many commenters
disagreed with validating data from all
participating HOP QDRP hospitals
following the process currently used
under the RHQDAPU program. The
commenters stated that a measure match
rate approach as proposed was
preferable.
Response: We thank the commenters
for expressing their views.
Comment: Some commenters
supported the second and third
alternative methods proposed as also
effective approaches for data validation
and suggested criteria for targeting. In
support of the third alternative method,
commenters stated that this would be an
efficient use of both hospital and CMS
resources and would assure that all
participating HOP QDRP hospital data
are valid. Other commenters expressed
opposition to use of criteria to target
hospitals for validation or the inability
to comment due to lack of detail.
Response: We thank these
commenters for their views on the use
of criteria for targeting hospitals for
validation purposes. As we stated, these
additional validation approaches were
for consideration in future years and
that we did not yet have criteria for
targeting. We will consider the
suggested criteria in future validation
planning in future rulemaking. As
discussed in section 3(a) of the HOP–
QDRP portion of this final rule, we will
be conducting a test validation program
this year and the results of the
validation will not affect the CY 2010
annual payment update.
Comment: One commenter stated that
some vendors provide data validation
services to hospitals and suggested that
CMS entertain a formal relationship
with such entities rather than being
solely responsible for national data
validation.
Response: We thank the commenter
for this information.
We appreciate all the public
comments received regarding the
alternate validation approaches
proposed and will take them into
account as we develop validation
proposals for CY 2011.
F. Publication of HOP QDRP Data
Section 1833(t)(17)(E) of the Act
requires that the Secretary establish
procedures to make data collected under
this program available to the public and
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to report quality measures of process,
structure, outcome, patients’
perspectives of care, efficiency, and
costs of care that relate to services
furnished in outpatient settings in
hospitals on the CMS Web site. We
intend to make the information
collected under the HOP QDRP public
in CY 2010 by posting it on the CMS
Web site. Participating hospitals will be
granted the opportunity to review this
information as we have recorded it
before the information is published.
CMS requires hospitals to sign and
submit a Notice of Participation form in
order to participate in the HOP QDRP.
Hospitals signing this form agree that
they will allow CMS to publicly report
the quality measures as required by the
HOP QDRP.
All hospitals have a unique CCN,
whereas a single hospital may have
multiple National Provider Identifiers
(NPI), another CMS identifier. In the CY
2009 OPPS/ASC proposed rule, we
proposed for CY 2010 that hospitals
sharing the same CCN must combine
data collection and submission across
their multiple campuses for all clinical
measures for public reporting purposes
(73 FR 41546). We also proposed to
publish quality data by CCN under the
HOP QDRP; however, we will note on
our Web site where the publicly
reported measures combine results from
two or more hospitals. This approach is
consistent with the approach taken
under the IPPS RHQDAPU program.
Comment: Several commenters agreed
with the proposal that hospitals with
the same CCN have their data publicly
reported as one facility (with a notation
when data from more than one hospital
is combined). Some of these
commenters supported the proposal that
they believed that the proposal would
add important alignment of clinical
reporting with financial reporting.
Response: We thank the commenters
for their support of our proposal to
report data by CCN. We proposed to
report data by CCN for several reasons.
First, the unit affected by the OPPS
annual payment update subject to
meeting the requirements under the
HOP QDRP is handled by CCN; it is not
separated by NPI or other individual
facility identifier. Second, hospitals
meet survey and certification
requirements by CCN, again not by any
other individual facility identifier.
Third, the additional Medicare
identifier for facilities, the NPI, is not a
uniform identifier; the NPI can refer to,
for example, an individual clinic, a
provider group, or a hospital. Fourth, as
stated by several commenters, reporting
by CCN would align the reporting of
quality of care data with financial data.
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For these reasons, at this time, we
consider the CCN as the payment and
hospital certification identifier
representative of entire hospital entity
to be the appropriate identifier for
public reporting.
Comment: A few commenters urged
CMS to identify a means to report each
facility’s performance in order to
provide accurate information to
consumers trying to assess the quality of
a given hospital.
Response: For reasons discussed
above, we believe that the CCN is
currently the most appropriate identifier
for public reporting. However, we are
aware that this aspect of shared CCNs is
a serious and complex problem and we
are continuing to work toward a
resolution of the problem that
accommodates both consumer and
hospital payment needs. We understand
that there is not always a one-to-one
relationship between the NPI and the
CCN upon which the HOP QDRP is
based. At this time, we are trying to
assess the extent of this problem. In
terms of determining eligibility of an
HOPD’s full annual payment update, we
have addressed this by maintaining an
NPI to CCN crosswalk. For CY 2010
public reporting, data would be publicly
reported on the CMS Web site by CCN,
but we intend to indicate instances
where data from two or more hospitals
are combined.
Comment: Numerous commenters
expressed support for public reporting
of the hospital outpatient measures, and
recommended that the hospital
outpatient measures be added to the
existing Hospital Compare tool. The
commenters also recommended
evaluation of the HOP QDRP data and
consumer testing before any information
is released publicly to ensure that
information provided to consumers and
physicians is not misleading. One
commenter expressed concern over the
possibility of less than 12 months of
data being used for public reporting,
and recommended that all measures
have a minimum of 12 months
implementation before they are eligible
for inclusion in public reporting and the
validation process affecting hospitals’
annual payment updates.
Response: We will consider using
Hospital Compare for the public
reporting of HOPD data. However, no
decision has been made at this time. As
part of our measure maintenance
contract, we continue to evaluate the
measure specifications and measures
data. We conduct consumer testing on a
regular basis to inform decisions about
Web site display, language and
navigation. We will implement public
reporting for outpatient measures in CY
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2010, but have not made any decisions
about what quarters will be reported
when they are reported. In the case of
our other public reporting timeframes,
data reported in March 2010 are to be
based upon 3Q08 through 2Q09, and
data reported in December 2010 are to
be based upon 2Q09 through 1Q10.
However, we may also choose to report
less than a full 12 months when we
begin public reporting under HOP
QDRP.
Comment: One commenter believed
that, for providers and consumers, the
information presented on Hospital
Compare is confusing, and it is difficult
to decipher which information is
representative of the total population or
only the Medicare population. The
commenter stated that Medicare claimsbased information under the HOP QDRP
will continue to add to the confusion of
what is representative of the total
population served by the hospital versus
which is only representative of the
Medicare population.
Response: We understand that this is
a problem and would prefer to have data
that represent the entire population, that
is, all-payer, for all measures.
Unfortunately, this is not possible at
this time. We have access only to
Medicare administrative (claims and
enrollment) data that are used for the
outcome measures (30-day riskstandardized mortality and newly
adopted readmission rates) reported on
Hospital Compare. We are interested in
obtaining all-payer administrative data,
but there are infrastructure and other
challenges. Until we have access to allpayer administrative data, we make
every effort to label the data sources on
Hospital Compare so that users
understand that the underlying
populations differ for some measures.
After consideration of the public
comments received and as noted in the
above responses, in this rule with
comment period, we are finalizing our
proposal that hospitals sharing the same
CCN must combine data collection and
submission across their multiple
campuses for all HOP QDRP measures.
We also are finalizing our proposal to
publicly report HOP QDRP measures by
CCN with notation on the Web site
where the publicly reported measures
combine results from two or more
hospitals. Participating hospitals will be
granted the opportunity to review this
information as we have recorded it
before the information is published. We
intend to publicly report on our Web
site hospital outpatient measures data in
CY 2010 but have not made a decision
regarding what quarters will be reported
or when these data will be reported. In
addition, we will continue to explore
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the use of Hospital Compare and other
locations for the public reporting of
HOPD data. We anticipate
communicating our decision about these
reporting issues in the CY 2010 OPPS/
ASC proposed rule.
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G. HOP QDRP Reconsideration and
Appeals Procedures
When the IPPS RHQDAPU program
was initially implemented, it did not
include a reconsideration submission
process for hospitals. Subsequently, we
received many requests for
reconsideration of those payment
decisions and, as a result, established a
process by which participating hospitals
would submit requests for
reconsideration. We anticipated similar
concerns with the HOP QDRP and,
therefore, in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66875) we stated our intent to
implement for the HOP QDRP a
reconsideration process modeled after
the reconsideration process we
implemented for the IPPS RHQDAPU
program. In the CY 2009 OPPS/ASC
proposed rule (73 FR 41547), we
proposed a mandatory reconsideration
and appeals process that would apply to
the CY 2010 payment decisions. Under
our proposal, in order to receive
reconsideration of a CY 2010 payment
decision, the hospitals must—
(1) Submit to CMS, via QualityNet, a
Reconsideration Request form that will
be made available on the QualityNet
Web site. This form shall contain the
following information:
• Hospital Medicare ID number
known as the CCN.
• Hospital Name.
• CMS-identified reason for failure
(as provided in any CMS notification of
failure to the hospital).
• Hospital basis for requesting
reconsideration. This must identify the
hospital’s specific reason(s) for
believing it met the HOP QDRP program
requirements and should receive a full
annual payment update.
• CEO contact information, including
name, e-mail address, telephone
number, and mailing address (must
include physical address, not just a post
office box).
• A copy of all material that the
hospital submitted to CMS in order to
receive the full payment update for the
year that is the subject of the
reconsideration request. Such material
would include, but not be limited to, the
applicable Notice of Participation form,
quality measure data that the hospital
submitted, and data that the hospital
submitted in response to a validation
request.
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• QualityNet System Administrator
contact information, including name, email address, telephone number, and
mailing address (must include physical
address, not just the post office box).
• The request must be signed by the
hospital’s CEO.
(2) Following receipt of a request for
reconsideration, CMS will—
• Provide an e-mail
acknowledgement, using the contact
information provided in the
reconsideration request, to the CEO and
the QualityNet Administrator notifying
them that the hospital’s request has
been received.
• Provide a formal response to the
hospital CEO, using the contact
information provided in the
reconsideration request, notifying the
hospital of the outcome of the
reconsideration process.
If a hospital is dissatisfied with the
result of a HOP QDRP reconsideration
decision, the hospital may file a claim
under 42 CFR Part 405, Subpart R
(PRRB appeal).
Comment: Several commenters
supported hospital appeals and
reconsideration processes and urged
CMS to have these processes in place at
the same time as the validation process
and that strict timelines be defined so
that the public has access to information
as quickly as possible.
Response: We thank these
commenters for their support of hospital
appeals and reconsideration processes.
We plan to complete any CY 2009
reconsideration reviews and
communicate the results of these
determinations within 60 to 90 days
following the date of the request for
reconsideration. If a hospital is
dissatisfied with the result of this
reconsideration, the hospital may file a
claim under the PRRB process with its
associated timelines. As discussed
previously, we will be conducting a
voluntary test validation program using
data from services beginning January 1,
2009; there is no validation requirement
to be met to be considered toward
payment decisions affecting CY 2010
payment. The results of this test
validation program will not affect the
CY 2010 payment update for any
hospital.
Comment: One commenter stated that
the PRRB process under the RHQDAPU
program upon which the proposed
reconsideration and appeals process for
the HOP QDRP is modeled has been
unduly long and hospitals do not learn
of CMS’ decision on reconsideration
requests in a timely manner. The
commenter urged CMS to revise the
process to produce more timely
decisions. Another commenter
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68779
recommended that an appeal process be
at least 90 days due to the time involved
to investigate and respond.
Response: We interpret the comment
to refer to the proposed HOP–QDRP
reconsideration process. We believe that
there are competing interests of
timeliness and completeness in any
reconsideration and appeals process.
We agree that hospitals need to know
the results of any reconsideration and
appeals process as quickly as possible.
As stated above, we plan to complete
the reconsideration process within 60 to
90 days following the date of the request
for reconsideration. Based on previous
experience with the RHQDAPU
reconsideration process, we believe that
this timeframe is necessary to
adequately review the estimated volume
of HOP–QDRP reconsideration cases. If
a hospital is dissatisfied with the result
of this reconsideration, the hospital may
file a claim under the PRRB process,
with its associated timelines (see 42
CFR Part 405, Subpart R (PRRB appeal)).
After consideration of the public
comments received, we are adopting as
final the HOP QDRP reconsideration
and appeals process as proposed. We
believe that any CY 2009
reconsideration review will require 60
to 90 days for completion based upon
experience with the RHQDAPU program
and we plan to communicate all
determinations within 60 to 90 days
following the request for
reconsideration.
H. Reporting of ASC Quality Data
As discussed above, section 109(b) of
the MIEA–TRHCA amended section
1833(i) of the Act by redesignating
clause (iv) as clause (v) and adding
sections 1833(i)(2)(D)(iv) and1833(i)(7)
to the Act. These amendments authorize
the Secretary to require ASCs to submit
data on quality measures and to reduce
the annual payment update in a year by
2.0 percentage points for ASCs that fail
to do so. These provisions permit, but
do not require, the Secretary to require
ASCs to submit such data and to reduce
any annual increase for noncompliant
ASCs.
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66875), we
indicated that we intended to
implement the provisions of section
109(b) of the MIEA–TRHCA in a future
rulemaking. While we believe that
promoting high quality care in the ASC
setting through quality reporting is
highly desirable and fully in line with
our efforts under other payment
systems, we believed that the transition
to the revised payment system in CY
2008 posed such a significant challenge
to ASCs that it would be most
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appropriate to allow some experience
with the revised payment system before
introducing other new requirements. We
believed that implementation of quality
reporting in CY 2008 would require
systems changes and other
accommodations by ASCs, facilities
which do not have prior experience
with quality reporting as hospitals
already have for inpatient quality
measures, at a time when they are
implementing a significantly revised
payment system. We believed that our
CY 2008 decision to implement quality
reporting for HOPDs prior to
establishing quality reporting for ASCs
would allow time for ASCs to adjust to
the changes in payment and case-mix
that are anticipated under the revised
payment system. We would also gain
experience with quality measurement in
the ambulatory setting in order to
identify the most appropriate measures
for quality reporting in ASCs prior to
the introduction of the requirement in
ASCs.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41547), we noted that we
continue to believe that promoting high
quality care in the ASC setting through
quality reporting is highly desirable and
fully in line with our efforts under other
payment systems. However, we
continue to have the concerns outlined
above for CY 2009 and, therefore, we
intend to implement the provisions of
section 109(b) of the MIEA–TRHCA in
a future rulemaking. We invited public
comment on this deferral of quality data
reporting for ASCs and invited
suggestions for quality measures geared
toward the services provided by ASCs.
We also sought comment on potential
reporting mechanisms for ASC quality
data, including electronic submission of
these data.
Comment: Many commenters agreed
with the CMS proposal to defer quality
data reporting from ASCs until a later
rulemaking. Some of the commenters
agreed with CMS’ assessment regarding
the need to complete implementation of
the revised ASC payment system before
implementing quality measure data
reporting.
Response: We thank these
commenters for their support of our
decision to defer quality data reporting
from ASCs until a later rulemaking.
Comment: One commenter disagreed
with CMS’ assessment regarding the
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revised ASC payment system posing
ongoing challenges to such a magnitude
as to prevent the reporting of quality of
care data in 2009.
Response: We thank the commenter
for this view, but we still believe that
we should not increase burdens on
ASCs at this time with a new data
reporting system while implementing a
revised payment system.
Comment: Several commenters
supported measuring the quality of
services provided in the ASC setting.
Some commenters urged the
implementation of a quality reporting
system for ASCs as soon as possible.
Some commenters stated that such
reporting with similar measures would
allow the same level of transparency for
both hospitals and ASCs. Some
commenters suggested that reporting
begin in CY 2009 on the five NQFendorsed quality measures that were
developed by the ASC Quality
Collaboration. Some commenters stated
that selected measures should include
an electronic data submission
mechanism. Several commenters
expressed concerns of the potential data
collection burden for ASCs; some of
these commenters suggested the
administrative claims approach to be
the most feasible for ASCs to submit
quality of care data. One commenter
recommended that ASCs not be required
to report the same quality data as that
as HOPDs due to the nature of their
services.
Response: We will consider these
comments and suggestions for future
implementation of ASC quality measure
data.
Comment: One commenter suggested
that a mandatory reconsideration and
appeals process provided that data
under reconsideration or appeal not be
publicly displayed until resolution of
such reconsideration or appeal for ASC
reporting and that an appropriate
method of applying the required
reduction to payments for ASCs that do
not meet requirements be devised.
Response: We have not proposed any
reconsideration and appeals process for
ASC quality measure reporting.
However, we appreciate these
comments and suggestions for future
implementation of a reconsideration
and appeals process for ASC quality
measure data reporting and will
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consider them for future
implementation.
After consideration of the public
comments received, we continue to
believe that promoting high quality care
in the ASC setting through quality
reporting is highly desirable and is fully
in line with our efforts under other
payment systems. We intend to
implement quality measures in the ASC
setting in a future rulemaking.
I. FY 2010 IPPS Quality Measures Under
the RHQDAPU Program
In the FY 2009 IPPS proposed rule (73
FR 23651), we noted that, to the extent
that the proposed quality measures for
FY 2010 under the RHQDAPU program
had not already been endorsed by a
consensus building entity such as the
NQF, we anticipated that they would be
endorsed prior to the time that we
issued the FY 2009 IPPS final rule. We
stated that we intended to finalize the
FY 2010 RHQDAPU program measure
set for the FY 2010 payment
determination in the FY 2009 IPPS final
rule, contingent upon the endorsement
status of the proposed measures.
However, we stated that, if a measure
had not received NQF endorsement by
the time we issued the FY 2009 IPPS
final rule, we intended to finalize that
measure for the RHQDAPU program
measure set in this CY 2009 OPPS/ASC
final rule with comment period if the
measure received endorsement prior to
the time we issued this CY 2009 OPPS/
ASC final rule with comment period (73
FR 23651). We previously have finalized
some measures in this manner when
endorsement of a measure is expected
by the publication date of an upcoming
rule (72 FR 66876). We requested public
comment on these measures in the FY
2009 IPPS proposed rule and received
comments on these measures during the
FY 2009 IPPS proposed rule public
comment period. We responded to these
comments in the FY 2009 IPPS final
rule (73 FR 48606).
In the FY 2009 IPPS final rule (73 FR
48611), we set out, as listed below, two
measures which had not yet received
NQF endorsement, and stated that we
intended to adopt for the FY 2010
RHQDAPU program measure set in this
CY 2009 OPPS/ASC final rule with
comment period if the measures receive
endorsement from a national consensusbased entity such as NQF:
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PROPOSED QUALITY MEASURES TO BE FINALIZED IN THE CY 2009 OPPS/ASC FINAL RULE WITH COMMENT PERIOD
[Contingent on endorsement by national consensus-building entity]
Readmission Measures (Medicare Patients)
• AMI 30–Day Risk Standardized Readmission Measure (Medicare patients).
• Pneumonia (PN) 30–Day Risk Standardized Readmission Measure (Medicare patients).
NQF has endorsed the two measures
listed above and we are finalizing the
Risk-Standardized Readmission
measures (Medicare patients) for AMI
and Pneumonia to be included in the
CY 2010 RHQDAPU program measure
set.
XVII. Healthcare-Associated Conditions
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A. Background
As noted in its landmark 1999 report
‘‘To Err is Human: Building a Safer
Health System,’’ the Institute of
Medicine found that medical errors are
a leading cause of morbidity and
mortality in the United States. Total
national costs of these errors due to lost
productivity, disability, and health care
costs were estimated at $17 billion to
$29 billion.2 As one approach to
combating healthcare-associated
conditions, in 2005, Congress
authorized CMS to adjust Medicare IPPS
hospital payments to encourage the
prevention of these conditions. Section
1886(d)(4)(D) of the Act (as added by
section 5001(c) of the Deficit Reduction
Act (DRA) of 2005, Public Law 109–171)
required the Secretary to select by
October 1, 2007, at least two conditions
that are: (1) High cost, high volume, or
both; (2) assigned to a higher paying
DRG when present as a secondary
diagnosis; and (3) could reasonably have
been prevented through the application
of evidence-based guidelines. CMS has
titled this initiative Hospital-Acquired
Conditions (HAC) and Present on
Admission (POA) Indicator Reporting.
Beginning October 1, 2008, Medicare
cannot assign an inpatient discharge
that includes only the selected
conditions to a higher-paying MS–DRG
unless these conditions were present on
admission. Beginning October 1, 2007,
CMS required hospitals to begin
submitting information on Medicare
inpatient hospital claims specifying
whether diagnoses were present on
admission. Through FY 2008 and FY
2009 IPPS rulemaking, CMS selected 10
categories of hospital-acquired
conditions (72 FR 47202 through 47218
and 73 FR 23547 through 23562).
2 Institute
of Medicine: To Err Is Human: Building
a Safer Health System, November 1999. Available
at: https://www.iom.edu/Object.File/Master/4/117/
ToErr-8pager.pdf.
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The preventable hospital-acquired
conditions payment provision at section
1886(d)(4)(D) of the Act is part of an
array of Medicare value-based
purchasing (VBP) tools that CMS is
using to promote increased quality and
efficiency of care. These tools include
measuring performance, using payment
incentives, publicly reporting
performance results, applying national
and local coverage policy decisions,
enforcing conditions of participation,
and providing direct support for
providers through QIO activities. CMS’
application of VBP tools through
various initiatives is transforming
Medicare from a passive payer to an
active purchaser of higher-value health
care services. CMS is applying these
strategies across the continuum of care
for Medicare beneficiaries.
B. Expanding the Principles of the IPPS
Hospital-Acquired Conditions Payment
Provision to the OPPS
As discussed in the CY 2009 OPPS/
ASC proposed rule (73 FR 741548), the
principle of Medicare not paying more
for the preventable hospital-acquired
conditions during inpatient stays paid
under the IPPS could be applied more
broadly to other Medicare payment
systems for conditions that occur or
result from health care delivered in
other settings. Other potential settings of
care include HOPDs, ASCs, SNFs, home
health care, end-stage renal disease
(ESRD) facilities, and physician
practices; therefore, we will refer to
conditions that occur in settings other
than the inpatient hospital setting as
‘‘healthcare-associated conditions’’ and
continue to refer to those that occur in
the inpatient setting as ‘‘hospitalacquired conditions.’’ Implementation
of this concept would be different for
each setting, as each Medicare payment
system is different. In addition, selected
conditions must be reasonably
preventable through the application of
evidence-based guidelines and this
might vary for candidate conditions
across the various care settings.
However, CMS is committed to aligning
incentives across settings of care for all
of CMS’ VBP initiatives, including the
hospital-acquired conditions payment
provision.
The risks of preventable medical
errors leading to the occurrence of
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healthcare-associated conditions are
likely to be high in the outpatient
setting, given the large number of
encounters and exposures that occur in
these settings. Approximately 530,000
preventable drug-related injuries are
estimated to occur each year among
Medicare beneficiaries in outpatient
clinics.3 These statistics clearly point to
the significant magnitude of the
problem of healthcare-associated
conditions in outpatient settings. Recent
trends have shown a shift in services
from the inpatient setting to the HOPD,
and we expect the occurrence of
healthcare-associated conditions
stemming from outpatient care to grow
directly as a result of this shift in sites
of service.
For these reasons, we believe the
HOPD, where a broad array of services
covered and paid under the OPPS are
provided, could be another setting for
Medicare to extend the concept of not
paying more for preventable healthcareassociated conditions that occur as a
result of care provided during an
encounter. Hospitals provide a range of
services under the OPPS that may
overlap or precede the inpatient
activities of the hospital, including
many surgical procedures and
diagnostic tests that are commonly
performed on both hospital inpatients
and outpatients. Similarly, individuals
who are eventually admitted as hospital
inpatients often initiate their hospital
encounter in the HOPD, where they
receive clinic or emergency department
visits or observation care that precede
their inpatient hospital admission. In
addition, like the IPPS, the OPPS is also
subject to the ‘‘pay-for-reporting’’
provision that affects the hospital
annual payment update, by the
authority of section 1833(t)(17) of the
Act (as amended by section 109(a) of the
MIEA–TRHCA). Under this authority,
hospitals report quality data for
specified performance measures related
to hospital outpatient services under the
HOP QDRP. Hospitals that fail to meet
the reporting requirements established
by CMS for the payment update year
receive a reduced payment update that
3 Asplen, P., Wolcott, J., Bootman, J.L.,
Cronenwett, L.R. (editors): Preventing Medication
Errors: Quality Chasm Series, The National
Academy Press, 2007. Available at: https://
www.nap.edu/catalog.php?record_id=11623.
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is applicable to OPPS payments for most
services furnished by hospitals in
outpatient settings in the succeeding
year. The HOP QDRP is further
discussed in section XVI. of this final
rule with comment period.
As noted in the CY 2009 OPPS/ASC
proposed rule (73 FR 41548), we did not
propose new Medicare policy in this
discussion of healthcare-associated
conditions as they relate to the OPPS.
Instead, we solicited public comments
on options and considerations,
including statutory authority, related to
extending the IPPS hospital-acquired
conditions payment provision for
hospitals to the OPPS. As indicated in
the proposed rule, we understand that
there would be challenges in expanding
the IPPS provision to other settings paid
under different Medicare payment
systems, and we specifically invited
public comments that present ideas and
models for extending the principle
behind the IPPS provision to the OPPS.
To stimulate reflection and creativity,
we presented discussion in the
following areas:
• Criteria for possible candidate
OPPS conditions
• Collaboration process
• Potential OPPS healthcareassociated conditions
• OPPS infrastructure and payment
for encounters resulting in healthcareassociated conditions
1. Criteria for Possible Candidate OPPS
Conditions
We have applied the following
statutory criteria to the analysis of
candidate inpatient conditions for the
IPPS hospital-acquired conditions
payment provision:
• Cost or Volume—Medicare data
must support that the selected inpatient
conditions are high cost, high volume,
or both.
• Complicating Conditions (CC) or
Major Complication Conditions
(MCC)—Selected inpatient conditions
must be represented by ICD–9–CM
diagnosis codes that clearly identify the
condition, are designated as a CC or an
MCC, and result in the assignment of
the case to an MS–DRG that has a higher
payment when the code is reported as
a secondary diagnosis. That is, selected
inpatient conditions must be a CC or an
MCC that would, in the absence of this
provision, result in assignment to a
higher paying MS–DRG.
• Evidence-Based Guidelines—
Selected inpatient conditions must be
reasonably preventable through the
application of evidence-based
guidelines. By reviewing guidelines
developed by professional
organizations, academic institutions,
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and other entities such as the Healthcare
Infection Control Practices Advisory
Committee (HICPAC), we evaluated
whether guidelines are available that
hospitals should follow to prevent the
condition from occurring in the
hospital.
• Reasonably Preventable—Selected
inpatient conditions must be reasonably
preventable through the application of
evidence-based guidelines.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41549), we specifically
sought public comment on the
applicability of these criteria to the
selection of candidate healthcareassociated conditions for the OPPS. We
indicated in the proposed rule that we
were specifically interested in public
comment on the reasonably preventable
criterion in the HOPD setting. As we
explained in that rule, there are
significant infrastructure differences
between the IPPS and the OPPS, as
discussed further in section XVII.B.4. of
this final rule with comment period.
Thus, in the proposed rule, we
expressed interest in receiving public
comments generally and specifically
those that would help answer the
following questions:
• Are there examples within the
context of the reporting of ICD–9–CM
codes for diagnoses and HCPCS codes
for services on OPPS claims that could
be used to identify where a higher
payment for a hospital outpatient
encounter would result from a
healthcare-associated condition?
• Are there examples of evidencebased guidelines related to the
prevention of high volume or high cost
conditions, or both, that are sufficiently
rigorous to permit selection of
healthcare-associated conditions that
could reasonably have been prevented
in the HOPD setting?
• What other criteria should be
considered in the selection of
healthcare-associated conditions for the
OPPS?
2. Collaboration Process
CMS has worked with public health
and infectious disease experts from the
Centers for Disease Control and
Prevention (CDC) to select hospitalacquired conditions, including
infections, that meet the statutory
criteria under section 1886(d)(4)(D) of
the Act for application in the hospital
inpatient setting. CMS and CDC have
also collaborated to develop the process
for submission of a present on
admission (POA) indicator on the
inpatient claim for each diagnosis. We
would expect to continue our
collaboration with CDC to examine the
relevance and applicability of a POA
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indicator in the HOPD setting, and also
to utilize its expertise in chronic
diseases in the selection of candidate
healthcare-associated conditions for the
OPPS. In addition, we would expect to
seek collaboration with the Agency for
Healthcare Research and Quality
(AHRQ) to utilize its expertise in patient
safety. We would also expect to seek
collaboration with other Federal
agencies and with medical specialty
societies. In the CY 2009 OPPS/ASC
proposed rule, we specifically solicited
public comment regarding a
collaborative process for the
identification of candidate healthcareassociated conditions for hospital
outpatient services and a mechanism for
public input from stakeholders.
3. Potential OPPS Healthcare-Associated
Conditions
The FY 2008 IPPS final rule (72 FR
47202 through 47218) and the FY 2009
IPPS final rule with comment period (73
FR 48471 through 48491) provided a
detailed analysis supporting the
selection of the hospital-acquired
conditions. In the CY 2009 OPPS/ASC
proposed rule (73 FR 41550), we
solicited public comments on the
following conditions that have been
selected as inpatient hospital-acquired
conditions:
• Object left in during surgery;
• Air embolism;
• Blood incompatibility; and
• Falls and trauma fractures,
dislocations, intracranial injuries,
crushing injuries, and burns.
We observed that the characteristics
of these conditions are such that they
would be relatively straightforward to
incorporate in an OPPS healthcareassociated conditions payment
provision. For example, these events
would likely occur and be coded in the
timeframe of an OPPS encounter
reported on a single claim and
determination of the occurrence of these
events would probably not require
sequential evaluation of claims over
time. We specifically requested public
comment on the potential for
considering these conditions as
healthcare-associated conditions for the
HOPD.
We acknowledged that reporting even
this short list of healthcare-associated
conditions as a secondary diagnosis on
a claim in order to attribute their
occurrence to the HOPD encounter
might present problems for hospitals,
particularly for the conditions resulting
from falls or trauma. Thus, we
specifically requested public comment
on whether or not we could assume that
these conditions reported as secondary
diagnoses on OPPS claims would have
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developed during the encounter or
whether the reporting of POA indicator
information should be required under
the OPPS (and perhaps under every
Medicare payment system) because POA
data increase the utility of claims for
analyzing the characteristics of a
clinical encounter. More generally, we
explained that we recognize that
patients may be cared for by different
providers across settings and that the
provider caring for certain types of
complicating conditions may not have
provided the healthcare services that led
to the healthcare-associated condition.
Therefore, we indicated in the CY 2009
OPPS/ASC proposed rule (73 FR 41550)
that we welcomed broad public
comment on the approaches and
challenges related to the appropriate
attribution of different types of
healthcare-associated conditions
encountered in the HOPD. Moreover, we
also understand that patients differ in
their severity and complexity of disease,
as well as their likelihood of following
medical recommendations. Therefore,
we specifically requested public
comment on how to account for patientspecific risk factors that would increase
the likelihood of the occurrence of
healthcare-associated conditions (73 FR
41550).
Ultimately, payment policy for
healthcare-associated conditions under
the OPPS should fully address the broad
range of clinical services in the HOPD
where preventable healthcare-associated
conditions may harm Medicare
beneficiaries. Therefore, we solicited
public comment on additional
candidate conditions that could have
applicability to the OPPS, beyond those
mentioned above that would be
extensions from the IPPS final or
proposed hospital-acquired conditions.
We indicated that we were particularly
interested in recommendations of
preventable healthcare-associated
conditions that are likely to occur with
frequency in the HOPD (and other
outpatient settings) and that may be
associated with significant harm, such
as adverse drug events related to
medication errors or other
complications of care for which we
either currently have no diagnosis codes
or where correct coding for such
occurrences has not been clearly
defined.
External Cause-of-Injury coding (Ecoding) may represent a mechanism for
coding clarity for preventable
healthcare-associated conditions such as
adverse drug events related to
medication errors. The CDC has been
interested in further developing and
expanding strategies to improve Ecoding. A recent CDC Workgroup report
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discussed the importance and value of
using high-quality E-coding.4
Workgroup recommendations included
enhancing the completeness and
accuracy of E-coding and making Ecoded data more useful for injury
surveillance and prevention activities
(including medical errors) at the local,
State, and Federal levels.
4. OPPS Infrastructure and Payment for
Encounters Resulting in HealthcareAssociated Conditions
The OPPS infrastructure is a
prospective payment system based on
relative costs from hospital claims for
services assigned to APC groups, where
there is an individual payment rate that
is specific to each APC. Each APC
contains HCPCS codes for items or
services that are clinically similar and
that have comparable resource costs. In
most cases, an APC payment is made for
each unit of each separately payable
HCPCS code through the code’s
assigned APC. For a single hospital
outpatient clinical encounter in which a
patient receives services described by
several HCPCS codes with individual
APC assignments (for example,
emergency department visit, first hour
of therapeutic intravenous infusion,
chest x-ray, and electrocardiogram), the
hospital would receive multiple APC
payments for that encounter. This
payment approach is altogether different
from the MS–DRG-based IPPS, which
groups the services provided to an
inpatient into an assigned MS–DRG for
which a single payment for the inpatient
case is made. Under the MS–DRGs that
took effect in FY 2008, there are
currently 258 sets of MS–DRGs that can
split into 2 or 3 subgroups based on the
presence or absence of a CC or an MCC.
(We refer readers to the FY 2008 IPPS
final rule with comment period for a
discussion of DRG reforms (72 FR
47141).) Prior to the October 1, 2008
effective date of the IPPS hospitalacquired conditions payment provision,
if a condition acquired during a hospital
stay was one of the conditions on the CC
or MCC list, the hospital received a
higher payment under the MS–DRGs.
Beginning October 1, 2008, Medicare
can no longer assign an inpatient
hospital discharge to a higher paying
MS–DRG if a selected hospital-acquired
condition was not present on admission
and if no other CC or MCC is present.
That is, the case will be paid as though
the secondary diagnosis (selected
hospital-acquired condition) was not
4 Centers for Disease Control and Prevention:
Morbidity and Mortality Weekly Report, March 28,
2008, Vol. 57, No. RR–1. Available at: https://
cdc.gov/mmwr/mmwr_rr.html.
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present, unless a nonselected secondary
diagnosis that is a CC or an MCC is also
present. Medicare will continue to
assign a discharge to a higher paying
MS–DRG if the selected condition was
present on admission.
As discussed previously, the OPPS
currently has neither the infrastructure
to identify POA indicator data nor the
ability to stratify by CC or MCC for
differential payment under the present
APC payment methodology. OPPS
claims report an ‘‘admitting diagnosis’’
that identifies the reason for the
encounter prior to the establishment of
the principal diagnosis, but the
admitting diagnosis cannot be presumed
to be equivalent to a diagnosis that is
present on admission as reported on an
inpatient claim. As a consequence,
initial application of a healthcareassociated conditions payment policy
under the OPPS might be limited in its
scope of conditions as discussed above
and in its options for payment
adjustment. We specifically requested
public comment on how necessary a
POA indicator would be for the
candidate conditions we had identified
for potential use in the OPPS setting,
and on how the OPPS infrastructure
could be modified to allow for the
incorporation of any POA information
(73 FR 41550 through 41551).
Further, we also solicited
recommendations on how hospital
payment for a clinical encounter in the
hospital outpatient setting (which could
include multiple individual APC
payments) could be adjusted to reflect a
derivative payment reduction similar to
the CC/MCC MS–DRG adjustment for
hospital-acquired conditions under the
IPPS. Without a POA and risk
stratification infrastructure for the
OPPS, one approach to limiting OPPS
payment for healthcare-associated
conditions in the short term could be to
pay for all services provided in the
encounter that led to the healthcareassociated condition at the same
reduced rate that would be paid to a
hospital that failed to meet the quality
reporting requirements. Currently, this
would mean that the hospital payment
for an encounter where a healthcareassociated condition resulted would be
based on the OPPS conversion factor
reduced by a 2 percentage point
reduction to the market basket increase
for the year. Alternatively, a flat case
rate reduction percentage could be
considered for all, or a subset, of
services provided in the clinical
encounter. This reduction could
potentially be empirically derived from
analyzing the costs of subsets of OPPS
claims for Medicare beneficiaries with
and without healthcare-associated
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conditions, or could possibly be
developed through analysis of the IPPS
payment relationship between MS–
DRGs with the presence or absence of a
CC or an MCC. Any reduction in OPPS
payment should also be applied to the
20-percent beneficiary copayment
requirement for the OPPS so that the
beneficiary’s cost sharing (which is paid
for each service furnished) would not
rise as a proportion of the total Medicare
payment when the payment would be
reduced. Furthermore, the hospital
should not be able to bill the beneficiary
for OPPS services that either would not
be paid or would be paid at an adjusted
amount under an OPPS healthcareassociated conditions payment
provision.
In contrast to the payment limitation
approach used for the IPPS, we
explained in the CY 2009 OPPS/ASC
proposed rule that we recognized that
neither of the possible payment
limitation approaches discussed above
would specifically target the separate
OPPS payment for those additional
hospital services provided as a result of
the healthcare-associated condition (as
opposed to the payment for the services
that initially brought the beneficiary to
the HOPD). We noted that the current
OPPS payment structure sets a single
payment rate for a service based on the
APC median cost from all claims for
services assigned to the APC, including
cases with healthcare-associated
conditions as well as cases without
healthcare-associated conditions.
Therefore, we stated that we believe it
could be appropriate to reduce the
single OPPS payment through one of the
general payment limitation approaches
described above for the OPPS because
any additional costs of encounters
resulting in healthcare-associated
conditions would already be included
in the base OPPS payment rates for most
OPPS services. We specifically
requested public comment on these
possibilities or other ways to use or
adapt the current OPPS infrastructure
for purposes of implementing a
healthcare-associated conditions
payment provision.
As discussed in the CY 2009 OPPS/
ASC proposed rule (73 FR 41551), a
related application of the broad
principle behind the IPPS hospitalacquired conditions payment provision
could be accomplished through
Medicare secondary payer policy by
requiring the provider that failed to
prevent the occurrence of a healthcareassociated condition in one setting to
pay for all or part of the necessary
followup care in a second setting. This
would shield the Medicare program
from paying for the downstream effects
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of a condition acquired in the first
setting but treated in the second setting.
This type of scenario would likely be
common for certain healthcareassociated conditions related to HOPD
care, given the relatively short lengths of
stay for HOPD services. We indicated
that we were interested in receiving
public comments regarding this more
general approach to extending beyond
the inpatient setting the concept of not
providing Medicare payment for
healthcare-associated conditions,
including the advantages and
disadvantages of taking a payment
system by payment system approach or
of adopting the general principle of
holding the provider that failed to
prevent the occurrence of a condition in
one setting responsible for payment of
the followup care in any other setting.
Comment: Several commenters fully
supported expanding the IPPS hospitalacquired conditions policy to HOPDs
and ASCs. They encouraged CMS to
expand the policy as supported by the
clinical evidence base in order to
improve patient outcomes and work
toward aligning payment toward higher
value across settings. They also
expressed full support for the criteria
used and the four specific healthcareassociated conditions discussed.
However, the majority of commenters
had specific concerns with the
suggested conditions or concerns about
CMS’ authority and ability to fairly
implement such a policy for outpatient
settings. Some commenters supported
the general idea of a healthcareassociated conditions payment policy
for HOPDs, while others opposed any
expansion of the IPPS hospital-acquired
conditions payment provision to other
settings. Some commenters stated that
CMS should not/cannot implement an
OPPS healthcare-associated condition
payment policy without explicit
statutory authority. Many commenters
also stated that CMS should not
implement a related policy in HOPDs,
ASCs, or physicians’ offices without
gathering several years of data and
gaining implementation experience for
IPPS hospital-acquired conditions.
Several commenters recommended that
CMS develop an advisory panel of
clinicians and scientists, including both
academic researchers and clinicians
active in patient care in HOPDs, to
provide the agency with assistance in
developing the policy.
Response: Given that so much
medical care is now provided to
Medicare beneficiaries outside of the
hospital inpatient setting, we believe
that extending a healthcare-associated
conditions payment policy to the OPPS
is an important and essential next step
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in Medicare’s focus on quality and
value. We believe it is fully appropriate
to adopt a policy of not paying more for
medical care that harms patients or
leads to complications that could have
been prevented. Because the high
volume services delivered in the HOPD
are so varied, we believe a healthcareassociated conditions payment policy in
the HOPD would allow CMS to extend
its quality activities and drive quality
and value by stimulating behaviors that
are patient-centered and focus on the
continuum of care and patient safety
goals. The hospital community has
already begun to focus on quality in the
HOPD by submitting relevant quality
data through the HOP QDRP, and
hospital participation in the program
determines the hospital’s annual
payment update. We believe that a
healthcare-associated conditions
payment policy would take this initial
effort to the next level of quality
improvement.
Moreover, we believe that we have
statutory authority to implement a
healthcare-associated conditions
payment policy for the OPPS.
Specifically, section 1833(t)(2)(E) of the
Act provides that the ‘‘ * * * Secretary
shall establish, in a budget neutral
manner, * * * adjustments as
determined to be necessary to ensure
equitable payments * * *.’’ Consistent
with our usual practice, we would
pursue the development and adoption
of such a policy through our annual
notice and comment rulemaking to
update the OPPS. We believe an urgent
and compelling rationale exists for
considering a healthcare-associated
conditions payment policy necessary to
ensuring equitable payments under the
OPPS. While we plan to attend to and
learn from our experience with the
implementation and ongoing
development of the IPPS hospitalacquired conditions policy, we do not
believe that it is necessary for us to gain
years of experience with that program
before pursuing a healthcare-associated
conditions payment policy for the
OPPS. As the commenters pointed out,
the IPPS and OPPS are very different
payment systems, and we believe that
the most appropriate course at this point
is to consider a healthcare-associated
conditions payment policy for the OPPS
that takes into account the most current
and emerging knowledge and
experience in this rapidly evolving area
of health care policy.
We appreciate the challenges raised
by commenters, and we will continue to
evaluate and seek input from
stakeholders and other potential
collaborators to identify healthcareassociated conditions that are
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meaningful in the HOPD setting and
may propose payment adjustments for
them, as appropriate, in a future OPPS
annual rulemaking cycle, to ensure
equitable payments. We understand the
importance and value of identifying
appropriate collaborators to work with
us as we develop the policy, identify
conditions, and address implementation
issues. Therefore, we intend to continue
an open dialogue with stakeholders
regarding all issues relevant to the
development of a healthcare-associated
conditions policy over the upcoming
months, which we anticipate will begin
this winter with an IPPS/OPPS hospitalacquired/healthcare-associated
conditions listening session, jointly
sponsored with the CDC.
Comment: Some commenters
suggested that CMS should reconsider
the criteria for possible candidate OPPS
conditions and specifically define
‘‘reasonably preventable’’ for the HOPD
setting. Several commenters stated that
clinically-proven guidelines for
prevention should be available and that
there should be solid evidence that, by
following the guidelines, the likelihood
of the occurrence of an event can be
reduced to zero or near zero. Other
commenters suggested that CMS define
rates or frequencies of ‘‘reasonably
preventable’’ events and design a
strategy to both reward and penalize
hospitals based on data-driven findings
that would ultimately also serve to drive
quality improvement.
Several commenters addressed some
of the potential specific healthcareassociated conditions discussed in the
CY 2009 OPPS/ASC proposed rule (73
FR 41549), as well as suggested other
conditions that might be considered or
should not be considered. Two
commenters were concerned with the
potential inclusion of falls and trauma
as a condition. Another commenter
requested that hospitals providing
rehabilitation therapy services be
exempt from a healthcare-associated
conditions payment policy because of
the inherent risk of falls associated with
the provision of rehabilitation services.
In addition, one commenter requested
that if CMS were to implement a policy
for healthcare-associated conditions in
the HOPD setting, CMS should continue
the established IPPS policy of excluding
Staphylococcus aureus septicemia and
methicillin-resistant Staphylococcus
aureus infection because these
infections are not ‘‘reasonably
preventable.’’ One commenter stated
that blood is rarely transfused in the
outpatient setting and, therefore, blood
incompatibility should be removed from
consideration. A few commenters stated
that CMS should not simply incorporate
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all of the IPPS hospital-acquired
conditions into the OPPS. Several
commenters suggested that CMS
consider adding serious disability or
death caused by adverse events and
serious disability or death caused by
medication errors as future healthcareassociated conditions. Finally, several
commenters recommended that CMS
should use a process similar to that used
for identifying IPPS hospital-acquired
conditions, that is, working with the
CDC, before implementation of a
healthcare-associated conditions
program in the HOPD setting.
Many commenters requested that
CMS delay any implementation of a
healthcare-associated conditions
payment policy under the OPPS until
adoption of ICD–10, to facilitate the
collection of more accurate data and the
use of E-codes. In addition, many
commenters stated that the attribution
of healthcare-associated conditions in
the HOPD setting is difficult because
patients often see multiple physicians or
practitioners in multiple distinct
hospital outpatient departments and
settings. Finally, several commenters
believed that there was a serious need
to develop risk adjustment techniques to
account for differences in patient
severity and other patient
characteristics, especially for teaching
hospitals and other hospitals, such as
cancer hospitals, that see many highrisk patients.
Response: We understand the
commenters’ concerns about the choice
of conditions for a healthcare-associated
conditions payment policy in the
outpatient environment, and we plan to
work with knowledgeable experts in
hospital outpatient care to choose
reasonably preventable conditions based
on solid evidence for future proposed
policies. Our goal is to eliminate
preventable events to the extent
possible, while stimulating hospitals to
design system changes to minimize the
occurrence of errors broadly.
We appreciate the public comments
about the specific healthcare-associated
conditions discussed in the CY 2009
OPPS/ASC proposed rule, as well as
other suggestions made by commenters
regarding other potential HOPD-specific
conditions. We note that each of the
four conditions discussed in the CY
2009 OPPS/ASC proposed rule is among
the Serious Reportable Events
(commonly referred to as ‘‘never
events’’) identified by the NQF and
included in the current IPPS hospitalacquired conditions payment provision.
We will continue to consider each of
these conditions, as well as others
suggested by commenters, as we move
forward to develop a healthcare-
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associated conditions payment policy
for the OPPS. We agree that the future
implementation of ICD–10 will be
helpful to identify adverse events and
medical errors, but we do not see the
necessity of waiting for ICD–10 to
initiate a healthcare-associated
conditions program under the OPPS.
We agree that the OPPS APC payment
methodology currently does not
distinguish the severity of illness of
patients being treated within each APC
group. Hospital claims for both low and
high severity patients contribute to the
calculation of the overall median cost
for the services and procedures assigned
to each APC. We also understand that a
process to document and capture
patient comorbidities and existing
complications in outpatient settings is
not yet fully developed. As a result, a
healthcare-associated conditions
payment policy for the OPPS would
need to be initiated and then
incrementally refined, potentially using
Serious Reportable Events as a starting
point until a fair risk adjustment
program could be implemented.
Likewise, we acknowledge that
Medicare patients may see physicians or
other practitioners in multiple HOPDs
and clinics, physicians’ offices, ASCs, or
other settings during a given episode-ofcare; therefore, accountability could be
difficult to assign. While we understand
that there are complexities associated
with attribution in any setting,
particularly ambulatory settings,
complications are most likely the result
of a breakdown in communication of
accurate, timely, and relevant
information among practitioners and
providers. Consequently, we believe
that expansion of healthcare-associated
conditions to settings beyond the IPPS
is an urgent and essential next stage in
encouraging the coordination of the
highest quality health care for Medicare
beneficiaries.
Comment: Several commenters stated
that the IPPS hospital-acquired
conditions payment reduction methods
would not be appropriate for the OPPS
because the OPPS APC payments are
HCPCS code-based and not based on
diagnosis and disease severity, as is the
IPPS. Several commenters suggested
that without changes to the OPPS
payment structure, there would be no
fair or straightforward methodology for
adjusting hospital payment. Several
commenters recommended that CMS
use a flat case rate reduction, but
cautioned that this would require a
comparison of costs for services
between claims with healthcareassociated conditions and those without
healthcare-associated conditions. The
commenters also recommended several
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other alternative payment mechanisms.
For example, some commenters
suggested episode-based payments
encompassing the continuum of care
that recognize and reward effective postdischarge care. Other commenters
offered a data-driven approach to
establish benchmark and best practice
complication rates for healthcareassociated conditions where CMS could
set payment rates based on average
complication rates and provide
evidence-based tools to help hospitals
work toward lower complication rates.
Several commenters argued that holding
one provider responsible for payment of
costs downstream would not be viable
because of multiple payment systems,
contractors, and providers.
Response: We appreciate the concerns
of the commenters about developing a
payment reduction policy associated
with healthcare-associated conditions
under the OPPS, given the differences
between the HCPCS code-based OPPS
and MS–DRG-based IPPS payment
infrastructures, and we welcome
consideration of the payment reduction
methodologies suggested by others. We
note that we received no public
comments on the possibility of
providing the same reduced payment
rate for services in the HOPD encounter
that led to the healthcare-associated
condition that would be paid to a
hospital that failed to meet the quality
reporting requirements. We will fully
consider each of the payment reduction
methodologies suggested by
commenters and discussed in the CY
2009 OPPS/ASC proposed rule (73 FR
41550). We also plan to continue an
open dialogue with stakeholders as we
move forward over the coming months
toward the goal of establishing a strong
connection between an OPPS
healthcare-associated conditions
payment policy and the delivery of the
highest quality health care. We also
expect that the future development and
refinement of a healthcare-associated
conditions payment policy, as well as
POA indicators for the outpatient
setting, will lead to increased
communication among providers,
contractors, and policymakers, as well
as potentially more integrated payment
for Part B services across payment
systems. This, in turn, could allow for
holding one provider responsible to
another for payment of costs
downstream for healthcare-associated
conditions.
Comment: Many commenters asserted
that the POA indicators in use for the
IPPS hospital-acquired conditions
policy beginning October 1, 2008 may
need to be modified as a requirement for
healthcare-associated conditions in the
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HOPD or ASC setting. Several
commenters observed that the
conditions CMS proposed for
consideration (air embolism, object left
in during surgery, blood
incompatibility, and falls and trauma)
would likely result in an inpatient
admission with the healthcareassociated condition reported as present
on admission. Many commenters also
argued that the HOPD episode-of-care is
often too short to identify whether a
condition was present at the beginning
of the hospital outpatient stay. They
also believed that there would likely be
unintended consequences to using a
POA indicator for the OPPS, such as
hospitals providing increased and
unnecessary diagnostic testing. Several
commenters claimed that having to
report POA indicators for all ICD–9–CM
diagnosis codes would be an
administrative burden on hospitals.
They requested that CMS consider
narrowing hospital outpatient POA data
collection to specific conditions or
specific populations of beneficiaries. In
addition, one commenter suggested that
the entire current ICD–9–CM Official
Coding Guidelines for POA would have
to be evaluated and possibly revised or
rewritten for outpatient settings, due to
potential complications of collecting
POA information in the outpatient
setting using the current guidelines. A
number of commenters believed the
term ‘‘present on admission’’ was not
applicable to the HOPD setting and
suggested the term would need to be
changed to ‘‘present on arrival.’’ Finally,
some commenters suggested that a
‘‘present on encounter’’ indicator or
another form of incorporation of preexisting conditions into an episode-ofcare might be more useful than a POA
indicator because care may extend into
other settings or to other caregivers or
practitioners.
Response: We acknowledge that the
POA indicator was designed for hospital
inpatient use and would need to be
refined for the HOPD setting, both to
accommodate events occurring in the
hospital outpatient setting that directly
result in hospital admission (for
example, air embolism), as well as to
allow identification of HOPD initiated
healthcare-associated conditions that
may become apparent distinct from the
date of the initiating event (for example,
object left in during surgery). We believe
that accountability of a single hospital
provider for the quality of medical care
provided across its outpatient and
inpatient settings should be a central
component of patient-centered care
coordination and effective
implementation of hospital-acquired
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and healthcare-associated conditions
payment policies. For instance, we do
not believe that a preventable condition
acquired in the HOPD that results in an
inpatient admission should be
considered POA because it occurred
before there was a physician’s written
order to admit the patient. In such a
case, it was the hospital’s care that
caused the condition and the inpatient
admission and, in our view, the
condition should not be considered as a
complication or major complication in
determining the Medicare inpatient
hospital payment. It would be clinically
non-intuitive and counter to the goals of
patient safety and value-based
purchasing if healthcare-associated
conditions that developed during an
HOPD encounter and resulted in an
inpatient admission could not be
identified through our coding systems
and, therefore, an appropriate payment
adjustment could not be provided. We
will raise this issue with the NUBC,
which is responsible for maintaining the
POA reporting definitions. In addition,
we believe that it would be both
inappropriate and a disservice to
beneficiaries for hospitals to engage in
activities such as delayed admission or
transfer between a provider’s facilities
or satellites in order to avoid an IPPS
hospital-acquired condition payment
reduction.
It is imperative that as we consider
expansion of the IPPS hospital-acquired
conditions payment policy to other
settings, we synchronize policies across
Medicare payment systems. Therefore,
we look forward to working with the
NUBC to develop POA indicators
appropriate to outpatient settings. We
also plan to work with the NUBC to
refine and update the POA reporting
definitions so that we can accomplish
the goals of the IPPS hospital-acquired
and OPPS healthcare-associated
conditions policies of holding a
provider responsible for preventable
conditions attributable to care provided
in its own outpatient or inpatient
settings, while also ensuring that the
reporting definitions continue to be
appropriate and effective for
nonhospital-acquired conditions
payment and research purposes. As we
move toward an OPPS healthcareassociated conditions payment policy,
we will work with hospitals and other
stakeholders to ensure that reporting of
conditions in outpatient settings could
be accomplished in a way that would be
administratively manageable for
hospitals, while discouraging potential
undesirable effects on beneficiaries and
the Medicare program, such as
overutilization of diagnostic testing.
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In summary, we thank commenters
for their thoughtful responses and
suggestions to our CY 2009 OPPS/ASC
proposed rule discussion and questions
regarding the potential for extension of
the IPPS hospital-acquired conditions
payment provision to outpatient settings
through a healthcare-associated
conditions payment policy. We view
addressing the ongoing problem of
preventable healthcare-associated
conditions in outpatient settings,
including the HOPD, as a key valuebased purchasing strategy to sharpen the
focus on such improvements beyond
hospital inpatient care to those settings
where the majority of Medicare
beneficiaries receive most of their health
care services. We look forward to
continuing to work with stakeholders to
improve the quality, safety, and value of
healthcare provided to Medicare
beneficiaries, beginning with the joint
IPPS/OPPS listening session that we
anticipate holding this winter.
XVIII. Hospital Conditions of
Participation: Requirements for
Approval and Re-Approval of
Transplant Centers To Perform Organ
Transplants; Policy Clarification
On March 30, 2007, we published in
the Federal Register (72 FR 15198) a
final rule that set forth the requirements
that heart, heart-lung, intestine, kidney,
lung, and pancreas transplant centers
must meet to participate as Medicareapproved transplant centers. These
requirements included procedures for
approval and re-approval, as well as
disapproval, of transplant centers. In
that final rule, we summarized and
responded to the public comments that
we had received on a preceding
proposed rule published in the Federal
Register on February 4, 2005 (70 FR
6140).
This final rule clarifies and revises
several statements of policy that were
provided in the March 30, 2007 final
rule as responses to public comments
received on the proposed rule.
Specifically, among the public
comments received, a few commenters
recommended that ‘‘a center should be
allowed to continue Medicare
participation pending exhaustion of any
appeals, provided that its treatment of
Medicare beneficiaries does not
jeopardize their health and safety.’’ In
the March 30, 2007 final rule (72 FR
15242), we responded, in part, to this
public comment by stating that ‘‘[i]f a
transplant center appeals a termination
of Medicare approval under 42 CFR part
498, the termination will not occur until
the appeals process, if any, is
completed.’’ This statement is contrary
to longstanding Medicare policy.
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In addition, in the February 4, 2005
proposed rule, we had proposed at
§ 482.104(c)(2) to require a transplant
center being terminated to inform
patients on the center’s waiting list of
that fact 30 days prior to the
termination. One commenter who
responded to the proposed rule
recommended that CMS modify the
proposed 30-day notification
requirement by adding language to
indicate that patients on the center’s
waiting list must be informed 30 days
prior to the termination ‘‘and following
the exhaustion of all appeals provided
pursuant to [part] 498.’’ In the preamble
to the March 30, 2007 final rule at page
15248, we responded to this comment
in part by stating that ‘‘[i]n most cases
Medicare providers and suppliers are
permitted to continue to participate in
Medicare while an appeal is pending.
* * *’’ This response statement is also
contrary to longstanding Medicare
policy.
In this final rule, we are clarifying the
two responses in the preamble of the
March 30, 2007 final rule to make clear
that longstanding Medicare policy does
not permit a provider to continue to
participate in the Medicare program
until the provider has exhausted all
appeals. In fact, it has been the
consistent policy of this Department for
more than 30 years to make provider
agreement terminations, and most
alternative sanctions, effective prior to
the running of the administrative
appeals process. Where the matter has
arisen in litigation over the years, the
courts have upheld this position. We
cite the following court cases as
examples: Cathedral Rock of North
College Hill, Inc. v. Shalala, 223 F.3d
354 (6th Cir. 2000); Caton Ridge Nursing
Home, Inc. v. Califano, 596 F.2d 608
(4th Cir. 1979); and Geriatrics, Inc. v.
Harris, 640 F.2d 262 (10th Cir. 1981).
While there are many legal arguments
that have been made in support of this
view, the Department has taken this
position largely based on its underlying
belief that patients or residents of health
care facilities should not be subjected to
continued poor quality of care for the
pendency of an appeal which can be
lengthy in duration. In this context, the
interests of providers wanting to stay in
the program must be of secondary
importance to the well-being of the
Medicare patient population.
Thus, if a provider, such as a
transplant center, appeals a termination
of Medicare approval under 42 CFR part
498, termination occurs on the date
established by CMS, and termination
will be prior to the onset of any appeals
process, whether or not the deficiency
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poses immediate jeopardy to the health
and safety of patients.
Therefore, in this final rule, we are
clarifying the response to comment
language of the preamble of the March
30, 2007 final rule at page 15242 by
revising it to read ‘‘Thus, if a transplant
center appeals a termination of
Medicare approval under 42 CFR part
498, the termination will occur before
the appeals process, if any, begins.’’
(Emphasis added) We are clarifying the
response to comment language of the
preamble of the March 30, 2007 final
rule at page 15248 by revising it to read
‘‘Medicare providers and suppliers are
not entitled to have their program
participation continue during the
pendency of the administrative appeals
process.’’ We note that no change is
being made to the regulation text
because the regulation itself does not
call for a prior hearing. Our intent is
only to clarify and correct earlier
preamble statements that ran contrary to
a longstanding policy of this
Department.
This clarification does not impose
information collection and
recordkeeping requirements.
Consequently, it need not be reviewed
by the Office of Management and
Budget under the authority of the
Paperwork Reduction Act of 1995 (44
U.S.C. 35).
The revised preamble statements
merely clarify existing policy and,
therefore, the impact is negligible.
XIX. Files Available to the Public via
the Internet
A. Information in Addenda Related to
the CY 2009 Hospital OPPS
Addenda A and B to this final rule
with comment period provide various
data pertaining to the CY 2009 payment
for items and services under the OPPS.
Addendum A, which includes a list of
all APCs to be payable under the OPPS,
and Addendum B, which includes a list
of all active HCPCS codes and all
currently active HCPCS codes that will
be discontinued at the end of CY 2008
with their assigned OPPS payment
status and comment indicators, are
available to the public by clicking
‘‘Hospital Outpatient Regulations and
Notices’’ on the CMS Web site at:
https://www.cms.hhs.gov/
HospitalOutpatientPPS/.
For the convenience of the public, we
also are including on the CMS Web site
a table that displays the HCPCS code
data in Addendum B sorted by APC
assignment, identified as Addendum C.
Addendum D1 defines the payment
status indicators that are used in
Addenda A and B. Addendum D2
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defines the comment indicators that are
used in Addendum B. Addendum E lists
the HCPCS codes that only are payable
to hospitals as inpatient procedures and
are not payable under the OPPS.
Addendum L contains the out-migration
wage adjustment for CY 2009.
Addendum M lists the HCPCS codes
that are members of a composite APC
and identifies the composite APC to
which each is assigned. This addendum
also identifies the status indicator for
the code and a comment indicator if
there is a change in the code’s status
with regard to its membership in the
composite APC. Each of the HCPCS
codes included in Addendum M has a
single procedure payment APC, listed in
Addendum B, to which it is assigned
when the criteria for assignment to the
composite APC are not met. When the
criteria for payment of the code through
the composite APC are met, one unit of
the composite APC payment is paid,
thereby providing packaged payment for
all services that are assigned to the
composite APC according to the specific
I/OCE logic that applies to the APC. We
refer readers to the discussion of
composite APCs in section II.A.2.e. of
this final rule with comment period for
a complete description of the composite
APCs.
These addenda and other supporting
OPPS data files are available on the
CMS Web site at: https://
www.cms.hhs.gov/
HospitalOutpatientPPS/.
B. Information in Addenda Related to
the CY 2009 ASC Payment System
Addenda AA and BB to this final rule
with comment period provide various
data pertaining to the CY 2009 payment
for ASC covered surgical procedures
and covered ancillary services for which
ASCs may receive separate payment.
Addendum AA lists the ASC covered
surgical procedures and the CY 2009
ASC payment indicators and payment
rates for each procedure. Addendum BB
displays the ASC covered ancillary
services and their CY 2009 payment
indicators and payment rates. All
relative payment weights and payment
rates for CY 2009 are a result of
applying the revised ASC payment
system methodology established in the
final rule for the revised ASC payment
system published in the Federal
Register on August 2, 2007 (72 FR
42470 through 42548) to the final CY
2009 OPPS and MPFS ratesetting
information.
Addendum DD1 defines the payment
indicators that are used in Addenda AA
and BB. Addendum DD2 defines the
comment indicators that are used in
Addenda AA and BB.
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Addendum EE (available only on the
Internet) lists the surgical procedures
that are excluded from Medicare
payment if furnished in ASCs. The
excluded procedures listed in
Addendum EE are surgical procedures
that are either assigned to the OPPS
inpatient list, are not covered by
Medicare, are reported using a CPT
unlisted code, or have been determined
to pose a significant safety risk or are
expected to require an overnight stay
when performed in ASCs.
These addenda and other supporting
ASC data files are included on the CMS
Web site at: https://www.cms.hhs.gov/
ASCPayment/. The MPFS data files are
located at: https://www.cms.hhs.gov/
PhysicianFeeSched/.
The links to all of the FY 2009 IPPS
wage index related tables (that are to be
used for the CY 2009 OPPS) that were
published as tentative and final in the
FY 2009 IPPS final rule (73 FR 48779
through 49021) and that were issued as
final in a subsequent document
published in the Federal Register on
October 3, 2008 (73 FR 57888) are
accessible on the CMS Web site at:
https://www.cms.hhs.gov/
AcuteInpatientPPS/WIFN.
XX. Collection of Information
Requirements
A. Legislative Requirement for
Solicitation of Comments
Under the Paperwork Reduction Act
of 1995 (PRA), we are required to
provide 60-day notice in the Federal
Register and solicit public comment
before a collection of information
requirement is submitted to the Office of
Management and Budget (OMB) for
review and approval. In order to fairly
evaluate whether an information
collection should be approved by OMB,
section 3506(c)(2)(A) of the PRA
requires that we solicit comment on the
following issues:
• The need for the information
collection and its usefulness in carrying
out the proper functions of our agency.
• The accuracy of our estimate of the
information collection burden.
• The quality, utility, and clarity of
the information to be collected.
• Recommendations to minimize the
information collection burden on the
affected public, including automated
collection techniques.
B. ASC Conditions for Coverage
Collections
In the August 31, 2007 ASC CfCs
proposed rule (72 FR 50478), we
solicited public comments on each of
the issues outlined under section XX.A.
of this preamble for the sections under
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items XX.B.1. through 4. below
included in the proposed rule that
contain information collection
requirements.
1. Condition for Coverage—Governing
Body and Management (§ 416.41)
Section 416.41 sets out the conditions
for coverage related to the governing
body and management of ASCs. Each
ASC must have a governing body that
assumes full legal responsibility for
determining, implementing, and
monitoring policies governing the ASC’s
total operation. Section 416.41(b)(3)
states that, as a condition for coverage,
an ASC must have a written transfer
agreement with the hospital as
referenced in §§ 416.41(b)(1) and (b)(2).
The burden associated with this
requirement is the time and effort
involved in the ASC having a written
transfer agreement with the hospital
receiving the transfer. This requirement
is subject to the PRA, and is currently
approved under OMB No. 0938–0266,
with an expiration date of June 30, 2011.
Section 416.41(c)(1) requires that an
ASC maintain a written disaster
preparedness plan that provides for the
emergency care of patients in the event
of fire, natural disaster, functional
failure of equipment, or other
unexplained circumstances that are
likely to threaten personal health and
safety. Section 416.41(c)(3) requires that
an ASC complete a written evaluation of
each drill conducted to test the
effectiveness of the disaster
preparedness plan.
The burden associated with the
requirements in §§ 416.41(c)(1) and
(c)(3) is the time and effort necessary to
draft and maintain the written disaster
preparedness plan. In addition, there is
burden associated with drafting and
maintaining the reports on the
effectiveness of the plan. We estimate
that an administrator, earning $49.00
per hour, would be largely responsible
for developing the plan and for
managing the yearly drills and
evaluations. We are estimating that the
yearly cost for one ASC to develop and
implement a disaster preparedness plan
will be approximately 4 hours at $49.00
per hour, with a net cost of $196.00 per
ASC. The total cost for all ASCs is
estimated to be $999,600.
We did not receive any public
comments on these information
collection requirements.
2. Condition for Coverage—Quality
Assessment and Performance
Improvement (§ 416.43)
Section 416.43 sets out the conditions
for coverage for quality assessment and
performance improvement. ASCs,
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through the governing body and with
the active participation of the medical
staff, must develop, implement, and
maintain an ongoing, data-driven QAPI
program. This section outlines the
standards for the scope of the QAPI
program, the use of quality indicator
data, the prioritization of performance
improvement program activities, the
complexity of performance
improvement projects, and the
responsibilities of ASC governing
bodies. Specifically, § 416.43(d)(2) states
that an ASC must fully document the
performance improvement projects that
are being conducted. The
documentation, at a minimum, must
include the reason(s) for implementing
the project, and a description of the
results of the project.
The burden associated with this
requirement is the time and effort
involved in collecting, analyzing, and
documenting the performance
improvement projects. We estimate that
each ASC would spend 18 hours a year
collecting, analyzing, and documenting
the findings. These activities would
most likely be managed by the ASC’s
administrator. Based on an hourly rate
of $49.00, the total cost of these
activities is estimated to be $882 per
ASC.
We did not receive any public
comments on this information
collection requirement.
3. Condition for Coverage—Patient
Rights (§ 416.50)
Section 416.50 sets out the
requirements an ASC must meet when
informing a patient of his or her rights,
in addition to requirements for the
protection and promotion of these
rights. Section 416.50(a)(1) requires that
an ASC provide the patient or, as
appropriate, the patient’s representative
with verbal and written notice of the
patient’s rights in advance of the
procedure to be performed at the ASC
and in a language and manner that the
patient or patient’s representative
understands.
The burden associated with these
requirements is the time and effort
required to inform the patient or, as
appropriate, the patient’s representative
of the patient’s rights. Because ASCs
must notify patients either verbally or in
writing in advance of the patient coming
under the ASC’s care, ASCs may choose
to mail the patient rights notification to
the patient along with the pre-surgical
information, the physician’s financial
interests or ownership, and the advance
directives. Generally, the most effective
and efficient manner to furnish a notice
of rights is to initially develop a general
notice which can be subsequently
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discussed and/or distributed as needed.
We expect that an ASC will use this
simple and inexpensive approach in
order to meet this requirement. In
response to the needs of their specific
patient populations, some ASCs might
choose to have their patient rights
notification written in the predominant
language(s) of their patients. More than
likely, this message would be written by
a registered nurse or similar
professional. A typical message might
be in three parts: An introduction; the
information section; and a section for
follow-up questions and issues. We
expect the effort to develop this onetime message would not exceed 1 hour
at a cost of $39.00 for each ASC. We
believe that this would be a one-time
cost for ASCs and estimate that the total
costs would be $198,900 for all ASCs.
Section 416.50(a)(2)(i) requires ASCs
to provide the patient or representative
with information concerning its policies
on advance directives, including a
description of applicable State law.
Section 416.50(a)(2)(iii) requires
documentation in a prominent part of
the patient’s medical record that
indicates whether or not the patient has
executed an advance directive. The
burden associated with these
requirements is the time and effort
necessary for disseminating the
information to the patient and
maintaining the necessary
documentation in the medical record.
ASCs mail information to their patients
concerning documentation that must be
completed prior to the surgical
procedure. Dissemination of the
advance directives information will
result in the inclusion of one additional
sheet of paper in the ASC’s mailing
packet. In addition, as a matter of both
law and ethics, health care providers are
generally expected to provide care that
conforms to the wishes and priorities of
the patient. Thus, information on
advance directives should be
communicated in a way that effectively
notifies patients of their right to
complete an advance directive before
they agree to use the facility’s services
because the facility’s policy could be
important to a patient’s choice of
whether to use that facility. Providing
advance directives information to
patients prior to the patient’s first visit
to the ASC is typically done by ASCs
even though it is not specifically
federally mandated.
However, arguably, informing patients
concerning advance directives is in
keeping with the current requirement
concerning documentation of properly
executed informed patient consent
found at § 416.47 and would be
considered part of the ASC’s standard
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operating costs. Thus, while these
requirements are subject to the PRA, we
believe they would constitute usual and
customary business practices. Pursuant
to 5 CFR 1320.3(b)(2), we will not
include these activities in the PRA
analysis.
Section 416.50(a)(3) imposes both
recordkeeping and reporting
requirements. Specifically,
§ 416.50((a)(3)(ii) states that an ASC
must fully document all alleged
violations relating, but not limited to,
mistreatment, neglect, verbal, mental,
sexual or physical abuse. In addition, at
§ 416.50(a)(3)(iii), an ASC must
immediately report the allegations to a
person in authority in the ASC. Under
§ 416.50(a)(3)(iv), the ASC must
immediately report substantiated
allegations to the State and local bodies
having jurisdiction, and the State survey
agency if warranted. In addition,
§ 416.50(a)(3)(v) requires an ASC to
document how the grievance was
addressed. The ASC must also provide
the patient with a written notice of its
decision.
The burden associated with this
requirement is the time and effort
necessary to fully document the alleged
violation or complaint, disclose the
written notice to each patient who filed
a grievance, and report the alleged
violations to the aforementioned
entities. We estimate that, on average, it
will take each ASC 15 minutes at a cost
of $39.00 an hour to develop and
disseminate 12 notices on an annual
basis (3 hours per ASC), for a total ASC
burden of 15,300 hours at a cost of
$596,700.
Since ASCs began operating under
Medicare in 1982, they have been
required to provide information to
patients about the procedures to be
performed. This information is provided
to patients by way of the informed
patient consent in the current
regulation. ASCs are also responsible for
providing patients with information
concerning expected outcomes. The
final rule requires that ASCs continue
this practice. Therefore, we do not
anticipate that ASCs will incur
significant costs associated with this
requirement.
While these requirements are subject
to the PRA, we believe they would
constitute a usual and customary
business practice. Pursuant to 5 CFR
1320.3(b)(2), we will not include these
activities in the PRA analysis.
We did not receive any public
comments on these information
collection requirements.
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4. Condition for Coverage—Patient
Admission, Assessment, and Discharge
(§ 416.52)
Section 416.52(a) requires each
patient to have a comprehensive
medical history and physical
assessment no more than 30 days before
the scheduled surgery date. The patient
also must have a pre-surgical
assessment which must occur upon
admission. Section 416.52(b) requires
that the patient’s post-surgical condition
must be assessed and documented in
the medical record and that the patient’s
post-surgical needs must be addressed
and included in the discharge notes.
Section 416.52(c) requires that ASCs
provide each patient written discharge
instructions and ensure that each
patient receives a discharge order signed
by a physician or other qualified
practitioner. ASCs also must ensure all
patients are discharged in the company
of a responsible adult.
The burden associated with these
requirements is the time and effort
necessary to perform the assessments
and to document the information in the
medical record. However, performing
patient assessments and documenting
medical records is normal and
customary business practice for health
care providers. Therefore, while these
requirements are subject to the PRA, the
associated burden is exempt as it meets
the requirements set forth in 5 CFR
1320.3(b)(2).
We did not receive any public
comments on these information
collection requirements.
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5. Revisions to the CfC on Infection
Control in This Final Rule (§ 416.51)
In § 416.51 of the August 31, 2007
ASC CfCs proposed rule, we included a
CfC on infection control, which
specified that an ASC must (1) provide
a functional and sanitary environment
for the provision of surgical services by
adhering to professionally acceptable
standards of practice and (2) maintain
an ongoing program designed to
prevent, control, and investigate
infections and communicable diseases.
The program would be required to
designate a qualified professional who
has training in infection control,
integrate the infection control program
into the ASC’s QAPI program, and be
responsible for providing a plan of
action for preventing, identifying, and
managing infections and communicable
diseases and for immediately
implementing corrective and preventive
measures that result in improvement.
As discussed in section XV.B.2.b.(5)
of this preamble of this final rule, in
response to public comments received,
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we are revising § 416.51(b) to specify
that the infection control and
prevention program must include
documentation that the ASC has
considered, selected, and implemented
nationally recognized infection control
guidelines.
The burden associated with this
requirement is the time and effort
necessary to document the
consideration, selection, and
implementation of the nationally
recognized infection control guidelines
information in the program. We believe
that the time needed for the required
documentation would be negligible.
Therefore, while this requirement is
subject to the PRA, the associated
burden is exempt as it meets the
requirements set forth in 5 CFR
1320.3(b)(2).
f. Effects of the Patient Admission,
Assessment, and Discharge Provision
(§ 416.52)
We are finalizing this new condition
because it represents the current
standard of practice and does not pose
additional burden.
(1) Effects of the Admission and PreSurgical Assessment Provision
We are requiring the completion of a
comprehensive medical history and
physical assessment no more than 30
days before the day of the scheduled
surgery. It is very unlikely that the
comprehensive medical history will be
completed at the ASC. Therefore, there
is unlikely to be any ASC burden
associated with this requirement.
We are requiring that a pre-surgical
assessment be completed upon
admission to the ASC. Existing
regulations at § 416.42(a) require a
physician to examine the patient
immediately before surgery to evaluate
the risks involved in administering
anesthesia and performing the
procedure. Physicians must determine
that patients, including those at high
risk, are able to undergo the surgery
itself and be able to manage recovery.
Pre-surgical assessments represent a
current standard of community practice,
are currently required under existing
regulations, and, therefore, do not pose
additional burden.
To ensure the ASC health care team
has all patient information available
when needed, the medical history and
physical assessment must be placed in
the patient’s medical record before the
surgical procedure is started. There is
no burden associated with this
requirement.
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(2) Effects of the Post-Surgical
Assessment Provision
The post-surgical assessment requires
the ASC to ensure the patient’s postsurgical condition is documented in the
medical record by a physician or other
qualified practitioner in accordance
with State law and ASC policy, and the
patient’s post-surgical needs addressed
and included in the discharge notes.
Post-surgical assessments, located in the
current regulation under surgical
services, reflect ASC standard of
practice, and therefore, do not pose
additional burden.
(3) Effects of the Discharge Provision
The ASC is required to provide each
patient with discharge instructions and
ensure each patient has a signed
discharge order, any needed overnight
supplies and physician contact
information for followup care or an
appointment. Requiring the patient to
have a signed discharge order, discharge
instructions, any immediate overnight
supplies that may be needed, and
physician contact information when the
patient leaves the ASC is standard
practice. Therefore, we do not believe
this is a new burden for ASCs.
Therefore, while these requirements
are subject to the PRA, the associated
burden is exempt as it meets the
requirements set forth in 5 CFR
1320.3(b)(2).
C. Associated Information Collections
Not Specified in Regulatory Text
This final rule with comment period
does not impose any information
collection requirements through
regulatory text. However, this final rule
with comment period makes reference
to one associated information collection
concerning the HOP QDRP that is not
discussed in the regulatory text. The
following is a discussion of this
collection, for which we solicited public
comment in the CY 2009 OPPS/ASC
proposed rule (73 FR 41552).
Section 419.43(h) requires hospitals,
in order to qualify for the full annual
update, to submit quality data to CMS,
as specified by CMS. In section XVI.C.1.
of the CY 2009 OPPS/ASC proposed
rule (73 FR 41541), we proposed the
specific requirements related to the data
that must be submitted for the update
for CY 2010. The burden associated
with this section is the time and effort
associated with collecting and
submitting the data, completing
participating forms and submitting
charts for chart audit validation. In the
CY 2009 OPPS/ASC proposed rule (73
FR 41552), we estimated that there will
be approximately 3,500 respondents per
year.
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For hospitals to collect and submit the
information on the required measures,
we estimated it will take 30 minutes per
sampled case. In this final rule with
comment period, we have reduced the
burden associated with our proposed
data submission requirements by
making hospital submission of the
aggregate numbers of outpatient
episodes of care which are eligible for
submission under the HOP QDRP
voluntary, instead of requiring this
submission as we proposed. Thus,
although in the proposed rule based on
an estimated 10 percent sample size and
estimated populations of 2.5 to 5
million outpatient visits per measure,
we estimated a total of 1,800,000 cases
per year, the changes in this final rule
with comment period will reduce this
burden.
In addition, in the proposed rule we
estimated that completing participation
forms will require approximately 4
hours per hospital per year. (Hospitals
that continue to participate in the HOP
QDRP only have to complete the
participation form in the first year that
they participate.) We expected the
burden for all of these hospitals to total
914,000 hours per year.
For CY 2010, we proposed that the
proposed validation process would
require a random sample of 800
participating hospitals to submit 50
charts on an annual basis. The burden
associated with this requirement is the
time and effort associated with
collecting, copying, and submitting
these charts. It would take
approximately 20 hours per hospital to
submit the 50 charts. There would be a
total of approximately 40,000 charts
(800 hospitals × 50 charts per hospital)
submitted by the hospitals to CMS for
a total burden of 16,000 hours.
Therefore, the total burden for all
hospitals would be 930,000 hours per
year.
In this final rule with comment period
we have revised the validation process.
The validation process will be used a
test to provide feedback to all
participating hospitals, but will not
affect CY 2010 payment determinations.
We will still use a sample of 800
participating hospitals, but we will
sample 50 or less cases per hospital.
Thus, we believe that the burden for the
validation process will be somewhat
less than our original estimate, although
we cannot determine how much less
until we determine the final number of
cases sampled.
We did not receive any public
comments specifically regarding these
burden estimates. We believe that our
proposed estimates are still valid for
this final rule with comment period,
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although we expect that the actual
burden will be somewhat reduced by
the changes from the proposed rule
adopted in this final rule with comment
period discussed above.
We are requesting OMB’s emergency
review and approval of the information
collection requirements in
§§ 416.41(c)(1) and (c)(3), 416.43, and
416.50. Emergency review and approval
is necessary to ensure that these
requirements are approved before the
effective date of these provisions.
If you comment on these information
collection and record keeping
requirements, please mail copies
directly to the following by the date
listed in the ‘‘DATES’’ section of this
final rule with comment period:
Centers for Medicare & Medicaid
Services, Office of Strategic
Operations and Regulatory Affairs,
Division of Regulations Development,
Attn.: William Parham, CMS–1404–
FC, Room C5–14–03, 7500 Security
Boulevard, Baltimore, MD 21244–
1850.
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Room 10235, New Executive
Office Building, Washington, DC
20503, Attn: CMS Desk Officer, CMS–
1404–FC Fax (202) 395–6974.
XXI. Waiver of Proposed Rulemaking
A. Requirements for Waivers
We ordinarily publish a notice of
proposed rulemaking in the Federal
Register to provide for public comment
before the provisions of a rule take effect
in accordance with section 553(b) of the
Administrative Procedure Act (APA).
The notice of proposed rulemaking
includes a reference to the legal
authority under which the rule is
proposed, and the terms and substances
of the proposed rule or a description of
the subjects and issues involved.
However, this procedure can be waived
if the Secretary finds, for good cause,
that the notice-and-comment procedure
is impracticable, unnecessary, or
contrary to the public interest, and
incorporates a statement of the finding
and the reasons therefore in the rule.
B. OPPS Regulations Update to 42 CFR
419.43(d)(1)(i)(B)
We are making a technical correction
to § 419.43(d)(1)(i)(B) to appropriately
reference § 419.66. The correcting
amendment to § 419.43(d)(1)(i)(B)
merely removes the phrase ‘‘paragraph
(e) of this section’’ and adds in its place
the correct cross-reference ‘‘§ 419.66.’’
As this correction does not make
substantive changes to any underlying
policy and is purely technical in nature,
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we find good cause to waive notice-andcomment procedures as unnecessary.
C. OPPS Regulations Update to 42 CFR
419.43(f)
We are making a technical conforming
amendment to § 419.43(f) which sets
forth our longstanding, consistent policy
to exclude certain items and services
from eligibility for outlier payments.
Under our longstanding policy, drugs
and biologicals, as well as items paid at
charges adjusted to cost by application
of a hospital-specific CCR are excluded
from the payment adjustment in
§ 419.43(d). In the past, we updated the
regulations at § 419.43(f) to specifically
identify those items paid at charges
adjusted to cost by a hospital-specific
CCR that we exclude from this
adjustment (for example, brachytherapy
sources). We are now specifying in a
general manner that items paid at
charges adjusted to cost are not eligible
for the adjustment in § 419.43(d) (rather
than specifically listing all items that
are paid at charges adjusted to cost and
that are excluded from the payment
adjustment in § 419.43(d)). This
technical conforming amendment
reflects our existing policy which has
previously been subject to notice-andcomment procedures. Therefore, we
find good cause to waive notice-andcomment procedures as unnecessary.
D. OPPS Regulations Update to 42 CFR
419.43(g)(4)
We are making a correcting
amendment to § 419.43(g)(4) which sets
forth our longstanding, consistent policy
to exclude items paid at charges
adjusted to cost by application of a
hospital-specific CCR from the payment
adjustment in § 419.43(g)(4). Instead of
annually updating the regulations at
§ 419.43 to specifically identify those
items paid at charges adjusted to cost,
for administrative ease and
convenience, § 419.43(g)(4) now
specifies in a general manner that items
and services paid at charges adjusted to
cost by a hospital-specific CCR are not
eligible for the adjustment in
§ 419.43(g)(2). This correcting
amendment does not alter our
longstanding, consistent policy
regarding items paid at charges adjusted
to cost by application of a hospitalspecific CCR. As these changes reflect
existing policy and the substantive
policies have already undergone noticeand-comment procedures, we find good
cause to waive notice-and-comment
procedures as unnecessary.
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E. OPPS Regulations Update to 42 CFR
419.70
We are revising § 419.70(d)(2), (d)(4),
and (d)(5) of the regulations to make
technical corrections and to incorporate
nondiscretionary provisions of section
147 of Public Law 110–275 (as
described in sections I.F.5. and II.E.1. of
this final rule with comment period)
with respect to the extension and
expansion of the Medicare hold
harmless provision under the OPPS for
certain hospitals. We note that Public
Law 110–275 was enacted on July 15,
2008, subsequent to issuance of the CY
2009 OPPS/ASC proposed rule. Because
the rule makes conforming changes to
the regulation in order to implement
section 147 of Public Law 110–275, we
find good cause to waive notice-andcomment procedures as unnecessary.
In the case of the correcting
amendments to §§ 419.70(e), 419.70(g),
and 419.70(i), we merely substitute the
word ‘‘paragraph’’ with the word
‘‘section’’ in order to correct inaccurate
cross-references. These corrections do
not make substantive changes to any
underlying policy and are purely
technical in nature. Therefore, we find
good cause to waive notice-andcomment procedures as unnecessary.’’
In addition, as explained previously
in this final rule with comment period,
we are substituting the word
‘‘paragraph’’ with the word ‘‘part’’ in
§ 419.70(d)(2) in order to more precisely
capture existing policy and to correct an
inaccurate cross-reference. This change
is technical in nature and does not
change the substantive underlying
policy. Therefore, we find good cause to
waive notice-and-comment procedures
as unnecessary.
XXII. Response to Comments
Because of the large number of public
comments we normally receive on
Federal Register documents, we are not
able to acknowledge or respond to them
individually. We will consider all
comments we receive by the date and
time specified in the ‘‘DATES ’’ section of
this final rule with comment period,
and, when we proceed with a
subsequent document(s), we will
respond to those comments in the
preamble to that document(s).
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XXIII. Regulatory Impact Analysis
A. Overall Impact
We have examined the impacts of this
final rule with comment period (CMS–
1404–FC) and the two final rules (CMS–
3887–F and CMS 3835–F–1) as required
by Executive Order 12866 (September
1993, Regulatory Planning and Review),
as amended by Executive Order 13258,
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the Regulatory Flexibility Act (RFA)
(September 19, 1980, Public Law 96–
354), section 1102(b) of the Social
Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104–4),
Executive Order 13132 on Federalism,
and the Congressional Review Act (5
U.S.C. 804(2)).
1. Executive Order 12866
Executive Order 12866 (as amended
by Executive Order 13258) directs
agencies to assess all costs and benefits
of available regulatory alternatives and,
if regulation is necessary, to select
regulatory approaches that maximize
net benefits (including potential
economic, environmental, public health
and safety effects, distributive impacts,
and equity). A regulatory impact
analysis (RIA) must be prepared for
major rules with economically
significant effects ($100 million or more
in any 1 year).
We estimate that the effects of the
OPPS provisions that will be
implemented by this final rule with
comment period will result in
expenditures exceeding $100 million in
any 1 year. We estimate the total
increase (from changes in this final rule
with comment period as well as
enrollment, utilization, and case-mix
changes) in expenditures under the
OPPS for CY 2009 compared to CY 2008
to be approximately $1.6 billion.
We estimate that the effects of the
changes to the ASC payment system
provisions for CY 2009 (such as adding
14 procedures that were previously
excluded to the CY 2009 ASC list of
covered surgical procedures and
designating 8 additional procedures as
office-based) will have no net effect on
Medicare expenditures in CY 2009
compared to the level of expenditures in
CY 2008. A more detailed discussion of
the effects of the changes to the ASC
payment system for CY 2009 is provided
in section XXIII.C. of this final rule with
comment period.
This final rule with comment period
is ‘‘economically significant’’ as
measured by the $100 million threshold,
and hence also a major rule under the
Congressional Review Act. Accordingly,
we have prepared a regulatory impact
analysis that, to the best of our ability,
presents the costs and benefits of the
rulemaking. Table 53 and Table 54 of
this final rule with comment period
display the redistributional impact of
the CY 2009 changes on ASC payment,
grouped by specialty area and then by
procedures with the greatest ASC
expenditures, respectively.
We have determined that the final
rule for the ASC CfCs is not a major rule
because the overall economic impact for
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all the new CfCs is estimated to be $26.2
million annually.
We have determined that the final
rule that contains clarification regarding
the Secretary’s ability to terminate
Medicare providers and suppliers (that
is, relating specifically to transplant
centers) during an appeal of a
determination that affects participation
in the Medicare program will have no
net effect on Medicare expenditures.
2. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze
options for regulatory relief of small
businesses if a rule has a significant
impact on a substantial number of small
entities. For purposes of the RFA, small
entities include small businesses,
nonprofit organizations, and small
governmental jurisdictions. Many
hospitals, other providers, ASCs, and
other suppliers are considered to be
small entities, either by being nonprofit
organizations or by meeting the Small
Business Administration (SBA)
definition of a small business (hospitals
having revenues of $34.5 million or less
in any 1 year; ambulatory surgical
centers having revenues of $10 million
or less in any 1 year). (For details on the
latest standards for health care
providers, we refer readers to the SBA’s
Web site at: https://sba.gov/idc/groups/
public/documents/sba_homepage/
serv_sstd_tablepdf.pdf (refer to the
620000 series).)
For purposes of the RFA, we have
determined that many hospitals and
most ASCs would be considered small
entities according to the SBA size
standards. Individuals and States are
not included in the definition of a small
entity. Therefore, the Secretary has
determined that this final rule with
comment period will have a significant
impact on a substantial number of small
entities.
In relation to the final rule on the ASC
CfCs, we estimate there are
approximately 5,100 Medicareparticipating ASCs (that includes both
deemed and non-deemed facilities) with
average admissions of approximately
1,240 patients per ASC (based on the
number of patients seen in ASCs in
2008 divided by the number of ASCs in
2008). As stated earlier, most ASCs are
considered to be small entities, either by
nonprofit status or by having revenues
of $7 million to $34.5 million in any 1
year. The cost of this final rule is less
than 1 percent of the total ASC
Medicare revenue per facility.
According to the CMS national
expenditure data, Medicare paid
approximately $3 billion to ASCs in
2007.
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3. Small Rural Hospitals
In addition, section 1102(b) of the Act
requires us to prepare a regulatory
impact analysis if a rule may have a
significant impact on the operations of
a substantial number of small rural
hospitals. This analysis must conform to
the provisions of section 604 of the
RFA. With the exception of hospitals
located in certain New England
counties, for purposes of section 1102(b)
of the Act, we now define a small rural
hospital as a hospital that is located
outside of an urban area and has fewer
than 100 beds. Section 601(g) of the
Social Security Amendments of 1983
(Pub. L. 98–21) designated hospitals in
certain New England counties as
belonging to the adjacent urban areas.
Thus, for OPPS purposes, we continue
to classify these hospitals as urban
hospitals. We believe that the changes to
the OPPS in this final rule with
comment period will affect both a
substantial number of rural hospitals as
well as other classes of hospitals and
that the effects on some may be
significant. Therefore, the Secretary has
determined that this final rule with
comment period will have a significant
impact on the operations of a substantial
number of small rural hospitals.
In addition, the Secretary has
determined that the final rule on the
ASC CfCs will not have a significant
impact on the operations of a substantial
number of rural hospitals because ASCs
are designed to only provide procedures
on an outpatient basis, and, thus, are not
competing with rural hospitals for
inpatient procedures.
Also, the clarification of Medicare
termination policy for providers and
suppliers, specifically transplant
centers, in this final rule will have no
significant effect on small rural
hospitals.
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4. Unfunded Mandates
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
also requires that agencies assess
anticipated costs and benefits before
issuing any rule whose mandates
require spending in any 1 year of $100
million in 1995 dollars, updated
annually for inflation. That threshold
level is currently approximately $130
million. This final rule with comment
period will not mandate any
requirements for State, local, or tribal
governments, nor will it affect private
sector costs. The final rule relating to
revisions of the ASC CfCs and the final
rule containing policy clarification of
the policy on termination of Medicare
providers and suppliers will not have an
effect on the expenditures of State,
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local, or tribal government, and the
impact on the private sector is estimated
to be less than $120 million.
5. Federalism
Executive Order 13132 establishes
certain requirements that an agency
must meet when it promulgates a
proposed rule (and subsequent final
rule) that imposes substantial direct
costs on State and local governments,
preempts State law, or otherwise has
Federalism implications.
We have examined the OPPS and ASC
provisions included in this final rule
with comment period in accordance
with Executive Order 13132,
Federalism, and have determined that
they will not have a substantial direct
effect on State, local or tribal
governments, preempt State law, or
otherwise have a Federalism
implication. As reflected in Table 51
below, we estimate that OPPS payments
to governmental hospitals (including
State and local governmental hospitals)
will increase by 4.4 percent under this
final rule with comment period. The
provisions related to payments to ASCs
in CY 2009 will not affect payments to
governmental hospitals.
In addition, this final rule on ASC
CfCs has no Federalism implications
and will not affect State and local
governments. However, for purposes of
burden estimates, we are unable to
accurately determine the number of
ASCs that are already compliant with
these requirements. Therefore, we have
decided to err on the high cost side and
apply the derived cost estimates to the
total number of ASCs participating in
Medicare. In addition, we believe the
increased quality initiatives outlined in
the regulation should have little or no
effect on the benefit cost of ASC
services.
We also have examined the policy
clarification relating to termination of
Medicare providers and suppliers in
this final rule in accordance with
Executive Order 13132, Federalism, and
have determined that it will not have a
substantial direct effect on State, local
or tribal governments, preempt State
law, or otherwise have a Federalism
implication.
B. Effects of OPPS Changes in This Final
Rule With Comment Period
We are making several changes to the
OPPS that are required by the statute.
We are required under section
1833(t)(3)(C)(ii) of the Act to update
annually the conversion factor used to
determine the APC payment rates. We
also are required under section
1833(t)(9)(A) of the Act to revise, not
less often than annually, the wage index
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and other adjustments. In addition, we
must review the clinical integrity of
payment groups and weights at least
annually. Accordingly, in this final rule
with comment period, we are updating
the conversion factor and the wage
index adjustment for hospital outpatient
services furnished beginning January 1,
2009, as we discuss in sections II.B. and
II.C., respectively, of this final rule with
comment period. We also are revising
the relative APC payment weights using
claims data from January 1, 2007,
through December 31, 2007, and
updated cost report information. We are
continuing the payment adjustment for
rural SCHs, including EACHs. We are
removing two device categories, HCPCS
code C1821 (Interspinous process
distraction device (implantable)) and
HCPCS code L8690 (Auditory
osseointegrated device, includes all
internal and external components), from
pass-through payment status in CY
2009. Finally, we list the 15 drugs and
biologicals in Table 23 of this final rule
with comment period that we are
removing from pass-through payment
status for CY 2009.
Under this final rule with comment
period, the update change to the
conversion factor as provided by statute
will increase total OPPS payments by
3.9 percent in CY 2009. The changes to
the APC weights, the changes to the
wage indices, and the continuation of a
payment adjustment for rural SCHs,
including EACHs, will not increase
OPPS payments because these changes
to the OPPS are budget neutral.
However, these updates do change the
distribution of payments within the
budget neutral system as shown in
Table 51 below and described in more
detail in this section.
1. Alternatives Considered
Alternatives to the changes we are
making and the reasons that we have
chosen the options are discussed
throughout this final rule with comment
period. Some of the major issues
discussed in this final rule with
comment period and the options
considered are discussed below.
a. Alternatives Considered for Payment
of Multiple Imaging Procedures
We are revising our payment
methodology for multiple imaging
procedures performed during a single
session using the same imaging
modality by applying a composite APC
payment methodology in CY 2009. We
will provide one composite APC
payment each time a hospital bills for
second and subsequent procedures
described by the HCPCS codes in one
imaging family on a single date of
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service. As discussed in detail in section
II.A.2.e.(5) of this final rule with
comment period, we are utilizing three
imaging families of HCPCS codes based
on imaging modality for purposes of this
methodology (that is, Ultrasound, CT
and CTA, and MRI and MRA). The
composite APC methodology for
multiple imaging services will result in
the creation of the following five new
APCs due to the statutory requirement
that we differentiate payment for OPPS
imaging services provided with and
without contrast: APC 8004 (Ultrasound
Composite); APC 8005 (CT and CTA
without Contrast Composite); APC 8006
(CT and CTA with Contrast Composite);
APC 8007 (MRI and MRA without
Contrast Composite); and APC 8008
(MRI and MRA with Contrast
Composite).
We considered three alternative CY
2009 payment options for imaging
services under the OPPS. The first
alternative we considered was to make
no change to the existing payment
policy of providing hospitals a full APC
payment for each imaging service on a
claim, regardless of how many
procedures are performed during a
single session using the same imaging
modality or whether the procedures are
performed on contiguous body areas.
We did not choose this alternative
because we believe that continuing the
existing payment methodology would
neither reflect nor promote the
efficiencies hospitals can achieve when
they perform multiple imaging
procedures during a single session, as
demonstrated in CY 2007 claims data
and discussed in section II.A.2.e.(5) of
this final rule with comment period.
The second alternative we considered
was to utilize the 11 families of imaging
HCPCS codes applicable under the
MPFS multiple imaging discount policy,
distinct groups of codes that are based
on imaging modality and contiguous
body area, in the development of the
multiple imaging composite APCs. We
did not choose this alternative because,
as we discuss in section II.A.2.e.(5) of
this final rule with comment period, we
believe that the large number of smaller
MPFS families are neither appropriate
nor necessary for the OPPS. These
groups do not correspond to the larger
APC groups of services paid under the
OPPS, in contrast to the service-specific
payment under the MPFS, and would
not reflect all efficiencies that may
typically be gained in a single imaging
session in the hospital outpatient setting
of care.
The third alternative we considered
and are adopting for CY 2009 is to
develop the multiple imaging composite
APCs by collapsing the 11 MPFS
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imaging families into 3 imaging families
based solely on imaging modality. We
chose this alternative because we
believe that the contiguous body area
concept that is central to the MPFS
imaging families is not necessary to
capture potential efficiencies in a
hospital outpatient imaging session. As
discussed in section II.A.2.e.(5) of this
final rule with comment period, we do
not expect second and subsequent
imaging services of the same modality
involving noncontiguous body areas to
require certain duplicate facility
services. We believe that collapsing the
11 MPFS imaging families into 3 groups
for purposes of the OPPS multiple
imaging composite payment
methodology most accurately reflects
how these services are provided in the
hospital outpatient setting of care and
will most effectively encourage hospital
efficiencies that could be achieved
when multiple imaging procedures are
performed during a single session. We
also believe that deriving the multiple
imaging composite APCs from 3
collapsed imaging families, rather than
the 11 MPFS imaging families, will
enable us to maximize the use of
multiple imaging claims for ratesetting.
b. Alternatives Considered for the HOP
QDRP Requirements for the CY 2009
Payment Update
As discussed in section XVI.D.2. of
this final rule with comment period, we
are implementing the payment
provisions of section 109(a) of the
MIEA–TRHCA, which amended section
1833(t) of the Act by adding a new
subsection (17). In summary, new
section 1833(t)(17)(A) of the Act
requires that certain hospitals that fail to
meet the HOP QDRP reporting
requirements incur a 2.0 percentage
point reduction to their OPD fee
schedule increase factor, that is, the
market basket update. The application
of a reduced OPD fee schedule increase
factor results in reduced national
unadjusted payment rates that will
apply to certain outpatient items and
services performed by hospitals that are
required to report outpatient quality
data and that fail to meet the HOP QDRP
requirements.
As described in detail in section
XVI.D.2. of this final rule with comment
period, effective for services paid under
the CY 2009 OPPS, we will calculate
two conversion factors: A full market
basket conversion factor (that is, the full
CF) and a reduced market basket
conversion factor (that is, the reduced
CF). We will calculate a ‘‘reporting
ratio’’ that will apply to payment for
hospitals that fail to meet their reporting
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requirements, by dividing the reduced
CF by the full CF.
Under the OPPS, we have two levels
of Medicare beneficiary copayment for
many separately paid services: The
minimum unadjusted copayment and
the national unadjusted copayment. The
minimum unadjusted copayment is
always 20 percent of the unadjusted
national payment rate for each
separately payable service. The national
unadjusted copayment is determined
based on the historic coinsurance rate
for the services assigned to the APC. We
considered two alternative policy
options for the copayment calculation
methodology for those hospitals that fail
to meet the HOP QDRP requirements.
The first alternative we considered
was to calculate the national unadjusted
copayments and the minimum
unadjusted copayments based on the
reduced national unadjusted payment
rates, using our standard copayment
methodology. We found that, in many
cases, the beneficiary copayment
amount would remain the same as
calculated based on the full national
unadjusted payment rates, although the
total reduced national unadjusted
payment rate would decline because of
the reduction to the conversion factor.
Therefore, in these cases, the ratio of the
copayment to the total payment (the
coinsurance percentage) would increase
rather than decrease if we were to
calculate copayments based on the
reduced national unadjusted payment
rates. We did not choose this option
because we believe that the increased
coinsurance percentage that results from
this methodology is contradictory to the
intent of the statute that the coinsurance
percentage should never increase and is
also contradictory to our copayment
rules that are intended to gradually
reduce the percentage of the payment
attributed to copayments until the
copayment is equal to the minimum
unadjusted copayment for all services.
The second alternative we considered
and are adopting is to apply the
reporting ratio noted above to both the
national unadjusted copayment and the
minimum unadjusted copayment that
would apply to each APC for hospitals
that receive the reduced CY 2009 OPPS
payment update. Beneficiaries and
secondary payers will therefore not pay
a higher coinsurance rate and will share
in the reduction of payments to these
hospitals. We believe that this
alternative will allow us to
appropriately set the national
unadjusted copayments for the reduced
OPPS national unadjusted payment
rates and is most consistent with the
eventual establishment of 20 percent of
the payment rate as the uniform
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c. Alternatives Considered Regarding
OPPS Cost Estimation for Relative
Payment Weights
Since the implementation of the
OPPS, some commenters have raised
concerns about potential bias in the
OPPS cost-based weights due to ‘‘charge
compression,’’ which is the practice of
applying a lower charge markup to
higher-cost services and a higher charge
markup to lower-cost services. To
explore this issue, in August 2006, we
awarded a contract to RTI to study the
effects of charge compression in
calculating the IPPS relative weights,
particularly with regard to the impact
on inpatient DRG payments, and to
consider methods to reduce the
variation in the CCRs used to calculate
costs for the IPPS relative weights across
services within cost centers. Of specific
note was analysis of a regression-based
methodology estimating an average
adjustment for CCRs by type of revenue
code from an observed relationship
between provider cost center CCRs and
proportional billing of high and low cost
services in the cost center.
In August 2007, we expanded the RTI
contract to determine whether the
findings of the report were also
applicable to the payment weights
established under the OPPS and to more
systematically explore cost estimation
issues specific to the OPPS, including
the revenue code-to-cost center
crosswalk. We refer readers to section
II.A.1.c. of this final rule with comment
period for discussion of the issues and
the Web site at https://www.rti.org for the
RTI findings and recommendations.
The final RTI report describing its
research findings was made available at
about the time of the issuance of the CY
2009 OPPS/ASC proposed rule. In this
report, RTI made a number of
recommendations for achieving more
accurate estimates of cost for services
paid under both the IPPS and the OPPS.
This report also distinguished between
two types of research findings and
recommendations, that is, those
pertaining to the accounting or cost
report data itself and those related to
statistical regression analysis. RTI made
11 recommendations to improve IPPS
and OPPS cost estimation, including
both short-term and long-term
accounting changes, and short-term
regression-based and other statistical
adjustments. For a detailed discussion
of the RTI recommendations from the
July 2008 report, we refer readers to
section II.A.1.c. of this final rule with
comment period.
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With respect to adopting the RTI
recommendations, we considered three
alternatives. The first alternative we
considered and the one we adopted was
to make no changes in response to the
RTI findings and to accept none of the
recommendations regarding cost
estimation. While we agree with RTI’s
findings that there are likely
misassigned costs in the cost reports
that could adversely affect the OPPS
relative weights and that charge
compression influences the OPPS
payment weights, we are adopting this
alternative for CY 2009 OPPS for the
reasons discussed in detail in the
discussion of charge compression in
sections II.A.1.c.(2) and V.B.3. of this
final rule with comment period.
However, as we discussed in the FY
2009 IPPS final rule with comment
period (73 FR 48458 through 48467), we
believe that creation of a new cost
center to facilitate more accurate
estimation of device costs is preferable
to the regression-based adjustment of
CCRs. Moreover, as we explain in
section II.A.1.c.(2) of this final rule with
comment period, prior to adopting any
changes in the revenue code-to-cost
center crosswalk used to adjust hospital
charges to costs for OPPS ratesetting as
recommended by RTI, we will provide
a streamlined comparison of median
costs that isolates changes attributable
to the revenue code-to-cost center
crosswalk to allow for informed analysis
and additional public input regarding
the RTI-recommended changes to the
crosswalk.
The second alternative we considered
was to accept all of the RTI
recommendations. We did not choose
this alternative because of the
magnitude and scope of impact on APC
relative weights that would result from
adopting all accounting and statistical
changes in cost estimation that were
recommended. Further, the numerous
and substantial changes that RTI
recommended have significantly
complex interactions with one another,
and we believe that we should proceed
cautiously in considering their
adoption. In a budget neutral payment
system, increases in payment for some
services always result in reductions to
payment for other services. We believe
that any potential accounting and
statistical changes in cost estimation are
likely to result in significant shifts in
payment among hospital departments
and among hospitals and should be
thoroughly assessed before we decide
whether to propose changes in OPPS
cost estimation.
The third alternative we considered
was to break the single standard cost
center 5600 on the Medicare cost report
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into two new standard cost centers,
Drugs with High Overhead Cost Charged
to Patients and Drugs with Low
Overhead Cost Charged to Patients, to
reduce the reallocation of pharmacy
overhead cost from expensive to
inexpensive drugs and biologicals when
setting an equivalent average ASP-based
payment amount in the future. As
discussed in section V.B.3. of this final
rule with comment period, we did not
choose this alternative because hospitals
indicated that it would be an
extraordinary administrative burden to
report the HCPCS codes for drugs
administered to inpatients that are paid
separately under the OPPS (but not paid
separately under the IPPS) and to
allocate the pharmacy overhead costs
(for example, salaries, supplies, and
equipment costs) between two new drug
cost centers.
2. Limitations of Our Analysis
The distributional impacts presented
here are the projected effects of the CY
2009 policy changes on various hospital
groups. We post on our Web site our
hospital-specific estimated payments for
CY 2009 with the other supporting
documentation for this final rule with
comment period. To view the hospitalspecific estimates, we refer readers to
the CMS Web site at: https://
www.cms.hhs.gov/
HospitalOutpatientPPS/. Select
‘‘regulations and notices’’ from the left
side of the page and then select ‘‘CMS–
1404–FC’’ from the list of regulations
and notices. The hospital-specific file
layout and the hospital-specific file are
listed with the other supporting
documentation for this final rule with
comment period. We show hospitalspecific data only for hospitals whose
claims were used for modeling the
impacts shown in Table 51 below. We
do not show hospital-specific impacts
for hospitals whose claims we were
unable to use. We refer readers to
section II.A.2. of this final rule with
comment period for a discussion of the
hospitals whose claims we do not use
for ratesetting and impact purposes.
We estimate the effects of the
individual policy changes by estimating
payments per service, while holding all
other payment policies constant. We use
the best data available, but do not
attempt to predict behavioral responses
to our policy changes. In addition, we
do not make adjustments for future
changes in variables such as service
volume, service-mix, or number of
encounters. As we have done in
previous rules, we solicited public
comment and information about the
anticipated effect of our proposed
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changes on hospitals and our
methodology for estimating them.
We received several public comments
on the form and content of the impact
analysis.
Comment: Many commenters stated
their concern that no Louisiana CMHCs
(including small or rural CMHCs) were
included in the impact table. The
commenters believed that CMS is
required by regulation to calculate the
estimated impact of the OPPS/ASC
proposed rule on all small and rural
providers. Another commenter was
concerned with CY 2009 proposed
policy changes that the commenter
believed would reduce OPPS payments
to Michigan hospitals. The commenter
estimated that Michigan hospitals
would lose approximately $115 million
annually when providing OPPS services
to Medicare beneficiaries.
Response: We are including estimated
impacts for all providers (including
small, rural CMHCs located in
Louisiana) in the first line of Table 51
in this final rule with comment period.
We also are including estimated impacts
for all CMHCs on the last line of the
impact table. Furthermore, we post on
the CMS Web site estimated impact for
every hospital and CMHC whose claims
were used in modeling the impacts of
this final rule with comment period. As
noted above, to view the hospitalspecific estimates, we refer readers to
the CMS Web site at: https://
www.cms.hhs.gov/
HospitalOutpatientPPS/. Select
‘‘regulations and notices’’ from the left
side of the page and then select ‘‘CMS–
1404–FC’’ from the list of regulations
and notices. Hospitals and CMHCs
whose claims were used in ratesetting
and modeling the impact of this CY
2009 OPPS/ASC final rule with
comment period can review the
estimated impact that the policies
adopted in this CY 2009 OPPS/ASC
final rule with comment period may
have on them by looking at our
estimates on this table. There are
estimated payments for more than 50
CMHCs from Louisiana in the file. With
respect to Michigan hospitals, we
estimate that 94 percent of the hospitals
in Michigan would receive increased
OPPS payments as a result of the CY
2009 OPPS.
In summary, we have made available
on the CMS Web site the estimated
amounts that we expect would be paid
to each hospital and CMHC for which
claims were used in ratesetting and
modeling of impacts for the CY 2009
OPPS. These estimated amounts were
used to generate the impacts identified
in Table 51 below.
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3. Estimated Effects of This Final Rule
with Comment Period on Hospitals
Table 51 below shows the estimated
impact of this final rule with comment
period on hospitals. Historically, the
first line of the impact table, which
estimates the change in payments to all
hospitals, has always included cancer
and children’s hospitals, which are held
harmless to their pre-BBA payment to
cost ratio. We also are including CMHCs
in the first line that includes all
providers because we included CMHCs
in our weight scaler estimate. We
typically do not report a separate impact
for CMHCs because they are paid for
only one service, PHP, under the OPPS,
and each CMHC can typically easily
estimate the impact of the changes by
referencing payment for PHP services in
Addendum A to this final rule with
comment period. Because we are
adopting a CY 2009 policy change to
PHP payment that is more complicated
than a simple change in the payment
rate, this year we present separate
impacts for CMHCs in Table 51 and
discuss the impact on CMHCs in section
XXIII.B.4. of this final rule with
comment period.
The estimated increase in the total
payments made under the OPPS is
limited by the increase to the
conversion factor set under the
methodology in the statute. The
distributional impacts presented do not
include assumptions about changes in
volume and service-mix. The enactment
of Public Law 108–173 on December 8,
2003, provided for the additional
payment outside of the budget
neutrality requirement for wage indices
for specific hospitals reclassified under
section 508. The MMSEA extended
section 508 reclassifications through
September 30, 2008. Section 124 of
Public Law 110–275 further extended
section 508 reclassifications through
September 30, 2009. The amounts
attributable to this reclassification are
incorporated into the CY 2008
estimates.
Table 51 shows the estimated
redistribution of hospital and CMHC
payments among providers as a result of
APC reconfiguration and recalibration;
wage indices; the combined impact of
the APC recalibration, wage effects, and
the market basket update to the
conversion factor; and, finally,
estimated redistribution considering all
payments for CY 2009 relative to all
payments for CY 2008, including the
impact of changes in the outlier
threshold and changes to the passthrough payment estimate. We did not
model a budget neutrality adjustment
for the rural adjustment for SCHs,
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including EACHs, because we are not
making any changes to the policy for CY
2009. Because updates to the conversion
factor, including the update of the
market basket and the subtraction of
additional money dedicated to passthrough payment for CY 2009, are
applied uniformly across services,
observed redistributions of payments in
the impact table for hospitals largely
depend on the mix of services furnished
by a hospital (for example, how the
APCs for the hospital’s most frequently
furnished services will change), and the
impact of the wage index changes on the
hospital. However, total payments made
under this system and the extent to
which this final rule with comment
period will redistribute money during
implementation also will depend on
changes in volume, practice patterns,
and the mix of services billed between
CY 2008 and CY 2009, which CMS
cannot forecast.
Overall, the final OPPS rates for CY
2009 will have a positive effect for
providers paid under the OPPS,
resulting in a 3.9 percent increase in
Medicare payments. Removing cancer
and children’s hospitals because their
payments are held harmless to the preBBA ratio between payment and cost,
and CMHCs, suggests that these changes
will result in a 4.1 percent increase in
Medicare payments to all other
hospitals, exclusive of transitional passthrough payments. The majority of the
difference is attributable to the
redistribution of 0.24 percent of total
spending from CMHCs due to the
changes in payment for partial
hospitalization services. The remainder
of the difference is attributable to
changes in OPPS payment to cancer and
children’s hospitals, which are not
adversely affected by this estimated
reduction in OPPS payment because the
law provides additional payment for
them that is outside of OPPS budget
neutrality.
To illustrate the impact of the final
CY 2009 changes, our analysis begins
with a baseline simulation model that
uses the final CY 2008 weights, the FY
2008 final post-reclassification IPPS
wage indices, and the final CY 2008
conversion factor. Column 2 in Table 51
shows the independent effect of changes
resulting from the reclassification of
services among APC groups and the
recalibration of APC weights, based on
12 months of CY 2007 hospital OPPS
claims data and more recent cost report
data. We modeled the effect of APC
recalibration changes for CY 2009 by
varying only the weights (the final CY
2008 weights versus the CY 2009
weights calculated using the CY 2007
claims used for this final rule with
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comment period) and calculating the
percent difference in payments. Column
2 also reflects the effect of changes
resulting from the APC reclassification
and recalibration changes and any
changes in multiple procedure discount
patterns that occur as a result of the
changes in the relative magnitude of
payment weights.
Column 3 reflects the independent
effects of updated wage indices,
including application of budget
neutrality for the rural floor policy on a
statewide basis. While we have
included changes to the rural
adjustment in this column in the past,
we did not model a budget neutrality
adjustment for the rural adjustment for
SCHs, including EACHs, because we are
making no changes to the policy for CY
2009. We modeled the independent
effect of updating the wage index and
the rural adjustment by varying only the
wage index, using the CY 2009 scaled
weights and a CY 2008 conversion
factor that included a budget neutrality
adjustment for changes in wage effects
and the rural adjustment between CY
2008 and CY 2009.
Column 4 demonstrates the combined
‘‘budget neutral’’ impact of APC
recalibration (that is, Column 2), the
wage index update (that is, Column 3),
as well as the impact of updating the
conversion factor with the market basket
update. We modeled the independent
effect of the budget neutrality
adjustments and the market basket
update by using the weights and wage
indices for each year, and using a CY
2008 conversion factor that included the
market basket update and budget
neutrality adjustments for differences in
wages.
Finally, Column 5 depicts the full
impact of the CY 2009 policies on each
hospital group by including the effect of
all the changes for CY 2009 (including
the APC reconfiguration and
recalibration shown in Column 2) and
comparing them to all estimated
payments in CY 2008, including
changes to the wage index under section
508 of Public Law 108–173 as extended
by the MMSEA and further extended by
Public Law 110–275. Column 5 shows
the combined budget neutral effects of
Columns 2 through 4, plus the impact
of the change to the fixed outlier
threshold from $1,575 to $1,800; the
impact of the section 508
reclassification wage index extension;
and the impact of increasing the
estimate of the percentage of total OPPS
payments dedicated to transitional passthrough payments. We estimate that
these cumulative changes will increase
payments to all providers by 3.9 percent
for CY 2009. We modeled the
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independent effect of all changes in
Column 5 using the final weights for CY
2008 and the final weights for CY 2009.
We used the final conversion factor for
CY 2008 of $63.694 and the CY 2009
conversion factor of $66.059. Column 5
also contains simulated outlier
payments for each year. We used the
charge inflation factor used in the FY
2009 IPPS final rule of 5.85 percent
(1.0585) to increase individual costs on
the CY 2007 claims to reflect CY 2008
dollars, and we used the most recent
overall CCR in the July 2008 Outpatient
Provider-Specific File. Using the CY
2007 claims and a 5.85 percent charge
inflation factor, we currently estimate
that outlier payments for CY 2008, using
a multiple threshold of 1.75 and a fixeddollar threshold of $1,575, will be
approximately 0.73 percent of total
payments. Outlier payments of 0.73
percent appear in the CY 2008
comparison in Column 5. We used the
same set of claims and a charge inflation
factor of 12.04 percent (1.1204) and the
CCRs in the July 2008 Outpatient
Provider-Specific File, with an
adjustment of 0.9920 to reflect relative
changes in cost and charge inflation
between CY 2007 and CY 2009, to
model the CY 2009 outliers at 1.0
percent of total payments using a
multiple threshold of 1.75 and a fixeddollar threshold of $1,800.
Column 1: Total Number of Hospitals
The first line in Column 1 in Table 51
shows the total number of providers
(4,252), including cancer and children’s
hospitals and CMHCs for which we
were able to use CY 2007 hospital
outpatient claims to model CY 2008 and
CY 2009 payments by classes of
hospitals. We excluded all hospitals for
which we could not accurately estimate
CY 2008 or CY 2009 payment and
entities that are not paid under the
OPPS. The latter entities include CAHs,
all-inclusive hospitals, and hospitals
located in Guam, the U.S. Virgin
Islands, Northern Mariana Islands,
American Samoa, and the State of
Maryland. This process is discussed in
greater detail in section II.A. of this final
rule with comment period. At this time,
we are unable to calculate a
disproportionate share (DSH) variable
for hospitals not participating in the
IPPS. Hospitals for which we do not
have a DSH variable are grouped
separately and generally include
psychiatric hospitals, rehabilitation
hospitals, and LTCHs. We show the
total number (3,970) of OPPS hospitals,
excluding the hold-harmless cancer and
children’s hospitals and CMHCs, on the
second line of the table. We excluded
cancer and children’s hospitals because
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section 1833(t)(7)(D) of the Act
permanently holds harmless cancer
hospitals and children’s hospitals to a
proportion of their pre-BBA payment
relative to their pre-BBA costs and,
therefore, we removed them from our
impact analyses. We show the isolated
impact on 222 CMHCs in the last row
of the impact table and discuss that
impact separately below.
Column 2: APC Changes Due to
Reassignment and Recalibration
This column shows the combined
effects of reconfiguration, recalibration,
and other policies (such as composite
payment for multiple imaging
procedures performed on the same day,
payment for separately payable drugs at
ASP+4 percent, and changes in payment
for PHP services). In many cases, the
redistribution of 0.24 percent of total
OPPS spending created by the reduction
in the PHP payment offsets other
recalibration losses. Specifically, the
reduction in PHP payment is
redistributed to hospitals and reflected
in the 0.3 percent increase for the 3,970
hospitals that remain after excluding
hospitals held harmless and CMHCs.
Overall, these changes will increase
payments to urban hospitals by 0.3
percent. We estimate that large urban
hospitals will see an increase of 0.3
percent and other urban hospitals will
see a 0.4 percent increase in payments,
all attributable to recalibration.
Overall, rural hospitals will show a
0.1 percent increase as a result of
changes to the APC structure. With the
money redistributed from PHP services,
and other recalibration changes, rural
hospitals of all bed sizes will experience
no change or will experience changes
ranging from ¥0.5 to 0.6 percent.
Among teaching hospitals, the largest
observed impacts resulting from APC
recalibration include an increase of 0.5
percent for major teaching hospitals and
an increase of 0.4 percent for minor
teaching hospitals.
Classifying hospitals by type of
ownership suggests that proprietary
hospitals will see an increase of 0.2
percent, governmental hospitals will see
an increase of 0.2 percent, and
voluntary hospitals will see an increase
of 0.3 percent.
We note also that both low volume
urban and rural hospitals with less than
5,000 lines and hospitals for which DSH
payments are not available will
experience decreases of 0.3 to 2.5
percent as a result of the decline in
payment for PHP services and the
change in payment policy for PHP
services from one per diem rate in CY
2008 to two per diem rates in CY 2009,
as well as other recalibration changes.
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Column 3: New Wage Indices and the
Effect of the Rural Adjustment
This column estimates the impact of
applying the final FY 2009 IPPS wage
indices for the CY 2009 OPPS. Overall,
these changes will not change the
payments to urban or rural hospitals.
Among teaching hospitals, the largest
observed impact resulting from changes
to the wage indices is a decrease of 0.1
percent for major teaching hospitals in
contrast to no change for minor teaching
hospitals. Classifying hospitals by type
of ownership suggests that
governmental hospitals will see an
increase of 0.2 percent, and voluntary
and proprietary hospitals will
experience no change.
We estimate that the combination of
updated wage data from FY 2005 cost
reports and statewide application of
rural floor budget neutrality
redistributes payment among regions.
Both rural and urban areas in New
England and the Middle Atlantic states
experience declines of up to 0.8 percent.
The Central regions (excluding the East
North Central regions) and the Pacific
regions of the country experience
increases up to 1.2 percent. Change in
Puerto Rico’s wage data contributes to
the decrease of 0.9 percent.
dwashington3 on PRODPC61 with RULES2
Column 4: All Budget Neutrality
Changes and Market Basket Update
The addition of the market basket
update of 3.6 percent mitigates any
negative impacts on payments for CY
2009 created by the budget neutrality
adjustments made in Columns 2 and 3.
In general, all hospitals will see an
increase of 3.9 percent, attributable to
the 3.6 percent market basket increase,
the 0.24 percent increase in payment
weight created by the reduction in
payment for PHP services that is then
redistributed to other services and the
0.04 percent redistribution from
dedicated cancer and children’s
hospitals (which are not affected by the
redistribution because the law holds
them harmless). The 0.28 percent
increase is rounded to 0.3 for purposes
of Table 51.
Overall, these changes will increase
payments to urban hospitals by 3.9
percent. We estimate that large urban
hospitals will see an increase of 3.8
percent and other urban hospitals will
see a 4.1 percent increase.
Overall, rural hospitals will
experience a 3.7 percent increase as a
result of the market basket update and
other budget neutrality adjustments.
Rural hospitals that bill less than 5,000
lines will experience a 3.8 percent
increase. Increases in payment due to
the wage index modestly offset the
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reduction in payment for PHP services
in low volume rural hospitals. Rural
hospitals that bill more than 5,000 lines
will experience increases of 2.9 to 3.9
percent.
Among teaching hospitals, the
observed impacts resulting from the
market basket update and other budget
neutrality adjustments include an
increase of 4.0 percent for both major
and minor teaching hospitals.
Classifying hospitals by type of
ownership suggests that proprietary
hospitals will increase 3.8 percent,
governmental hospitals will increase 4.0
percent, and voluntary hospitals will
experience an increase of 3.9 percent.
Column 5: All Changes for CY 2009
Column 5 compares all changes for
CY 2009 to final payment for CY 2008
and includes the extended section 508
reclassification wage indices, the change
in the outlier threshold, and the
difference in pass-through estimates
which are not included in the combined
percentages shown in Column 4.
Overall, we estimate that providers will
experience an increase of 3.9 percent
under this final rule with comment
period in CY 2009 relative to total
spending in CY 2008. The projected 3.9
percent increase for all providers in
Column 5 reflects the 3.6 percent market
basket increase, less 0.02 percent for the
change in the pass-through estimate
between CY 2008 and CY 2009, plus
0.27 percent for the difference in
estimated outlier payments between CY
2008 (0.73 percent) and CY 2009 (1.0
percent), less 0.02 percent for the
extended section 508 wage payments,
and results in 3.87 percent that rounds
to the 3.9 percent increase shown in
Table 51. When we exclude cancer and
children’s hospitals (which are held
harmless to their pre-OPPS costs) and
CMHCs, the gain will be 4.1 percent.
The combined effect of all changes for
CY 2009 will increase payments to
urban hospitals by 4.2 percent. We
estimate that large urban hospitals will
see a 4.1 percent increase, while ‘‘other’’
urban hospitals will experience an
increase of 4.3 percent. Urban hospitals
that bill less than 5,000 lines will
experience an increase of 1.4 percent.
Overall, rural hospitals will
experience a 3.9 percent increase as a
result of the combined effects of all
changes for CY 2009. Rural hospitals
that bill less than 5,000 lines will
experience an increase of 4.6 percent,
which is greater than the 3.8 percent
increase in Column 4. All rural
hospitals that bill greater than 5,000
lines will experience increases ranging
from 3.1 percent to 4.1 percent.
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Among teaching hospitals, the largest
observed impacts resulting from the
combined effects of all changes include
an increase of 4.5 percent for major
teaching hospitals and an increase of 4.2
percent for minor teaching hospitals.
Classifying hospitals by type of
ownership suggests that proprietary
hospitals will gain 3.9 percent,
governmental hospitals will experience
an increase of 4.4 percent, and
voluntary hospitals will experience an
increase of 4.1 percent.
4. Estimated Effects of This Final Rule
With Comment Period on CMHCs
The last row of the impact analysis in
Table 51 demonstrates the impact on
CMHCs. We modeled this impact
assuming that CMHCs will continue to
provide the same number of days of
PHP care, with each day having either
three services or four or more services,
as seen in the CY 2007 claims data.
Using these assumptions, there will be
a 22.8 percent decrease in payments to
CMHCs due to these APC policy
changes (shown in Column 2). Column
3 shows that the CY 2009 wage index
updates account for a small decrease in
payments to CMHCs (0.3 percent). We
note that all providers paid under the
OPPS, including CMHCs, receive a 3.6
percent market basket increase (shown
in Column 4). Combining this market
basket increase, along with changes in
APC policy for CY 2009 and the CY
2009 wage index updates, the combined
impact on CMHCs for CY 2009 is a 19.5
percent decrease.
We anticipate that CMHCs will
change their behavior in response to the
CY 2009 payment rates for PHP services,
consistent with patient need. By
providing one additional qualifying
partial hospitalization service, CMHCs
will qualify for payment of APC 0173
(Level II Partial Hospitalization payment
(4 or more services)), whose payment
rate is approximately $205, rather than
APC 0172 (Level I Partial
Hospitalization payment rate (3
services)), whose payment rate is
approximately $161. This change in
behavior will lessen the impact on
CMHCs in CY 2009.
Using the CY 2007 CMHC claims data,
there are a large number of days
provided by CMHCs with only 3
services furnished in a given day
(approximately 1 million days billed by
CMHCs were for 3 units of service). If
CMHCs were to provide 1 additional
service on 50 percent of those 1 million
days with 3 services, we estimate that
the impact on CY 2009 payment to
CMHCs will be a 15.8 percent decrease
rather than a 22.8 percent decrease
(which is the decrease due to APC
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changes, while keeping the number of
days with 3 services the same as
reflected in CY 2007 claims data).
Continuing to use the assumption that
50 percent of CMHC days with three
services would qualify for the Level II
PHP payment rate, we estimate that the
combined impact including all changes
(market basket increase, changes in APC
policy for CY 2009, and CY 2009 wage
index updates), on CMHCs for CY 2009
will be approximately a 12.1 percent
decrease in payment.
We believe that CMHCs may provide
additional services on days in excess of
the 50 percent of current 3 service days
assumed in the scenario described
above, behavior which would further
mitigate the estimated decrease in
payments to CMHCs. Furthermore, we
note that there are approximately 40,000
days billed by CMHCs in CY 2007 with
only 1 or 2 PHP services. The impact
analysis shown in Table 51 is modeled
assuming that those days will not
receive any payment, in accordance
with our policy to deny payment for
days with less than three services.
However, we anticipate that CMHCs
will also change their behavior in
response to our policy to deny payment
for days with less than three services, to
the extent providing additional services
is consistent with the plan of care
established by each patient’s physician.
This change in behavior would mitigate
modeled payment reductions to CMHCs
because additional days with three or
more services would qualify for new
APC 0172 or new APC 0173.
TABLE 51—IMPACT OF CHANGES FOR CY 2009 HOSPITAL OUTPATIENT PROSPECTIVE PAYMENT SYSTEM
APC
recalibration
New wage
index and rural
adjustment
Comb (cols 2,
3) with market
basket update
All changes
(1)
dwashington3 on PRODPC61 with RULES2
Number of
hospitals
(2)
(3)
(4)
(5)
ALL PROVIDERS * ....................................................
ALL HOSPITALS (excludes hospitals held harmless
and CMHCs) ...........................................................
URBAN HOSPITALS .................................................
LARGE URBAN (GT 1 MILL.) ............................
OTHER URBAN (LE 1 MILL.) ............................
RURAL HOSPITALS ..................................................
SOLE COMMUNITY * * * ..................................
OTHER RURAL ..................................................
BEDS (URBAN):
0–99 BEDS * * * ................................................
100–199 BEDS ...................................................
200–299 BEDS ...................................................
300–499 BEDS ...................................................
500 + BEDS ........................................................
BEDS (RURAL):
0–49 BEDS * * * ................................................
50–100 BEDS * * * ............................................
101–149 BEDS ...................................................
150–199 BEDS ...................................................
200 + BEDS ........................................................
VOLUME (URBAN):
LT 5,000 Lines ....................................................
5,000–10,999 Lines ............................................
11,000–20,999 Lines ..........................................
21,000–42,999 Lines ..........................................
GT 42,999 Lines .................................................
VOLUME (RURAL):
LT 5,000 Lines ....................................................
5,000–10,999 Lines ............................................
11,000–20,999 Lines ..........................................
21,000–42,999 Lines ..........................................
GT 42,999 Lines .................................................
REGION (URBAN):
NEW ENGLAND .................................................
MIDDLE ATLANTIC ............................................
SOUTH ATLANTIC .............................................
EAST NORTH CENT ..........................................
EAST SOUTH CENT ..........................................
WEST NORTH CENT .........................................
WEST SOUTH CENT .........................................
MOUNTAIN .........................................................
PACIFIC ..............................................................
PUERTO RICO ...................................................
REGION (RURAL):
NEW ENGLAND .................................................
MIDDLE ATLANTIC ............................................
SOUTH ATLANTIC .............................................
EAST NORTH CENT ..........................................
EAST SOUTH CENT ..........................................
WEST NORTH CENT .........................................
WEST SOUTH CENT .........................................
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4,252
0.0
3.6
3.9
3,970
2,970
1,620
1,350
1,000
405
595
0.3
0.3
0.3
0.4
0.1
0.1
0.0
0.0
0.0
0.0
0.1
0.0
¥0.1
0.0
3.9
3.9
3.8
4.1
3.7
3.6
3.7
4.1
4.2
4.1
4.3
3.9
4.0
3.8
1,003
907
469
401
190
0.4
0.2
0.4
0.4
0.3
0.0
0.0
0.2
0.0
¥0.2
4.0
3.8
4.2
4.0
3.7
4.2
3.9
4.3
4.3
4.2
356
379
159
62
44
¥05
¥0.1
0.0
0.4
0.6
0.1
¥0.1
0.2
0.1
¥0.2
3.2
3.4
3.8
4.2
4.0
3.4
3.6
3.9
4.4
4.4
608
176
280
514
1,392
¥2.5
0.4
0.5
0.1
0.4
0.1
¥0.1
0.2
0.1
0.0
1.2
3.9
4.3
3.8
4.0
1.4
4.0
4.5
3.9
4.2
77
100
187
318
318
¥0.3
¥0.7
¥0.7
¥0.3
0.3
0.5
0.2
0.0
0.0
0.0
3.8
3.1
2.9
3.3
3.9
4.6
3.7
3.1
3.5
4.1
153
380
457
471
195
189
486
192
399
48
0.4
0.4
0.3
0.4
0.2
0.6
0.1
0.4
0.1
0.1
¥0.1
¥0.6
¥0.1
¥0.4
0.0
0.5
0.1
0.1
1.2
¥0.9
3.9
3.4
3.9
3.6
3.8
4.7
3.8
4.2
4.9
2.8
4.1
3.5
4.0
4.1
4.0
4.8
4.2
4.4
5.0
3.2
24
68
168
127
179
114
210
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0.0
0.9
0.3
¥0.2
0.2
¥0.1
0.3
¥0.2
¥0.8
¥0.3
0.0
¥0.5
0.3
0.2
0.4
3.7
3.6
3.4
3.3
3.7
4.2
3.9
3.9
3.8
3.5
3.6
3.8
4.8
4.0
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TABLE 51—IMPACT OF CHANGES FOR CY 2009 HOSPITAL OUTPATIENT PROSPECTIVE PAYMENT SYSTEM—Continued
Number of
hospitals
APC
recalibration
New wage
index and rural
adjustment
Comb (cols 2,
3) with market
basket update
All changes
(1)
(2)
(3)
(4)
(5)
76
34
¥0.2
¥0.1
¥0.2
1.1
3.2
4.6
3.4
4.8
2,965
725
280
0.2
0.4
0.5
0.0
0.0
¥0.1
3.8
4.0
4.0
4.0
4.2
4.5
9
400
398
815
985
749
614
1.9
0.5
0.4
0.3
0.3
0.1
¥2.2
0.0
¥0.4
0.0
¥0.1
0.2
0.1
0.2
5.5
3.8
4.0
3.8
4.1
3.8
1.5
5.5
3.9
4.3
4.0
4.3
4.2
1.6
0.4
0
1,482
7
583
0.0
0.0
0.3
1.7
¥2.2
4.0
0.0
0.0
¥0.1
0.2
4.3
0.0
3.9
5.2
1.5
0.0
4.0
5.2
1.6
2,113
1,275
582
222
MOUNTAIN .........................................................
PACIFIC ..............................................................
TEACHING STATUS:
NON-TEACHING ................................................
MINOR ................................................................
MAJOR ...............................................................
DSH PATIENT PERCENT:
0 ..........................................................................
GT 0–0.10 ...........................................................
0.10–0.16 ............................................................
0.16–0.23 ............................................................
0.23–0.35 ............................................................
GE 0.35 ...............................................................
DSH NOT AVAILABLE * * .................................
URBAN TEACHING/DSH:
TEACHING & DSH898 .......................................
TEACHING/NO DSH ..........................................
NO TEACHING/DSH ..........................................
NO TEACHING/NO DSH ....................................
DSH NOT AVAILABLE * * .................................
TYPE OF OWNERSHIP:
VOLUNTARY ......................................................
PROPRIETARY ..................................................
GOVERNMENT ..................................................
CMHCs .......................................................................
0.3
0.2
0.2
¥22.8
0.0
0.0
0.2
¥0.3
3.9
3.8
4.0
¥19.5
4.1
3.9
4.4
¥19.5
Column (1) shows total hospitals.
Column (2) shows the impact of changes resulting from the reclassification of HCPCS codes among APC groups and the recalibration of APC
weights based on CY 2007 hospital claims data.
Column (3) shows the budget neutral impact of updating the wage index by applying the FY 2009 hospital inpatient wage index. We did not
make any changes to the rural adjustment.
Column (4) shows the impact of all budget neutrality adjustments and the addition of the market basket update.
Column (5) shows the additional adjustments to the conversion factor resulting from a change in the pass-through estimate and adds outlier
payments. This column also shows the impact of the extended 508 wage reclassification, which ends September 30, 2009.
* These 4,252 providers include children and cancer hospitals, which are held harmless to pre-BBA payments, and CMHCs.
** Complete DSH numbers are not available for providers that are not paid under IPPS, including rehabilitation, psychiatric, and long-term care
hospitals.
* * * Section 1833(t)(7)(D) of the Act specifies that rural hospitals with 100 or fewer beds and SCHs with 100 or fewer beds (urban and rural) receive additional payment for covered hospital outpatient services furnished during CY 2009 for which the prospective payment amount is less
than the pre-BBA amount. The amount of payment is increased by 85 percent of that difference for CY 2009.
dwashington3 on PRODPC61 with RULES2
5. Estimated Effect of This Final Rule
With Comment Period on Beneficiaries
For services for which the beneficiary
pays a copayment of 20 percent of the
payment rate, the beneficiary share of
payment will increase for services for
which the OPPS payments will rise and
will decrease for services for which the
OPPS payments will fall. For example,
for a service assigned to Level IV Needle
Biopsy/Aspiration Except Bone Marrow
(APC 0037) in the CY 2008 OPPS, the
national unadjusted copayment was
$228.76, and the minimum unadjusted
copayment was $172.95. For CY 2009,
the national unadjusted copayment for
APC 0037 is $228.76, the same national
unadjusted copayment in effect for CY
2008. The minimum unadjusted
copayment for APC 0037 is $178.60 or
20 percent of the national unadjusted
payment rate for APC 0037 of $892.96
for CY 2009. The minimum unadjusted
copayment will rise because the
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payment rate for APC 0037 will rise for
CY 2009. In all cases, the statute limits
beneficiary liability for copayment for a
service to the hospital inpatient
deductible for the applicable year. The
CY 2009 hospital inpatient deductible is
$1,068.
In order to better understand the
impact of changes in copayment on
beneficiaries, we modeled the percent
change in total copayment liability
using CY 2007 claims. We estimate,
using the claims of the 4,252 hospitals
and CMHCs on which our modeling is
based, that total beneficiary liability for
copayments will decline by
approximately $62 million or, as an
overall percentage of total payments,
from 24.8 percent in CY 2008 to 23.3
percent in CY 2009. This estimated
decline in beneficiary liability is a
consequence of the APC recalibration
and reconfiguration we are adopting for
CY 2009.
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6. Conclusion
The changes in this final rule with
comment period will affect all classes of
hospitals and CMHCs. Some classes of
hospitals will experience significant
gains and others less significant gains,
but all classes of hospitals will
experience positive updates in OPPS
payments in CY 2009. In general,
CMHCs will experience an overall
decline of 19.5 percent in payment due
to the creation of two APCs for PHP and
the recalibration of the payment rates.
Table 51 demonstrates the estimated
distributional impact of the OPPS
budget neutrality requirements that
results in a 3.9 percent increase in
payments for CY 2009, after considering
all changes to APC reconfiguration and
recalibration, as well as the market
basket increase, wage index changes,
estimated payment for outliers, and
changes to the pass-through payment
estimate. The accompanying discussion,
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in combination with the rest of this final
rule with comment period, constitutes a
regulatory impact analysis.
7. Accounting Statement
As required by OMB Circular A–4
(available at https://
www.whitehouse.gov/omb/circulars/
a004/a-4.pdf), in Table 52, we have
prepared an accounting statement
showing the CY 2009 estimated hospital
OPPS incurred benefit impact
associated with the CY 2009 hospital
68801
outpatient market basket update shown
in this final rule with comment period,
based on the 2008 Trustees’ Report
baseline. All estimated impacts are
classified as transfers.
TABLE 52—ACCOUNTING STATEMENT: CY 2009 ESTIMATED HOSPITAL OPPS INCURRED BENEFIT IMPACT ASSOCIATED
WITH THE CY 2009 HOSPITAL OUTPATIENT MARKET BASKET UPDATE (IN BILLIONS)
Category
Transfers
Annualized Monetized Transfers ....
From Whom to Whom ....................
$0.8 billion.
Federal Government to outpatient hospitals and other providers who received payment under the hospital
OPPS.
dwashington3 on PRODPC61 with RULES2
Total .........................................
$0.8 billion.
C. Effects of ASC Payment System
Changes in This Final Rule With
Comment Period
On August 2, 2007, we published in
the Federal Register the final rule for
the revised ASC payment system,
effective January 1, 2008 (72 FR 42470).
In that final rule, we: Adopted the
methodologies to set payment rates for
covered ASC services to implement the
revised payment system so that it would
be designed to result in budget
neutrality as required by section 626 of
Public Law 108–173; established that
the OPPS relative payment weights
would be the basis for payment and that
we would update the system annually
as part of the OPPS rulemaking cycle;
and provided that the revised ASC
payment rates would be phased-in over
4 years. During the 4-year transition to
full implementation of the revised ASC
rates, payments for surgical procedures
paid in ASCs in CY 2007 will be made
using a blend of the CY 2007 ASC
payment rate and the revised ASC
payment rate for that calendar year. In
CY 2009, we are paying ASCs using a
50/50 blend, in which payment would
be calculated by adding 50 percent of
the CY 2007 ASC rate for a surgical
procedure on the CY 2007 ASC list of
covered surgical procedures and 50
percent of the CY 2009 revised ASC rate
for the same procedure. For CY 2010,
we would transition the blend to a 25/
75 blend of the CY 2007 ASC rate and
the revised ASC payment rate.
Beginning in CY 2011, we would pay
ASCs for all covered surgical
procedures, including those on the CY
2007 ASC list, at the full revised ASC
payment rates. Payment for procedures
that were not included on the ASC list
of covered surgical procedures in CY
2007 is not subject to the transitional
payment methodology.
ASC payment rates are calculated by
multiplying the ASC conversion factor
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by the ASC relative payment weight. As
discussed fully in section XV. of this
final rule with comment period, we set
the CY 2009 ASC relative payment
weights by scaling unadjusted CY 2009
ASC relative payment weights by the
ASC scaler of 0.9751. These weights
take into consideration the 50/50 blend
for the second year of transitional
payment for certain services. If there
were no transition, the scaler for CY
2009 fully implemented payment rates
would be 0.9412. The estimated effects
on payment rates during this
transitional period are varied and are
reflected in the estimated payments
displayed in Tables 53 and 54 below.
The CY 2009 ASC conversion factor
was calculated by adjusting the CY 2008
ASC conversion factor to account for
changes in the pre-floor and prereclassified hospital wage indices
between CY 2008 and CY 2009. Under
section 1833(i)(2)(C)(iv) of the Act, there
is no inflation update to the ASC
conversion factor for CY 2009. The final
CY 2009 ASC conversion factor is
$41.393.
1. Alternatives Considered
Alternatives to the changes we are
making and the reasons that we have
chosen the options are discussed
throughout this final rule with comment
period.
a. Alternatives Considered for OfficeBased Procedures
According to our final policy for the
revised ASC payment system, we
designate as office-based those
procedures that are added to the ASC
list of covered surgical procedures in CY
2008 or later years that we determine
are usually performed in physicians’
offices based on consideration of the
most recent available volume and
utilization data for each individual
procedure code and/or, if appropriate,
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the clinical characteristics, utilization,
and volume of related codes. We
establish payment for procedures
designated as office-based at the lesser
of the MPFS nonfacility PE RVU amount
or the ASC rate developed according to
the standard methodology of the revised
ASC payment system.
In developing this final rule with
comment period, we reviewed the
newly available CY 2007 utilization data
for all surgical procedures added to the
ASC list of covered surgical procedures
in CY 2008 and for those procedures for
which the office-based designation is
temporary in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66840 through 66841). Based on that
review, and as discussed in section
XV.E. of this final rule with comment
period, we are newly designating eight
surgical procedures as office-based, with
four of those designations as permanent.
We considered two alternatives in
developing this policy.
The first alternative we considered
was to make no change to the procedure
payment designations. This would mean
that we would continue to pay for the
eight procedures we are designating as
office-based at an ASC payment rate
developed according to the standard
methodology of the revised ASC
payment system. We did not select this
alternative because our analysis of data
for these services and related
procedures indicated that the eight
procedures we are designating as officebased could be considered to be usually
performed in physicians’ offices.
Consistent with our final policy adopted
in the August 2, 2007 revised ASC
payment system final rule (72 FR
42509), we were concerned that if these
services were not designated as officebased, their ASC payment could create
financial incentives for the procedures
to shift from physicians’ offices to ASCs
for reasons unrelated to clinical
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dwashington3 on PRODPC61 with RULES2
decisions regarding the most
appropriate setting for surgical care.
The second alternative we considered,
and the alternative we selected, is to
designate eight additional procedures as
office-based for CY 2009. Three of the
eight procedures are newly-created CPT
codes that will become effective
beginning January 1, 2009. We selected
this alternative because our review of
the most recent available volume and
utilization data and/or, if appropriate,
the clinical characteristics, utilization
and volume of related codes indicated
that these procedures could be
considered to be usually performed in
physicians’ offices. We believe that
designating these procedures as either
temporarily or permanently officebased, which results in the ASC
payment rate for these procedures
potentially being capped at the
physician’s office rate (that is, the MPFS
nonfacility PE RVU amount), if
applicable, is an appropriate step to
ensure that Medicare payment policy
does not create financial incentives for
such procedures to shift unnecessarily
from physicians’ offices to ASCs,
consistent with our final policy adopted
in the August 2, 2007 revised ASC
payment system final rule.
b. Alternatives Considered for Covered
Surgical Procedures
According to our final policy for the
revised ASC payment system, we
designate as covered surgical
procedures all surgical procedures that
we determine do not pose a significant
risk to beneficiary safety and are not
expected to require an overnight stay.
In developing this final rule with
comment period, we reviewed the
clinical characteristics and newly
available CY 2007 utilization data, if
applicable, for all procedures reported
by Category III CPT codes implemented
July 1, 2008, newly created Category I
CPT and Level II HCPCS codes for CY
2009, and surgical procedures that were
excluded from ASC payment for CY
2008. Based on that review, we
identified 16 surgical procedures for
which there are newly created Category
I CPT codes for CY 2009 CPT and 14
procedures that had been excluded from
the list in CY 2008 that meet the criteria
for inclusion on the ASC list of covered
surgical procedures and we are adding
those procedures to the list for CY 2009
payment. We considered two
alternatives in developing this policy.
The first alternative we considered
was to make no change to the ASC list
of covered surgical procedures. We did
not select this alternative because our
analysis of data for these services and
related procedures indicated that the
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additional 30 procedures we are
designating as covered surgical
procedures for CY 2009 may be safely
provided to beneficiaries in ASCs and
are not expected to require an overnight
stay. Consistent with our final policy,
we were concerned that if these services
were not designated as ASC covered
surgical procedures, beneficiaries would
lack access to these services in the most
clinically appropriate setting.
The second alternative we considered,
and the alternative we selected, is to
designate 30 additional procedures as
ASC covered surgical procedures for CY
2009. We selected this alternative
because our review of the clinical
characteristics and newly available CY
2007 utilization data, if applicable, for
all of these procedures indicated that
they do not pose a significant risk to
beneficiary safety and are not expected
to require an overnight stay, and thus
they meet the criteria for inclusion on
the list of ASC covered surgical
procedures. We believe that adding
these procedures to the list of covered
surgical procedures is an appropriate
step to ensure that beneficiary access to
services is not limited unnecessarily.
2. Limitations of Our Analysis
Presented here are the projected
effects of the changes for CY 2009 on
Medicare payment to ASCs. A key
limitation of our analysis is our inability
to predict changes in ASC service-mix
between CY 2007 and CY 2009 with
precision. The aggregate impacts
displayed in Tables 53 and 54 below are
based upon a methodology that assumes
no changes in service-mix with respect
to the CY 2007 ASC data used for this
final rule with comment period. In
addition, data on services that are newly
payable under the revised ASC payment
system are not yet reflected in the
available claims data. We believe that
the net effect on Medicare expenditures
resulting from the CY 2009 changes will
be negligible in the aggregate. However,
such changes may have differential
effects across surgical specialty groups
as ASCs adjust to payment rates. We are
unable to accurately project such
changes at a disaggregated level. Clearly,
individual ASCs will experience
changes in payment that differ from the
aggregated estimated impacts presented
below.
3. Estimated Effects of This Final Rule
With Comment Period on Payments to
ASCs
Some ASCs are multispecialty
facilities that perform the gamut of
surgical procedures, from excision of
lesions to hernia repair to cataract
extraction; others focus on a single
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specialty and perform only a limited
range of surgical procedures, such as
eye, digestive system, or orthopedic
procedures. The combined effect on an
individual ASC of the update to the CY
2009 payments will depend on a
number of factors including, but not
limited to, the mix of services the ASC
provides, the volume of specific services
provided by the ASC, the percentage of
its patients who are Medicare
beneficiaries, and the extent to which an
ASC provides different services in the
coming year. The following discussion
presents tables that display estimates of
the impact of the CY 2009 update to the
revised ASC payment system on
Medicare payments to ASCs, assuming
the same mix of services as reflected in
our CY 2007 claims data. Table 53
depicts the aggregate percent change in
payment by surgical specialty group and
Table 54 shows a comparison of
payment for procedures that we
estimate will receive the most Medicare
payment in CY 2009.
Table 53 shows the effects on
aggregate Medicare payments under the
revised ASC payment system by surgical
specialty group. We have aggregated the
surgical HCPCS codes by specialty
group and estimated the effect on
aggregated payment for surgical
specialty groups, considering separately
the CY 2009 transitional rates and the
fully implemented revised ASC
payment rates that would apply in CY
2009 if there were no transition. The
groups are sorted for display in
descending order by estimated Medicare
program payment to ASCs for CY 2008.
The following is an explanation of the
information presented in Table 53.
• Column 1—Surgical Specialty
Group indicates the surgical specialties
into which ASC procedures are
grouped. We used the CPT code range
definitions and Level II HCPCS codes
and Category III CPT codes, as
appropriate, to account for all surgical
procedures to which the Medicare
program payments are attributed.
• Column 2—Estimated CY 2008 ASC
Payments were calculated using CY
2007 ASC utilization (the most recent
full year of ASC utilization) and CY
2008 ASC payment rates. The surgical
specialty groups are displayed in
descending order based on estimated CY
2008 ASC payments.
• Column 3—Estimated CY 2009
Percent Change with Transition (50/50
Blend) is the aggregate percentage
increase or decrease, compared to CY
2008, in Medicare program payment to
ASCs for each surgical specialty group
that is attributable to updates to the ASC
payment rates for CY 2009 under the
scaled, 50/50 blend of the CY 2007 ASC
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payment rate and the CY 2009 ASC
payment rate.
• Column 4—Estimated CY 2009
Percent Change without Transition
(Fully Implemented) is the aggregate
percentage increase or decrease in
Medicare program payment to ASCs for
each surgical specialty group that would
be attributable to updates to ASC
payment rates for CY 2009 compared to
CY 2008 if there were no transition
period to the fully implemented
payment rates. The percentages
appearing in Column 4 are presented
only as comparisons to the percentage
changes under the transition policy in
column 3. We are not eliminating or
modifying the policy for a 4-year
transition that was finalized in the
August 2, 2007 revised ASC payment
system final rule (72 FR 42519).
As seen in Table 53, the update to
ASC rates for CY 2009 is expected to
result in small aggregate decreases in
payment amounts for eye and ocular
adnexa and nervous system procedures
and somewhat greater decreases for
digestive system procedures. As shown
in column 4 in the table, those payment
decreases would be expected to be
greater in CY 2009 if there were no
transitional payment for all three of
those surgical specialty groups.
Generally, for the surgical specialty
groups that account for less ASC
utilization and spending, the expected
payment effects of the CY 2009 update
are positive. ASC payments for
procedures in those surgical specialties
will increase in CY 2009 with the 50/50
transitional payment rates and, in the
absence of the transition, would
increase even more. For instance, in the
68803
aggregate, payment for integumentary
system procedures is expected to
increase by 7 percent under the CY 2009
rates and by 19 percent if there were no
transition. Similar effects are observed
for genitourinary, cardiovascular,
musculoskeletal, respiratory, and
auditory system procedures as well. An
estimated increase in aggregate payment
for the specialty group does not mean
that all procedures in the group will
experience increased payment rates. For
example, the estimated increased
payments at the surgical specialty group
level may be due to decreased payments
for some of the most frequently
provided procedures in the group and
the moderating effect of the sometimes
substantial payment increases for the
less frequently performed procedures
within the surgical specialty group.
TABLE 53—ESTIMATED CY 2009 IMPACT OF THE UPDATE TO THE ASC PAYMENT SYSTEM ON ESTIMATED AGGREGATE
CY 2009 MEDICARE PROGRAM PAYMENTS UNDER THE 50/50 TRANSITION BLEND AND WITHOUT A TRANSITION, BY
SURGICAL SPECIALTY GROUP
Surgical specialty group
Estimated CY
2008 ASC
payments (in
millions)
Estimated CY
2009 percent
change with
transition (50/
50 blend)
Estimated CY
2009 percent
change without transition
(fully implemented)
(1)
(2)
(3)
(4)
dwashington3 on PRODPC61 with RULES2
Eye and ocular adnexa ................................................................................................................
Digestive system ..........................................................................................................................
Nervous system ...........................................................................................................................
Musculoskeletal system ...............................................................................................................
Integumentary system .................................................................................................................
Genitourinary system ...................................................................................................................
Respiratory system ......................................................................................................................
Cardiovascular system ................................................................................................................
Auditory system ...........................................................................................................................
Table 54 below shows the estimated
impact of the updates to the revised
ASC payment system on aggregate ASC
payments for selected procedures
during CY 2009 with and without the
transitional blended rate. The table
displays 30 of the procedures receiving
the greatest estimated CY 2008 aggregate
Medicare payments to ASCs. The
HCPCS codes are sorted in descending
order by estimated CY 2008 program
payment.
• Column 1—HCPCS code.
• Column 2—Short Descriptor of the
HCPCS code.
• Column 3—Estimated CY 2008 ASC
Payments were calculated using CY
2007 ASC utilization (the most recent
full year of ASC utilization) and the CY
2008 ASC payment rates. The estimated
CY 2008 payments are expressed in
millions of dollars.
• Column 4—CY 2009 Percent
Change with Transition (50/50 Blend)
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reflects the percent differences between
the estimated ASC payment for CY 2008
and the estimated payment for CY 2009
based on the update, incorporating a 50/
50 blend of the CY 2007 ASC payment
rate and the CY 2009 revised ASC
payment rate.
• Column 5—CY 2009 Percent
Change without Transition (Fully
Implemented) reflects the percent
differences between the estimated ASC
payment for CY 2008 and the estimated
payment for CY 2009 based on the
update if there were no transition period
to the fully implemented payment rates.
The percentages appearing in Column 5
are presented as a comparison to the
percentage changes under the transition
policy in Column 4. We are not
eliminating or modifying the policy for
the 4-year transition that was finalized
in the August 2, 2007, revised ASC
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$1,397
753
327
222
89
88
23
15
6
¥1
¥6
¥3
19
7
11
14
16
25
¥2
¥16
¥10
54
19
28
38
46
52
payment system final rule (72 FR
42519).
As displayed in Table 54, 25 of the 30
procedures with the greatest estimated
aggregate CY 2008 Medicare payment
are included in the three surgical
specialty groups that are estimated to
account for the most Medicare payment
in CY 2008, specifically eye and ocular
adnexa, digestive system, and nervous
system groups. Consistent with the
estimated payment effects on the
surgical specialty groups displayed in
Table 53, the estimated effects of the CY
2009 update on ASC payment for
individual procedures in year 2 of the
transition shown in Table 54 are varied.
Aggregate ASC payments for many of
the most frequently furnished ASC
procedures will decrease as the
transition causes individual procedure
payments to reflect relative ASC
payment weights that are more closely
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aligned with the relative payment
weights under the OPPS.
The ASC procedure for which the
most Medicare payment is estimated to
be made in CY 2008 is the cataract
removal procedure reported with CPT
code 66984 (Extracapsular cataract
removal with insertion of intraocular
lens prosthesis (one stage procedure),
manual or mechanical technique (e.g.,
irrigation and aspiration or
phacoemulsification)). The update to
the ASC rates will result in a 1 percent
payment decrease for that procedure in
CY 2009. The estimated payment effects
on the four other high volume eye and
ocular adnexa procedures included in
Table 54 are slightly positive and
negative, but for CPT code 66821
(Discission of secondary membranous
cataract (opacified posterior lens
capsule and/or anterior hyaloid); laser
surgery (e.g., YAG laser) (one or more
stages)), the expected CY 2009 payment
decrease is 10 percent, significantly
greater than the decreases expected for
any of the other eye and ocular adnexa
procedures shown.
The transitional payment rates for 8 of
the 9 digestive system procedures
included in Table 54 are expected to
decrease by 6 to 9 percent in CY 2009.
Those estimated decreases are
consistent with the estimated 6 percent
reduction shown in Table 53 for the
digestive system surgical specialty
group.
The 10 nervous system procedures for
which the most Medicare payment is
estimated to be made to ASCs in CY
2008 are included in Table 54. The CY
2009 update will result in 5 percent
payment decreases for 4 of those
procedures and result in even more
substantial decreases, 19 percent and 22
percent respectively, for CPT code
64484 (Injection, anesthetic agent and/
or steroid, transforaminal epidural;
lumbar or sacral, each additional level)
and CPT code 64476 (Injection,
anesthetic agent and/or steroid,
paravertebral facet joint or facet joint
nerve; lumbar or sacral, each additional
level). The other three nervous system
procedures included in the table will
realize payment increases, especially
CPT codes 64622 (Destruction by
neurolytic agent, paravertebral facet
joint nerve; lumbar or sacral, single
level) and 64721 (Neuroplasty and/or
transposition; medial nerve at carpal
tunnel) for which payment will increase
by 13 percent in CY 2009.
The estimated payment effects for
most of the remaining procedures listed
in Table 54 are positive. For example,
the CY 2009 transitional payment rate
for CPT codes 29880 (Arthroscopy,
knee, surgical; with meniscectomy
(medial AND lateral, including any
meniscal shaving)) and 29881
(Arthroscopy, knee, surgical; with
meniscectomy (medial OR lateral,
including any meniscal shaving)) are
estimated to increase 17 percent over
the CY 2008 transitional payment
amount.
TABLE 54—ESTIMATED IMPACT OF UPDATE TO CY 2009 ASC PAYMENT SYSTEM ON AGGREGATE PAYMENTS FOR
SELECTED PROCEDURES
(1)
dwashington3 on PRODPC61 with RULES2
Short descriptor
(2)
Estimated CY
2009 percent
change (50/50
Blend)
Estimated CY
2009 percent
change without transition
(fully implemented)
(4)
HCPCS code
Allowed
charges
(in mil)
(5)
(3)
66984
43239
45378
45380
45385
66821
62311
64483
66982
45384
G0121
G0105
15823
64475
43235
52000
64476
29881
64721
63650
29880
62310
67041
67904
64484
43248
28285
63685
64622
29848
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
Cataract surg w/iol, 1 stage ...............................................................................
Upper gi endoscopy, biopsy ..............................................................................
Diagnostic colonoscopy .....................................................................................
Colonoscopy and biopsy ....................................................................................
Lesion removal colonoscopy .............................................................................
After cataract laser surgery ...............................................................................
Inject spine l/s (cd) .............................................................................................
Inj foramen epidural l/s ......................................................................................
Cataract surgery, complex .................................................................................
Lesion remove colonoscopy ..............................................................................
Colon ca scrn not hi rsk ind ...............................................................................
Colorectal scrn; hi risk ind .................................................................................
Revision of upper eyelid ....................................................................................
Inj paravertebral l/s ............................................................................................
Uppr gi endoscopy, diagnosis ...........................................................................
Cystoscopy .........................................................................................................
Inj paravertebral l/s add-on ................................................................................
Knee arthroscopy/surgery ..................................................................................
Carpal tunnel surgery ........................................................................................
Implant neuroelectrodes ....................................................................................
Knee arthroscopy/surgery ..................................................................................
Inject spine c/t ....................................................................................................
Vit for macular pucker ........................................................................................
Repair eyelid defect ...........................................................................................
Inj foramen epidural add-on ...............................................................................
Uppr gi endoscopy/guide wire ...........................................................................
Repair of hammertoe .........................................................................................
Insrt/redo spine n generator ..............................................................................
Destr paravertebrl nerve l/s ...............................................................................
Wrist endoscopy/surgery ...................................................................................
Predictably, the previous ASC
payment system served as an incentive
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to ASCs to focus on providing
procedures for which they determined
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1,087
166
141
132
101
84
76
53
51
38
37
32
30
27
24
23
22
21
19
17
16
15
14
14
14
13
13
12
11
11
¥1
¥7
¥6
¥6
¥6
¥10
¥5
¥5
¥1
¥6
¥9
¥9
4
¥5
0
¥1
¥22
17
13
10
17
¥5
0
5
¥19
¥7
15
3
13
¥4
¥3
¥20
¥18
¥18
¥18
¥29
¥13
¥13
¥3
¥18
¥25
¥25
10
¥13
0
¥10
¥65
49
38
20
49
¥13
¥3
13
¥51
¥20
41
7
40
¥12
Medicare payments would support their
continued operation. We note that,
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historically, the ASC payment rates for
many of the most frequently performed
procedures in ASCs were similar to the
OPPS payment rates for the same
procedures. Conversely, procedures
with ASC payment rates that were
substantially lower than the OPPS rates
have been performed least often in
ASCs. We believe the revised ASC
payment system represents a major
stride toward encouraging greater
efficiency in ASCs and promoting a
significant increase in the breadth of
surgical procedures performed in ASCs
because it distributes payments across
the entire spectrum of covered surgical
procedures based on a coherent system
of relative payment weights that are
related to the clinical and facility
resource requirement characteristics of
those procedures.
4. Estimated Effects of This Final Rule
With Comment Period on Beneficiaries
We estimate that the CY 2009 update
to the ASC payment system will be
generally positive for beneficiaries with
respect to the procedures newly added
to the ASC list of covered surgical
procedures and for those designated as
office-based for CY 2009. First, except
for screening colonoscopy and flexible
sigmoidoscopy procedures, the ASC
coinsurance rate for all procedures is 20
percent. This contrasts with procedures
performed in HOPDs, where the
beneficiary is responsible for
copayments that range from 20 percent
to 40 percent of the procedure payment.
Second, ASC payment rates under the
revised payment system are lower than
payment rates for the same procedures
under the OPPS, so the beneficiary
coinsurance amount under the ASC
payment system almost always will be
less than the OPPS copayment amount
for the same services. (The only
exceptions would be if the ASC
coinsurance amount exceeds the
inpatient deductible. The statute
requires that copayment amounts under
the OPPS not exceed the inpatient
deductible.) For procedures newly
added to the ASC list of covered
surgical procedures in CY 2009 that
migrate from the HOPD to the ASC, the
beneficiary coinsurance amount will be
less than the OPPS copayment amount.
Furthermore, the additions to the list
will provide beneficiaries access to
more surgical procedures in ASCs.
Beneficiary coinsurance for services
migrating from physicians’ offices to
ASCs may decrease or increase under
the revised ASC payment system,
depending on the particular service and
the relative payment amounts for that
service in the physician’s office
compared to the ASC. However, for
those procedures newly designated as
office-based in CY 2009, the beneficiary
coinsurance amount will be no greater
than the beneficiary coinsurance in the
physician’s office.
In addition, as finalized in the August
2, 2007 revised ASC payment system
final rule (72 FR 42520), in CY 2009, the
second year of the 4-year transition to
the ASC payment rates calculated
according to the standard methodology
of the revised ASC payment system,
ASC payment rates for a number of
commonly furnished ASC procedures
will continue to be reduced, resulting in
lower beneficiary coinsurance amounts
for these ASC services in CY 2009.
Continued migration of procedures
currently on the list of ASC covered
surgical procedures from the HOPD to
the ASC will also reduce beneficiary
liability for these services, for the two
reasons described above with respect to
the new ASC covered services.
68805
5. Conclusion
The updates to the ASC payment
system for CY 2009 will affect each of
the approximately 5,300 ASCs currently
approved for participation in the
Medicare program. The effect on an
individual ASC will depend on its mix
of patients, the proportion of the ASC’s
patients that are Medicare beneficiaries,
the degree to which the payments for
the procedures offered by the ASC are
changed under the revised payment
system, and the extent to which the ASC
provides a different set of procedures in
the coming year.
The revised ASC payment system is
designed to result in the same aggregate
amount of Medicare expenditures in CY
2009 as was estimated to be made in CY
2008. We estimate that the update to the
revised ASC payment system, including
the addition of surgical procedures to
the list of covered surgical procedures,
that we are adopting for CY 2009 will
have no net effect on Medicare
expenditures compared to the estimated
level of Medicare expenditures in CY
2008.
6. Accounting Statement
As required by OMB Circular A–4
(available at https://www.whitehousegov/
omb/circulars/a004/a-4.pdf), in Table
55 below, we have prepared an
accounting statement showing the
classification of the expenditures
associated with the statutorily required
zero percent update to the CY 2009
revised ASC payment system, based on
the provisions of this final rule with
comment period. This table provides
our best estimate of Medicare payments
to providers and suppliers as a result of
the update to the CY 2009 ASC payment
system, as presented in this final rule
with comment period. All expenditures
are classified as transfers.
TABLE 55—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES FROM CY 2008 TO CY 2009 AS A
RESULT OF THE CY 2009 UPDATE TO THE REVISED ASC PAYMENT SYSTEM
Category
Transfers
Annualized Monetized Transfers ..............................................................
From Whom to Whom ..............................................................................
Annualized Monetized Transfer ................................................................
From Whom to Whom ..............................................................................
dwashington3 on PRODPC61 with RULES2
Total ...................................................................................................
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$0 Million.
Federal Government to Medicare Providers and Suppliers.
$0 Million.
Premium Payments from Beneficiaries to Federal Government.
$0 Million.
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Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations
D. Effects of Final Requirements for
Hospital Reporting of Quality Data for
Annual Hospital Payment Update
dwashington3 on PRODPC61 with RULES2
1. Hospital Reporting of Outpatient
Quality Data Under the HOP QDRP
In section XVII. of the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66871), we finalized our measures
and requirements for reporting of
quality data to CMS for services
furnished in hospital outpatient settings
under the CY 2009 HOP QDRP. The
initial data submission for April to June
2008 services is due to the OPPS
Clinical Warehouse by November 1,
2008 (72 FR 66871). CMS and its
contractors will provide assistance to all
affected hospitals that wish to submit
data. In section XVI. of this final rule
with comment period, we discuss our
measures and requirements for reporting
of quality data to CMS for services
furnished in hospital outpatient settings
under the CY 2010 HOP QDRP.
We have no previous history under
the HOP QDRP to indicate the
percentage of hospitals that will submit
quality data. However, for the initial
data submission, in CY 2008, 98 percent
of affected hospitals have pledged to
participate. In addition, results from the
RHQDAPU program indicate that over
98 percent of IPPS hospitals submitted
quality data in the initial year of the
program. We expect that affected
hospitals will participate at
approximately the same rate under the
HOP QDRP. We have continued our
efforts to ensure that our CMS
contractors provide assistance to all
affected hospitals that wish to submit
data. Therefore, for purposes of this CY
2009 impact analysis, we have assumed
that the 98 percent of affected hospitals
that have pledged to participate will
qualify for the full payment update
factor for CY 2009.
2. Hospital Reporting of Inpatient
Quality Data Under the RHQDAPU
Program
In the FY 2009 IPPS proposed rule (73
FR 23651), we noted that, to the extent
that the proposed quality measures for
FY 2010 under the RHQDAPU program
had not already been endorsed by a
consensus building entity such as the
NQF, we anticipated that they would be
endorsed prior to the time that we
issued the FY 2009 IPPS final rule. We
stated that we intended to finalize the
FY 2010 RHQDAPU program measure
set for the FY 2010 payment
determination in the FY 2009 IPPS final
rule, contingent upon the endorsement
status of the proposed measures.
However, we stated that, if a measure
had not received NQF endorsement by
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the time we issued the FY 2009 IPPS
final rule, we intended to finalize that
measure for the RHQDAPU program
measure set in this CY 2009 OPPS/ASC
final rule with comment period if the
measure received endorsement prior to
the time we issued this CY 2009 OPPS/
ASC final rule with comment period (73
FR 23651). We requested public
comment on these measures.
In the FY 2009 IPPS final rule (73 FR
48611), we set out, as listed below, two
measures which had not yet received
NQF endorsement, and that we
intended to adopt for the FY 2010
RHQDAPU program measure set in this
CY 2009 OPPS/ASC final rule with
comment period if the measures receive
endorsement from a national consensusbased entity such as NQF:
READMISSION MEASURES (MEDICARE
PATIENTS)
• AMI 30-Day Risk Standardized Readmission Measure (Medicare patients).
• Pneumonia (PN) 30-Day Risk Standardized Readmission Measure (Medicare patients).
In section XVI.I. of this final rule with
comment period, we finalized these
measures because we expect them to
receive NQF endorsement. We estimate
that the two new RHQDAPU program
readmission measures for Medicare
patients adopted in this final rule with
comment period will have no
incremental impact on the percentage of
hospitals that will qualify for the full
IPPS payment update factor for FY
2010. These two measures are
calculated using Medicare Part A
inpatient claims already submitted by
hospitals. Past experience from adding
other RHQDAPU program claims-based
measures indicates that no hospitals are
expected to be impacted in their FY
2010 IPPS Medicare payment update.
E. Effects of ASC Conditions for
Coverage Changes in This Final Rule
1. Effects on ASCs
As described in section XV.B. of the
preamble of this document, the ASC
CfCs final rule presents new provisions,
as well as provisions that are carried
over from the existing ASC CfC
regulations. For purposes of this section,
we have assessed only the impact of the
new provisions. Other provisions have
not been revised and, therefore, do not
present a new burden to ASCs.
Table 56 contains data that are
frequently used in this impact
statement. The salary-related cost data
are referenced from the
Salarywizard.com Web site at https://
hrsalarycenter.salary.com. Some of the
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requirements contained in the new CfC
provisions are already standard medical
or business practices. Therefore, these
requirements do not present an
additional burden to ASCs.
We recognize that, in describing what
the effect of this rule will be on ASCs,
burden estimates may not accurately
reflect the experience of all ASCs.
Facilities vary in the complexity of
operations and processes, and.
therefore, associated costs may differ.
TABLE 56—YEAR 2008 DATA USED
THROUGH THIS IMPACT ANALYSIS
Number
of
Medicare-certified
ASCs nationwide .......................
Average number of patients per
ASC ...........................................
Hourly rate of administrator* ........
Hourly rate of registered nurse* ...
5,100
1,240
$49.00
$39.00
* Hourly salary rates include base salary,
bonuses, Social Security, 401(k)/403(b), disability, health care, pension, and time off.
We are revising the following existing
conditions: Governing body and
management; Evaluation of quality; and
Laboratory and radiologic services. We
are finalizing the following new
conditions: Patient rights, Infection
control, and Patient admission,
assessment and discharge.
a. Effects of the Governing Body and
Management Provision (§ 416.41)
This ASC CfCs final rule expands the
responsibility of the governing body to
include the QAPI program and the
creation and maintenance of a disaster
preparedness plan. The governing
body’s specific responsibilities for QAPI
are detailed in the new QAPI condition
located at § 416.43(e). The assignment of
burden for this requirement can be
found under the description of the QAPI
requirement.
The existing regulations require that
ASCs meet certain safety requirements
under § 416.44, ‘‘Condition for
coverage—Environment.’’ In an effort to
ensure ASCs are equipped to handle
emergencies and disasters, we are
requiring that ASCs develop a plan
specific to disaster preparedness that
would provide for the emergency care of
patients, ASC staff, and patient family
members who are in the ASC when/if
unexpected events or circumstances
occur at the ASC or in the immediate
community that threaten the health of
these individuals. The plan requires an
ASC to coordinate with appropriate
State and local agencies and, as
available, to seek their advice on plan
development. The plan also requires an
annual review to test the plan’s
effectiveness.
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In addition to an annual review, the
rule also requires that the ASC staff be
able to demonstrate, through annual
drills and written evaluations, the ASCs
ability to manage emergencies that are
likely to occur within their geographic
area.
We estimate that an administrator,
earning $49.00 per hour, would be
largely responsible for developing the
plan and for managing the yearly drills
and evaluations. We are estimating that
the yearly cost for one ASC to develop
and implement a disaster preparedness
plan will be approximately 4 hours at
$49.00 per hour, with a net cost of
$196.00 per ASC. The total cost for all
ASCs is estimated to be $99,600.
b. Effects of the QAPI Provision
(§ 416.43)
In § 416.43, we are replacing the
existing requirement, ‘‘Evaluation of
quality,’’ with a revised requirement
entitled, ‘‘Quality assessment and
performance improvement’’. As part of
our efforts to establish regulatory
consistency where possible among
providers and suppliers, we are adding
a QAPI program that requires ASCs to
continuously monitor quality
improvement through focused projects,
identify barriers to improvements, take
efforts to measure improvements in
patient health outcomes, and work to
reduce medical errors. ASCs are also
expected to measure, analyze and track
quality indicators, including adverse
patient events, infection control, and
other aspects of performance, including
processes of care and services furnished
in the ASC.
Once an area of concern is identified,
the ASC will develop a plan for
improvement. The ASC determines the
specifics of the plan, assesses its
effectiveness, and monitors the results
learned.
This condition includes five
standards: program scope; program data;
program activities; performance
improvement projects; and governing
body responsibilities. Because ASCs are
already required in the current CfCs to
evaluate the quality of care they provide
on an ongoing basis, many providers are
already using some version of a
comprehensive quality assessment and
performance improvement program. We
estimate that it would take 12 hours for
each ASC to develop its own quality
assessment performance improvement
program. We also estimate that each
ASC would spend 18 hours a year
collecting and analyzing the findings. In
addition, we estimate that each ASC
would spend 4 hours a year training its
staff and 18 hours a year implementing
performance improvement activities.
Both the program development and
implementation functions would most
likely be managed by the ASC’s
administrator. Based on an hourly rate
of $49.00, the total cost of the quality
assessment and performance
improvement condition for coverage is
estimated to be $2,548 per ASC.
The hourly burden is based on
estimates that are found in the ‘‘Hospital
Conditions of Participation: Quality
Assessment and Performance
Improvement’’ final rule (68 FR 3435,
January 24, 2003). We estimated that a
hospital would spend 80 hours
collecting and analyzing information on
68807
12 identified measures. According to
our 2002 statistics, 5,985 hospitals
discharged 11.8 million patients in
2000. This means that the statistically
average hospital discharged
approximately 2,000 patients that year.
Collecting and analyzing data for 2,000
patients, we estimate that the
implementation burden would take 80
hours. Based on the estimate that the
average ASC treats and discharges 1,240
patients per year, we reduced the
burden for ASCs to 52 hours each. A
new standard, Program scope, requires
that the existing evaluation activities
demonstrate measurable improvement
in patient health outcomes. This rule
also requires the use of quality indicator
data in the QAPI program, but does not
require any specific data collection or
utilization, nor would it require ASCs to
report the collected data. This would
give the ASCs flexibility and minimize
burden.
A new standard, Program activities,
identifies priority areas that an ASC
must consider in its program. ASCs
would be expected to carry out
assessment activities according to the
scope and complexity of their programs.
This rule requires the governing body
to become involved in all aspects of the
QAPI program. We have estimated the
burden based on management by an
administrator. There should be direct
and open communication between the
program manager and the governing
body. The analysis of a variety of
reports, program prioritization, and
allocation of resources are all standard
business practices and, therefore, we
have not assigned additional burden to
these functions.
TABLE 57—SUMMARY OF QUALITY ASSESSMENT AND PERFORMANCE IMPROVEMENT BURDEN
Time per ASC
(hours)
Standard
Total time
(hours)
Cost per ASC
Total cost
12
18
4
18
61,200
91,800
20,400
91,800
$588
882
196
882
$2,998,800
4,498,200
99,600
4,498,200
Annual total ...............................................................................................
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Developing QAPI .............................................................................................
Collecting/analyzing findings ...........................................................................
Training staff ....................................................................................................
Implementing improvement activities ...............................................................
52
265,200
2,548
12,994,800
The various ASC accreditation and
professional health organizations (that
is, The Joint Commission, the AAAASF,
the AAAHC, and the AOA) support
advances in patient care in a number of
ways and actively encourage health care
entities to expand and improve their
existing programs. These organizations
are familiar with quality improvement
programs and are likely to have actual
or referral information available to assist
ASCs in setting up their QAPI programs.
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In developing a QAPI program, ASCs
are urged to take advantage of the
variety of information that exists from
the industry. ASCs may also find that
QAPI programs for other entities, such
as hospitals, can be adapted to fit
certain needs.
Comment: One commenter disagreed
with our estimated costs in the
proposed rule of developing and
implementing a QAPI program.
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Response: In this final rule, we have
not increased the burden estimate from
the proposed rule because the
commenter did not establish cause for a
modification.
c. Effects of the Laboratory and
Radiologic Services Provision (§ 416.49)
Final changes to this CfC are editorial.
There is no additional burden assigned
to this CfC.
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d. Effects of the Patient Rights Provision
(§ 416.50)
The existing regulations do not
contain a condition-level patient rights
requirement. The final rule recognizes
that ASC patients are entitled to certain
rights that must be protected and
preserved, and that all patients must be
free to exercise these rights. The final
rule details basic information that ASCs
are required to provide to patients:
Notice of rights; exercise of patient
rights and respect for property and
person; privacy and safety; and
confidentiality of clinical records. This
condition also includes a requirement
for advance directives, as specified at 42
CFR Part 489, Subpart I, and a
requirement for the submission and
investigation of grievances.
We have identified potential burden
in the following areas.
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(1) Effects of the Notice of Rights—
Verbal and Written Notice Provision
An ASC is required to provide
patients or, as appropriate, their
representatives with verbal or written
notice of the rights and responsibilities
of the patient in advance of the patient
coming under the care of the ASC.
Because ASCs must notify patients
either verbally or in writing in advance
of the patient coming under the ASC’s
care, ASCs may choose to mail the
patient rights notification to the patient
along with the pre-surgical information,
the physician’s financial interests or
ownership, and the advance directives.
Generally, the most effective and
efficient manner to furnish a notice of
rights is to initially develop a general
notice which can be subsequently
discussed and/or distributed as needed.
We expect that an ASC will use this
simple and inexpensive approach in
order to meet this requirement. In
response to the needs of their specific
patient populations, some ASCs might
choose to have their patient rights
notification written in the predominant
language(s) of their patients. More than
likely, this message would be written by
a registered nurse or similar
professional. A typical message might
be in three parts: An introduction; the
information section; and a section for
followup questions and issues. We
expect the effort to develop this onetime message would not exceed 1 hour
at a cost of $39.00 for each ASC. We
believe that this would be a one-time
cost for ASCs and estimate that the total
costs would be $198,900 for all ASCs. If
an ASC chooses to mail the patient
rights to the ASC patient, this form
would accompany the other pre-surgical
treatment forms that an ASC typically
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mails to the patient. It is likely that the
patient’s rights form would consist of a
one page, brochure-type informational.
We believe the cost associated with
adding this informational brochure to
the pre-surgical treatment package
would be nominal. Therefore, we have
not calculated a cost for this mailing.
In many cases, notifying patients
verbally of their rights is already being
done and some ASCs may already be
employing interpreters to make certain
that patients who do not understand
English fully understand their rights
and responsibilities. However, for
purposes of this analysis, we will
assume that all ASCs need to budget for
this activity. The cost for language
services can range from moderate hourly
amounts to daily, full-time interpreters
at $800 per day. Telephonic services are
more reasonable and more accessible
and can be purchased for $2.00 per
minute. We are not able to determine
the percentage of non-English speaking
patients an ASC would care for in a year
as that depends on a number of
variables, including the ASC’s
geographic location. In addition, the
availability of in-person language
services would also vary from location
to location and, while it may not be
preferred, in some cases the use of
family members may be necessary.
Given this discussion, we estimate
that 3 percent of an average annual ASC
caseload of 1,240 cases might require
interpreter services and 15 minutes of
time would be needed for an interpreter
to provide a general description of the
rights to which the patient is entitled.
Because a percentage of an ASC’s
patients will speak Spanish or French,
as these languages are commonly
spoken in some parts of the country, we
expect that friends and relatives of
patients speaking these languages would
be available to assist in understanding
issues related to the patient’s scheduled
procedure. Therefore, the need for an
ASC to hire an interpreter in these cases
would be infrequent. (Other than
English, Spanish is the language most
commonly spoken in 42 States.) The
ASC may have to take steps to arrange
for an interpreter for some patients
when other options are not available.
• Telephone interpretive services at
$2.00/minute × 15 minutes = $30.00 per
patient. The cost for telephone
interpreter services is, for example,
dependent upon the language, the
consumed time, or frequency. Costs
range from $75.00 an hour to $160.00 or
more an hour. The figure of $2.00 per
minute is an estimated average cost.
• 3 percent × 1,240 patient caseload
= 37 patients per year per ASC requiring
the services of an interpreter.
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• $30.00 × 37 = $1,110.00 per ASC.
• $1,110 × 5,100 ASCs = $5,661,000
estimated cost total for all ASCs.
(2) Effects of the Advance Directives
Provision
Each ASC is required to establish an
advance directive policy, and provide
the patient or representative with
information concerning its policies on
advance directives, including a
description of applicable State laws and,
if requested, official State advance
directive forms. Each ASC is also
required to explain these policies to
their patients. This includes providing
information on any conscience
objections the physician(s) and/or the
ASC might have to advance directives;
documenting whether an individual has
executed an advance directive; and
educating staff on the importance of
advance directives. We expect that
many ASCs already communicate
information about advance directives to
their patients because advance
directives are common in hospitals and
a significant portion of Medicare
patients have had some experience with
hospitals. Many ASCs have already
formulated some type of advance
directives policy.
We estimate that the development of
an advance directives document
utilizing generic advance directives
forms obtained from existing Web sites
or from State agency Web sites, by a
registered nurse or equivalent will take
1 hour at $39.00 per ASC. The estimated
cost for all ASCs is $198,900. We
randomly queried a small sample of
State Web sites and found generic
advance directives forms in English and
Spanish that were posted and available
for downloading.
We believe that these functions reflect
standard industry practice and,
therefore, would add no burden. While
this requirement is subject to the PRA,
we believe the burden associated with
this requirement would constitute a
usual and customary business practice.
Pursuant to 5 CFR 1320.3(b)(2), we will
not include the cost of this activity in
the economic impact analysis.
Some ASCs will choose to mail
advance directives to their patients
along with the other pre-surgical
treatment information. In instances
when ASCs mail the advance directives,
it would also be appropriate to mail the
ASC’s disclosures concerning any
policies the ASC or the ASC’s
physicians might have regarding
specific patient rights, for example, do
not resuscitate orders, etc. We believe
such information should be mailed with
the package of information in an effort
to afford patient the opportunity to seek
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out another ASC in the event they are
uncomfortable or in disagreement with
the ASC’s policies on advance
directives.
Most advance directives consist of a
one-page brochure. Because ASCs
already mail a package of information to
the patient, we again believe the cost of
including a second additional page
would be nominal and, therefore, assign
no burden to this activity.
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(3) Effects of the Submission and
Investigation of Patient Complaints
Provision
We estimate that an ASC may have to
investigate complaints from
approximately 1 percent (12 patients) of
its caseload due to allegations of
mistreatment, and neglect, for example.
We are not aware of an existing
repository of records that accurately
identifies the number and exact nature
of ASC complaints. Therefore, 1 percent
is an estimate.
An investigation could average 1 hour
and would be managed by an
administrator. Twelve hours could be
spent by each ASC in this activity.
• 12 hours × $49.00 (administrator’s
hourly salary) = $588 estimated cost for
each ASC.
• $588 × 5,100 ASCs = $2,998,800
estimated cost for all ASCs.
In its resolution of the grievance, an
ASC must investigate all allegations,
document how the violation or
grievance was addressed, and provide
the patient with written notice of its
decision containing the name of an ASC
contact person, the steps taken to
investigate the grievance, the results of
the grievance process, and the date the
grievance process was completed.
The burden associated with this
requirement is the time and effort
necessary to fully document the alleged
violation or complaint and to disclose
the written notice to each patient who
filed a grievance. We estimate that, on
average, it will take each ASC 15
minutes at a cost of $39.00 an hour to
develop and disseminate 12 notices on
an annual basis (3 hours per ASC), for
a total ASC burden of 15,300 hours at
a cost $596,700.
While this requirement is subject to
the PRA, we believe it would constitute
a usual and customary business
practice. Pursuant to 5 CFR 1320.3(b)(2),
we will not include this activity in the
economic impact analysis.
(4) Effects of the Exercise of Rights and
Respect for Property and Person
Provision
Since ASCs began operating under
Medicare in 1982, they have been
required to provide information to
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patients about the procedures to be
performed. This information is provided
to patients by way of the informed
patient consent in the current
regulation. ASCs are also responsible for
providing patients with information
concerning expected outcomes. The
final rule requires that ASCs continue
this practice. Therefore, we do not
anticipate that ASCs will incur
significant costs associated with this
requirement.
(5) Effects of the Privacy and Safety
Provision
The current regulatory language
requires that an ASC provide a safe and
sanitary environment to protect the
health and safety of patients. The final
rule adds the requirement that the
patient has the right to personal privacy.
We are defining personal privacy in this
case as providing the patient access to
an area of the ASC which is shielded
from view from others to prepare for the
procedure to be performed. This would
mean a place to disrobe, speak with
ASC personnel about issues and
concerns, and then get dressed
following the procedure. While this
requirement is subject to the PRA, we
believe that it would constitute a usual
and customary business practice.
Pursuant to 5 CFR 1320.3(b)(2), we will
not include this activity in the economic
impact analysis.
(6) Effects of the Confidentiality of
Clinical Records Provision
The existing regulation at § 416.47(a)
requires that an ASC develop a system
for the proper collection, storage, and
use of patient records. This use includes
such purposes as to provide appropriate
health care, for payment information,
for disease management, and for quality
assessment. The changes in the final
rule merely provide a formal
clarification of the current requirement’s
approach the proper use of records.
ASCs recognize the need for privacy
regarding patient medical records and
have already instituted policies based
on the Federal HIPAA Privacy Rule,
which requires appropriate safeguards
to protect the privacy of individually
identifiable health information and
regulates the use and disclosure of such
information. In addition, 48 States have
medical privacy laws that are applicable
to patients’ health information. Some
State laws are specific in prohibiting
unlawful disclosure of patient
information while, in other States,
prohibitions are linked to laws
governing specific medical entities.
Most health care facilities have already
instituted procedures to address this
issue to conform to State laws.
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68809
Therefore, we do not believe this final
rule will impose any significant
additional financial or resource burdens
on ASCs.
e. Effects of the Infection Control
Provision (§ 416.51)
As we proposed, we are elevating the
level of importance of the infection
control requirements, located at
§ 416.44(a)(3), to the condition level.
The ASC is required to ensure that the
infection control program minimizes
infections and communicable diseases
that could affect both patients and ASC
staff. We are also requiring that a
designated professional in the ASC be
responsible for the program. We
estimate the burden increase to be
minimal, except for the ongoing training
expense to make certain that the
designated professional continues to be
familiar with current infection control
information.
ASCs are currently required to have a
program that identifies and prevents
infections, maintains a sanitary
environment, and reports results to the
appropriate authorities. The new
condition requires the ASC to designate
an individual (in most cases this would
be a nurse or an environmental
engineer) to be responsible for the ASC
infection control program. The ASC can
continue to designate the individual
that currently oversees the infection
control program. However, the ASC
must also assure that the person who is
designated is, through a combination of
training, knowledge and experience,
capable of performing this task. To
ensure the individual continues his/her
current knowledge of infection control
methodologies and techniques, he/she
would need to engage in continuing
education in infection control on a
frequent or at least an annual basis.
We estimate that an ASC would spend
approximately $500 per calendar year
on infection control training for the
designated individual. This cost was
based on the quantity of technical
information that we believe is
appropriate to be included in an
infection control program. The cost also
includes the time spent by the ASC
infection control officer (the trainee),
the cost for a qualified trainer and the
training materials. We estimate that the
course would run 4 hours. The total
estimated cost for all ASCs would be
$2,550,000. We do not expect that
individuals would have to travel any
significant distance to meet this training
requirement.
Comment: One commenter suggested
that CMS underestimated the burden of
costs in the proposed rule with respect
to the infection control program. The
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commenter suggested that the cost
estimate for training did not consider
the cost associated with initial training.
Response: The existing ASC
regulations at § 416.44(a)(3) already
requires an ASC to have an infection
control program that is capable of
identifying and preventing infections.
ASC clinicians such as nurses and
pharmacists, in addition to physicians,
are already involved in implementing
infection control practices as part of the
current requirement. These
professionals already have a
fundamental knowledge base from
which to draw, and, therefore, we do
not believe initial training cost is an
issue here. Therefore, we are retaining
the burden estimate as proposed.
The infection control condition also
includes the requirement that the
infection control program be part of the
ASC’s QAPI program. We have not
prescribed specific areas to be
monitored or a process that must be
followed to meet the requirement. We
have not assigned any burden to this
requirement because, under the current
rules, the ASC should already be
evaluating quality activities and
executing an infection control program.
This requirement has been included as
a formal way of ensuring it is an integral
part of the ASC’s QAPI process.
This CfC requires an ASC to continue
to take specific and appropriate actions
to address the prevention and control of
infections. We do not believe this will
add any regulatory burden because this
condition reflects contemporary
standard practice in ASC facilities and,
again, should be part of the ASC
obligation under the current rules.
f. Effects of the Patient Admission,
Assessment, and Discharge Provision
(§ 416.52)
The condition reflects a more patientcentered approach that we believe will
result in an improved quality of care,
and more emphasis on patient
outcomes. Specifically, we are finalizing
this new condition because it represents
the current standard of practice and
does not pose additional burden.
(1) Effects of the Admission and PreSurgical Assessment Provision
We are requiring the completion of a
comprehensive medical history and
physical assessment no more than 30
days before the day of the scheduled
surgery. It is very unlikely that the
comprehensive medical history will be
completed at the ASC. Therefore, there
is unlikely to be any ASC burden
associated with this requirement.
We are requiring that a pre-surgical
assessment be completed upon
admission to the ASC. Existing
regulations at § 416.42(a) require a
physician to examine the patient
immediately before surgery to evaluate
the risks involved in administering
anesthesia and performing the
procedure. Physicians must determine
that patients, including those at high
risk, are able to undergo the surgery
itself and be able to manage recovery.
Pre-surgical assessments represent a
current standard of community practice,
are currently required under a different
description, and, therefore, do not pose
additional burden.
To ensure the ASC health care team
has all patient information available
when needed, the medical history and
physical assessment must be placed in
the patient’s medical record before the
surgical procedure is started. There is
no burden associated with this
requirement.
(2) Effects of the Post-Surgical
Assessment Provision
The post-surgical assessment requires
the ASC to ensure the patient’s postsurgical condition is documented in the
medical record by a physician or other
qualified practitioner in accordance
with State law and ASC policy, and the
patient’s post-surgical needs addressed
and included in the discharge notes.
Post-surgical assessments, located in the
current regulation under surgical
services, reflect ASC standard of
practice, and therefore, do not pose
additional burden.
(3) Effects of the Discharge Provision
The ASC is required to provide each
patient with discharge instructions and
ensure each patient has a signed
discharge order, any needed overnight
supplies and physician contact
information for followup care or an
appointment. Requiring the patient to
have a signed discharge order, discharge
instructions, any immediate overnight
supplies that may be needed, and
physician contact information when the
patient leaves the ASC is standard
practice. Therefore, we do not believe
this is a new burden for ASCs.
The total compliance cost for ASCs is
listed below by condition.
TOTAL COST TO ASCS TO IMPLEMENT REGULATION
Condition
Activity
§ 416.41 .......
§ 416.43 .......
Governing Body (Disaster Preparedness) .........................................................................................................
QAPI ...................................................................................................................................................................
Develop Program ........................................................................................................................................
Collecting & Analyzing Findings .................................................................................................................
Training Staff ..............................................................................................................................................
Implementing Improvement Activities .........................................................................................................
Patient Rights .....................................................................................................................................................
Develop Patient Notice of Rights ...............................................................................................................
Telephone Interpreter .................................................................................................................................
Develop Advance Directive ........................................................................................................................
Investigating Patients’ Complaints ..............................................................................................................
Develop/Disseminate Complaint Investigation Notice ................................................................................
Annual Infection Control Training ......................................................................................................................
$999,600
12,994,800
($2,998,800)
($4,498,200)
($ 999,600)
($4,498,200)
9,654,400
($198,900)
($5,661,000)
($198,900)
($2,998,800)
($ 596,700)
2,550,000
Total Implementation Cost for All ASCs ..............................................................................................................................
26,198,800
§ 416.50 .......
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§ 416.51 .......
2. Alternatives Considered
One alternative was to maintain the
existing CfCs without revisions.
However, we concluded this was not a
reasonable option because our existing
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Cost for all ASCs
CfCs, in some cases, are not compatible
with the current standards of practice.
Revising the existing CfCs takes
advantage of continuing advances in the
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health care delivery field. In addition,
listed below are other alternatives.
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a. Alternatives to the Governing Body
and Management Provision (§ 416.41)
We considered not including the
requirement for the disaster
preparedness plan. However, as
witnessed by the problems affecting
health care facilities across the Gulf
region in September 2005 as a result of
Hurricane Katrina, we have finalized
this requirement to ensure the safety of
patients and staff members alike.
b. Alternatives to the QAPI Provision
(§ 416.43)
We discussed eliminating any
reference to the use of quality indicator
data, including patient care data.
However, in light of the existing and
proposed hospital, home health and
rural health clinic quality assessment
and performance improvement
requirements, we believe ASCs also
must continue current efforts in quality
improvement by building a foundation
where quality indicator data can be used
to identify activities that lead to poor
patient outcomes.
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c. Alternatives to the Patient Rights
Provision (§ 416.50)
We considered not requiring a patient
rights standard in ASCs because we are
aware that ASCs currently participate in
some patient rights’ activities, for
example, documenting patient’s
executed informed consent;
safeguarding patient’s privacy; and
encouraging patients to participate in
treatment decisions by discussing
treatment options with them. However,
to facilitate greater communication
between patients and health care
facilities and to ensure that patients
receive considerate, respectful care in
all health care settings, we have
determined that ASC facilities should be
required to provide patients or their
representatives with a notice of the
patient’s rights in a language that the
patient understands. We believe this
requirement will protect and promote
considerate and respectful treatment of
ASC patients.
d. Alternatives to the Discharge
Provision (§ 416.52)
We considered requiring that the ASC
have a physician on its premises
whenever a patient is in the facility.
However, we determined this might be
impractical considering there are
circumstances when patients are present
in the ASC facility before and after
procedures that do not warrant the need
for physician coverage. Therefore, we
believe the requirement of a signed
discharge order will provide more
flexibility and continue to ensure proper
physician or qualified provider coverage
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until the patient has completely
recovered and physically leaves the
ASC facility.
3. Conclusion
This is not a major rule, because the
overall impact for all new conditions is
estimated to be $26.2 million annually.
Moreover, a detailed assessment of the
associated costs and benefits, as
outlined by section 202 of the Unfunded
Mandates Reform Act, will not be
performed because the impact of this
regulation does not reach the $130
million threshold.
F. Executive Order 12866
In accordance with the provisions of
Executive Order 12866, this OPPS/ASC
final rule with comment period, the
ASC CfCs final rule, and the final rule
that clarifies Medicare policy regarding
terminations of providers and suppliers
were reviewed by the OMB.
List of Subjects
68811
care as specified under § 424.24(e) of
this chapter; and
*
*
*
*
*
(c) Partial hospitalization programs
are intended for patients who—
(1) Require a minimum of 20 hours
per week of therapeutic services as
evidenced in their plan of care;
(2) Are likely to benefit from a
coordinated program of services and
require more than isolated sessions of
outpatient treatment;
(3) Do not require 24-hour care;
(4) Have an adequate support system
while not actively engaged in the
program;
(5) Have a mental health diagnosis;
(6) Are not judged to be dangerous to
self or others; and
(7) Have the cognitive and emotional
ability to participate in the active
treatment process and can tolerate the
intensity of the partial hospitalization
program.
PART 416—AMBULATORY SURGICAL
SERVICES
42 CFR Part 410
Health facilities, Health professions,
Laboratories, Medicare, Rural areas,
X-rays.
3. The authority citation for Part 416
continues to read as follows:
■
42 CFR Part 416
Authority: Secs. 1102 and 1871 of the
Social Security Act (42 U.S.C. 1302 and
1395hh).
Health facilities, Health professions,
Medicare, Reporting and recordkeeping
requirements.
■
42 CFR Part 419
Hospitals, Medicare, Reporting and
recordkeeping requirements.
■ For reasons stated in the preamble of
this document, the Centers for Medicare
& Medicaid Services is amending 42
CFR Chapter IV as set forth below:
PART 410—SUPPLEMENTARY
MEDICAL INSURANCE (SMI)
BENEFITS
1. The authority citation for Part 410
continues to read as follows:
■
Authority: Secs. 1102 and 1871 of the
Social Security Act (42 U.S.C. 1302 and
1395hh).
2. Section 410.43 is amended by—
■ a. Removing the word ‘‘and’’ at the
end of paragraph (a)(2).
■ b. Redesignating paragraph (a)(3) as
paragraph (a)(4).
■ c. Adding a new paragraph (a)(3).
■ d. Adding a new paragraph (c).
The additions read as follows:
■
§ 410.43 Partial hospitalization services:
Conditions and exclusions.
(a) * * *
(3) Are furnished in accordance with
a physician certification and plan of
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4. Section 416.2 is amended by
revising the definition of ‘‘Ambulatory
surgical center or ASC’’ to read as
follows:
§ 416.2
Definitions.
*
*
*
*
*
Ambulatory surgical center or ASC
means any distinct entity that operates
exclusively for the purpose of providing
surgical services to patients not
requiring hospitalization and in which
the expected duration of services would
not exceed 24 hours following an
admission. The entity must have an
agreement with CMS to participate in
Medicare as an ASC, and must meet the
conditions set forth in subparts B and C
of this part.
*
*
*
*
*
5. Section 416.41 is revised to read as
follows:
■
§ 416.41 Condition for coverage—
Governing body and management.
The ASC must have a governing body
that assumes full legal responsibility for
determining, implementing, and
monitoring policies governing the ASC’s
total operation. The governing body has
oversight and accountability for the
quality assessment and performance
improvement program, ensures that
facility policies and programs are
administered so as to provide quality
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health care in a safe environment, and
develops and maintains a disaster
preparedness plan.
(a) Standard: Contract services. When
services are provided through a contract
with an outside resource, the ASC must
assure that these services are provided
in a safe and effective manner.
(b) Standard: Hospitalization. (1) The
ASC must have an effective procedure
for the immediate transfer, to a hospital,
of patients requiring emergency medical
care beyond the capabilities of the ASC.
(2) This hospital must be a local,
Medicare-participating hospital or a
local, nonparticipating hospital that
meets the requirements for payment for
emergency services under § 482.2 of this
chapter.
(3) The ASC must—
(i) Have a written transfer agreement
with a hospital that meets the
requirements of paragraph (b)(2) of this
section; or
(ii) Ensure that all physicians
performing surgery in the ASC have
admitting privileges at a hospital that
meets the requirements of paragraph
(b)(2) of this section.
(c) Standard: Disaster preparedness
plan. (1) The ASC must maintain a
written disaster preparedness plan that
provides for the emergency care of
patients, staff and others in the facility
in the event of fire, natural disaster,
functional failure of equipment, or other
unexpected events or circumstances that
are likely to threaten the health and
safety of those in the ASC.
(2) The ASC coordinates the plan with
State and local authorities, as
appropriate.
(3) The ASC conducts drills, at least
annually, to test the plan’s effectiveness.
The ASC must complete a written
evaluation of each drill and promptly
implement any corrections to the plan.
■ 6. Section 416.42 is amended by—
■ a. Revising paragraph (a).
■ b. Removing paragraph (c).
■ c. Redesignating paragraph (d) as
paragraph (c).
Revised paragraph (a) reads as
follows:
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§ 416.42 Condition for coverage—Surgical
services.
(a) Standard: Anesthetic risk and
evaluation. (1) A physician must
examine the patient immediately before
surgery to evaluate the risk of anesthesia
and of the procedure to be performed.
(2) Before discharge from the ASC,
each patient must be evaluated by a
physician or by an anesthetist as
defined at § 410.69(b) of this chapter, in
accordance with applicable State health
and safety laws, standards of practice,
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and ASC policy, for proper anesthesia
recovery.
*
*
*
*
*
■ 7. Section 416.43 is revised to read as
follows:
§ 416.43 Conditions for coverage—Quality
assessment and performance improvement.
The ASC must develop, implement
and maintain an ongoing, data-driven
quality assessment and performance
improvement (QAPI) program.
(a) Standard: Program scope. (1) The
program must include, but not be
limited to, an ongoing program that
demonstrates measurable improvement
in patient health outcomes, and
improves patient safety by using quality
indicators or performance measures
associated with improved health
outcomes and by the identification and
reduction of medical errors.
(2) The ASC must measure, analyze,
and track quality indicators, adverse
patient events, infection control and
other aspects of performance that
includes care and services furnished in
the ASC.
(b) Standard: Program data. (1) The
program must incorporate quality
indicator data, including patient care
and other relevant data regarding
services furnished in the ASC.
(2) The ASC must use the data
collected to—
(i) Monitor the effectiveness and
safety of its services, and quality of its
care.
(ii) Identify opportunities that could
lead to improvements and changes in its
patient care.
(c) Standard: Program activities. (1)
The ASC must set priorities for its
performance improvement activities
that—
(i) Focus on high risk, high volume,
and problem-prone areas.
(ii) Consider incidence, prevalence,
and severity of problems in those areas.
(iii) Affect health outcomes, patient
safety, and quality of care.
(2) Performance improvement
activities must track adverse patient
events, examine their causes, implement
improvements, and ensure that
improvements are sustained over time.
(3) The ASC must implement
preventive strategies throughout the
facility targeting adverse patient events
and ensure that all staff are familiar
with these strategies.
(d) Standard: Performance
improvement projects. (1) The number
and scope of distinct improvement
projects conducted annually must
reflect the scope and complexity of the
ASC’s services and operations.
(2) The ASC must document the
projects that are being conducted. The
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documentation, at a minimum, must
include the reason(s) for implementing
the project, and a description of the
project’s results.
(e) Standard: Governing body
responsibilities. The governing body
must ensure that the QAPI program—
(1) Is defined, implemented, and
maintained by the ASC.
(2) Addresses the ASC’s priorities and
that all improvements are evaluated for
effectiveness.
(3) Specifies data collection methods,
frequency, and details.
(4) Clearly establishes its expectations
for safety.
(5) Adequately allocates sufficient
staff, time, information systems and
training to implement the QAPI
program.
■ 8. Section 416.49 is revised to read as
follows:
§ 416.49 Condition for coverage—
Laboratory and radiologic services.
(a) Standard: Laboratory services. If
the ASC performs laboratory services, it
must meet the requirements of Part 493
of this chapter. If the ASC does not
provide its own laboratory services, it
must have procedures for obtaining
routine and emergency laboratory
services from a certified laboratory in
accordance with Part 493 of this
chapter. The referral laboratory must be
certified in the appropriate specialties
and subspecialties of service to perform
the referred tests in accordance with the
requirements of Part 493 of this chapter.
(b) Standard: Radiologic services. (1)
The ASC must have procedures for
obtaining radiological services from a
Medicare approved facility to meet the
needs of patients.
(2) Radiologic services must meet the
hospital conditions of participation for
radiologic services specified in § 482.26
of this chapter.
■ 9. A new § 416.50 is added to read as
follows:
§ 416.50
rights.
Condition for coverage—Patient
The ASC must inform the patient or
the patient’s representative of the
patient’s rights, and must protect and
promote the exercise of such rights.
(a) Standard: Notice of rights. (1) The
ASC must provide the patient or the
patient’s representative with verbal and
written notice of the patient’s rights in
advance of the date of the procedure, in
a language and manner that the patient
or the patient’s representative
understands. In addition, the ASC
must—
(i) Post the written notice of patient
rights in a place or places within the
ASC likely to be noticed by patients (or
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their representative, if applicable)
waiting for treatment. The ASC’s notice
of rights must include the name,
address, and telephone number of a
representative in the State agency to
whom patients can report complaints, as
well as the Web site for the Office of the
Medicare Beneficiary Ombudsman.
(ii) The ASC must also disclose,
where applicable, physician financial
interests or ownership in the ASC
facility in accordance with the intent of
Part 420 of this subchapter. Disclosure
of information must be in writing and
furnished to the patient in advance of
the date of the procedure.
(2) Standard: Advance directives. The
ASC must comply with the following
requirements:
(i) Provide the patient or, as
appropriate, the patient’s representative
in advance of the date of the procedure,
with information concerning its policies
on advance directives, including a
description of applicable State health
and safety laws and, if requested,
official State advance directive forms.
(ii) Inform the patient or, as
appropriate, the patient’s representative
of the patient’s right to make informed
decisions regarding the patient’s care.
(iii) Document in a prominent part of
the patient’s current medical record,
whether or not the individual has
executed an advance directive.
(3) Standard: Submission and
investigation of grievances. (i) The ASC
must establish a grievance procedure for
documenting the existence, submission,
investigation, and disposition of a
patient’s written or verbal grievance to
the ASC.
(ii) All alleged violations/grievances
relating, but not limited to,
mistreatment, neglect, verbal, mental,
sexual, or physical abuse, must be fully
documented.
(iii) All allegations must be
immediately reported to a person in
authority in the ASC.
(iv) Only substantiated allegations
must be reported to the State authority
or the local authority, or both.
(v) The grievance process must
specify timeframes for review of the
grievance and the provisions of a
response.
(vi) The ASC, in responding to the
grievance, must investigate all
grievances made by a patient or the
patient’s representative regarding
treatment or care that is (or fails to be)
furnished.
(vii) The ASC must document how
the grievance was addressed, as well as
provide the patient with written notice
of its decision. The decision must
contain the name of an ASC contact
person, the steps taken to investigate the
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grievance, the results of the grievance
process, and the date the grievance
process was completed.
(b) Standard: Exercise of rights and
respect for property and person.
(1) The patient has the right to—
(i) Exercise his or her rights without
being subjected to discrimination or
reprisal.
(ii) Voice grievances regarding
treatment or care that is (or fails to be)
furnished.
(iii) Be fully informed about a
treatment or procedure and the expected
outcome before it is performed.
(2) If a patient is adjudged
incompetent under applicable State
health and safety laws by a court of
proper jurisdiction, the rights of the
patient are exercised by the person
appointed under State law to act on the
patient’s behalf.
(3) If a State court has not adjudged
a patient incompetent, any legal
representative designated by the patient
in accordance with State law may
exercise the patient’s rights to the extent
allowed by State law.
(c) Standard: Privacy and safety. The
patient has the right to—
(1) Personal privacy.
(2) Receive care in a safe setting.
(3) Be free from all forms of abuse or
harassment.
(d) Standard: Confidentiality of
clinical records. The ASC must comply
with the Department’s rules for the
privacy and security of individually
identifiable health information, as
specified at 45 CFR parts 160 and 164.
■ 10. A new § 416.51 is added to read
as follows:
§ 416.51 Conditions for coverage—
Infection control.
The ASC must maintain an infection
control program that seeks to minimize
infections and communicable diseases.
(a) Standard: Sanitary environment.
The ASC must provide a functional and
sanitary environment for the provision
of surgical services by adhering to
professionally acceptable standards of
practice.
(b) Standard: Infection control
program. The ASC must maintain an
ongoing program designed to prevent,
control, and investigate infections and
communicable diseases. In addition, the
infection control and prevention
program must include documentation
that the ASC has considered, selected,
and implemented nationally recognized
infection control guidelines. The
program is—
(1) Under the direction of a
designated and qualified professional
who has training in infection control;
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68813
(2) An integral part of the ASC’s
quality assessment and performance
improvement program; and
(3) Responsible for providing a plan of
action for preventing, identifying, and
managing infections and communicable
diseases and for immediately
implementing corrective and preventive
measures that result in improvement.
■ 11. A new § 416.52 is added to read
as follows:
§ 416.52 Conditions for coverage—Patient
admission, assessment and discharge.
The ASC must ensure each patient
has the appropriate pre-surgical and
post-surgical assessments completed
and that all elements of the discharge
requirements are completed.
(a) Standard: Admission and presurgical assessment. (1) Not more than
30 days before the date of the scheduled
surgery, each patient must have a
comprehensive medical history and
physical assessment completed by a
physician (as defined in section 1861(r)
of the Act) or other qualified
practitioner in accordance with
applicable State health and safety laws,
standards of practice, and ASC policy.
(2) Upon admission, each patient
must have a pre-surgical assessment
completed by a physician or other
qualified practitioner in accordance
with applicable State health and safety
laws, standards of practice, and ASC
policy that includes, at a minimum, an
updated medical record entry
documenting an examination for any
changes in the patient’s condition since
completion of the most recently
documented medical history and
physical assessment, including
documentation of any allergies to drugs
and biologicals.
(3) The patient’s medical history and
physical assessment must be placed in
the patient’s medical record prior to the
surgical procedure.
(b) Standard: Post-surgical
assessment. (1) The patient’s postsurgical condition must be assessed and
documented in the medical record by a
physician, other qualified practitioner,
or a registered nurse with, at a
minimum, post-operative care
experience in accordance with
applicable State health and safety laws,
standards of practice, and ASC policy.
(2) Post-surgical needs must be
addressed and included in the discharge
notes.
(c) Standard: Discharge. The ASC
must—
(1) Provide each patient with written
discharge instructions and overnight
supplies. When appropriate, make a
followup appointment with the
physician, and ensure that all patients
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are informed, either in advance of their
surgical procedure or prior to leaving
the ASC, of their prescriptions, postoperative instructions and physician
contact information for followup care.
(2) Ensure each patient has a
discharge order, signed by the physician
who performed the surgery or procedure
in accordance with applicable State
health and safety laws, standards of
practice, and ASC policy.
(3) Ensure all patients are discharged
in the company of a responsible adult,
except those patients exempted by the
attending physician.
PART 419—PROSPECTIVE PAYMENT
SYSTEM FOR HOSPITAL OUTPATIENT
DEPARTMENT SERVICES
12. The authority citation for Part 419
continues to read as follows:
■
Authority: Secs. 1102, 1833(t), and 1871 of
the Social Security Act (42 U.S.C. 1302,
1395l(t), and 1395hh).
13. Section 419.41 is amended by
revising paragraph (c)(4)(iv) to read as
follows:
■
§ 419.41 Calculation of national
beneficiary copayment amounts and
national Medicare program payment
amounts.
*
*
*
*
*
(c) * * *
(4) * * *
(iv) The copayment amount is
computed as if the adjustment under
§§ 419.43(d) and (e) (and any
adjustments made under § 419.43(f) in
relation to these adjustments) and
§ 419.43(h) had not been paid.
*
*
*
*
*
■ 14. Section 419.42 is amended by
revising paragraph (e) to read as follows:
§ 419.42 Hospital election to reduce
coinsurance.
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*
*
*
*
*
(e) In electing reduced coinsurance, a
hospital may elect a copayment amount
that is less than that year’s wageadjusted copayment amount for the
group but not less than 20 percent of the
APC payment rate as determined under
§ 419.32 or, in the case of payments
calculated under § 419.43(h), not less
than 20 percent of the APC payment rate
as determined under § 419.43(h).
*
*
*
*
*
■ 15. Section 419.43 is amended by—
■ a. In paragraph (d)(1)(i)(B), removing
the phrase ‘‘paragraph (e) of this
section’’ and adding in its place the
cross-reference ‘‘§ 419.66’’.
■ b. Adding new paragraphs (d)(5) and
(d)(6).
■ c. Revising paragraph (f).
■ d. Revising paragraph (g)(4).
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e. Adding a new paragraph (h)(4).
The additions and revisions read as
follows:
■
§ 419.43 Adjustments to national program
payment and beneficiary copayment
amounts.
*
*
*
*
*
(d) * * *
(5) Cost-to-charge ratios for
calculating charges adjusted to cost. For
hospital outpatient services (or groups
of services) as defined in paragraph
(d)(1) of this section performed on or
after January 1, 2009—
(i) CMS may specify an alternative to
the overall ancillary cost-to-charge ratio
otherwise applicable under paragraph
(d)(5)(ii) of this section. A hospital may
also request that its Medicare contractor
use a different (higher or lower) cost-tocharge ratio based on substantial
evidence presented by the hospital.
Such a request must be approved by the
CMS.
(ii) The overall ancillary cost-tocharge ratio applied at the time a claim
is processed is based on either the most
recent settled cost report or the most
recent tentative settled cost report,
whichever is from the latest cost
reporting period.
(iii) The Medicare contractor may use
a statewide average cost-to-charge ratio
if it is unable to determine an accurate
overall ancillary cost-to-charge ratio for
a hospital in one of the following
circumstances:
(A) A new hospital that has not yet
submitted its first Medicare cost report.
(For purposes of this paragraph, a new
hospital is defined as an entity that has
not accepted assignment of an existing
hospital’s provider agreement in
accordance with § 489.18 of this
chapter.)
(B) A hospital whose overall ancillary
cost-to-charge ratio is in excess of 3
standard deviations above the
corresponding national geometric mean.
This mean is recalculated annually by
CMS and published in the annual notice
of prospective payment rates issued in
accordance with § 419.50(a).
(C) Any other hospital for whom
accurate data to calculate an overall
ancillary cost-to-charge ratio are not
available to the Medicare contractor.
(6) Reconciliation. For hospital
outpatient services furnished during
cost reporting periods beginning on or
after January 1, 2009—
(i) Any reconciliation of outlier
payments will be based on an overall
ancillary cost-to-charge ratio calculated
based on a ratio of costs to charges
computed from the relevant cost report
and charge data determined at the time
the cost report coinciding with the
service is settled.
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(ii) At the time of any reconciliation
under paragraph (d)(6)(i) of this section,
outlier payments may be adjusted to
account for the time value of any
underpayments or overpayments. Any
adjustment will be based on a widely
available index to be established in
advance by CMS, and will be applied
from the midpoint of the cost reporting
period to the date of reconciliation.
*
*
*
*
*
(f) Excluded services and groups. The
following services or groups are
excluded from qualification for the
payment adjustment under paragraph
(d)(1) of this section:
(1) Drugs and biologicals that are paid
under a separate APC; and
(2) Items and services paid at charges
adjusted to costs by application of a
hospital-specific cost-to-charge ratio.
(g) * * *
(4) Excluded services and groups. The
following services or groups are
excluded from qualification for the
payment adjustment in paragraph (g)(2)
of this section:
(i) Drugs and biologicals that are paid
under a separate APC;
(ii) Devices paid under 419.66; and
(iii) Items and services paid at charges
adjusted to costs by application of a
hospital-specific cost-to-charge ratio.
*
*
*
*
*
(h) * * *
(4) Beneficiary copayment. The
beneficiary copayment for services to
which the adjustment to the conversion
factor specified under paragraph (h)(1)
of this section applies is the product of
the national beneficiary copayment
amount calculated under § 419.41 and
the ratio of the adjusted conversion
factor calculated under paragraph (h)(1)
of this section divided by the
conversion factor specified under
§ 419.32(b)(1).
■ 16. Section 419.70 is amended by—
■ a. Revising the introductory text of
paragraph (d)(2).
■ b. Revising the heading of paragraph
(d)(4).
■ c. Adding a new paragraph (d)(5).
■ d. In paragraphs (e), (g), and (i),
removing the term ‘‘paragraph’’ and
adding it its place the term ‘‘section.’’
The revisions and additions read as
follows:
§ 419.70 Transitional adjustments to limit
decline in payments.
*
*
*
*
*
(d) * * *
(2) Temporary treatment for small
rural hospitals on or after January 1,
2006. For covered hospital outpatient
services furnished in a calendar year
from January 1, 2006, through December
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31, 2009, for which the prospective
payment system amount is less than the
pre-BBA amount, the amount of
payment under this part is increased by
95 percent of that difference for services
furnished during 2006, 90 percent of
that difference for services furnished
during 2007, and 85 percent of that
difference for services furnished during
2008 and 2009 if the hospital—
*
*
*
*
*
(4) Temporary treatment for sole
community hospitals located in rural
areas for covered hospital outpatient
services furnished during cost reporting
periods beginning on or after January 1,
2004 and before January 1, 2006. * * *
(5) Temporary treatment for sole
community hospitals located in rural
VerDate Aug<31>2005
15:50 Nov 17, 2008
Jkt 217001
areas on or after January 1, 2009, and
through December 31, 2009. For covered
hospital outpatient services furnished
on or after January 1, 2009, and
continuing through December 31, 2009,
for which the prospective payment
system amount is less than the pre-BBA
amount, the amount of payment under
this part is increased by 85 percent of
that difference if the hospital—
(i) Is a sole community hospital as
defined in § 412.92 of this chapter or is
an essential access community hospital
as described under § 412.109 of this
chapter; and
(ii) Has 100 or fewer beds as defined
in § 412.105(b) of this chapter.
*
*
*
*
*
PO 00000
Frm 00315
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68815
(Catalog of Federal Domestic Assistance
Program No. 93.773, Medicare—Hospital
Insurance; and Program No. 93.774,
Medicare—Supplementary Medical
Insurance Program)
(Catalog of Federal Domestic Assistance
Program No. 93.778, Medical Assistance
Program)
Dated: October 23, 2008.
Kerry Weems,
Acting Administrator, Centers for Medicare
& Medicaid Services.
Dated: October 29, 2008.
Michael O. Leavitt,
Secretary.
BILLING CODE 4120–01–P
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Tuesday,
November 18, 2008
Book 2 of 2
Pages 68921–69518
Part II—Continued
Department of
Health and Human
Services
sroberts on PROD1PC70 with RULES
Centers for Medicare & Medicaid Services
42 CFR Parts 410, 416, and 419
Medicare Program: Changes to the
Hospital Outpatient Prospective Payment
System and CY 2009 Payment Rates;
Changes to the Ambulatory Surgical
Center Payment System and CY 2009
Payment Rates; Hospital Conditions of
Participation: Requirements for Approval
and Re-Approval of Transplant Centers
To Perform Organ Transplants—
Clarification of Provider and Supplier
Termination Policy Medicare and
Medicaid Programs: Changes to the
Ambulatory Surgical Center Conditions
for Coverage; Final Rule
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[FR Doc. E8–26212 Filed 10–30–08; 4:15 pm]
BILLING CODE 4120–10–C
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]]>Agencies
[Federal Register Volume 73, Number 223 (Tuesday, November 18, 2008)]
[Rules and Regulations]
[Pages 68502-69380]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-26212]
[[Page 68921]]
-----------------------------------------------------------------------
Part II--Continued
Book 2 of 2
Pages 68921-69518
Department of Health and Human Services
-----------------------------------------------------------------------
Centers for Medicare & Medicaid Services
-----------------------------------------------------------------------
42 CFR Parts 410, 416, and 419
Medicare Program: Changes to the Hospital Outpatient Prospective
Payment System and CY 2009 Payment Rates; Changes to the Ambulatory
Surgical Center Payment System and CY 2009 Payment Rates; Hospital
Conditions of Participation: Requirements for Approval and Re-Approval
of Transplant Centers To Perform Organ Transplants--Clarification of
Provider and Supplier Termination Policy Medicare and Medicaid
Programs: Changes to the Ambulatory Surgical Center Conditions for
Coverage; Final Rule
Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 /
Rules and Regulations
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[FR Doc. E8-26212 Filed 10-30-08; 4:15 pm]
BILLING CODE 4120-10-C
