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]

Download as PDF 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. VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 http://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: PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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: http:// 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 dwashington3 on PRODPC61 with RULES2 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 http://www.gpoaccess.gov/index.html, 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 68503 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 E:\FR\FM\18NOR2.SGM 18NOR2 68504 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations dwashington3 on PRODPC61 with RULES2 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 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) E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 68505 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68506 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 dwashington3 on PRODPC61 with RULES2 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. VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 68507 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 E:\FR\FM\18NOR2.SGM 18NOR2 68508 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations dwashington3 on PRODPC61 with RULES2 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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: http://www.cms.hhs. gov/FACA/05_ AdvisoryPanelonAmbulatory PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 68509 dwashington3 on PRODPC61 with RULES2 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 http://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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 68510 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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. dwashington3 on PRODPC61 with RULES2 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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. PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 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. E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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. dwashington3 on PRODPC61 with RULES2 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. VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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. PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 a. Database Source and Methodology E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68512 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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: http://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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 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 dwashington3 on PRODPC61 with RULES2 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 18NOR2 dwashington3 on PRODPC61 with RULES2 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 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 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 ‘‘Overlap bypass codes’’ .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. .................. 68518 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 .................. Jkt 217001 PO 00000 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. Frm 00018 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 .................. 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. 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 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’’ .................. .................. .................. .................. .................. 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: http://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 VerDate Aug<31>2005 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 Frm 00019 Fmt 4701 Sfmt 4700 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: http://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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68520 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: http://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: http://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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 Frm 00020 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 68521 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68522 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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. VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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: http:// 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68524 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 68525 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68526 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 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. E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 68527 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: http:// 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, http:// 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, E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68528 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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: http://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 PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 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. E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations dwashington3 on PRODPC61 with RULES2 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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. PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 68530 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations dwashington3 on PRODPC61 with RULES2 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations ‘‘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 dwashington3 on PRODPC61 with RULES2 Revenue code 0250 0251 0252 0254 0255 0257 0258 0259 ............. ............. ............. ............. ............. ............. ............. ............. VerDate Aug<31>2005 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. 15:50 Nov 17, 2008 Jkt 217001 PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 68531 E:\FR\FM\18NOR2.SGM 18NOR2 68532 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations TABLE 2—CY 2009 PACKAGED REVENUE CODES—Continued Revenue code dwashington3 on PRODPC61 with RULES2 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 ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. ............. 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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. PO 00000 Frm 00032 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00033 Fmt 4701 Sfmt 4700 68533 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68534 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00034 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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)). VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00035 Fmt 4701 Sfmt 4700 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 (http:// www.ahacentraloffice.org) and either faxed to 312–422–4583 or mailed directly to the AHA Central Office: Central Office on HCPCS, American E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68536 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00036 Fmt 4701 Sfmt 4700 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’ E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00037 Fmt 4701 Sfmt 4700 68537 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. E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68538 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00038 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations dwashington3 on PRODPC61 with RULES2 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 ....................... VerDate Aug<31>2005 15:50 Nov 17, 2008 CY 2009 APC title Level I Implantation of Neurostimulator. Percutaneous Implantation of Neurostimulator Electrodes. Jkt 217001 PO 00000 Frm 00039 Fmt 4701 Sfmt 4700 68539 E:\FR\FM\18NOR2.SGM 18NOR2 68540 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations TABLE 3—CY 2009 DEVICE-DEPENDENT APCS—Continued Final CY 2009 APC dwashington3 on PRODPC61 with RULES2 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 .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... .................... 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 ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00040 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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. PO 00000 Frm 00041 Fmt 4701 Sfmt 4700 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. E:\FR\FM\18NOR2.SGM 18NOR2 68542 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations dwashington3 on PRODPC61 with RULES2 (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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00042 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00043 Fmt 4701 Sfmt 4700 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, E:\FR\FM\18NOR2.SGM 18NOR2 68544 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 ........................................................................ dwashington3 on PRODPC61 with RULES2 (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 VerDate Aug<31>2005 Final CY 2009 approximate APC median cost CY 2009 APC title 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00044 Fmt 4701 Sfmt 4700 $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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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: http://www.cms.hhs.gov/ VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00045 Fmt 4701 Sfmt 4700 68545 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68546 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00046 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations (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. VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00047 Fmt 4701 Sfmt 4700 68547 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68548 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00048 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 .................................................................... .................................................................... .................................................................... .................................................................... .................................................................... .................................................................... .................................................................... .................................................................... .................................................................... .................................................................... .................................................................... .................................................................... .................................................................... .................................................................... .................................................................... .................................................................... .................................................................... .................................................................... .................................................................... .................................................................... .................................................................... .................................................................... dwashington3 on PRODPC61 with RULES2 (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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00049 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 68550 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 dwashington3 on PRODPC61 with RULES2 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00050 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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). VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00051 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 68552 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations dwashington3 on PRODPC61 with RULES2 ‘‘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) VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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. PO 00000 Frm 00052 Fmt 4701 Sfmt 4700 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: E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations • 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00053 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68554 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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, PO 00000 Frm 00054 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00055 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68556 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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. VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 (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 PO 00000 Frm 00056 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 ........................................................................................................................................ dwashington3 on PRODPC61 with RULES2 (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. VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00057 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68558 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00058 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00059 Fmt 4701 Sfmt 4700 68559 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68560 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00060 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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. VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00061 Fmt 4701 Sfmt 4700 68561 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68562 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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. VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00062 Fmt 4701 Sfmt 4700 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. E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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; VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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: http://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 PO 00000 Frm 00063 Fmt 4701 Sfmt 4700 68563 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68564 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00064 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00065 Fmt 4701 Sfmt 4700 68565 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. E:\FR\FM\18NOR2.SGM 18NOR2 68566 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 PO 00000 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. Frm 00066 Fmt 4701 Sfmt 4700 E:\FR\FM\18NOR2.SGM 18NOR2 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 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 ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... 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 ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 PO 00000 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. Frm 00067 Fmt 4701 Sfmt 4700 E:\FR\FM\18NOR2.SGM 18NOR2 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 ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... 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 ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 PO 00000 Frm 00068 Fmt 4701 Sfmt 4700 E:\FR\FM\18NOR2.SGM 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 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... 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 ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... ..................................................................................................................................................................... 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 Frm 00069 Fmt 4701 Sfmt 4700 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, E:\FR\FM\18NOR2.SGM 18NOR2 68570 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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, VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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- PO 00000 Frm 00071 Fmt 4701 Sfmt 4700 68571 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68572 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00072 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00073 Fmt 4701 Sfmt 4700 68573 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. E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68574 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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: http://www.cms.hhs.gov/ HospitalOutpatientPPS/04_pass through_payment.asp#TopOfPage. One requirement for separate pass-through PO 00000 Frm 00074 Fmt 4701 Sfmt 4700 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 http://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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 dwashington3 on PRODPC61 with RULES2 * 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00075 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 68576 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations dwashington3 on PRODPC61 with RULES2 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00076 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations dwashington3 on PRODPC61 with RULES2 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00077 Fmt 4701 Sfmt 4700 68577 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68578 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00078 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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. VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00079 Fmt 4701 Sfmt 4700 68579 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68580 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00080 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00081 Fmt 4701 Sfmt 4700 68581 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68582 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00082 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00083 Fmt 4701 Sfmt 4700 68583 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68584 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00084 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations dwashington3 on PRODPC61 with RULES2 $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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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), PO 00000 Frm 00085 Fmt 4701 Sfmt 4700 68585 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68586 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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. VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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: http://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). PO 00000 Frm 00086 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 .................................................................................. VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 PO 00000 Frm 00087 RURAL URBAN RURAL URBAN RURAL URBAN RURAL Fmt 4701 Final CY 2009 default CCR ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. Sfmt 4700 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 ....................................................................... VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 PO 00000 Frm 00088 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 Final CY 2009 default CCR ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. Sfmt 4700 E:\FR\FM\18NOR2.SGM 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. ............................................. 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 PO 00000 Frm 00089 Fmt 4701 Sfmt 4700 0.242 0.240 0.336 0.267 0.244 0.221 0.257 0.238 0.413 0.430 0.257 0.266 0.406 0.422 0.349 0.342 0.399 0.346 0.293 0.349 0.418 0.331 Previous default CCR (CY 2008 OPPS final rule) 0.258 0.244 0.334 0.289 0.256 0.241 0.271 0.242 0.416 0.406 0.268 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. E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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. PO 00000 Frm 00090 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00091 Fmt 4701 Sfmt 4700 68591 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 E:\FR\FM\18NOR2.SGM 18NOR2 68592 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations dwashington3 on PRODPC61 with RULES2 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: http:// 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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). PO 00000 Frm 00092 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00093 Fmt 4701 Sfmt 4700 68593 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68594 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00094 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00095 Fmt 4701 Sfmt 4700 68595 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. E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68596 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00096 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00097 Fmt 4701 Sfmt 4700 68597 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68598 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00098 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00099 Fmt 4701 Sfmt 4700 68599 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. E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68600 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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. VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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. PO 00000 Frm 00100 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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. dwashington3 on PRODPC61 with RULES2 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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). PO 00000 Frm 00101 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68602 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 PO 00000 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68604 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 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 Frm 00104 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. E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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/ VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 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 E:\FR\FM\18NOR2.SGM 18NOR2 68606 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations dwashington3 on PRODPC61 with RULES2 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00106 Fmt 4701 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: http:// 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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 dwashington3 on PRODPC61 with RULES2 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00107 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68608 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00108 Fmt 4701 Sfmt 4700 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, E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 dwashington3 on PRODPC61 with RULES2 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00109 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68610 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00110 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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. dwashington3 on PRODPC61 with RULES2 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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. PO 00000 Frm 00111 Fmt 4701 Sfmt 4700 68611 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68612 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00112 Fmt 4701 Sfmt 4700 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. E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00113 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 68614 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations dwashington3 on PRODPC61 with RULES2 $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: http://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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00114 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 18NOR2 68616 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 ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... 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 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ 0129 ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ PO 00000 Frm 00116 Fmt 4701 Sfmt 4700 E:\FR\FM\18NOR2.SGM 18NOR2 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 ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... 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 ........................................................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ $397 ........................ ........................ ........................ ........................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ 0138 ................ ................ ................ ................ PO 00000 Frm 00117 Fmt 4701 Sfmt 4700 E:\FR\FM\18NOR2.SGM 18NOR2 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 .............................................................. ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ $1,283 ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ........................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ 0139 ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ................ ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... ...................................................... 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00118 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00119 Fmt 4701 Sfmt 4700 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. E:\FR\FM\18NOR2.SGM 18NOR2 68620 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00120 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 (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 PO 00000 Frm 00121 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68622 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00122 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 dwashington3 on PRODPC61 with RULES2 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00123 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 68624 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations dwashington3 on PRODPC61 with RULES2 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00124 Fmt 4701 Sfmt 4700 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 .............................................. dwashington3 on PRODPC61 with RULES2 90829 .............................................. VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 PO 00000 Frm 00125 Fmt 4701 Sfmt 4700 E:\FR\FM\18NOR2.SGM 18NOR2 68626 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 .............................................. dwashington3 on PRODPC61 with RULES2 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00126 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00127 Fmt 4701 Sfmt 4700 68627 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68628 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00128 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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. dwashington3 on PRODPC61 with RULES2 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 http:// 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 PO 00000 Frm 00129 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68630 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00130 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 .............................................................. dwashington3 on PRODPC61 with RULES2 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 .............................................. .............................................. .............................................. .............................................. .............................................. VerDate Aug<31>2005 15:50 Nov 17, 2008 AICD, dual chamber. AICD, single chamber. Cath, brachytx seed adm. Event recorder, cardiac. Generator, neurostim, imp. Jkt 217001 PO 00000 Frm 00131 Fmt 4701 Sfmt 4700 E:\FR\FM\18NOR2.SGM 18NOR2 68632 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00132 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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: http://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: http:// 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: http://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’’ VerDate Aug<31>2005 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: http://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 PO 00000 Frm 00133 Fmt 4701 Sfmt 4700 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, E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 68634 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00134 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 PO 00000 Frm 00135 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 68636 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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). PO 00000 Frm 00136 Fmt 4701 Sfmt 4700 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 E:\FR\FM\18NOR2.SGM 18NOR2 dwashington3 on PRODPC61 with RULES2 Federal Register / Vol. 73, No. 223 / Tuesday, November 18, 2008 / Rules and Regulations 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: http://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 VerDate Aug<31>2005 15:50 Nov 17, 2008 Jkt 217001 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 radiopharmac