Medicare Program: Changes to the Hospital Outpatient Prospective Payment System and CY 2010 Payment Rates; Changes to the Ambulatory Surgical Center Payment System and CY 2010 Payment Rates, 60316-60983 [E9-26499]
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Federal Register / Vol. 74, No. 223 / Friday, November 20, 2009 / Rules and Regulations
Centers for Medicare & Medicaid
Services
42 CFR Parts 410, 416, and 419
[CMS–1414–FC]
RIN 0938–AP41
Medicare Program: Changes to the
Hospital Outpatient Prospective
Payment System and CY 2010 Payment
Rates; Changes to the Ambulatory
Surgical Center Payment System and
CY 2010 Payment Rates
dcolon on DSK2BSOYB1PROD with RULES2
AGENCY: Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Final rule with comment period.
SUMMARY: This final rule with comment
period revises the Medicare hospital
outpatient prospective payment system
(OPPS) to implement applicable
statutory requirements and changes
arising from our continuing experience
with this system. 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,
2010.
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 will
apply, and other pertinent ratesetting
information for the CY 2010 ASC
payment system. These changes are
applicable to services furnished on or
after January 1, 2010.
DATES: Effective Date: The provisions of
this rule are effective January 1, 2010.
Comment Period: We will consider
comments on the subject areas listed in
the SUPPLEMENTARY INFORMATION section
of this rule that are received at one of
the addresses provided in the
ADDRESSES section of this rule no later
than 5 p.m. EST on December 29, 2009.
Application Deadline for 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 8, 2010.
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In commenting, please refer
to file code CMS–1414–FC. Because of
staff and resource limitations, we cannot
accept comments by facsimile (FAX)
transmission.
You may submit comments in one of
four ways (no duplicates, please):
1. Electronically. You may submit
electronic comments on this regulation
to https://www.regulations.gov. Follow
the instructions for ‘‘Comment or
Submission’’ and enter the file code to
find the document accepting comments.
2. By regular mail. You may mail
written comments (one original and two
copies) to the following address ONLY:
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, Attention: CMS–1414–
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.
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–1414–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
ADDRESSES:
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
PO 00000
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for review of applications for a new
class of new technology intraocular
lenses must be sent by regular mail to
ASC/NTOL, 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.
Michele Franklin, (410) 786–4533, and
Jana Lindquist, (410) 786–4533,
Partial hospitalization and
community mental health center
issues.
James Poyer, (410) 786–2261, Reporting
of quality data issues.
SUPPLEMENTARY INFORMATION:
Comment Subject Areas: We will
consider comments on the following
subject areas discussed in this final rule
with comment period that are received
by the date and time indicated in the
DATES section of this final rule with
comment period:
(1) 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;
(2) Recognition of plasma protein
fraction as a blood product or a
biological for OPPS payment, as
discussed in section II.A.1.d.(2) of this
final rule with comment period;
(3) Potential alternative coding
schemes for reporting hospital clinic
visits for new and established patients,
as discussed in section IX.B.1. of this
final rule with comment period;
(4) The possibility of extending the
direct supervision requirements for
hospital-based partial hospitalization
program services to those same services
in community mental health centers, as
discussed in section XII.D.3. of this final
rule with comment period; and
(5) The possibility of establishing
direct physician supervision
requirements for ASC services, as
discussed in section XV.A.3. of this
final rule with comment period.
Inspection of Public Comments: All
comments received before the close of
the comment period are available for
viewing by the public, including any
personally identifiable or confidential
business information that is included in
a comment. We post all comments
received before the close of the
comment period on the following Web
site as soon as possible after they have
been received: https://
www.regulations.gov. Follow the search
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instructions on that Web site to view
public comments.
Comments received timely will also
be available for public inspection as
they are received, generally beginning
approximately 3 weeks after publication
of a document, at the headquarters of
the Centers for Medicare & Medicaid
Services, 7500 Security Boulevard,
Baltimore, MD 21244, on Monday
through Friday of each week from 8:30
a.m. to 4 p.m. EST. To schedule an
appointment to view public comments,
phone 1–800–743–3951.
Electronic Access
This Federal Register document is
also available from the Federal Register
online database through GPO Access, a
service of the U.S. Government Printing
Office. Free public access is available on
a Wide Area Information Server (WAIS)
through the Internet and via
asynchronous dial-in. Internet users can
access the database by using the World
Wide Web; the Superintendent of
Documents’ home page address is
https://www.gpoaccess.gov/,
by using local WAIS client software, or
by telnet to swais.access.gpo.gov, then
login as guest (no password required).
Dial-in users should use
communications software and modem
to call (202) 512–1661; type swais, then
login as guest (no password required).
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Alphabetical List of Acronyms
Appearing in This Final Rule
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
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
CKD Chronic kidney disease
CMHC Community mental health center
CMS Centers for Medicare & Medicaid
Services
CORF Comprehensive outpatient
rehabilitation facility
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CPT [Physicians’] Current Procedural
Terminology, Fourth Edition, 2009,
copyrighted by the American Medical
Association
CR Cardiac rehabilitation
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
HOPQDRP Hospital Outpatient Quality
Data Reporting Program
ICD–9–CM International Classification of
Diseases, Ninth Edition, Clinical
Modification
ICR Intensive cardiac rehabilitation
IDE Investigational device exemption
IME Indirect medical education
I/OCE Integrated Outpatient Code Editor
IOL Intraocular lens
IPPS [Hospital] Inpatient prospective
payment system
IVIG Intravenous immune globulin
KDE Kidney disease education
MAC Medicare Administrative Contractor
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
PO 00000
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OPD [Hospital] Outpatient department
OPPS [Hospital] Outpatient prospective
payment system
PBD Provider-based department
PHP Partial hospitalization program
PM Program memorandum
PPI Producer Price Index
PPS Prospective payment system
PR Pulmonary rehabilitation
PRA Paperwork Reduction Act
QAPI Quality Assessment and Performance
Improvement
QIO Quality Improvement Organization
RAC Recovery Audit Contractor
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., and XVI.
through XXI. 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
XVIII.A. 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., XVI., and XVIII. through
XXI. of this final rule with comment
period and in Addenda AA, BB, DD1,
DD2, and EE to this final rule with
comment period. (Addendum EE is
available on the Internet only; we refer
readers to section XVIII.B. of this final
rule with comment period.)
Table of Contents
I. Background and Summary of the CY 2010
OPPS/ASC Final Rule With Comment
Period
A. Legislative and Regulatory Authority for
the Hospital Outpatient Prospective
Payment System
B. Excluded OPPS Services and Hospitals
C. Prior Rulemaking
D. Advisory Panel on Ambulatory Payment
Classification (APC) Groups
1. Authority of the APC Panel
2. Establishment of the APC Panel
3. APC Panel Meetings and Organizational
Structure
E. Background and Summary of the CY
2010 OPPS/ASC Proposed Rule
1. Updates Affecting OPPS Payments
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2. OPPS Ambulatory Payment
Classification (APC) Group Policies
3. OPPS Payment for Devices
4. OPPS Payment Changes 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
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 Changes and Clarifications
12. OPPS Payment Status and Comment
Indicators
13. OPPS Policy and Payment
Recommendations
14. Updates to the Ambulatory Surgical
Center (ASC) Payment System
15. Reporting Quality Data for Annual
Payment Rate Updates
16. Healthcare-Associated Conditions
17. Regulatory Impact Analysis
F. Public Comments Received in Response
to the CY 2010 OPPS/ASC Proposed
Rule
G. Public Comments Received in Response
to the November 18, 2008 OPPS/ASC
Final Rule With Comment Period
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. Data Development Process and
Calculation of Median Costs
a. Claims Preparation
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)
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(5) Multiple Imaging Composite APCs
(APCs 8004, 8005, 8006, 8007, and 8008)
3. Calculation of OPPS Scaled Payment
Weights
4. Changes to Packaged Services
a. Background
b. Packaging Issues
(1) Packaged Services Addressed by the
February 2009 APC Panel
Recommendations
(2) Packaged Services Addressed by the
August 2009 APC Panel
Recommendations
(3) Other Service-Specific Packaging Issues
B. Conversion Factor Update
C. Wage Index Changes
D. Statewide Average Default CCRs
E. OPPS Payment 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 Pub. L. 108–173
(MMA)
F. Hospital Outpatient Outlier Payments
1. Background
2. Outlier Calculation
3. Final Outlier Calculation
4. 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 CPT and Level
II HCPCS Codes
1. Treatment of New Level II HCPCS Codes
and Category I CPT Vaccine Codes and
Category III CPT Codes
2. Process for New Level II HCPCS Codes
and Category I and Category III CPT
Codes for Which We Are Soliciting
Public Comments on the CY 2010 OPPS/
ASC Final Rule With Comment Period
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. Cardiovascular Services
a. Cardiovascular Telemetry (APC 0209)
b. Implantable Loop Recorder Monitoring
(APC 0689)
c. Transluminal Balloon Angioplasty (APC
0279)
2. Gastrointestinal Services
a. Change of Gastrostomy Tube (APC 0676)
b. Laparoscopic Liver Cryoablation (APC
0131)
c. Cholangioscopy (APC 0151)
d. Laparoscopic Hernia Repair (APC 0131)
3. Genitourinary Services
a. Percutaneous Renal Cryoablation (APC
0423)
b. Hemodialysis (APC 0170)
c. Radiofrequency Remodeling of Bladder
Neck (APC 0165)
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d. Change of Bladder Tube (APC 0121)
4. Nervous System Services
a. Pain-Related Procedures (APCs 0203,
0204, 0206, 0207, 0221, 0224, and 0388)
b. Magnetoencephalography (APCs 0065
and 0067)
5. Ocular Services
a. Insertion of Anterior Segment Aqueous
Drainage Device (APC 0234)
b. Backbench Preparation of Corneal
Allograft
6. Orthopedic and Musculoskeletal
Services
a. Arthroscopic Procedures (APCs 0041
and 0042)
b. Knee Arthroscopy (APCs 0041 and 0042)
c. Shoulder Arthroscopy (APC 0042)
d. Fasciotomy Procedures (APC 0049)
e. Fibula Repair (APC 0062)
f. Forearm Orthopedic Procedures (APCs
0050, 0051, and 0052)
g. Low Energy Extracorporeal Shock Wave
Therapy (Low Energy ESWT)
h. Insertion of Posterior Spinous Process
Distraction Device (APC 0052)
7. Radiation Therapy Services
a. Proton Beam Therapy (APCs 0664 and
0667)
b. Stereotactic Radiosurgery (SRS)
Treatment Delivery Services (APCs 0065,
0066, 0067, and 0127)
c. Clinical Brachytherapy (APCs 0312 and
0651)
8. Other Services
a. Low Frequency, Non-Contact, NonThermal Ultrasound (APC 0013)
b. Skin Repair (APCs 0134 and 0135)
c. Group Psychotherapy (APC 0325)
d. Portable X–Ray Services
e. Home Sleep Study Tests (APC 0213)
IV. OPPS Payment for Devices
A. Pass-Through Payments for Devices
1. Expiration of Transitional Pass-Through
Payments for Certain Devices
2. Provisions for Reducing Transitional
Pass-Through Payments To Offset Costs
Packaged Into APC Groups
a. Background
b. Final Policy
B. Adjustment to OPPS Payment 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 2009
3. Drugs, Biologicals, and
Radiopharmaceuticals With New or
Continuing Pass-Through Status in CY
2010
4. Pass-Through Payments for Implantable
Biologicals
a. Background
b. Policy for CY 2010
5. Definition of Pass-Through Payment
Eligibility Period for New Drugs and
Biologicals
6. Provision for Reducing Transitional
Pass-Through Payments for Diagnostic
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Radiopharmaceuticals and Contrast
Agents To Offset Costs Packaged Into
APC Groups
a. Background
b. Payment Offset Policy for Diagnostic
Radiopharmaceuticals
c. Payment Offset Policy for Contrast
Agents
B. OPPS Payment for Drugs, Biologicals,
and Radiopharmaceuticals Without PassThrough Status
1. Background
2. Criteria for Packaging Payment for
Drugs, Biologicals, and
Radiopharmaceuticals
a. Background
b. Cost Threshold for Packaging of Payment
for HCPCS Codes That Describe Certain
Drugs, Nonimplantable Biologicals, and
Therapeutic Radiopharmaceuticals
(‘‘Threshold-Packaged Drugs’’)
c. Packaging Determination for HCPCS
Codes That Describe the Same Drug or
Biological But Different Dosages
d. Packaging of Payment for Diagnostic
Radiopharmaceuticals, Contrast Agents,
and Implantable Biologicals (‘‘PolicyPackaged’’ Drugs and Devices)
3. Payment for Drugs and Biologicals
Without Pass-Through Status That Are
Not Packaged
a. Payment for Specified Covered
Outpatient Drugs (SCODs) and Other
Separately Payable and Packaged Drugs
and Biologicals
b. Payment Policy
4. Payment for Blood Clotting Factors
5. Payment for Therapeutic
Radiopharmaceuticals
a. Background
b. Payment Policy
6. 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 for CY 2010
C. Separate Threshold for Outlier Payments
to CMHCs
XI. Procedures That Will Be Paid Only as
Inpatient Procedures
A. Background
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B. Changes to the Inpatient List
XII. OPPS Nonrecurring Technical and Policy
Changes and Clarifications
A. Kidney Disease Education Services
1. Background
2. Payment for Services Furnished by
Providers of Services Located in a Rural
Area
B. Pulmonary Rehabilitation, Cardiac
Rehabilitation, and Intensive Cardiac
Rehabilitation Services
1. Legislative Changes
2. Payment for Services Furnished to
Hospital Outpatients in a Pulmonary
Rehabilitation Program
3. Payment for Services Furnished to
Hospital Outpatients Under a Cardiac
Rehabilitation or an Intensive Cardiac
Rehabilitation Program
4. Physician Supervision for Pulmonary
Rehabilitation, Cardiac Rehabilitation,
and Intensive Cardiac Rehabilitation
Services
C. Stem Cell Transplants
D. Physician Supervision
1. Background
2. Issues Regarding the Physician
Supervision of Hospital Outpatient
Services Raised by Hospitals and Other
Stakeholders
3. Policies for Direct Supervision of
Hospital and CAH Outpatient
Therapeutic Services
4. Policies for Direct Supervision of
Hospital and CAH Outpatient Diagnostic
Services
5. Summary of CY 2010 Physician
Supervision Final Policies
E. Direct Referral for Observation Services
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
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. MedPAC Recommendations
B. APC Panel Recommendations
C. OIG Recommendations
XV. Updates to the Ambulatory Surgical
Center (ASC) Payment System
A. Background
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
B. 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 2009
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C. 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 2010
c. ASC Covered Surgical Procedures
Designated as Device-Intensive
(1) Background
(2) Changes to List of Covered Surgical
Procedures Designated as DeviceIntensive for CY 2010
d. ASC Treatment of Surgical Procedures
Removed From the OPPS Inpatient List
for CY 2010
2. Covered Ancillary Services
D. 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 2010
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 2010
E. New Technology Intraocular Lenses
(NTIOLs)
1. Background
2. NTIOL Application Process for Payment
Adjustment
3. Classes of NTIOLs Approved and New
Requests for Payment Adjustment
a. Background
b. Request To Establish New NTIOL Class
for CY 2010 and Deadline for Public
Comment
4. Payment Adjustment
5. ASC Payment for Insertion of IOLs
6. Announcement of CY 2010 Deadline for
Submitting Requests for CMS Review of
Appropriateness of ASC Payment for
Insertion of an NTIOL Following
Cataract Surgery
F. ASC Payment and Comment Indicators
1. Background
2. ASC Payment and Comment Indicators
G. ASC Policy and Payment
Recommendations
H. Revision to Terms of Agreements for
Hospital-Operated ASCs
1. Background
2. Changes to the Terms of Agreements for
ASCs Operated by Hospitals
I. Calculation of the ASC Conversion
Factor and ASC Payment Rates
1. Background
2. Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment
Weights for CY 2010 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. Overview
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2. Hospital Outpatient Quality Data
Reporting Under Section 109(a) of Public
Law 109–432
3. Reporting ASC Quality Data for Annual
Payment Update
4. HOPQDRP Quality Measures for the CY
2009 Payment Determination
5. HOP QDRP Quality Measures for the CY
2010 Payment Determination
a. Background
b. Maintenance of Technical Specifications
for Quality Measures
c. Publication of HOP QDRP Data
B. Quality Measures for the CY 2011
Payment Determination
1. Considerations in Expanding and
Updating Quality Measures Under the
HOP QDRP Program
2. Retirement of HOP QDRP Quality
Measures
3. HOP QDRP Quality Measures for the CY
2011 Payment Determination
C. Possible Quality Measures Under
Consideration for CY 2012 and
Subsequent Years
D. Payment Reduction for Hospitals That
Fail To Meet the HOP QDRP
Requirements for the CY 2010 Payment
Update
1. Background
2. Reporting Ratio Application and
Associated Adjustment Policy for CY
2010
E. Requirements for HOPD Quality Data
Reporting for CY 2011 and Subsequent
Years
1. Administrative Requirements
2. Data Collection and Submission
Requirements
a. General Data Collection and Submission
Requirements
b. Extraordinary Circumstance Extension
or Waiver for Reporting Quality Data
3. HOP QDRP Validation Requirements
a. Data Validation Requirements for CY
2011
b. Data Validation Approach for CY 2012
and Subsequent Years
c. Additional Data Validation Conditions
Under Consideration for CY 2012 and
Subsequent Years
F. 2010 Publication of HOP QDRP Data
G. HOP QDRP Reconsideration and
Appeals Procedures
H. Reporting of ASC Quality Data
I. Electronic Health Records
XVII. Healthcare-Associated Conditions
A. Background
1. Preventable Medical Errors and
Hospital-Acquired Conditions (HACs)
Under the IPPS
2. Expanding the Principles of the IPPS
HACs Payment Provision to the OPPS
3. Discussion in the CY 2009 OPPS/ASC
Final Rule With Comment Period
B. Public Comments and
Recommendations on Issues Regarding
Healthcare-Associated Conditions From
the Joint IPPS/OPPS Listening Session
C. CY 2010 Approach to HealthcareAssociated Conditions Under the OPPS
XVIII. Files Available to the Public via the
Internet
A. Information in Addenda Related to the
CY 2010 Hospital OPPS
B. Information in Addenda Related to the
CY 2010 ASC Payment System
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XIX. Collection of Information Requirements
A. Legislative Requirements for
Solicitation of Comments
B. Associated Information Collections Not
Specified in Regulatory Text
1. Hospital Outpatient Quality Data
Reporting Program (HOP QDRP)
2. HOP QDRP Quality Measures for the CY
2010 and CY 2011 Payment
Determinations
3. HOP QDRP Validation Requirements
4. HOP QDRP Reconsideration and
Appeals Procedures
5. Additional Topics
XX. Response to Comments
XXI. Regulatory Impact Analysis
A. Overall Impact
1. Executive Order 12866
2. Regulatory Flexibility Act (RFA)
3. Small Rural Hospitals
4. Unfunded Mandates
5. Federalism
B. Effects of OPPS Changes in This Final
Rule With Comment Period
1. Alternatives Considered
2. Limitations 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
2. Limitations of Our Analysis
3. Estimated Effects of This Final Rule
With Comment Period on Payments to
ASCs
4. Estimated Effects of This Final Rule
With Comment Period on Beneficiaries
5. Conclusion
6. Accounting Statement
D. Effects of Requirements for Reporting of
Quality Data for Annual Hospital
Payment Update
E. Executive Order 12866
Regulation Text
Addenda
Addendum A—Final OPPS APCs for CY
2010
Addendum AA—Final ASC Covered Surgical
Procedures for CY 2010 (Including Surgical
Procedures for Which Payment Is
Packaged)
Addendum B—Final OPPS Payment by
HCPCS Code for CY 2010
Addendum BB—Final ASC Covered
Ancillary Services Integral to Covered
Surgical Procedures for CY 2010 (Including
Ancillary Services for Which Payment Is
Packaged)
Addendum D1—Final OPPS Payment Status
Indicators for CY 2010
Addendum DD1—Final ASC Payment
Indicators for CY 2010
Addendum D2—Final OPPS Comment
Indicators for CY 2010
Addendum DD2—Final ASC Comment
Indicators for CY 2010
Addendum E— HCPCS Codes That Are Paid
as Inpatient Procedures for CY 2010
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Addendum L–CY 2010 OPPS Out-Migration
Adjustment
Addendum M—HCPCS Codes for
Assignment to Composite APCs for CY
2010
I. Background and Summary of the CY
2010 OPPS/ASC Final Rule With
Comment Period
A. Legislative and Regulatory Authority
for the Hospital Outpatient Prospective
Payment System
When Title XVIII of the Social
Security Act (the Act) was 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 Act authorizing implementation
of a PPS for hospital outpatient services.
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.
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 following Acts made additional
changes to the OPPS: the Medicare,
Medicaid, and SCHIP Benefits
Improvement and Protection Act (BIPA)
of 2000 (Pub. L. 106–554); the Medicare
Prescription Drug, Improvement, and
Modernization Act (MMA) of 2003 (Pub.
L. 108–173); the Deficit Reduction Act
(DRA) of 2005 (Pub. L. 109–171),
enacted on February 8, 2006; 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; the
Medicare, Medicaid, and SCHIP
Extension Act (MMSEA) of 2007 (Pub.
L. 110–173), enacted on December 29,
2007; and the Medicare Improvements
for Patients and Providers Act (MIPPA)
of 2008 (Pub. L. 110–275), enacted on
July 15, 2008.
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
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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 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
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
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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
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.
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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. These rules
can be viewed on the CMS Web site at:
https://www.cms.hhs.gov/Hospital
OutpatientPPS/. We published in the
Federal Register on November 18, 2008
the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68502). 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 2009
OPPS on the basis of claims data from
January 1, 2007, through December 31,
2007, and to implement certain
provisions of Public Law 110–173 and
Public Law 110–275. In addition, we
responded to public comments received
on the provisions of the November 27,
2007 final rule with comment period (72
FR 66580) 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
July 18, 2008 OPPS/ASC proposed rule
for CY 2009 (73 FR 41416).
Subsequent to publication of the CY
2009 OPPS/ASC final rule with
comment period, we published in the
Federal Register on January 26, 2009, a
correction notice (74 FR 4343 through
4344) to correct certain technical errors
in the CY 2009 OPPS/ASC final rule
with comment period.
On July 20, 2009, we issued in the
Federal Register (74 FR 35232) a
proposed rule for the CY 2010 OPPS/
ASC payment system to implement
statutory requirements and changes
arising from our continuing experience
with both systems.
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D. Advisory Panel on Ambulatory
Payment Classification (APC) Groups
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1. Authority of the APC Panel
Section 1833(t)(9)(A) of the Act, as
amended by section 201(h) of Public
Law 106–113, and redesignated by
section 202(a)(2) of Public Law 106–113,
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 four
times: on November 1, 2002; on
November 1, 2004; on November 21,
2006; and on November 2, 2008. The
current charter specifies, among other
requirements, that: the APC Panel
continues to be technical in nature; is
governed by the provisions of the
FACA; may convene up to three
meetings per year; has a Designated
Federal Officer (DFO); and is chaired by
a Federal official designated by the
Secretary.
The current APC Panel membership
and other information pertaining to the
APC Panel, including its charter,
Federal Register notices, membership,
meeting dates, agenda topics, and
meeting reports, can be viewed on the
CMS Web site at: https://www.cms.hhs.
gov/FACA/05_AdvisoryPanelon
AmbulatoryPaymentClassification
Groups.asp#TopOfPage.
3. APC Panel Meetings and
Organizational Structure
The APC Panel first met on February
27 through March 1, 2001. Since the
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initial meeting, the APC Panel has held
16 meetings, with the last meeting
taking place on August 5 and 6, 2009.
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. 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 2009 APC Panel meeting. At that
meeting, the APC Panel recommended
that the work of these three
subcommittees continue, and we accept
those recommendations of the APC
Panel. All subcommittee
recommendations are discussed and
voted upon by the full APC Panel.
Discussions of the other
recommendations made by the APC
Panel at the August 2009 meeting are
included in the sections of this final
rule with comment period that are
specific to each recommendation. For
discussions of earlier APC Panel
meetings and recommendations, we
refer readers to previously published
hospital OPPS/ASC proposed and final
rules, the CMS Web site mentioned
earlier in this section, and the FACA
database at: https://fido.gov/facadata
base/public.asp.
Comment: Several commenters
requested that CMS include ASC
representation on the APC Panel.
Because the revised ASC payment
system is based upon the same APC
groups and relative payment weights as
the OPPS, the commenters believed that
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ASC representation on the APC Panel
would ensure input from
representatives of all care settings that
provide surgical services whose
payment groups and payment weights
are affected by the OPPS. Further, the
commenters urged CMS to revise the
APC Panel’s charter to reflect the
current alignment of the OPPS and the
revised ASC payment system by
including representation from the ASC
industry on the APC Panel, as the
commenters believed is permitted by
the statute.
Response: We acknowledge that the
revised ASC payment system provides
Medicare payments to ASCs for surgical
procedures that are 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. 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. ASCs are suppliers, not
providers. The charter must comply
with the statute, which does not include
representatives of suppliers on the APC
Panel. Therefore, although we
understand the concerns of the
commenters regarding ASC input on the
APC Panel now that the ASC payment
system is based on the OPPS relative
payment weights, we cannot revise the
charter to include ASC representation.
E. Background and Summary of the CY
2010 OPPS/ASC Proposed Rule
A proposed rule appeared in the July
20, 2009 Federal Register (74 FR 35232)
that set forth proposed changes to the
Medicare hospital OPPS for CY 2010 to
implement statutory requirements and
changes arising from our continuing
experience with the system. In addition,
we set forth proposed changes to the
revised Medicare ASC payment system
for CY 2010, including updated
payment weights, covered surgical
procedures, and covered ancillary items
and 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
reporting quality data for annual
payment rate updates for CY 2011 and
subsequent calendar years, the
requirements for data collection and
submission for the annual payment
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update, and a proposed reduction in the
OPPS payment for hospitals that fail to
meet the HOP QDRP requirements for
the CY 2010 payment update, in
accordance with the statutory
requirement. The following is a
summary of the major proposed changes
included in the CY 2010 OPPS/ASC
proposed rule:
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1. Updates Affecting OPPS Payments
In section II. of the proposed rule, we
set forth—
• The methodology used to
recalibrate the 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 proposed 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
HCPCS codes to APCs.
• The proposed establishment of a
number of new APCs.
• Our analyses of Medicare claims
data and certain recommendations of
the APC Panel.
• The application of the 2 times rule
and proposed exceptions to it.
• The proposed changes to specific
APCs.
• The proposed movement of
procedures from New Technology APCs
to clinical APCs.
3. OPPS Payment for Devices
In section IV. of the proposed rule, we
discussed the proposed pass-through
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payment for specific categories of
devices and the proposed adjustment for
devices furnished at no cost or with
partial or full credit.
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12. OPPS Payment Status and Comment
Indicators
4. OPPS Payment Changes for Drugs,
Biologicals, and Radiopharmaceuticals
In section V. of the proposed rule, we
discussed the proposed CY 2010 OPPS
payment for drugs, biologicals, and
radiopharmaceuticals, including the
proposed payment for drugs,
biologicals, and radiopharmaceuticals
with and without pass-through status.
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
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 2010 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 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 coding and payment 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 data.
9. Payment for Partial Hospitalization
Services
In section X. of the proposed rule, we
set forth the 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 for payment
under the OPPS.
In section XIV. of the proposed rule,
we addressed recommendations made
by the Medicare Payment Advisory
Commission (MedPAC) in its March
2009 report to Congress, by the Office of
Inspector General (OIG), and by the APC
Panel regarding the OPPS for CY 2010.
14. Updates to the Ambulatory Surgical
Center (ASC) Payment System
In section XV. of the proposed rule,
we discussed the proposed updates of
the revised ASC payment system and
payment rates for CY 2010.
15. Reporting Quality Data for Annual
Payment Rate Updates
In section XVI. of the proposed rule,
we discussed the proposed quality
measures for reporting hospital
outpatient (HOP) quality data for the
annual payment update factor for CY
2011 and subsequent calendar years; set
forth the requirements for data
collection and submission for the
annual payment update; and discussed
the reduction in the OPPS payment for
hospitals that fail to meet the HOP
Quality Data Reporting Program (QDRP)
requirements for CY 2010.
16. Healthcare-Associated Conditions
In section XVII. of the proposed rule,
we discussed public responses to a
December 2008 CMS public listening
session addressing the potential
extension of the principle of Medicare
not paying more under the IPPS for the
care of preventable hospital-acquired
conditions experienced by a Medicare
beneficiary during a hospital inpatient
stay to medical care in other settings
that are paid under other Medicare
payment systems, including the OPPS,
for those healthcare-associated
conditions that occur or result from care
in those other settings.
11. OPPS Nonrecurring Technical and
Policy Changes and Clarifications
17. Regulatory Impact Analysis
In section XII. of the proposed rule,
we discussed nonrecurring technical
issues, proposed policy changes, and
provided policy clarifications.
In section XXI. of the proposed rule,
we set forth an analysis of the impact
the proposed changes would have on
affected entities and beneficiaries.
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F. Public Comments Received in
Response to the CY 2010 OPPS/ASC
Proposed Rule
We received approximately 1,527
timely pieces of correspondence
containing multiple comments on the
CY 2010 OPPS/ASC proposed rule. We
note that we received some public
comments that were outside of the
scope of the CY 2010 OPPS/ASC
proposed rule. These out-of-scope
public comments are not addressed in
this final rule with comment period.
New (and substantially revised) CY
2010 HCPCS codes are designated with
comment indicator ‘‘NI’’ in Addenda B,
AA, and BB of this final rule with
comment period to signify that their CY
2010 interim OPPS and/or ASC
treatment are open to public comment
on this final rule with comment period.
Summaries of the public comments that
are within the scope of the CY 2010
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.
G. Public Comments Received in
Response to the November 18, 2008
OPPS/ASC Final Rule With Comment
Period
We received approximately 41 timely
pieces of correspondence on the CY
2009 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 of that final rule with
comment period. Summaries of those
public comments on topics open to
comment in the CY 2009 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.
II. Updates Affecting OPPS Payments
A. Recalibration of APC Relative
Weights
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1. Database Construction
a. Database Source and Methodology
Section 1833(t)(9)(A) of the Act
requires that the Secretary review and
revise the relative payment weights for
APCs at least annually. In the April 7,
2000 OPPS final rule with comment
period (65 FR 18482), we explained in
detail how we calculated the relative
payment weights that were
implemented on August 1, 2000 for each
APC group.
For CY 2010, we proposed to use the
same basic methodology that we
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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, 2010, and before January
1, 2011 (CY 2010). That is, we proposed
to recalibrate the relative payment
weights for each APC based on claims
and cost report data for hospital
outpatient department (HOPD) 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 APC relative payment
weights for CY 2010, we used
approximately 141 million final action
claims for hospital outpatient
department services furnished on or
after January 1, 2008, and before January
1, 2009. (For exact counts of claims
used, we refer readers to the claims
accounting narrative under supporting
documentation for this final rule with
comment period on the CMS Web site
at: https://www.cms.hhs.gov/
HospitalOutpatientPPS/HORD/.)
Of the 141 million final action claims
for services provided in hospital
outpatient settings used to calculate the
CY 2010 OPPS payment rates for this
final rule with comment period,
approximately 107 million claims were
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 50
million claims 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
68 million were ‘‘pseudo’’ single or
‘‘single session’’ claims (created from 26
million multiple procedure claims using
the process we discuss later in this
section). Approximately 657,000 claims
were 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. As described in section
II.A.2. of this final rule with comment
period, our data development process is
designed with the goal of using
appropriate cost information in setting
the APC relative weights. The bypass
process is described in section II.A.1.b.
of this final rule with comment period.
This section discusses how we develop
‘‘pseudo’’ single claims, with the
intention of using more appropriate data
from the available claims. In some cases,
the bypass process allows us to use
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some portion of the submitted claim for
cost estimation purposes, while the
remaining information on the claim
continues to be unusable. Consistent
with the goal of using appropriate
information in our data development
process, we only use claims (or portions
of each claim) that are appropriate for
ratesetting purposes. Ultimately, we
were able to use for CY 2010 ratesetting
some portion of 95 percent of the CY
2008 claims containing services payable
under the OPPS.
As proposed, the APC relative weights
and payments for CY 2010 in Addenda
A and B to this final rule with comment
period were calculated using claims
from CY 2008 that were processed
before January 1, 2009 and continue to
be based on the median hospital costs
for services in the APC groups. We
selected claims for services paid under
the OPPS and matched these claims to
the most recent cost report filed by the
individual hospitals represented in our
claims data. We continue to believe that
it is appropriate to use the most current
full calendar year claims data and the
most recently submitted cost reports to
calculate the median costs
underpinning the APC relative payment
weights and the CY 2010 payment rates.
We did not receive any public
comments on our proposal to base the
CY 2010 APC relative weights on the
most currently available cost reports
and on claims for services furnished in
CY 2008. Therefore, for the reasons
noted above in this section, we are
finalizing our data source for the
recalibration of the CY 2010 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 2010, 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 in this section. 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 derived from the costs
of furnishing one procedure and
because, in many circumstances, we are
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
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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
were submitted as multiple procedure
claims spanning multiple dates of
service, or claims that 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. The history of our use of a
bypass list to generate ‘‘pseudo’’ single
claims is well documented, most
recently in the CY 2009 OPPS/ASC final
rule with comment period (73 FR 68512
through 68519). In addition, for CY
2008, we increased packaging and
created the first composite APCs. This
also increased the number of bills that
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. Further, for CY 2009,
we expanded the composite APC model
to one additional clinical area, multiple
imaging services (73 FR 68559 through
68569), which also increased the
number of bills we were able to use to
calculate APC median costs. 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 2010 OPPS/ASC proposed
rule (74 FR 35239 through 35241), we
proposed to continue to apply these
processes to enable us to use as much
claims data as possible for ratesetting for
the CY 2010 OPPS. This process
enabled us to create, for this final rule
with comment period, approximately 68
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), to add to the approximately
32 million ‘‘natural’’ single bills. For
this final rule with comment period,
‘‘pseudo’’ single and ‘‘single session’’
procedure bills represent 68 percent of
all single bills used to calculate median
costs.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35239 through 35241), we
proposed to bypass 438 HCPCS codes
for CY 2010. Since the inception of the
bypass list, we have calculated the
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percent of ‘‘natural’’ single bills that
contained packaging for each HCPCS
code and the amount of packaging on
each ‘‘natural’’ single bill for each code.
Each year, we generally retain the codes
on the previous year’s bypass list and
use the update year’s data (for CY 2010,
data available for the February 2009
APC Panel meeting from CY 2008
claims processed through September 30,
2008 and CY 2007 claims data
processed through June 30, 2008 used to
model the final payment rates for CY
2009) to determine whether it would be
appropriate to propose to add additional
codes to the previous year’s bypass list.
For CY 2010, we proposed to continue
to bypass all of the HCPCS codes on the
CY 2009 OPPS bypass list. We also
proposed to add to the bypass list for CY
2010 all HCPCS codes not on the CY
2009 bypass list that, using both CY
2009 final rule and February 2009 APC
Panel data, met the same previously
established empirical criteria for the
bypass list that are summarized below.
Because we must make some
assumptions about packaging in the
multiple procedure claims in order to
assess a HCPCS code for addition to the
bypass list, we assume that the
representation of packaging on
‘‘natural’’ single claims for any given
code is comparable to packaging for that
code in the multiple claims. The
proposed criteria for the bypass list
were:
• There are 100 or more ‘‘natural’’
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
‘‘natural’’ 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
procedures 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 ‘‘natural’’ single claims
is equal to or less than $50. This
criterion also limits the amount of error
in redistributed costs. Throughout the
bypass process, we do not know the
dollar value of the packaged cost that
should be appropriately attributed to the
other procedures on the claim. Ensuring
that redistributed costs associated with
a bypass code are small in amount and
volume protects the validity of cost
estimates for low cost services billed
with the bypassed service.
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• 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 2010
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 packaging
associated with specific services,
especially on a multiple procedure
claim. We also proposed to continue to
include on the bypass list certain
HCPCS codes in order to purposefully
direct the assignment of packaged costs
to a companion code where services
always appear together and where there
would otherwise be few single claims
available for ratesetting. For example,
we have previously discussed our
reasoning for adding HCPCS code
G0390 (Trauma response team
associated with hospital critical care
service) and the CPT codes for
additional hours of drug administration
to the bypass list (73 FR 68513 and 71
FR 68117 through 68118).
As a result of the multiple imaging
composite APCs that we established in
CY 2009, we note that the program logic
for creating ‘‘pseudo’’ singles from
bypassed codes that are also members of
multiple imaging composite APCs
changed. 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 session’’
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, at the end of
the ‘‘pseudo’’ single processing logic,
we reassessed the claims without
suppression of the ‘‘overlap bypass
codes’’ under our longstanding
‘‘pseudo’’ single process to determine
whether we could convert additional
claims to ‘‘pseudo’’ single claims. (We
refer readers to section II.A.2.b. 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
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identified by asterisks (*) in Table 1 of
the CY 2010 OPPS/ASC proposed rule
(74 FR 35242 through 35252).
At the February 2009 APC Panel
Meeting, the APC Panel recommended
that CMS place CPT code 76098
(Radiological examination, surgical
specimen) on the bypass list and
reassign the code to APC 0260 (Level I
Plain Film Except Teeth) in response to
a public presentation requesting that
CMS makes these changes. Although
CPT code 76098 would not be eligible
for addition to the bypass list because
the frequency and magnitude of
packaged costs in its ‘‘natural’’ single
claims exceed the empirical criteria, the
presenter suggested that the ‘‘natural’’
single claims represented aberrant
billing with inappropriate packaged
services and pointed out that the
packaged services support the surgical
procedures that commonly are also
reported on claims for CPT code 76098.
The presenter suggested that bypassing
CPT code 76098 would properly
allocate packaged costs to surgical
procedures on these claims, and would
increase the number of single claims
available for ratesetting for both CPT
code 76098 and the associated surgical
breast procedures. The APC Panel
indicated that the issues raised by the
presenter appeared to be consistent with
clinical practice and subsequently made
the recommendation to bypass CPT
code 76098 and reassign the code to
APC 0260 based on the code’s revised
cost.
Based on the APC Panel’s specific
recommendation for CPT code 76098,
we studied the billing patterns for the
code in the ‘‘natural’’ single and
multiple major claims in the CY 2008
claims data available for the February
2009 APC Panel. The presenter asserted
that CPT code 76098 is commonly billed
with surgical breast procedures and our
claims data from the multiple procedure
claims confirm this observation.
However, as noted above, there are also
a significant number of ‘‘natural’’ single
bills in those data (1,303), and these
‘‘natural’’ single claims include costly
packaged services, such as CPT code
19290 (Preoperative placement of
needle localization wire, breast) and
CPT 77032 code (Mammographic
guidance for needle placement, breast
(eg, for wire localization or for
injection), each lesion, radiological
supervision and interpretation). We
have received anecdotal information
indicating that hospitals may place
guidance wires prior to surgery in the
hospital’s radiology department and
then examine the surgical specimen in
the radiology department after its
surgical removal. This information,
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along with the number of observed
‘‘natural’’ single claims, suggests that
the packaged costs might appropriately
be associated with the radiological
examination of the breast specimen.
Although bypassing CPT code 76098
would allow for the creation of more
‘‘pseudo’’ single claims for ratesetting, it
would also require the assumption that
all packaging on the claim would be
correctly assigned to the remaining
major procedure where it exists and that
on ‘‘natural’’ single bills no packaging
would be appropriately associated with
CPT code 76098. Given the number of
‘‘natural’’ single bills for CPT code
76098 and the significant packaged
costs on these claims, we are not
confident that placement of this code on
the bypass list is appropriate.
While we did not propose to place
CPT code 76098 on the bypass list, we
wanted to continue to provide separate
payment for this procedure when
appropriate. We believe that CPT code
76098 is generally ancillary and
supportive to surgical breast procedures.
In CY 2008 we established a group of
conditionally packaged codes, called
‘‘T-packaged codes,’’ whose payment is
packaged when one or more separately
paid surgical procedures with status
indicator ‘‘T’’ are provided during a
hospital encounter. In order to provide
separate payment for CPT code 76098
when not provided with a separately
payable surgical procedure and also to
recognize its ancillary and supportive
nature when it accompanies separately
payable procedures, we proposed to
conditionally package CPT code 76098
as a ‘‘T-packaged code’’ for CY 2010,
identified with status indicator ‘‘Q2’’ in
Addendum B to the CY 2010 OPPS/ASC
proposed rule. As a ‘‘T-packaged code,’’
CPT code 76098 would receive separate
payment except where it appears with a
surgical procedure, in which case its
payment would be packaged.
Designating CPT 76098 in this way
allows the separate payment to
appropriately account for the packaged
costs that appear on the code’s
‘‘natural’’ single bills, while also
allowing us to use more multiple
procedure claims that include both a
surgical procedure and CPT code 76098
to set the payment rates for the related
surgical procedures. The CPT codespecific median cost of CPT code 76098
in the CY 2008 claims data available for
the February 2009 APC Panel meeting
was approximately $346, consistent
with its CY 2009 assignment to APC
0317 (Level II Miscellaneous Radiology
Procedures), which had an observed
APC median cost in those data of
approximately $339. In contrast, the
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median cost of APC 0260, the APC
reassignment recommended by the APC
Panel, was much lower in the APC
Panel data, approximately $46.
Therefore, we did not accept the APC
Panel’s recommendation to reassign
CPT code 76098. Instead, we proposed
to continue its assignment to APC 0317
for CY 2010 in those cases where CPT
code 76098 is separately paid.
Comment: Several commenters
requested that CMS add CPT code
76098 to the bypass list and reassign it
to APC 0260. The commenters believed
that CPT 76098 is similar with respect
to resource use to the other codes
assigned to APC 0260. The commenters
also claimed that including CPT code
76098 on the bypass list would
appropriately make more claims
available for ratesetting purposes for the
CPT code itself and the surgical breast
procedures that appear with CPT code
76098 in the multiple major procedure
claims. Another commenter supported
the proposal to not include CPT code
76098 on the CY 2010 bypass list.
Response: The hospital claims data
show that there is significant packaging
associated with CPT code 76098.
Therefore, we believe CPT code 76098
is not appropriate for inclusion on the
bypass list.
In examining the billing patterns for
CPT 76098, we noted its failure to meet
the empirical criteria for inclusion on
the bypass list. The significant number
of ‘‘natural’’ single claims suggests that
these claims are an accurate
representation of hospital billing
practices in certain clinical situations.
Further, we believe the packaging on
these claims is properly associated with
the code. Anecdotal information on the
placement of wires prior to surgery
suggests that the packaging on the
‘‘natural’’ single claims reflects
appropriate billing in some clinical
scenarios, such as when hospitals place
guidance wires prior to surgery in the
hospital’s radiology department and
then examine the surgical specimen in
the radiology department after its
surgical removal. This example
illustrates appropriate billing on
‘‘natural’’ single claims for CPT code
76098 because the hospital has
accurately reported all services that the
hospital provided to the patient on the
claim. In this case, the hospital did not
provide the associated surgical breast
procedure; therefore, all packaging
would be appropriately associated with
CPT code 76098, which is the separately
payable service that the hospital
provided to the patient. This scenario
contradicts the commenter’s belief that
the significant packaging on the
‘‘natural’’ single claims for CPT code
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76098 would represent aberrant hospital
billing. As a result, for the CY 2010
proposed rule, we did not propose to
add CPT code 76098 to the bypass list.
However, based on our examination of
the claims data for the proposed rule,
we agreed that CPT 76098 is generally
ancillary and supportive to surgical
breast procedures. In order to provide
appropriate separate payment for CPT
code 76098 when the service is not
furnished with a separately payable
surgical procedure, and also to
recognize its ancillary and supportive
nature when it accompanies separately
payable procedures, we proposed to
conditionally package CPT code 76098
as a ‘‘T-packaged code’’ for CY 2010,
identified with status indicator ‘‘Q2’’ in
Addendum B to the proposed rule.
Designating CPT code 76098 as a ‘‘Tpackaged code’’ allows the separate
payment to appropriately account for
the packaged costs that appear on the
code’s ‘‘natural’’ single bills, while also
allowing us to use more multiple
procedure claims that include a surgical
procedure and CPT code 76098 to set
the payment rates for the related
surgical procedures. In turn, we are able
to use more data from the multiple
procedure claims with CPT code 76098
to set payment rates for the surgical
breast procedures on those claims. We
continue to believe that classifying CPT
code 76098 as a conditionally packaged
code with status indicator ‘‘Q2’’ is the
proper policy to both provide
appropriate payment when the service
is billed by itself and appropriate
payment for the associated surgical
breast procedures that it supports.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to assign status
indicator ‘‘Q2’’ to CPT code 76098.
When the service is furnished with a
separately payable surgical procedure
with status indicator ‘‘T’’ on the same
day, payment for CPT code 76098 is
packaged. Otherwise, payment for CPT
code 76098 is made separately through
APC 0317, which has a final APC
median cost of approximately $374. We
are not adding CPT code 76098 to the
bypass list for CY 2010.
Comment: Many commenters
supported the current methodology of
bypassing HCPCS codes and the goal of
using more data from the multiple major
claims. A few commenters noted that
some of the HCPCS codes on the
proposed CY 2010 bypass list do not
meet the empirical criteria described
above and observed that many codes
that meet the empirical criteria were not
included on the proposed bypass list.
The commenters highlighted findings
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from supporting data analysis to
illustrate their points. Several
commenters also raised concerns about
the transparency of the bypass process.
The commenters suggested that the
empirical criteria were not explained
clearly and were applied inconsistently.
Other commenters believed that there is
a lack of transparency regarding the
addition of codes to the bypass list and
the bypass process in general.
The commenters requested detailed
explanations about which codes are
included on the bypass list, asking that
CMS identify any codes on the bypass
list that do not meet the empirical
criteria and the reason for their
inclusion. Several commenters believed
that modifying the specific empirical
criteria that the median packaged cost
be less than $50 on less than 5 percent
of ‘‘natural’’ single bills would increase
the number of potential bypass codes
and ‘‘pseudo’’ single claims. Some
commenters suggested adopting a
different threshold of some low
percentage of total packaged costs on
the code’s single claims as a percent of
total costs on all single claims. They
believed that a percentage approach
could provide more stability in the
ratesetting process. One commenter also
suggested that more generous empirical
thresholds could be appropriate for a
select set of HCPCS codes by subtracting
the average packaged cost of the bypass
code from other costs on the date of
service where the code appears and is
used as a bypass code, specifically to
increase the number of claims available
for setting payment rates for APCs for
low dose rate brachytherapy services. A
few commenters recommended that the
median packaged cost threshold of $50
on less than 5 percent of ‘‘natural’’
single bills be updated as CMS has not
updated the threshold since its
introduction, and one commenter
claimed the packaged cost threshold
was arbitrary. Several commenters also
indicated that the HCPCS codes CMS
proposed to add to the CY 2010 OPPS
bypass list were not actually
incorporated into CMS’ ratesetting
process.
Response: As discussed above in this
section, we only apply the empirical
criteria to the ‘‘natural’’ single claims.
The bypass list is intended to consist of
services that have minimal or no
associated packaging, and in recent
years, also includes codes for services
that we wish to explicitly treat as not
having packaged costs for purposes of
OPPS payment. We refer readers to our
previous discussions regarding the
inclusion of additional hours of drug
administration services (73 FR 68513)
and HCPCS G0390 (71 FR 68117
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through 68118) on the bypass list for
further detail. Extracting ‘‘pseudo’’
single bills or unique estimates of a
single service’s total resource cost from
claims containing multiple procedures
requires making some assumptions
about the amount of packaging
associated with every service. As
reflected in the CY 2005 proposed rule
(69 FR 50474 through 50475), our
empirical criteria of 100 ‘‘natural’’
single claims, 5 percent or fewer
‘‘natural’’ single claims with packaging,
and median packaged cost less than $50
are intended to be conservative, that is,
to limit the amount and impact of
redistributed packaging from expanding
the bypass list. These criteria ensure
that the packaged costs associated with
bypass codes are limited, based on the
best information that we have in the
‘‘natural’’ single procedure claims.
Bypassing codes with significant
associated packaging would
inappropriately redistribute these
packaged costs to major procedures
billed with the bypass codes in the
multiple procedure claims, when the
individual line-items for the bypass
codes are removed to create ‘‘pseudo’’
single claims. Because we recognize that
the ‘‘natural’’ single claims are not
always good representations of the code
when it is reported on multiple major
claims, for example, a service with only
20 ‘‘natural’’ single claims, we also
judiciously include procedures on the
bypass list that both CMS’ medical
advisors and public commenters
identify as not including significant
packaging and for which our own data
analyses do not suggest that inclusion
on the bypass list would result in an
inappropriate redistribution of packaged
costs. Finally, our general policy each
year has been to retain codes from the
previous year’s bypass list without
reevaluation of these codes in the
context of the empirical criteria based
upon updated data. We listed and
discussed these empirical criteria most
recently in the CY 2010 OPPS/ASC
proposed rule (74 FR 35240 through
35241). The empirical criteria have
remained unchanged since first
implemented because it has been our
experience that they effectively limit the
inappropriate redistribution of packaged
costs when we create ‘‘pseudo’’ single
procedure claims.
In examining the empirical data
provided by commenters supporting
their requests for additions to the bypass
list, we believe that the research
supporting these public comments
applied the empirical criteria to all
single claims rather than only to the
‘‘natural’’ single claims. We note that
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this application of the empirical criteria
is inconsistent with our methodology of
generalizing about packaging in the
multiple procedure claims from the
‘‘natural’’ single procedure claims. We
do not believe that it would be
appropriate to expand the bypass list by
assuming that our packaging
redistribution after application of the
current bypass list should be used to
identify additional candidates for the
bypass list. Clearly comparing all single
bills, not just ‘‘natural’’ single bills,
would lead to the conclusion that many
more codes are eligible for inclusion on
the bypass list but could also compound
any inappropriate cost redistribution
created by the current ‘‘pseudo’’ single
claim development process. The OPPS
pays for individual items and services
and some APCs do not contain many
services and some of these services are
low cost. Further, some payment rates
are based on a small sample of single
procedure claims. Because
redistributing even a small amount of
packaging could have a potentially large
impact on median costs for small
volume or low cost APCs, we believe
our current empirical criteria and
reliance on ‘‘natural’’ single procedure
claims provide the most appropriate
bypass policy.
Some commenters indicated that a
packaged cost threshold based on a
percentage of low packaged costs out of
total costs for all single bills would be
more appropriate. We believe that using
a percentage could allow some
significant packaged costs to be
redistributed. Specifically,
implementing this change to the
empirical criteria could redistribute a
low percentage of packaged cost out of
total cost for all single bills to a very
inexpensive service, leading to potential
distortions in the APC relative weights.
This would be contrary to one primary
purpose of the empirical criteria, which
is to limit the inappropriate
redistribution of packaged costs in the
bypass process. We also do not
understand how adopting this policy
would introduce greater stability. If the
policy increased the size of the bypass
list, it could introduce greater instability
by inappropriately redistributing more
variable packaged costs from year to
year. With regard to the suggestion that
we subtract an average packaged cost for
the bypass code from each multiple
procedure claim, we believe that this
would inappropriately remove cost
information from the claims used for
ratesetting and assume that the removal
of that average cost is appropriate in
most cases.
While we are not adopting the
commenters’ suggested revisions to the
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empirical criteria for the CY 2010 OPPS
bypass list, we acknowledge that the
$50 median packaged cost threshold has
not been updated for several years and
that the real value of this packaged cost
threshold criterion has declined due to
inflation. Consequently, we will
consider whether it would be
appropriate to update the $50 dollar
packaged cost threshold for inflation
when identifying potential bypass codes
in future rulemaking.
The bypass list we used to calculate
payment rates for this final rule with
comment period omits 11 of the 14
HCPCS codes that we newly proposed
to add to the bypass list for the CY 2010
OPPS. Although these 14 proposed
codes met the empirical criteria for
inclusion on the bypass list for CY 2010
and although we listed them in Table 1
of the proposed rule (74 FR 35242
through 35352), we inadvertently
omitted them from the bypass list that
we used to calculate the median costs
and payment rates that we proposed for
CY 2010. To ensure consistency
between the proposed rule and the final
rule with comment period, we began
our modeling for this final rule with
comment period using the same list of
bypass codes that we used to create the
median costs and payment rates that we
proposed for CY 2010. Three proposed
radiation oncology code additions are
an exception to this approach. In this
final rule with comment period, we are
including these three proposed bypass
codes both because they meet the
empirical criteria and because
commenters on the CY 2010 OPPS/ASC
proposed rule specifically requested
that we add them to the CY 2010 bypass
list. These three codes are: CPT code
77300 (Basic radiation dosimetry,
central axis depth dose calculation,
TDF, NSD, gap calculation, off axis
factor, tissue inhomogeneity factors,
calculation of non-ionizing radiation
surface and depth dose, as required
during course of treatment, only when
prescribed by the treating physician);
CPT code 77331 (Special dosimetry
(e.g., TLD, microdosimetry)(specify),
only when prescribed by the treating
physician); and CPT code 77370
(Special medical radiation physics
consultation).
Thus, the bypass list that we used to
calculate the payment rates in this final
rule with comment period does not
include 11 of the 14 codes proposed for
inclusion on the CY 2010 bypass list.
These 11 HCPCS codes are identified in
Table 1 of this final rule with comment
period. In response to commenters’
requests that we document additions to
the bypass list, we have included a
column in the list of bypass codes in
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Table 2 to identify additions for the CY
2010 update year, and we will continue
to identify new additions in future
rulemaking.
Comment: A few commenters noted
that CMS removed radiation oncology
HCPCS codes that did not meet the
empirical criteria from the bypass list
for the CY 2009 OPPS/ASC final rule
with comment period. Observing that
this action had an adverse effect on the
median costs for those codes and
services frequently billed with those
codes, the commenters requested that a
number of the radiation oncology CPT
codes be added to the bypass list,
including CPT codes 77295
(Therapeutic radiology simulation-aided
field setting, 3-dimensional); 77299
(Unlisted procedure, therapeutic
radiology clinical treatment planning);
77300 (Basic radiation dosimetry
calculation, central axis depth dose
calculation, TDF, NSD, gap calculation,
off axis factor, tissue inhomogeneity
factors, calculation of non-ionizing
radiation surface and depth dose, as
required during course of treatment,
only when prescribed by treating
physician); 77301 (Intensity modulated
radiotherapy plan, including dosevolume histograms for target and critical
structure partial tolerance
specifications); 77310 (Teletherapy,
isodose plan (whether hand or computer
calculated); intermediate (three or more
treatment ports directed to a single area
of interest)); 77315 (Teletherapy.
Isodose plan (whether hand or computer
calculated); complex (mantle or inverted
Y, tangential ports, the use of wedges,
compensators, complex blocking,
rotational beam, or special beam
considerations)); 77327 (Brachytherapy
isodose plan; intermediate (multiplane
dosage calculations, application
involving 5 to10 sources/ribbons,
remote afterloading brachytherapy, 9 to
12 sources)); 77328 (Brachytherapy
isodose plan; complex (multiplane
isodose plan, volume implant
calculations, over 10 sources/ribbons
used, special spatial reconstruction,
remote afterloading brachytherapy, over
12 sources)); 77331 (Special dosimetry
(e.g., TLD, microdosimetry) (specify),
only when prescribed by the treating
physician); 77336 (Continuing medical
physics consultation, including
assessment of treatment parameters,
quality assurance of dose delivery, and
review of patient treatment
documentation in support of the
radiation oncologist, reporter per week
of therapy); 77370 (Special medical
radiation physics consultation); 77371
(Radiation treatment delivery,
stereotactic radiosurgery (SRS),
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complete course of treatment of cranial
lesion(s) consisting of 1 session; multisource Cobalt 60 based); 77401
(Radiation treatment delivery,
superficial and/or ortho voltage); 77470
(Special treatment procedure (e.g., total
body irradiation, hemibody radiation,
per oral, endocavitary or intraoperative
cone irradiation)); 77600 (Hyperthermia,
externally generated; superficial (i.e.,
heating to a depth of 4 cm or less));
77783 (Remote afterloading high
intensity brachytherapy; 9–12 source
positions or catheters); and 77789
(Surface application of radiation
source).
Response: Some of the HCPCS codes
that commenters suggested that we add
to the bypass list are already included
on the bypass list for this final rule with
comment period, including CPT codes
77301, 77315, 77336, and 77401. These
codes met the empirical criteria in
earlier years and, because of our policy
to retain codes once they have been
added to the bypass list, these codes
continue on the bypass list. However,
many of the codes that commenters
requested for addition the CY 2010
bypass list do not meet the empirical
criteria because the percentage of
‘‘natural’’ single procedure claims with
packaging exceeds 5 percent and, for
some, the low volume of ‘‘natural’’
single claims prevents us from making
an accurate assessment about packaging
in the multiple procedure claims. Most
of these codes have a low packaged
median cost in the ‘‘natural’’ single
procedure claims.
We examined the billing patterns for
these HCPCS codes in the multiple
major claims to better understand the
potential impact that adding the
recommended codes that do not meet
the empirical criteria to the bypass list
might have on the redistribution of
packaged costs. We specifically
analyzed the amount of packaged cost
on the same date of service as the
suggested bypass codes and other codes
in the same clinical series as the
recommended bypass codes in the
multiple procedure claims, as well as
the number of other procedures
appearing on the same date of service,
the APCs associated with these
procedures, and whether any of these
other procedures were already included
on the bypass list. For three codes,
specifically CPT codes 77600
(Hyperthermia, externally generated;
superficial (i.e. heating to a depth of
4cm or less)); 77605 (Hyperthermia,
externally generated; deep (i.e. heating
to depths greater than 4 cm)); and 77610
(Hyperthermia generated by interstitial
probe(s); 5 or fewer interstitial
applicators), we did not observe a
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significant amount of additional
packaging on the multiple procedure
claims or many other services, so we
believe that including these codes on
the bypass list would result in a limited
amount of redistributed packaged cost.
Therefore, we added these three codes
to the CY 2010 bypass list. We also
observed packaged costs associated with
CPT code 77327, but the amount was
proportionally limited relative to the
procedure costs on the same date of
service, and we believe that we can
appropriately add this code to the CY
2010 bypass list.
As discussed above in this section, we
also are adding the radiation oncology
codes that we proposed to include on
the CY 2010 bypass list, specifically
CPT codes 77300, 77331, and 77370,
because these codes meet the empirical
criteria, they were proposed for addition
to the bypass list, and several
commenters specifically requested these
codes be included on the bypass list.
However, several codes in the
commenters’ suggested additions to the
bypass list not only failed the empirical
criteria in the ‘‘natural’’ single
procedure claims, but also were
associated with significant packaged
costs proportional to the costs of the
other procedures appearing on the same
date of service and the presence of many
other separately paid procedures. Most
of this packaged cost on claims for the
candidate bypass codes was reported as
revenue code charges without HCPCS
codes, and we could not ascertain
whether some of the packaging should
be associated with the suggested bypass
code or with one of the many other
procedures appearing on the same date
of service in the multiple claims.
Because we would be unable to allocate
the packaged cost among services or to
determine that it was not associated
with the candidate bypass list code, we
believe it would be inappropriate to add
these HCPCS codes to the bypass list.
Although previous commenters have
suggested that packaging of radiation
guidance services in CY 2008 reduced
the number of claims available for
setting payment rates for radiation
oncology services, it is notable that only
a small portion of the packaged costs on
the claims for radiation oncology
services could be attributed to the
radiation guidance services. In
summary, we are not adding CPT codes
77295, 77299, 77310, 77328, 77371,
77470, 77783, and 77789 to the final CY
2010 bypass list.
We always appreciate the empirical
information that commenters submitted
regarding their suggested additions to
the bypass list. However, we note that,
due to the redistributive properties of
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the bypass list and our process for
creating ‘‘pseudo’’ single procedure
claims, we always must examine the
redistributive impact of additions to the
bypass list on all HCPCS code and APC
median costs. Future recommendations
from the public for additions to the
bypass list should consider the global
impact on APCs and HCPCS codes of
changes to the bypass list in order to
facilitate our evaluation of codes
suggested for inclusion on the bypass
list in the future.
Comment: Some commenters
supported the inclusion of the HCPCS
codes for additional hours of drug
administration on the bypass list. In
addition, several commenters requested
that CPT 90768 (Intravenous infusion,
for therapy, prophylaxis, or diagnosis
(specify substance or drug); concurrent
infusion (List separately in addition to
code for primary procedure)) be made
separately payable and added to the
bypass list to ensure consistent
treatment of codes for additional hours
of drug administration under the bypass
list.
Response: We appreciate the
commenters’ support and have
continued to include the separately
payable codes for additional hours of
drug administration on the CY 2010
bypass list. Bypassing these drug
administration codes, and associating
all the packaging with the code for the
initial hour of drug administration,
enables us to use many correctly coded
claims for initial drug administration
services that would otherwise not be
available for ratesetting. We did not
include CPT 90768 on the CY 2010
bypass list because we proposed to
unconditionally package its successor
code (CPT code 96368 (Intravenous
infusion, for therapy, prophylaxis, or
diagnosis (specify substance or drug);
concurrent infusion (List separately in
addition to code for primary
procedure))) in CY 2010 and, therefore,
CPT code 90768 is not a candidate for
the bypass list. Our final CY 2010 policy
to package payment for CPT code 96368
is discussed in section VIII.B. of this
final rule with comment period.
As discussed above, the bypass list
consists of separately paid services with
no or minimal packaging or separately
paid services that CMS knowingly
prices without including packaged costs
and associates any packaging with the
other service(s) billed on the same date
of service. The purpose of the bypass
list is to help develop better estimates
of total resource costs for a given
separately payable procedure through
creating ‘‘pseudo’’ single procedure
claims from the multiple procedure
claims by removing line-items without
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packaging from each claim’s date of
service. Including packaged codes on
the bypass list would remove valid
packaging from a multiple procedure
claim and would not allow CMS to
derive more estimates of a service’s total
resource costs from multiple procedure
claims. We have previously discussed
our reasons for packaging CPT code
90768 in the CY 2009 OPPS/ASC final
rule with final period (73 FR 68674).
Comment: Several commenters
supported the inclusion of HCPCS code
G0340 (Image-guided 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
commenters’ support and have
continued to include HCPCS code
G0340 on the CY 2010 bypass list.
Comment: One commenter requested
that CMS examine whether changes to
the bypass list or other edits included in
CMS’ ratesetting processes negatively
affected the proposed CY 2010 payment
rates for APC 0651 (Complex Interstitial
Radiation Source Application) and
composite APC 8001(LDR Prostate
Brachytherapy Composite).
Response: In analyzing the impact of
the final CY 2010 bypass list changes on
APCs 0651 and 8001, we noted modest
changes in both single procedure claim
frequency and median costs. In the case
of composite APC 8001, bypass list
changes increased the single procedure
claims available for ratesetting purposes
and reduced the median cost by roughly
2 percent. APC 0651 experienced a
modest increase of 3 percent in the
single procedure claims available for
ratesetting and its median cost also
increased by about 3 percent. Neither
APC 0651 nor composite APC 8001
experienced significant fluctuations in
median cost or single procedure claim
frequency due to the line-item trim
discussed in section II.A.2.(a) of this
final rule with comment period.
After consideration of the public
comments received, we are adopting, as
final, our proposed methodology to use
a bypass list to create ‘‘pseudo’’ single
claims. To ensure consistency between
the CY 2010 proposed and final rules,
we began our consideration of
comments using the same list of bypass
codes for this final rule with comment
period that we used to calculate the
median costs and payment rates that we
proposed for CY 2010, which was the
CY 2009 final rule bypass list. We added
HCPCS codes to the CY 2010 bypass list
based on whether they met the
empirical criteria and, if they did not,
whether we believe that the amount of
redistributed packaged cost that their
inclusion on the bypass list would
generate would be appropriate. We
ultimately added seven codes to the CY
2010 bypass list. The list of CY 2010
bypass code additions that we proposed
in the CY 2010 OPPS/ASC proposed
rule but did not implement in this final
rule with comment period appears in
Table 1. Table 2 below is the final list
of bypass codes for CY 2010. ‘‘Overlap
bypass codes’’ that are members of the
multiple imaging composite APCs are
identified by asterisks (*) in Table 2.
HCPCS codes that have been added for
CY 2010 are also identified by asterisks
(*) in Table 2.
TABLE 1—PROPOSED CY 2010 BYPASS CODE ADDITIONS EXCLUDED FROM FINAL CY 2010 BYPASS LIST
CY 2010 HCPCS Code
57452
76120
76813
88314
88367
92700
94660
95971
99406
CY 2010 Short descriptor
..........................................................................................................................................................................
..........................................................................................................................................................................
..........................................................................................................................................................................
..........................................................................................................................................................................
..........................................................................................................................................................................
..........................................................................................................................................................................
..........................................................................................................................................................................
..........................................................................................................................................................................
..........................................................................................................................................................................
99407 ..........................................................................................................................................................................
G0249 .........................................................................................................................................................................
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Exam of cervix w/scope.
Cine/video x-rays.
Ob us nuchal meas, 1 gest.
Histochemical stain.
Insitu hybridization, auto.
Ent procedure/service.
Pos airway pressure, CPAP.
Analyze neurostim, simple.
Behav chng smoking 3–10
min.
Behav chng smoking >10 min.
Provide INR test mater/equip.
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BILLING CODE 4120–01–C
c. Calculation of CCRs
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(1) Development of the CCRs
We calculated hospital-specific
overall ancillary CCRs and hospitalspecific departmental CCRs for each
hospital for which we had CY 2008
claims data from the most recent
available hospital cost reports, in most
cases, cost reports beginning in CY
2007. For the CY 2010 OPPS ratesetting,
we used the set of claims processed
during CY 2008. We applied the
hospital-specific CCR to the hospital’s
charges at the most detailed level
possible, based on a revenue code-tocost center crosswalk that contains a
hierarchy of CCRs used to estimate costs
from charges for each revenue code.
That crosswalk is available for review
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and continuous comment on the CMS
Web site at: https://www.cms.hhs.gov/
HospitalOutpatientPPS/
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 hospitalspecific departmental level. For a
discussion of the hospital-specific
overall ancillary CCR calculation, we
refer readers to the CY 2007 OPPS/ASC
final rule with comment period (71 FR
67983 through 67985).
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35253), we proposed to
continue using the hospital-specific
overall ancillary and departmental CCRs
to convert charges on the claims
reported under specific revenue codes
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to estimated costs through application
of a revenue code-to-cost center
crosswalk for CY 2010.
We did not receive any public
comments on this proposal. Therefore,
we are finalizing our proposal for CY
2010, 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. (We
discuss our CCR calculation in section
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II.A.1.c. of this final rule with comment
period and how we use these CCRs to
estimate cost on hospital outpatient
claims in detail in section II.A.2.a. of
this final rule with comment period). 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
center. Commenters on previous rules
have expressed increased concern about
the impact of charge compression when
CMS began setting the relative weights
for payment under the IPPS based on
the costs of inpatient hospital services,
rather than the charges for the services.
To explore this issue, in August 2006
we awarded a contract to RTI
International (RTI) to study the effects of
charge compression in calculating the
IPPS relative weights, particularly with
regard to the impact on inpatient
diagnosis-related group (DRG)
payments, and to consider methods to
capture better the variation in cost and
charges for individual services when
calculating costs for the IPPS relative
weights across services in the same cost
center. Of specific note was RTI’s
analysis of a regression-based
methodology estimating an average
adjustment for CCR by type of revenue
code from an observed relationship
between provider cost center CCRs and
proportional billing of high and low cost
services in the revenue codes associated
with the cost center in the claims data.
RTI issued a report in March 2007 with
its findings on charge compression. The
report is available on the CMS Web site
at: https://www.cms.hhs.gov/reports/
downloads/Dalton.pdf. Although this
report was focused largely on charge
compression in the context of the IPPS
cost-based relative weights, several of
the findings were relevant to the OPPS.
Therefore, we discussed the findings
and our responses to that 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).
RTI noted in its 2007 report that its
research was limited to IPPS DRG costbased 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
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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
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 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’ hospital-specific 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. The RTI final report can be
found on RTI’s Web site at: https://www.
rti.org/reports/cms/HHSM-500-20050029I/PDF/Refining_Cost_to_Charge_
Ratios_200807_Final.pdf. For a
complete discussion of the RTI
recommendations, public comments,
and our responses, we refer readers to
the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68519 through
68527).
In the FY 2009 IPPS final rule, we
finalized our proposal for both the 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
more expensive implantable devices
(such as pacemakers and other
implantable devices). Specifically, we
created one cost center for ‘‘Medical
Supplies Charged to Patients’’ and one
cost center for ‘‘Implantable Devices
Charged to Patients.’’ This change split
the CCR for ‘‘Medical Supplies and
Equipment’’ into one CCR for medical
supplies and another CCR for
implantable devices. In response to the
majority of commenters on the proposal
set forth in 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
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60343
(Pacemaker), 0276 (Intraocular lens),
0278 (Other implants), and 0624 (FDA
investigational devices). We made this
change to the cost report form for cost
reporting periods beginning in 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 believe we will
be able to use data from the revised cost
report form to estimate costs from
charges associated with UB–04 revenue
codes 0275, 0276, 0278, and 0624 for
implantable devices in order to more
accurately estimate the costs of devicerelated procedures for the CY 2013
OPPS relative weights. For a complete
discussion of the proposal, public
comments, and our responses, we refer
readers to the FY 2009 IPPS final rule
(73 FR 48458 through 45467).
For the CY 2009 OPPS/ASC proposed
rule, we made a similar proposal for
drugs, proposing to split the ‘‘Drugs
Charged to Patients’’ cost center into
two cost centers: one for drugs with
high pharmacy overhead costs and one
for drugs with low pharmacy overhead
costs (73 FR 41492). We noted that we
expected that CCRs from the proposed
new cost centers would be available in
2 to 3 years to refine OPPS drug cost
estimates by accounting for differential
hospital markup practices for drugs
with high and low pharmacy overhead
costs. However, after consideration of
the public comments received and the
APC Panel recommendations, we did
not finalize our proposal to split the
single standard ‘‘Drugs Charged to
Patients’’ cost center into two cost
centers, and instead indicated in the CY
2009 OPPS/ASC final rule with
comment period (73 FR 68659) that we
would continue to explore other
potential approaches to improve our
drug cost estimation methodology.
Unlike implantable devices, we do not
currently have a policy to address
charge compression in our cost
estimation for expensive drugs and
biologicals. In section V.B.3. of the CY
2010 OPPS/ASC proposed rule (74 FR
35326 through 35333), we proposed an
adjustment to our cost estimation
methodology for drugs and biologicals
to address charge compression by
proposing to shift a portion of the
pharmacy overhead cost associated with
packaged drugs and biologicals from
those packaged drugs and biologicals to
separately payable drugs and
biologicals; proposing payment for
separately payable drugs and biologicals
at ASP+4 percent; and proposing a
proportional reduction in the total
amount of pharmacy overhead cost
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associated with packaged drugs and
biologicals prior to our estimating the
total resource costs of individual OPPS
services.
Finally, in the CY 2009 OPPS/ASC
final rule with comment period, we
indicated that we would be making
some OPPS-specific changes in response
to the RTI report recommendations.
With regard to modifying the cost
reporting preparation software in order
to impose fixed descriptions for
nonstandard cost centers, we indicated
that the change would be made for the
next release of the cost report software.
We anticipate that these changes will be
made to the cost reporting software in
CY 2010 and will act as a quality check
for hospitals to review their choice of
nonstandard cost center code to ensure
that the reporting of nonstandard cost
centers is accurate, while not
significantly increasing provider
burden. In addition to improving the
reporting mechanism for the
nonstandard cost centers, we indicated
in the CY 2009 OPPS/ASC final rule
with comment period that we also
planned to add the new nonstandard
cost centers for Cardiac Rehabilitation,
Hyperbaric Oxygen Therapy, and
Lithotripsy. We expect that changes to
add these nonstandard cost centers also
will be made for cost reports beginning
in CY 2010. Furthermore, we noted in
the FY 2010 IPPS final rule (74 FR
43781 through 43782) that we are
updating the cost report form to
eliminate outdated requirements, in
conjunction with the Paperwork
Reduction Act (PRA), and that we had
proposed actual changes to the cost
reporting form, the attending cost
reporting software, and the cost report
instructions in Chapters 36 and 40 of
the PRM–II. The comment period for
this proposal (74 FR 31738) ended on
August 31, 2009. We believe that
improved cost report software, the
incorporation of new nonstandard cost
centers, and elimination of outdated
requirements will improve the accuracy
of the cost data contained in the
electronic cost report data files and,
therefore, the accuracy of our cost
estimation processes for the OPPS
relative weights. As has been described
above, CMS has taken steps to address
charge compression in the IPPS and
OPPS, and continues to examine ways
in which it can improve the accuracy of
its cost estimation process.
Comment: Several commenters
expressed support for the policy
adopted in the FY 2009 IPPS final rule,
with application to both the OPPS and
IPPS, to create one cost center for
‘‘Medical Supplies Charged to Patients’’
and one cost center for ‘‘Implantable
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Devices Charged to Patients.’’ Some
commenters recommended that CMS
verify the accuracy of the CCRs derived
from the new cost centers by comparing
CCRs calculated from the new cost
center against regression-based CCRs or
by undertaking other activities to ensure
that data reported in these revised cost
centers are consistent and accurate.
One commenter stated that hospitals
are reluctant to bill for devices that do
not remain in the patient upon
discharge, specifically cryoablation
probes, under revenue code 0278
(Medical/Surgical Supplies: Other
Implants). The commenter requested
that CMS work with hospitals to revise
the common hospital practice of billing
for cryoablation probes under revenue
code 0272 (Medical/Surgical Supplies:
Sterile Supplies) rather than revenue
code 0278. The commenter asserted that
billing cryoablation probes under
revenue code 0272 would result in
estimating costs from charges using a
CCR derived from the revised cost
center for ‘‘Medical Supplies Charged to
Patients,’’ rather than one derived from
the ‘‘Implantable Devices Charged to
Patients,’’ even though cryoablation
probes are high cost implantable
devices. The commenter believed that,
without a change in the revenue code
under which many hospitals report
cryoablation probes, the recent cost
center changes for medical supplies
would negatively bias the estimated cost
of cryoablation probes and the accuracy
of the APC payment rates for
cryoablation procedures.
Some commenters suggested that
CMS engage in outreach and
educational activities to hospitals on the
changes to the cost report and the
reporting of charges with respect to the
medical device and medical supply cost
centers so that hospitals can
appropriately report data. The
commenters recommended that the
outreach activities go beyond the
‘‘distribution of bulletins that are used
to inform providers about changes to the
Medicare program.’’
Response: We appreciate the
commenters’ support for our CY 2009
policy to split the ‘‘Medical Supplies
Charged to Patients’’ into one cost
center for ‘‘Medical Supplies Charged to
Patients’’ and one cost center for
‘‘Implantable Devices Charged to
Patients’’. In the FY 2009 IPPS final rule
(73 FR 48458 through 48467), we
explained in detail the reasoning behind
the development of the cost center split
and our decision to ultimately have
hospitals use the American Hospital
Association’s National Uniform Billing
Committee (NUBC) revenue codes to
determine what would be reported in
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the ‘‘Medical Supplies Charged to
Patients’’ and the ‘‘Implantable Devices
Charged to Patients’’ cost centers. In that
discussion, we noted that while we
require that the device broadly be
considered implantable to have its costs
and charges included in the new
‘‘Implantable Devices Charged to
Patients’’ cost center, our final policy
did not require the device to remain in
the patient at discharge (73 FR 48462
through 48463). We typically do not
specify a revenue code-to-cost center
crosswalk that hospitals must adopt to
prepare their cost report, recognizing
hospitals’ need to interpret the NUBC
definitions and cost reporting
requirements within the context of their
own financial systems. In response to
comments on our proposal to create the
new cost center in the FY 2009 IPPS
final rule, we did define the new
‘‘Implantable Devices Charged to
Patients’’ cost center by the revenue
codes that we believe would map to this
cost center to facilitate ease of reporting
by hospitals. We note that revenue code
definitions are established by the NUBC,
and we fully expect hospitals to follow
existing guidelines regarding revenue
code use. Specifically with regard to
reporting cryoablation probes, we do not
believe that the current NUBC definition
of revenue code 0278 (Medical/Surgical
Supplies and Devices (also see 062x, an
extension of 027x); Other implants (a))
precludes reporting hospital charges for
cryoablation probes under this revenue
code. Therefore, we believe hospitals
can report charges for cryoablation
probes under the revenue code 0278
using the definitions in the official UB
04 Data Specifications Manual.
As discussed in the FY 2010 IPPS
final rule (74 FR 43780), we reiterated
that we had not proposed any policy
changes with respect to the use of
revenue codes or alternative ways of
identifying high-cost devices. We refer
readers to the discussion in the FY 2009
IPPS final rule concerning our current
policy on these matters (73 FR 48462).
Hospitals were able to report costs and
charges for the new ‘‘Implantable
Devices Charged to Patients’’ cost center
for cost reporting periods beginning on
or after May 1, 2009 as line 55.30 on
Form 2552–96 and, at the time of
development of this final rule with
comment period, we anticipate that
hospitals will be able to report costs and
charges for the new cost center as line
69 on the revised draft Medicare
hospital cost report form CMS–2552–10
beginning February 1, 2010.
In the FY 2009 IPPS final rule (73 FR
48463), we agreed that once the data
reflecting the cost center changes
become available for ratesetting, we
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would evaluate the CCRs that we derive
from the new ‘‘Medical Supplies
Charged to Patients’’ and ‘‘Implantable
Devices Charged to Patients’’ cost
centers and that we would continue to
analyze cost report data. In the FY 2010
IPPS final rule (74 FR 43782), we
indicated that we might consider the
results of regression analyses as one way
to evaluate costs and charges reported in
the new cost center. However, we point
out that we do not believe it is
appropriate to ‘‘pick and choose’’
between CCRs; rather, the determining
factor should be payment accuracy,
regardless of whether one method
increases or decreases payment for
devices (73 FR 48463). That is, the
validity of the CCRs resulting from the
newly implemented cost center cannot
be determined to be accurate simply
because they will result in higher
overall cost estimates for procedures
that rely on implantable devices and,
therefore, higher APC payment rates.
As discussed in the FY 2010 IPPS
rule, we believe it is early to plan
specific outreach activities on the
revised cost report form CMS–2552–10
and the new ‘‘Implantable Devices
Charged to Patients’’ cost center, given
that the comment period for the revised
cost reporting forms closed on August
31, 2009. We agree that such
educational activities are important, and
we have been considering various
options for educating the provider
community that would involve fiscal
intermediaries, Medicare administrative
contractors, and cost report vendors. We
look forward to working with the
provider community on these
initiatives.
Comment: A few commenters noted
that two revenue codes became effective
for reporting radiopharmaceuticals,
specifically 0343 (Nuclear Medicine;
Diagnostic Radiopharmaceuticals) for
diagnostic preparations and 0344
(Nuclear Medicine; Therapeutic
Radiopharmaceuticals) for therapeutic
preparations in October 2004; and that
this more specific revenue code
reporting should help capture the
unique costs and charges of
radiopharmaceuticals. The commenters
also pointed out that the costs and
charges associated with these revenue
codes likely would be reported by
hospitals under the broader radiology
cost center on the Medicare hospital
cost report. They expressed concern
that, because the CCR used to estimate
charges for these revenue codes
encompasses a large volume of many
different services, the specificity of
charge information in the claims data
gained through use of the new revenue
codes would not translate into better
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cost estimation for diagnostic and
therapeutic radiopharmaceuticals under
the OPPS. The commenters suggested
that CMS require hospitals to report
costs and charges for these two revenue
codes as unique cost centers on the cost
report.
Response: We agree with the
commenters that the broader the range
and volume of services included in a
given cost center, the more the resulting
CCR calculated from the costs and
charges for that cost center represents a
weighted average of included services.
To the extent that the revenue codes
implemented in October 2004,
specifically 0343 (Nuclear Medicine;
Diagnostic Radiopharmaceuticals) for
diagnostic preparations and 0344
(Nuclear Medicine; Therapeutic
Radiopharmaceuticals) for therapeutic
preparations, have no specific
associated cost center in which to
capture their unique costs and charges
and to the extent hospitals report these
costs and charges in cost center 4100
‘‘Radiology—Diagnostic’’ or 4200
‘‘Radiology—Therapeutic,’’ the CCRs for
cost centers 4100 and 4200 that CMS
uses to estimate costs from charges on
claims for specific radiopharmaceuticals
will reflect the average cost and markup
associated with all diagnostic and
therapeutic radiology procedures.
However, our policy for establishing
new cost centers requires a public
review process that allows commenters
the opportunity to provide input on any
changes, and many commenters
historically have not been interested in
adding cost centers to the cost report
because of the associated hospital
administrative burden.
As we have noted above, we have
recently undertaken regulatory
comment and response on our effort to
update the cost report. The proposed
draft hospital cost report Form CMS–
2552–10 went on Federal Register
public display at the Office of the
Federal Register on July 2, 2009, for a
60-day review and comment period,
which ended on August 31, 2009. As we
stated in the CY 2009 OPPS/ASC final
rule with comment period (73 FR 68525
through 68526), that notice and
comment procedure is the process by
which we are considering public
comments requesting additional cost
centers. We will consider all comments
for new cost centers submitted through
that process as we work to improve and
modify the hospital cost report. We also
note that we make the revenue code-tocost center crosswalk that we use to
match Medicare hospital cost report
information with claims data
continually available for inspection and
comment on the CMS Web site: https://
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www.cms.hhs.gov/Hospital
OutpatientPPS.
Comment: One commenter believed
that the proposed drug cost center split
discussed in the CY 2009 OPPS/ASC
proposed rule would represent an
unnecessary burden for hospitals.
Response: While we welcome
comments regarding OPPS policy, we
note that the drug cost center proposal
was a CY 2009 proposal which was not
finalized (73 FR 68654 through 68657).
We have not proposed a policy to split
the drug cost center for CY 2010.
Comment: One commenter requested
that CMS issue clarifying instructions
for reporting computed tomography
(CT) and magnetic resonance imaging
(MRI) equipment and supported the
creation of new cost centers to capture
the unique costs and charges of CT
scanning, MRI, and other radiology
procedures.
Response: We did not propose to
implement separate standard radiology
cost centers for CT Scanning, MRI, and
other radiology procedures due to the
significant number of comments we
received in response to our general
request in the CY 2009 OPPS/ASC
proposed rule for comments and
reactions to RTI’s recommendations.
The commenters on the CY 2009 OPPS/
ASC proposed rule were generally in
favor of these cost centers in theory, but
suggested that the allocation of capital
cost across these cost centers was not
consistent or consistently accurate
across hospitals and that smaller
hospitals might not have sufficiently
sophisticated accounting systems to
accurately allocate costs (73 FR 68526).
In that discussion, we expressed our
preference for establishing these cost
centers as standard cost centers because
standard cost centers constitute the
minimum set of cost centers that a
hospital is required to report, assuming
that the hospital maintains separate
departments for those services and
reports the costs and charges for these
departments in separate accounts within
its own internal accounting systems. We
believe this step would improve the
accuracy of radiology payment by
encouraging greater and more consistent
reporting of the costs and charges
specifically associated with advanced
imaging services. However, we also
noted that nonstandard cost centers
already are available for CT Scanning
and MRI and that 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 on the cost report, even if CMS
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does not identify a nonstandard cost
center code for the department(s).
As we stated in the CY 2009 OPPS/
ASC final rule with comment (73 FR
68525 through 68526) and in response
to an earlier comment in this section,
we will consider public comments
requesting additional cost centers in
response to the PRA Federal Register
notice for the proposed draft cost report
form CMS–2552–10. The comment
period for this proposal ended August
31, 2009.
Comment: A few commenters
expressed concern about the timing for
implementing the nonstandard cost
center for cardiac rehabilitation,
suggesting that a delay could limit
beneficiary access to cardiac
rehabilitation services because the
proposed CY 2010 payment was too
low. The commenters noted that the
new CCRs would not be available for
setting OPPS payment rates until CY
2013.
Response: While we understand the
commenters’ concern regarding the
timing of implementing the cardiac
rehabilitation nonstandard cost center,
in our CY 2009 OPPS/ASC final rule
with comment period discussion (73 FR
68524), we explained our preference for
improving the accuracy of the APC
relative weights through long-term
changes to the cost report rather than
implementing short-term statistical
adjustments, in order to ensure that
actual hospital data are used to set
payment rates. As discussed above, we
currently anticipate we will implement
new nonstandard cost centers for
Cardiac Rehabilitation, Hyperbaric
Oxygen Therapy, and Lithotripsy with
the revised Medicare hospital cost
report form in CY 2010.
We have approximately 2.5 million
CY 2008 claims from almost 2,000
hospitals for cardiac rehabilitation
sessions available for setting the CY
2010 payment rates for these services.
Given that the OPPS payment for the
services has been highly stable for the
past several years, we have no reason to
believe that Medicare beneficiaries’
access to cardiac rehabilitation will be
limited in CY 2010 based on the final
OPPS payment rates for the services.
Further discussion of CY 2010 payment
for traditional and intensive cardiac
rehabilitation services is included in
section XII.B. of this final rule with
comment period.
Comment: One commenter believed
that CMS continues to expand and
complicate the antiquated Medicare cost
report rather than to design a helpful
tool. The commenter believes that the
current ‘‘piecemeal’’ approach to
revising the cost report is costly and
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burdensome. Based on that impression,
the commenter recommended that CMS
partner with the hospital industry to
consider more comprehensive changes
to the cost report.
Response: In the FY 2009 IPPS
proposed and final rules (73 FR 23546
and 73 FR 48461) and CY 2009 OPPS/
ASC proposed rule and final rule with
comment period (73 FR 41431 and 73
FR 68526), we stated that we began a
comprehensive review of the Medicare
hospital cost report, and splitting the
current cost center for ‘‘Medical
Supplies Charged to Patients’’ into one
line for ‘‘Medical Supplies Charged to
Patients’’ and another line for
‘‘Implantable Devices Charged to
Patients’’ is part of that initiative to
update and revise the cost report. We
also explained that in the context of the
effort to update the cost report and
eliminate outdated requirements, we
would make changes to the cost report
form and cost report instructions that
would be available to the public for
comment. Thus, the public would have
an opportunity to suggest the more
comprehensive reforms that one
commenter on the CY 2010 OPPS/ASC
proposed rule advocates. Similarly, the
public would be able to offer
suggestions for ensuring that these
reforms are made in a manner that is not
disruptive to hospitals’ billing and
accounting systems, and within the
guidelines of General Accepted
Accounting Principles (GAAP), which
are consistent with the Medicare
principles of reimbursement and sound
accounting practices. The proposed
draft hospital cost report Form CMS–
2552–10 went on Federal Register
public display at the Office of the
Federal Register on July 2, 2009, for a
60-day review and comment period,
which ended on August 31, 2009. We
will consider comments from the public
as we work to improve and modify the
hospital cost report. The cost center for
‘‘Implantable Devices Charged to
Patients’’ is available for use for cost
reporting periods beginning on or after
May 1, 2009. The revised hospital cost
report Form CMS–2552–10 will be
effective for cost reporting periods
beginning on or after February 1, 2010
(74 FR 43781 through 43782).
2. Data Development Process and
Calculation of Median Costs
In this section of this final rule with
comment period, we discuss the use of
claims to calculate final OPPS payment
rates for CY 2010. 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
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payment rates at: https://
www.cms.hhs.gov/
HospitalOutpatientPPS. The accounting
of claims used in the development of
this final rule with comment period is
included on the CMS Web site under
supplemental materials for the CY 2010
OPPS/ASC 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 in this
section we discuss the file of claims that
comprise the data set that is available
for purchase under a CMS data use
agreement. Our CMS Web site, https://
www.cms.hhs.gov/
HospitalOutpatientPPS, includes
information about purchasing the
‘‘OPPS Limited Data Set,’’ which now
includes the additional variables
previously available only in the OPPS
Identifiable Data Set, including ICD–9–
CM diagnosis codes and revenue code
payment amounts. This file is derived
from the CY 2008 claims that were used
to calculate the final payment rates for
the CY 2010 OPPS.
As proposed, we used the
methodology described in sections
II.A.2.b. through e. of this final rule with
comment period to establish the relative
weights used in calculating the final
OPPS payment rates for CY 2010 shown
in Addenda A and B to this final rule
with comment period.
a. Claims Preparation
For the CY 2010 OPPS/ASC proposed
rule, we used the CY 2008 hospital
outpatient claims processed before
January 1, 2009 to calculate the median
costs of APCs, which in turn are used
to set the proposed relative weights for
CY 2010. To begin the calculation of the
relative weights for CY 2010, we pulled
all claims for outpatient services
furnished in CY 2008 from the national
claims history file. This is not the
population of claims paid under the
OPPS, but all outpatient claims
(including, for example, critical access
hospital (CAH) claims and hospital
claims for clinical laboratory services
for persons who are neither inpatients
nor outpatients of the hospital). In the
discussion that follows, we have
updated the information to reflect the
claims available for this final rule with
comment period, specifically CY 2008
claims processed through June 30, 2009.
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,
providers submit claims with a
condition code 21 to elicit an official
denial notice from Medicare and
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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), 14X
(laboratory specimen 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.
2. Claims that were bill types 12X,
13X or 14X. Claims with bill types 12X
and 13X are hospital outpatient claims.
Claims with bill type 14X are laboratory
specimen claims, of which we use a
subset for the limited number of
services in these claims that are paid
under the OPPS.
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
rates determined through a separate
process.)
To convert charges on the claims to
estimated cost, we needed to multiply
those charges by the CCR associated
with each revenue code as discussed in
section II.A.1.c.(1) of this final rule with
comment period. For the CCR
calculation process, we used the same
general approach that we used in
developing the final APC rates for CY
2007, using the revised CCR calculation
that 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 2008 before
determining whether the CCRs for such
hospitals were valid.
We then calculated the CCRs for each
cost center and the overall ancillary
CCR for each hospital for which we had
claims data. We did this using hospitalspecific data from the Hospital Cost
Report Information System. We used the
most recent available cost report data, in
most cases, cost reports with cost
reporting periods beginning in CY 2007.
As proposed, for this final rule with
comment period, we used the most
recently submitted cost reports to
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calculate the CCRs to be used to
calculate median costs for the final CY
2010 OPPS payment rates. If the most
recent available cost report was
submitted but not settled, we looked at
the last settled cost report to determine
the ratio of submitted to settled cost
using the overall ancillary CCR, and we
then adjusted the most recent available
submitted but not settled cost report
using that ratio. We then calculated both
an overall ancillary CCR and cost
center-specific CCRs for each hospital.
We used the overall ancillary CCR
referenced in section II.A.1.c.(1) of this
final rule with comment period for all
purposes that require use of an overall
ancillary 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 ancillary 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, which is 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 ancillary 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 ancillary CCR
to the clinic revenue code. The revenue
code-to-cost center crosswalk is
available for inspection and comment
on the CMS Web site: https://
www.cms.hhs.gov/
HospitalOutpatientPPS. Revenue codes
not used to set medians or to model
impacts are identified with an ‘‘N’’ in
the revenue code-to-cost center
crosswalk.
As we proposed, we updated the
revenue code-to-cost center crosswalk to
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more accurately reflect the current use
of revenue codes. We indicated in the
CY 2009 OPPS/ASC final rule with
comment period (73 FR 68531) that we
intended 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 expanded this evaluation to
review all revenue codes in the revenue
code-to-cost center crosswalk that we
have used for OPPS ratesetting purposes
in recent years against the CY 2008
NUBC definitions of revenue codes in
place for CY 2008. As a result of that
review, we proposed to revise the
revenue code-to-cost center crosswalk as
described in Table 2 of the CY 2010
OPPS/ASC proposed rule (74 FR 35256
through 35261).
Comment: Two commenters
specifically addressed the proposed
OPPS treatment of a number of revenue
codes for CY 2010 and submitted
identical, detailed recommendations. In
general, the commenters agreed with the
proposed treatment of revenue codes
0253 (Pharmacy; Take Home Drugs);
0290 (Durable Medical Equipment
(other than renal); General
Classification); 0291 (Durable Medical
Equipment; Rental); 0292 (Durable
Medical Equipment; Purchase of New
DME); 0293 (Durable Medical
Equipment; Purchase of Used DME);
0294 (Durable Medical Equipment;
Supplies/Drugs for DME); 052x (FreeStanding Clinic; All Classifications);
066X (Respite Care; All Classifications);
0749, 0759, 0779, 0799, and 0910 (All
Reserved); and 0948 (Other Therapeutic
Services—Pulmonary Rehabilitation).
The commenters disagreed with the
proposed treatment of the revenue codes
as displayed in Table 3 below, which
provides the commenters’ perspective
on each revenue code.
Response: Specifically, our revenue
proposal addressed: (1) Acknowledging
that costs estimated from charges are
associated with specific revenue codes
when calculating OPPS payment rates;
(2) identifying the appropriate cost
center CCR that should be used to
estimate costs for certain revenue codes;
and (3) packaging of revenue center
costs into the costs of separately paid
procedures when revenue charges are
reported without a HCPCS code. The
commenters addressed some revenue
codes that were explicitly identified and
discussed in the CY 2010 OPPS/ASC
proposed rule (74 FR 35256 through
35266), as well as some additional
revenue codes. Table 3 below displays
our response to each area where the
commenters disagreed with our
proposed treatment of the revenue code.
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We note that we continually make our
revenue code-to-cost center crosswalk
available on the CMS Web site for
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review and comment, and we welcome
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the public at any time.
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Comment: One commenter suggested
that CMS include dates in the revenue
code-to-cost center crosswalk document
to allow hospitals and CMS to easily
track the effective dates for each change.
Response: We appreciate the desire to
track changes to the revenue code-tocost center crosswalk. However, rather
than document changes to individual
revenue codes in the crosswalk, we will
provide the public with the current and
past copies of the same revenue code-tocost center crosswalk that we directly
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incorporate into our modeling of the
OPPS payment rates each year.
Table 4 below shows the update to the
revenue codes for which estimated costs
on each claim for this final rule with
comment period are based and
incorporates the costs for those revenue
codes into APC median cost estimates.
Column A of Table 4 provides the 2008
revenue code and description. Column
B indicates whether the charges
reported with the revenue code will be
converted to cost and incorporated into
median cost estimates for CY 2010.
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Column C indicates whether the charges
reported with the revenue code were
converted to cost and incorporated into
median cost estimates for the CY 2009
OPPS. In both columns, a ‘‘Y’’ indicates
that the charges will be converted to
cost in CY 2010 (or were converted for
CY 2009), and an ‘‘N’’ indicates that
charges reported under the revenue
code will not be converted to cost and
incorporated into median cost estimates.
Finally, Column D provides our
rationale for the CY 2010 final change.
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Also, as a result of our comprehensive
review of the revenue codes included in
the revenue code-to-cost center
crosswalk, as we proposed, we are
adding revenue codes to the hierarchy
of primary, secondary, and tertiary
hospital cost report cost centers that
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result in the departmental CCRs that we
use to estimate cost from charges for
some revenue codes or to revise the
applicable cost centers associated with
a given revenue code. Table 5 below
lists the revenue codes for which we
made changes to the revenue code-tocost center crosswalk for CY 2010
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ratesetting and our rationale for each
change. With the exception of revenue
code 0942 (Other Therapeutic Services;
Education/Training), the revenue codes
for which we made changes to the
designated departmental CCRs are those
identified in our comprehensive review
that are also listed above in Table 4.
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TABLE 5—CHANGES TO CY 2010 OPPS HIERARCHY OF COST CENTERS IN THE REVENUE CODE-TO-COST CENTER
CROSSWALK
2008 Revenue code and description
Rationale for CY 2010 change
0392—Administration, Processing and Storage
for Blood and Blood Components; Processing
and Storage.
We crosswalked charges under revenue code 0392 to cost center 4700 (Blood Storing, Processing, & Transfusing) because we believe that cost center 4700 is the most likely departmental cost center to which hospitals would assign the costs of blood processing and storage. We made no secondary or tertiary cost centers because we believe that no other departmental cost centers are appropriate.
We crosswalked the charges reported under revenue code 0623 to cost center 5500 (Medical
Supplies Charged to Patients) as the primary cost center because we believe that the costs
associated with the charges for surgical dressings are most likely to be assigned by hospitals to cost center 5500. We made no secondary or tertiary cost centers because we believe that no other departmental cost centers are appropriate.
We crosswalked the charges under revenue code 0942 to cost center 6000 (Clinic) as the primary cost center. Previously, the charges under revenue code 0942 were crosswalked to
the overall ancillary CCR. As discussed above, we believe that cost center 6000 is a more
appropriate primary cost center. We made no secondary or tertiary cost centers because we
believe that no other departmental cost centers are appropriate.
We crosswalked the charges under revenue code 0948 to cost center 4900 (Respiratory Therapy) as primary and to cost center 6000 (Clinic) as secondary because we believe that hospitals are most likely to assign the costs of these services to these cost centers. We are not
establishing a tertiary cost center.
0623—Medical Surgical Supplies—Extension of
027X; Surgical Dressings.
0942—Other Therapeutic Services (also see
095x, an extension of 094x); Educ/Training.
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0948—Other Therapeutic Services (also see
095x, an extension of 094x); Pulmonary Rehabilitation.
Having revised the revenue code-tocost center crosswalk, we then
converted the charges to costs on each
claim by applying the CCR that we
believed was best suited to the revenue
code indicated on the line with the
charge. 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 the proposed rule
and this final rule with comment
period.
Thus, we applied CCRs as described
above to claims with bill type 12X, 13X,
or 14X, 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 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 then excluded claims without an
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 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
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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, therapeutic radiopharmaceutical
agents, and brachytherapy sources, as
well as other information used to set
payment rates, such as a unit-to-day
ratio for drugs.
To implement our policy to
redistribute some portion of total cost
for packaged drugs and biologicals to
the separately payable drugs and
biologicals as acquisition and pharmacy
overhead and handling costs discussed
in section V.B.3. of this final rule with
comment period, we used the line-item
cost data for drugs and biologicals for
which we had an HCPCS code with ASP
pricing information to calculate the
ASP+X values first for all drugs and
biologicals, and then for separately
payable drugs and biologicals and for
packaged drugs and biologicals,
respectively, by taking the ratio of total
claim cost for each group relative to
total ASP dollars (per unit of each drug
or biological HCPCS code’s July 2009
ASP amount multiplied by total units
for each drug or biological in the CY
2008 claims data). These values are
ASP+11 percent, ASP–3 percent, and
ASP+259 percent, respectively. As we
discuss in greater detail in section
V.B.3. of this final rule with comment
period, we are finalizing a policy to
redistribute $150 million of the total
cost in our claims data for packaged
drugs and biologicals that have an
associated ASP from packaged drugs
with an ASP to separately payable drugs
and biologicals. The $150 million is,
roughly, one-third of the difference of
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$445 million between the total cost of
packaged drugs and biologicals with an
associated ASP in our CY 2008 claims
data ($616 million) and ASP for the
same drugs and biologicals ($171
million). In response to comments that
CMS excluded valid overhead and
handling costs associated with drugs
lacking ASP information, largely costs
estimated from uncoded charges
reported under pharmacy revenue
codes, we also are finalizing a policy to
redistribute an additional $50 million of
the total cost in our claims data for
drugs and biologicals lacking an ASP,
largely for estimated costs associated
with uncoded charges billed under
pharmacy revenue code series 025X
(Pharmacy (also see 063X, an extension
of 025X)), 026X (IV Therapy), and 063X
(Pharmacy—Extension of 025X). As we
state in section V.B.3. of this final rule
with comment period, because we do
not know ASP for this subset of drug
costs, we do not know the amount of
associated pharmacy overhead. We
observe about $656 million for drugs
lacking an ASP in our CY 2008 claims
data. This total excludes the cost of
diagnostic and therapeutic
radiopharmaceuticals because they are
not reported under pharmacy revenue
codes or under the pharmacy cost center
on the cost report.
Removing a total of $150 million in
pharmacy overhead cost from packaged
drugs and biologicals reduces the $616
million to $466 million, a 24 percent
reduction. Removing $50 million from
the cost of drugs lacking an ASP reduces
the $656 million to $606 million, an 8
percent reduction. To implement our
final CY 2010 policy to redistribute
$150 million in claim cost from
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packaged drugs and biologicals with an
ASP to separately payable drugs and
biologicals and $50 million in claim
cost from packaged drugs and
biologicals lacking an ASP, including
uncoded pharmacy revenue code
charges, we multiplied the cost of each
packaged drug or biological with an
HCPCS code and ASP pricing
information in our CY 2008 claims data
by 0.76, and we multiplied all other
packaged drug costs in our CY 2008
claims data, excluding those for
diagnostic radiopharmaceuticals, by
0.92. We also added the redistributed
$200 million to the total cost of
separately payable drugs and biologicals
in our CY 2008 claims data, which
increased the relationship between the
total cost for separately payable drugs
and biologicals and ASP dollars for the
same drugs and biologicals to ASP+4
percent.
For CY 2010, we added an additional
trim in our claims preparation to
remove line-items that were not paid
during claim processing, presumably for
a line-item rejection or denial. The
number of edits for valid OPPS payment
in the Integrated Outpatient Code Editor
(I/OCE) and elsewhere has grown
significantly in the past few years,
especially with the implementation of
the full spectrum of National Correct
Coding Initiative (NCCI) edits. To
ensure that we are using valid claims
that represent the cost of payable
services to set payment rates, we
removed line-items with an OPPS status
indicator for the claim year (CY 2008)
and a status indicator of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’
or ‘‘X’’ when separately paid under the
final CY 2010 payment system. This
logic preserves charges for services that
would not have been paid in the claim
year but for which some estimate of cost
is needed for the prospective year, such
as services newly proposed to come off
the inpatient list for CY 2010 which
were assigned status indicator ‘‘C’’ in
the claim year.
Using February 2009 APC Panel data,
we estimate that the impact of removing
line-items with valid status indicators
that received no CY 2008 payment was
limited to approximately 1.4 percent of
all line-items for separately paid
services. This additional trim reduced
the number of single bills available for
ratesetting by 1.5 percent. For
approximately 92 percent of procedural
APCs, we observed a change in the APC
median cost of less than 1 percent. A
handful of APCs experienced greater
changes in median cost. For example,
APC 0618 (Trauma Response with
Critical Care) experienced declines in
both the number of single bills used to
set the median cost and the estimated
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median cost itself. This occurred
because the I/OCE has an edit to ensure
that HCPCS code G0390 (Trauma
response team activation associated
with hospital critical care service),
which is assigned to APC 0618, receives
payment only when one unit of G0390
appears with both a revenue code in the
68x series and CPT code 99291 (Critical
care, evaluation and management of the
critically ill or critically injured patient;
first 30–74 minutes) on the claim for the
same date of service, as described in the
CY 2007 OPPS/ASC final rule with
comment period (71 FR 68134). If the I/
OCE criteria are not met, HCPCS code
G0390 is not separately paid, and we
found that a number of CY 2008 claims
including HCPCS code G0390 did not
meet the criteria for payment. On the
other hand, a few APCs had greater
estimated median costs and greater
numbers of single bills as a result of this
additional trim, presumably because
removing lines from the claim allowed
us to identify more single bills. We
believe that removing lines with valid
status indicators that were edited and
not paid during claims processing
increases the accuracy of the single bills
used to determine the APC median costs
for ratesetting.
Comment: One commenter claimed
that the removal of charges and costs
from denied lines was in contrast to
longstanding policy for hospital
inpatient services. A few commenters
expressed concern about APC 0312
(Radioelement Applications), noting
that there has been significant
fluctuation in the payment rates for this
APC in the past. They believe that
implementing the proposed line-item
trim, which removed a significant
number of single claims, may have
contributed to that instability. The
commenters suggested that historical
data would not indicate any reason for
significant line-items to be trimmed.
One commenter believed that the
payment rates for low dose rate prostate
brachytherapy were arbitrary and unfair.
Based on the commenters’ impression
that the purpose of the line-item trim
was to act as a quality check, the
commenters requested that the line-item
trim be suppressed for APC 0312.
Response: While payment systems
such as the IPPS do not remove charge
and cost data, this is largely due to the
differences in the fundamental
structures of the two payment systems.
The IPPS is a system based on DRGs
that relies on significant bundling of
services under common clinical
scenarios, while the OPPS is largely
based on payment for a specific
individual service. These differences in
payment approach under each system
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are reflected in the way that data are
used to establish the payment weights,
from the CCRs used to reduce charges to
cost to the structure of how charge and
cost information is classified. One
byproduct of the differences between
the IPPS and the OPPS is the level of
editing in each system to ensure that a
correct payment is made. Similarly,
there are many NCCI edits to ensure that
payment is made to hospitals for
outpatient services only when there is
correct coding because there are
hundreds of APCs that may contribute
to inappropriate unbundling of services
when those services are reported for a
hospital outpatient encounter. In the CY
2010 OPPS/ASC proposed rule (74 FR
35262), we indicated that removing
lines with valid status indicators that
were edited and not paid during claims
processing increases the accuracy of the
single bills used for ratesetting. Doing so
allows the single bills used for
ratesetting purposes to be representative
of those services as they would be paid
in the prospective year.
In studying the billing patterns for
HCPCS codes that are assigned to APC
0312, we noted that the line-item trim
removes a number of unpaid single bills
for this APC, as the commenters had
suggested. However, we also observed a
general decline in the reporting of
services assigned to this APC that was
unrelated to the line-item trim,
suggesting that a portion of the observed
decline in the number of single bills
available for ratesetting is due to an
actual reduction in the frequency that
the services assigned to APC 0312 are
furnished. While we understand the
commenters’ concern regarding the
reduction of single bills used in
ratesetting for APC 0312, the data
suggest that the reduction is due in part
to a decline in the billing of individual
services assigned to the APC. Further,
we believe that removing these lineitems which have likely been rejected or
denied is appropriate in light of the goal
of using accurate single procedure
claims for ratesetting under the OPPS.
After consideration of the public
comments received relating to our CY
2010 proposal for claims preparation,
we are adopting it as final, with
modification to the treatment of certain
revenue codes as described in Table 4
in this section.
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
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of these groups follow below.) In the CY
2010 OPPS/ASC proposed rule (74 FR
35262), we proposed to continue our
current policy of defining major
procedures as any HCPCS code 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 2010, we
proposed to continue assigning status
indicator ‘‘R’’ to blood and blood
products; status indicator ‘‘U’’ to
brachytherapy sources; status indicator
‘‘Q1’’ to all ‘‘STVX-packaged codes;’’
status indicator ‘‘Q2’’ to all ‘‘T-packaged
codes;’’ and status indicator ‘‘Q3’’ 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. As discussed in the
CY 2009 OPPS/ASC final rule with
comment period (73 FR 68709), we
established status indicators ‘‘Q1,’’
‘‘Q2,’’ and ‘‘Q3’’ to facilitate
identification of the different categories
of codes. We proposed to treat these
codes in the same manner for data
purposes for CY 2010 as we have treated
them since 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. As discussed earlier in this
section, because we proposed to treat
CPT code 76098 as conditionally
packaged, this logic now includes the
addition of CPT code 76098 as a ‘‘Q2’’
code. 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 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.
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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.
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
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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 a
code for a separately payable or
packaged OPPS 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 file
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.
Because we did not receive any public
comments on our proposed process of
organizing claims by type, we are
finalizing our CY 2010 proposal without
modification.
(2) Creation of ‘‘Pseudo’’ Single Claims
As we 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 payable 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. As discussed
above, we ignore the ‘‘overlap bypass
codes,’’ that is, those HCPCS codes that
are both on the bypass list and are
members of the multiple imaging
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composite APCs, in this initial
assessment for ‘‘pseudo’’ single claims.
The CY 2010 ‘‘overlap bypass codes’’
are listed in Table 1 in section II.A.1.b.
of this final rule with comment period.
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
payable 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 otherwise be
multiple procedure claims and could
not be used.
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. Having
identified ‘‘single session’’ claims for
the imaging composite APCs, we
reassessed 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 payable code remained on
the claim. If so, we attributed the
packaged costs on the claim to the
single unit of the single remaining
separately payable code other than the
bypass code to create a ‘‘pseudo’’ single
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claim. We also identified line-items of
overlap bypass codes as a ‘‘pseudo’’
single claim. This allowed us to use
more claims data for ratesetting
purposes.
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,
set the units to one on that HCPCS code
to reflect our policy of paying only one
unit of a code with a status indicator of
‘‘Q1.’’ We then packaged all costs for the
following into a single cost for the ‘‘Q1’’
HCPCS code that had the highest CY
2008 relative weight to create a
‘‘pseudo’’ single claim for that code:
additional units of the status indicator
‘‘Q1’’ HCPCS code with the highest CY
2008 relative weight; other codes with
status indicator ‘‘Q1;’’ and all other
packaged HCPCS codes and packaged
revenue code costs. 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,
set the units to one on that HCPCS code
to reflect our policy of paying only one
unit of a code with a status indicator of
‘‘Q2.’’ We then packaged all costs for the
following into a single cost for the ‘‘Q2’’
HCPCS code that had the highest CY
2008 relative weight to create a
‘‘pseudo’’ single claim for that code:
additional units of the status indicator
‘‘Q2’’ HCPCS code with the highest CY
2008 relative weight; other codes with
status indicator ‘‘Q2;’’ and other
packaged HCPCS codes and packaged
revenue code costs. 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
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60361
status indicator ‘‘Q1’’ (‘‘STVXpackaged’’), we selected the status
indicator ‘‘Q2’’ HCPCS code (‘‘Tpackaged’’) that had the highest relative
weight for CY 2008 and set the units to
one on that HCPCS code to reflect our
policy of paying only one unit of a code
with a status indicator of ‘‘Q2.’’ We then
packaged all costs for the following into
a single cost for the selected (‘‘T
packaged’’) HCPCS code to create a
‘‘pseudo’’ single claim for that code:
additional units of the status indicator
‘‘Q2’’ HCPCS code with the highest CY
2008 relative weight; other codes with
status indicator ‘‘Q2;’’ codes with status
indicator ‘‘Q1’’ (‘‘STVX-packaged’’); and
other packaged HCPCS codes and
packaged revenue code costs. 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.
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 major and to multiple minor
claims. 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 noted that
the bilateral procedure logic did not
appear to appropriately exclude claims
with bilateral codes from the single
major claims, having observed bilateral
procedure codes in that claims subset.
Also, the commenter suggested that the
conditional packaging of the status
indicator ‘‘Q2’’ (‘‘T-packaged’’) codes
did not appear to be treated consistently
with the policy we proposed, which was
that a ‘‘Q2’’ procedure with the highest
scaled weight would be paid separately
when there is no status indicator ‘‘T’’
procedure on the claim and that the
costs of any other ‘‘Q2’’ codes on the
claim would be packaged.
Response: In seeking to address the
commenter’s observations, we
discovered that the bilateral logic was
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not processed correctly as we proposed.
Similarly, inaccurate program logic in
the weight comparison for status
indicator ‘‘Q2’’ (‘‘T-packaged’’) codes
caused the packaging to be assigned
based on order of precedence rather
than by weight.
For this final rule with comment
period, we accurately applied the
bilateral and status indicator ‘‘Q2’’ (‘‘Tpackaged’’) weight comparison
packaging logic, consistent with the
proposed and final policy. The national
unadjusted payments for CY 2010
accurately reflect the policy that we
proposed to continue for CY 2010 OPPS
and that we are finalizing in this final
rule with comment period.
After consideration of the public
comment received, we are finalizing our
CY 2010 proposal, without
modification, for the process by which
we develop ‘‘pseudo’’ single procedure
claims.
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 and 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. For CY 2010, this packaging
also included the redistributed
packaged pharmacy overhead cost
relative to the units of separately
payable drugs on each single procedure
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 2009 OPPS (73 FR 68531
through 68532) that we used for
packaging costs in median calculation.
As a result of that analysis, we proposed
to use the packaged revenue codes for
CY 2010 that were displayed in Table 4
of the CY 2010 OPPS/ASC proposed
rule (74 FR 35265 through 35266).
As noted in the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68531), 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 descriptions of the
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revenue code categories and
subcategories to better articulate the
meanings of the revenue codes without
actually changing the proposed list of
revenue codes. In the course of making
the changes in labeling for the revenue
codes in Table 2 of the CY 2009 OPPS/
ASC final rule with comment period, we
noticed some changes to revenue
categories and subcategories that we
believed warranted further review for
future OPPS updates. Although we
finalized the list of packaged revenue
codes in Table 2 for CY 2009, we
indicated in the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68531) that we intended 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
specifically requested public input and
discussion on this issue during the
comment period of the CY 2009 OPPS/
ASC final rule with comment period.
We did not receive any public
comments on this issue. As we discuss
in section II.A.2.a. of this final rule with
comment period, we have completed
that analysis for all revenue codes in the
revenue code-to-cost center crosswalk.
As discussed in the CY 2010 OPPS/ASC
proposed rule (74 FR 35264 through
35265), as a result, we proposed to add
several revenue codes to the list of
packaged revenue codes for the CY 2010
OPPS. Specifically, we believe that the
costs derived from charges reported
under revenue codes 0261 (IV Therapy;
Infusion Pump); 0392 (Administration,
Processing and Storage for Blood and
Blood Components; Processing and
Storage); 0623 (Medical Supplies—
Extension of 027X, Surgical Dressings);
0943 (Other Therapeutic Services (also
see 095X, an extension of 094X),
Cardiac Rehabilitation); and 0948 (Other
Therapeutic Services (also see 095X, an
extension of 094X), Pulmonary
Rehabilitation) are appropriately
packaged into payment for other OPPS
services when charges appear on lines
with these revenue codes but no HCPCS
code appears on the line. Revenue codes
that we proposed to add to the CY 2010
packaged revenue code list were
identified by asterisks (*) in Table 4 of
the CY 2010 OPPS/ASC proposed rule.
The public comments that we
received that resulted in our changing
the list of packaged revenue codes for
CY 2010 are discussed in section
II.A.2.a. of this final rule with comment
period. Thus, we are finalizing the
proposed packaged revenue codes for
CY 2010, with modification. The final
CY 2010 packaged revenue codes are
listed in Table 6 below. Revenue codes
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that we are adding to the CY 2010
packaged revenue code list are
identified by asterisks (*) in Table 6.
TABLE 6—FINAL CY 2010 PACKAGED
REVENUE CODES
Revenue code
Description
0250 ...............
Pharmacy; General Classification.
Pharmacy; Generic Drugs.
Pharmacy; Non-Generic
Drugs.
Pharmacy; Drugs Incident to
Other Diagnostic Services.
Pharmacy; Drugs Incident to
Radiology.
Pharmacy; Non-Prescription.
Pharmacy; IV Solutions.
Pharmacy; Other Pharmacy.
IV Therapy; General Classification.
IV Therapy; Infusion Pump.
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; 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.
0251 ...............
0252 ...............
0254 ...............
0255 ...............
0257
0258
0259
0260
...............
...............
...............
...............
*0261 ..............
0262 ...............
0263 ...............
0264 ...............
0269 ...............
0270 ...............
0271 ...............
0272 ...............
0275 ...............
0276 ...............
0278 ...............
0279 ...............
0280 ...............
0289 ...............
0343 ...............
0344 ...............
0370 ...............
0371 ...............
0372 ...............
0379 ...............
0390 ...............
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TABLE 6—FINAL CY 2010 PACKAGED
REVENUE CODES—Continued
TABLE 6—FINAL CY 2010 PACKAGED
REVENUE CODES—Continued
Revenue code
Description
Revenue code
Description
*0392 ..............
Administration, Processing
and Storage for Blood and
Blood Components; Processing and Storage.
Administration, Processing
and Storage for Blood and
Blood Components; Other
Blood Handling.
Medical Surgical Supplies—
Extension of 027X; Supplies Incident to Radiology.
Medical Surgical Supplies—
Extension of 027X; Supplies Incident to Other DX
Services.
Medical Supplies—Extension
of 027X, Surgical
Dressings.
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.
Recovery Room; General
Classification.
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.
0810 ...............
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.
Other Therapeutic Services
(also see 095X, an extension of 094X), Cardiac Rehabilitation.
Other Therapeutic Services
(also see 095X, an extension of 094X), Pulmonary
Rehabilitation.
0399 ...............
0621 ...............
0622 ...............
*0623 ..............
0624 ...............
0630 ...............
0631 ...............
0632 ...............
0633 ...............
0681 ...............
0682 ...............
0683 ...............
0684 ...............
0689 ...............
0700 ...............
0710 ...............
0720 ...............
0721 ...............
0732 ...............
0762 ...............
0801 ...............
0802 ...............
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0803 ...............
0804 ...............
0809 ...............
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0819 ...............
0821 ...............
0824 ...............
0825 ...............
0829 ...............
0942 ...............
*0943 ..............
*0948 ..............
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
payable 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 relative 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. 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
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
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60363
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. 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 657,000
claims as discussed above in this
section) in the CY 2010 median
development and ratesetting.
We used these claims to calculate the
CY 2010 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 for this final rule with
comment period 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
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.
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Comment: Several commenters
objected to the volatility of the OPPS
rates from year to year. The 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 CMS
limit reductions in APC payments to a
set percentage, with one commenter
noting that CMS dampened payment
decreases for blood and blood products
to mitigate large payment fluctuations in
order to limit provider losses. One
commenter suggested that the median
costs from claims be adjusted to limit
changes from year to year. Another
commenter suggested that CMS perform
a thorough examination of the payment
rates and examine billed charges, costs,
median and mean costs, and CCRs to
isolate the source of the fluctuations as
well as mandate a review of all APCs
that fluctuate above a certain
percentage, similar to the 2 times rule.
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
and changing the proportion of the
various services they furnish, which
have 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
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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
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 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.
While we recognize the reasoning
behind a policy that would dampen
both increases and decreases in the
weights or payment rates of the OPPS,
this would not be as simple or beneficial
as commenters have implied.
Implementing such a dampening policy
would require the assumption that
payment policy is static from year to
year. Based on the commenters’ own
acknowledgement, and the data used to
develop the OPPS, we know that this is
not true. Further, in seeking to mitigate
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fluctuations in the OPPS, implementing
such a system would make payments
less reflective of the true service costs.
Dampening payments across all APCs in
this way could unfairly harm those
hospitals whose true cost for a service
increases significantly, while
inappropriately benefiting those
hospitals whose true cost for a service
decreases significantly. While one
commenter requested that CMS adopt a
policy to investigate any APCs that
fluctuate above a certain threshold, this
mandate would be unnecessary since
we already examine all APCs that
experience significant median cost
fluctuations, as described in the CY
2010 OPPS/ASC proposed rule (74 FR
35626 through 35627).
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. They also noted
that the OPPS did not have a teaching
adjustment while many of the other
Medicare payment systems, such as
inpatient, psychiatric, and rehabilitation
facilities, already include one. 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
commenters explained that analysis of
2007 Medicare cost reports showed that
the average outpatient margins were
¥30.4 for major teaching hospitals,
¥13.8 for other teaching hospitals, and
¥14.4 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 states
that the Secretary shall establish, in a
budget neutral manner ‘‘* * * other
adjustments as determined to be
necessary to ensure equitable payments,
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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.
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 new technology
services and device-dependent
procedures, which we understand are
furnished largely by teaching hospitals.
We note that teaching hospitals benefit
from the recalibration of the APCs in
this final rule with comment period.
The final CY 2010 impacts by class of
hospital are displayed in Table 73 in
section XXI.B. of this final rule with
comment period.
After consideration of the public
comments we received, we are
finalizing our proposed CY 2010
methodology for calculating the median
costs upon which the CY 2010 OPPS
payment rates are based, with
modifications as discussed throughout
this section.
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
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.
At the February 2009 APC Panel
Meeting, the APC Panel recommended
that CMS study the claims data for any
APC in which the calculated payment
reduction would be greater than 10
percent. The APC Panel also
recommended that CMS provide a list of
APCs to the APC Panel at the next
meeting with a proposed payment rate
change of greater than 10 percent. While
we recognize the concerns the APC
Panel expressed with regards to cost
variability in the system, we already
engage in a standard review process for
all APCs that experience significant
changes in median costs. We study all
significant changes in estimated cost to
determine the effect that proposed and
final payment policies have on the APC
payment rates and ensure that these
policies are appropriate and that the
intended cost estimation methodologies
have been correctly applied. We note
that there are a number of factors that
cause APC median costs to change from
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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 the statute. With limited
exceptions, we are required by law to
reassign HCPCS codes to APCs where it
is necessary to avoid 2 times violations.
Thus, there are various mechanisms
already in place to ensure that we assess
changes in cost and adjust APC weights
accordingly or justify why we have not
made adjustments. We plan to continue
our examination of all APCs that
experience changes of greater than 10
percent. In the CY 2010 OPPS/ASC
proposed rule (74 FR 35267), we
indicated that we would provide the
APC Panel with a list of the APCs with
proposed changes in costs of more than
10 percent for CY 2010 at the next CY
2009 APC Panel meeting. Accordingly,
we accepted this recommendation of the
APC Panel in full.
At the August 2009 meeting of the
APC Panel, we provided the APC Panel
a list of all APCs fluctuating by more
than 10 percent when comparing the CY
2010 proposed rule APC median costs to
those based on CY 2009 final rule data.
We found that the median costs for 7
APCs decreased by 10 percent or more
and the median costs for 63 APCs
increased by 10 percent or more. These
changes occurred due to some of the
reasons described earlier, including
reassignment of HCPCS codes from one
APC to another to resolve 2 times
violations, modeling changes such as
the removal of lines for codes that were
not payable in CY 2008 under the OPPS
payment rules, low volumes of services
influencing the claims used to
determine APC median costs, and
updated cost and charge information
from hospital claims and cost reports.
We noted that the median costs for 63
APCs increased by 10 percent or more
and that the reasons for the increases
were similar to the reasons for the
decreases of more than 10 percent but,
in general, we found nothing that raised
concern regarding the data process we
used to calculate the proposed median
costs. The APC Panel discussed the
different APCs on the list but did not
express any significant concern with the
fluctuations. As a result, they did not
make any further recommendations
related to the list of APCs with median
costs fluctuating by greater than 10
percent.
At the February 2009 APC Panel
meeting, we reviewed and examined the
data process in preparation for the CY
2010 rulemaking cycle. At this meeting,
the APC Panel recommended that the
Data Subcommittee continue its work
and we accepted that recommendation.
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The APC Panel further recommended at
the August 2009 meeting that the Data
Subcommittee continue its work. We are
accepting this most recent
recommendation, and we will continue
to work closely with the APC Panel’s
Data Subcommittee to prepare and
review data and analyses relevant to the
APC configurations and OPPS payment
policies for hospital outpatient items
and services.
d. Calculation of Single Procedure APC
Criteria-Based Median Costs
(1) Device-Dependent APCs
Device-dependent APCs are
populated by HCPCS 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 2010 OPPS/ASC proposed
rule (74 FR 35267), we proposed to
revise our standard methodology for
calculating median costs for devicedependent APCs, which utilizes claims
data that generally represent the full
cost of the required device, to exclude
claims that contain the ‘‘FC’’ modifier.
Specifically, we proposed to calculate
the median costs for device-dependent
APCs for CY 2010 using only the subset
of single procedure claims from CY
2008 claims data that pass the
procedure-to-device and device-toprocedure edits; do not contain token
charges (less than $1.01) for devices; 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; and do not contain the ‘‘FC’’
modifier signifying that the hospital
received partial credit for the device.
The ‘‘FC’’ modifier became effective
January 1, 2008, and is present for the
first time on claims that would be used
in OPPS ratesetting for CY 2010. We
stated in the CY 2010 OPPS/ASC
proposed rule (74 FR 35267) that we
believe the standard methodology for
calculating median costs for device-
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dependent APCs, further refined to
exclude claims with the ‘‘FC’’ modifier,
gives us the most appropriate median
costs for device-dependent APCs in
which the hospital incurs the full cost
of the device.
The median costs for the majority of
device-dependent APCs that were
calculated using the CY 2010 proposed
rule claims data were generally stable,
with most median costs increasing
moderately compared to the median
costs upon which the CY 2009 OPPS
payment rates were based. However, the
median costs for APC 0225
(Implantation of Neurostimulator
Electrodes, Cranial Nerve) and APC
0418 (Insertion of Left Ventricular
Pacing Electrode) demonstrated
significant fluctuation. Specifically, the
proposed CY 2010 median cost for APC
0225 increased approximately 49
percent compared to the final CY 2009
median cost, although this APC median
cost had declined by approximately the
same proportion from CY 2008 to CY
2009. The proposed CY 2010 median
cost for APC 0418, which had decreased
approximately 45 percent from CY 2008
to CY 2009, showed an increase of
approximately 56 percent based on the
claims data available for the CY 2010
proposed rule. As indicated in the CY
2010 OPPS/ASC proposed rule (74 FR
35267), we believe the fluctuations in
median costs for these two APCs are a
consequence of the small number of
single bills upon which the median
costs are based and the small number of
providers of these 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 for low volume devicedependent APCs, particularly where
there are small numbers of single bills
from a small number of providers.
At the February 2009 meeting of the
APC Panel, one presenter stated that the
assignment of the single-array cranial
neurostimulator pulse generator
implantation procedure described by
CPT code 61885 (Insertion or
replacement of cranial neurostimulator
pulse generator or receiver, direct or
inductive coupling; with connection to
a single electrode array) to APC 0039
(Level I Implantation of Neurostimulator
Generator), along with the peripheral/
gastric neurostimulator pulse generator
implantation procedure described by
CPT code 64590 (Insertion or
replacement of peripheral or gastric
neurostimulator pulse generator or
receiver, direct or inductive coupling) is
not appropriate, given the clinical and
cost differences between the two
procedures. According to the presenter,
the cranial procedure described by CPT
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code 61885 is more similar clinically
and in terms of resource utilization to
the spinal neurostimulator pulse
generator implantation procedure
described by CPT code 63685 (Insertion
or replacement of spinal
neurostimulator pulse generator or
receiver, direct or inductive coupling),
which is the only CPT code assigned to
APC 0222 (Level II Implantation of
Neurostimulator) for CY 2009. The
presenter requested that the APC Panel
recommend that CMS restructure the
existing configuration of
neurostimulator pulse generator
implantation APCs for CY 2010 by
splitting APC 0039, so that procedures
involving peripheral/gastric
neurostimulators and cranial
neurostimulators would be in distinct
APCs, or by reassigning the cranial
neurostimulator pulse generator
implantation procedure described by
CPT code 61885 from APC 0039 to APC
0222. In response to this request, the
APC Panel recommended that CMS
combine APC 0039 and APC 0222 for
CY 2010, given the overall similarity in
median costs among the cranial,
peripheral/gastric, and spinal
neurostimulator pulse generator
implantation procedures assigned to
these two APCs. The APC Panel also
recommended that CMS maintain the
configuration of APC 0315 (Level III
Implantation of Neurostimulator
Generator) as it currently exists in CY
2009 for CY 2010. The dual-array
cranial neurostimulator pulse generator
implantation procedure described by
CPT code 61886 (Insertion or
replacement of cranial neurostimulator
pulse generator or receiver, direct or
inductive coupling; with connection to
two or more electrode arrays) is
currently the only procedure assigned to
APC 0315.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35267 through 35268), we
stated that we agree with the APC Panel
that the median costs of the procedures
described by CPT codes 61885, 63685,
and 64590 are sufficiently similar to
warrant placement of the CPT codes
into a single APC, rather than two APCs.
We accepted the APC Panel’s
recommendation and, therefore,
proposed to reassign CPT code 63685 to
APC 0039, to delete APC 0222, and to
maintain the current configuration of
APC 0315 for CY 2010. We also
proposed to change the title of APC
0315 to ‘‘Level II Implantation of
Neurostimulator Generator’’ to reflect
the proposed two-level, rather than
three-level, structure of the
neurostimulator pulse generator
implantation APCs.
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In reviewing the APC Panel
recommendation for consolidating APC
0039 and APC 0222, we observed that
the median costs of the procedures
assigned to APC 0425 (Level II
Arthroplasty or Implantation with
Prosthesis) and APC 0681 (Knee
Arthroplasty) also are sufficiently
similar to warrant combining these two
APCs into one APC. The proposed
median cost for the only procedure
currently assigned to APC 0681,
described by CPT code 27446
(Arthroplasty, knee, condyle and
plateau; medial OR lateral
compartment), was approximately
$7,464 based on the claims data
available for the CY 2010 OPPS/ASC
proposed rule. This proposed median
cost was very similar to the proposed
median cost of approximately $7,852
calculated for APC 0425, which
included other procedures involving the
implantation of prosthetic devices into
bone, similar to the procedure described
by CPT code 27446. Given the shared
resource and clinical characteristics of
the procedures included in APC 0425
and the only procedure assigned to APC
0681 for CY 2009, in the CY 2010 OPPS/
ASC proposed rule, we proposed to
consolidate these two APCs by
reassigning CPT code 27446 to APC
0425, and deleting APC 0681. We also
noted that, over the past several years,
the median cost for CPT code 27446 has
fluctuated due to a low volume of
services being performed by a small
number of providers, and to a single
provider performing the majority of
services (73 FR 68535). We indicated in
the CY 2010 OPPS/ASC proposed rule
(74 FR 35268) that we believe by
reassigning CPT code 27446 to APC
0425 and deleting APC 0681, we can
maintain greater stability from year to
year in the payment rate for this knee
arthroplasty service, while also paying
appropriately for the service.
At its August 2009 meeting, the APC
Panel heard a joint presentation from
neurostimulator manufacturers who
asserted that CMS’ proposal to
consolidate spinal, peripheral/gastric,
and single-array cranial neurostimulator
pulse generator implantation procedures
into a single APC does not adequately
capture facility resources associated
with the different types of
neurostimulator pulse generators
involved in these procedures and would
undermine access to rechargeable
neurostimulators. The neurostimulator
manufacturers asked the APC Panel to
recommend to CMS a revised, threelevel APC configuration for
neurostimulator pulse generator
implantation procedures that would
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differentiate payment for procedures
involving rechargeable and
nonrechargeable neurostimulators.
Following discussion of this request, the
APC Panel recommended that CMS
adopt the two-level neurostimulator
pulse generator implantation APC
configuration proposed by CMS for CY
2010.
Comment: Many commenters
supported CMS’ proposal to continue
using the standard methodology for
calculating median costs for devicedependent APCs, revised to exclude
claims that contain the ‘‘FC’’ modifier.
The commenters stated that the
exclusion of partial credit claims would
result in APC median costs that more
appropriately reflect true hospital costs.
Some commenters also supported the
mandatory reporting of all HCPCS
device C-codes to encourage hospitals to
remain vigilant in reporting the costs of
performing services involving devices.
The commenters urged CMS to continue
educating hospitals on the importance
of accurate coding for devices, supplies,
and other technologies to help ensure
these items are more appropriately
reflected in future years’ payment rates
for outpatient services.
Some commenters recommended
CMS continue examining and refining
the ratesetting methodology for
procedures involving devices in order to
encourage the continued development
and proliferation of new technology.
The commenters also encouraged CMS
to develop mechanisms for capturing
the costs of devices included on
multiple procedure claims.
Response: We appreciate the
commenters’ support of the standard
device-dependent APC ratesetting
methodology, including our proposal to
refine the methodology to exclude
claims that contain the ‘‘FC’’ modifier.
As we have stated in the past (73 FR
68535 through 68536), 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) and the April 2009 OPPS
update (Transmittal 1702, Change
Request 6416, dated March 13, 2009).
For HCPCS codes that are paid under
the OPPS, providers may also submit
inquiries to the AHA Central Office on
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HCPCS, which serves as a clearinghouse
on the proper use of Level I HCPCS
codes for hospitals and certain Level II
HCPCS codes for hospitals, physicians,
and other health professionals. Inquiries
must be submitted using the approved
form, which may be downloaded from
the AHA Web site (https://
www.ahacentraloffice.org) and either
faxed to 312–422–4583 or mailed
directly to the AHA Central Office:
Central Office on HCPCS, American
Hospital Association, One North
Franklin, Floor 29, Chicago, IL 60606.
We agree with the commenters that
we should continue to encourage the
development and proliferation of new
technology under the OPPS. We have
special mechanisms to provide payment
for new technologies and services under
the OPPS, including new technology
APCs and transitional pass-through
payments for certain devices. We refer
readers to sections III.C. and IV.A.,
respectively, of this final rule with
comment period for more information
on these payment methodologies. 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 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
cardiac resynchronization therapy
defibrillators and pacemakers and our
responses.
Comment: Many commenters
responded to CMS’ proposal to revise
the APC configuration for
neurostimulator pulse generator
implantation procedures from a threelevel structure to a two-level structure.
While one commenter supported the
proposal to combine the single-array
cranial neurostimulator pulse generator
implantation procedure, described by
CPT code 61885 and used for vagus
nerve stimulation, with the spinal
neurostimulator pulse generator
implantation procedure, described by
CPT code 63685, many commenters
argued that the proposed two-level
configuration for neurostimulator pulse
generator implantation procedures
would threaten patient access to
rechargeable spinal neurostimulators.
These commenters asserted that
hospitals may be unable to offer
rechargeable spinal neurostimulator
pulse generators at the proposed CY
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60367
2010 payment rate for APC 0039, which,
according to the commenters, is
substantially less than the cost of the
device and the CY 2009 payment rate
for the procedure. Some commenters
presented an analysis of CY 2008 OPPS
claims data available for the CY 2010
OPPS/ASC proposed rule that
demonstrated a $4,132 difference in
costs for spinal neurostimulator pulse
generator implantation procedures
involving rechargeable devices
compared to the same procedures
involving nonrechargeable devices.
According to these commenters, this
difference in cost warrants a separate
APC for rechargeable spinal
neurostimulator pulse generator
procedures. They argued that while the
cost difference does not violate the 2
times rule, it is large enough to
influence hospitals to choose the lower
cost nonrechargeable spinal
neurostimulator pulse generators
instead of the rechargeable devices if
hospitals receive the same payment for
the implantation procedure, regardless
of the type of technology that is used.
Several commenters noted that the
threat to patient access to rechargeable
spinal neurostimulators should be of
particular concern to CMS, given the
Agency’s past recognition of the
technology’s ability to reduce the need
for device replacements and the
associated surgical risks, thereby
reducing costs while providing optimal
therapy.
Some commenters also stated that the
consolidation of APC 0039 and APC
0222 would result in a
disproportionately small number of
single claims for procedures involving
spinal neurostimulator pulse generators
being used in ratesetting compared to
the number of single claims for other
types of neurostimulator pulse generator
implantation procedures (specifically,
peripheral/gastric and single-array
cranial), further reducing the payment
for these procedures relative to their
costs. The commenters pointed out that,
because spinal neurostimulator pulse
generator implantation procedures are
almost always performed with
permanent lead placement procedures,
rather than being staged as is common
with other neurostimulator implantation
procedures, they are typically not
captured in the single claims used to
calculate the median cost for
consolidated APC 0039, upon which
payment for that APC would be based.
Many commenters argued that the
proposed policy would be inconsistent
with CMS’ rationale in the CY 2008
OPPS/ASC final rule with comment
period for implementing the current
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APC configuration for neurostimulator
pulse generator implantation
procedures, which places the spinal
neurostimulator pulse generator
implantation procedure in its own APC.
According to the commenters, CMS
implemented a separate APC for this
procedure because, unlike other
neurostimulator pulse generator
implantation procedures that involve
only the less costly nonrechargeable
devices, spinal neurostimulator pulse
generator implantation procedures
utilize either the more costly
rechargeable device or the less costly
nonrechargeable device. The
commenters summarized CMS’
assessment in the CY 2008 OPPS/ASC
final rule with comment period that the
placement of the procedure described
by CPT code 63685 as the only
procedure in APC 0222 would enable
CMS to calculate payment rates for
spinal neurostimulator implantation
procedures that reflect changes in
surgical practice based on clinical,
rather than financial, considerations.
Many commenters asserted that CMS’
proposed APC configuration for
neurostimulator pulse generator
implantation procedures would result in
APC 0039 being overly broad and
clinically heterogeneous. The
commenters stated that the spinal,
peripheral/gastric, and single-array
cranial neurostimulator pulse generator
implantation procedures proposed for
assignment to APC 0039 are clinically
disparate and involve widely diverse
neurostimulator technologies (including
vagus nerve stimulators for epilepsy,
sacral nerve stimulators for urinary
incontinence, gastric pacemakers for
chronic nausea and vomiting, and
spinal neurostimulators for chronic
neuropathic pain). One commenter
requested that the CY 2010 proposal for
neurostimulator pulse generator
implantation procedures be reviewed by
a pain management physician and a
certified coder working in pain
management.
According to the commenters, in
order to address these concerns, CMS
should differentiate payment for
procedures involving rechargeable and
nonrechargeable neurostimulators by
revising the current (CY 2009) threelevel APC payment structure for
neurostimulator pulse generator
implantation procedures. The
commenters stated that their
recommended configuration would
group peripheral/gastric and spinal
neurostimulator pulse generator
implantation procedures (described by
CPT codes 64590 and 63685,
respectively) involving nonrechargeable
devices in Level 1; single-array cranial
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neurostimulator pulse generator
implantation procedures (described by
CPT code 61885) involving
nonrechargeable devices in Level 2; and
dual-array cranial neurostimulator pulse
generator implantation procedures
(described by CPT code 61886) and any
neurostimulator pulse generator
implantation procedure involving
rechargeable devices in Level 3.
According to the commenters, this APC
configuration for neurostimulator pulse
generator implantation procedures
could be implemented by assigning
APCs based on the presence of HCPCS
device C-codes present on claims or
through the creation of new Level II
HCPCS G-codes that would distinguish
procedures performed to implant
nonrechargeable neurostimulator pulse
generators from those performed to
implant rechargeable neurostimulator
pulse generators. The commenters
asserted that CMS has shown a
willingness to use alternative mapping
schemes in the past to differentiate
resource costs for procedures involving
technologies such as drug-eluting
coronary stents, implantable
cardioverter defibrillators (ICDs), and
linear accelerator-based stereotactic
radiosurgery (LINAC–SRS), when there
are important technology and facility
resource cost differences that cannot be
identified through the use of existing
CPT codes.
The commenters urged CMS to
maintain the current neurostimulator
pulse generator implantation APC
configuration as adopted in CY 2008 if
the Agency decides not to implement
their recommended three-level
technology-specific APC configuration,
or to create a four-level APC
configuration in which the existing APC
0039 is split, with one APC for singlearray cranial neurostimulator pulse
generator implantation procedures and a
separate APC for peripheral/gastric
neurostimulator pulse generator
implantation procedures. According to
the commenters, either approach would
yield more accurate payment rates than
CMS’ proposal for CY 2010.
Response: We do not agree with the
commenters who argued that we should
not implement our CY 2010 proposal to
revise the APC configuration of
neurostimulator pulse generator
implantation procedures from a threelevel structure to a two-level structure.
We are finalizing our CY 2010 proposal
to reassign CPT code 63685 to APC
0039, to delete APC 0222, and to
maintain the current configuration of
APC 0315. We believe that the final CY
2010 median costs for the
neurostimulator pulse generator
implantation procedures, described by
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CPT codes 61885, 63685, and 64590, are
sufficiently similar to warrant their
placement in a single APC, as
demonstrated in Table 7 below. The
difference between the procedure with
the highest median cost in APC 0039,
described by CPT code 63685, and the
procedure with the lowest median cost
in APC 0039, described by CPT code
64590, is approximately $3,000. Even if
we were to consider the difference in
costs between spinal neurostimulator
pulse generator implantation procedures
described by CPT code 63685 when they
are performed with a rechargeable
device compared to when they are
performed with a nonrechargeable
device, estimated by the commenters to
be approximately $4,000, the grouping
of these procedures in the same APC
would not violate the 2 times rule. We
also point out that, as demonstrated in
Table 7, we use a similar number of
single claims with each of the CPT
codes assigned to APC 0039 to calculate
the median cost upon which the final
CY 2010 payment rate for APC 0039 is
based.
We do not agree with the commenters
that these modest differences in costs,
either among the various types of
neurostimulator pulse generator
implantation procedures assigned to
APC 0039 or among the same types of
procedures involving rechargeable
versus nonrechargeable devices, are
sufficiently substantial to result in
hospitals denying access to the limited
subset of patients for whom the more
expensive rechargeable technology is
clinically indicated. We note that
payment based on a measure of central
tendency is a principle of any
prospective payment system. As we
have stated in the past (73 FR 68562),
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.
In addition to being similar in terms
of resource utilization, we believe the
procedures described by CPT codes
61885, 63685, and 64590 are
comparable from a clinical perspective
because they all involve the
subcutaneous placement of a
neurostimulator pulse generator. We do
not agree with the commenters who
argued that these procedures should be
considered clinically disparate because
they use widely diverse technologies for
very different clinical indications. It is
not uncommon under the OPPS to
group procedures described by
relatively general HCPCS codes that
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may utilize a wide variety of
technologies and may be performed to
treat different patient populations in the
same APC. Furthermore, as stated in the
CY 2009 OPPS/ASC final rule with
comment period (73 FR 66537), the
standard device-dependent APC
ratesetting methodology does not take
into consideration patient diagnoses. In
response to the commenter who
requested that the CY 2010 proposal for
neurostimulator pulse generator
implantation procedures be reviewed by
a pain management physician and a
certified coder working in pain
management, we note that the CMS staff
involved in reviewing the clinical
characteristics of the APC groups
include medical advisors from a variety
of specialties as well as certified coders.
We also do not agree that we should
not implement the two-level APC
configuration for neurostimulator pulse
generator implantation procedures as
proposed for CY 2010 because, as
argued by some commenters, it would
be inconsistent with our rationale in the
CY 2008 OPPS/ASC final rule with
comment period to maintain a separate
APC solely for spinal neurostimulator
pulse generator implantation
procedures. It is our standard process
under the OPPS to reassess the
composition of APCs, including
reviewing the median costs of
individual HCPCS codes, annually
when we have the most current claims
and Medicare cost report data, and to
propose through our annual rulemaking
cycle changes that we believe are
necessary to maintain and improve the
clinical and resource homogeneity of
APCs based on the updated data. In CY
2008, the median costs for the singlearray cranial and peripheral/gastric
neurostimulator pulse generator
implantation procedures described by
CPT codes 61885 and 64590 of $12,799
and $10,954, respectively, were more
divergent from the median cost
calculated for the spinal
neurostimulator pulse generator
implantation procedure of $15,150
using the CY 2006 claims and cost
report data available at that time,
compared to the median costs for these
procedures calculated from the CY 2008
claims and cost report data available for
this CY 2010 OPPS/ASC final rule with
comment period, as demonstrated in
Table 7 below.
Finally, we do not agree with the
commenters that we should differentiate
payment for neurostimulator pulse
generator implantation procedures
based on the type of technology that is
implanted (that is, rechargeable or
nonrechargeable), nor do we agree with
the commenters that past CMS policy to
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use alternative mapping schemes to
differentiate resource costs for certain
procedures, such as those involving
drug-eluting stents, ICDs, and LINAC–
SRS, serves as a precedent to do so. As
we have stated in the past (72 FR 66715
through 66716 and 73 FR 68538), a
policy to provide different payments for
the same procedures according to the
types of devices implanted 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. The circumstances
surrounding the payment policies and
coding configurations for drug-eluting
stents (67 FR 66732 through 66734),
ICDs (72 FR 66702 through 66703), and
LINAC–SRS (72 FR 66734 through
66737) are markedly different from the
circumstances surrounding
neurostimulator pulse generator
implantation procedures. We developed
HCPCS G-codes to distinguish payment
for procedures involving drug-eluting
stents from procedures involving nondrug-eluting stents because drug-eluting
stents did not meet the criteria for
transitional pass-through payment or for
payment under a New Technology APC.
Unlike drug-eluting stents, rechargeable
spinal neurostimulators were granted
pass-through status under the OPPS in
CY 2006, which lasted until December
31, 2007. In the case of ICDs, we created
HCPCS G-codes to gather cost data on
single and dual chamber ICDs, but we
did not differentiate payment for ICD
insertion based on the type of
technology that was used (72 FR 66703).
Finally, our policy to utilize HCPCS Gcodes rather than CPT codes for
payment under the OPPS for LINAC–
SRS treatment delivery services
recognizes the vastly different capital
equipment costs required for various
LINAC–SRS services, rather than
differences in the costs of single-use
devices implanted in patients during the
same procedure.
Comment: Some commenters
disagreed with CMS’’ presentation at the
August 2009 APC Panel meeting of the
proposed CY 2010 line-item median
costs for the two device HCPCS C-codes
that describe neurostimulator pulse
generators, specifically HCPCS code
C1767 (Generator, neurostimulator
(implantable), nonrechargeable) and
HCPCS code C1820 (Generator,
neurostimulator (implantable), with
rechargeable battery and charging
system). The commenters disputed the
accuracy of the data presented by CMS,
specifically that the line-item median
costs for HCPCS codes C1767 and C1820
are $9,606 and $9,636, respectively,
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60369
based on CY 2008 claims available for
the CY 2010 OPPS/ASC proposed rule.
According to the commenters, these
line-item median costs are inconsistent
with the commenters’’ analyses of CY
2010 OPPS/ASC proposed rule data,
which indicated that the line-item
median costs for HCPCS codes C1767
and C1820 are $10,580 and $13,587,
respectively. One commenter urged
CMS to reanalyze the data and to
disregard the APC Panel’s support of the
proposed CY 2010 APC configuration
for neurostimulator pulse generator
implantation procedures if the data
were found to be erroneous. Another
commenter characterized CMS’’
presentation of the line-item median
costs for HCPCS codes C1767 and C1820
as incomplete because OPPS payment
rates are based upon median costs that
include all packaged items and services
associated with providing a procedure
as they appear on single claims, and not
the line-item median costs for
individual devices. The commenter
asked CMS to ensure that all data
presented to the APC Panel in the future
is full and appropriate information for
decisionmaking.
Response: In response to the
commenters’’ concerns, we reassessed
our methodology for calculating the
proposed CY 2010 line-item median
costs for HCPCS codes C1767 and C1820
and verified that the information
presented to the APC Panel is accurate
based on the CY 2008 claims data
available for the CY 2010 OPPS/ASC
proposed rule. The line-item statistics
for these HCPCS codes, along with all
other HCPCS codes recognized under
the OPPS, are released to the public as
part of the OPPS limited data set. We do
not agree with the commenters that the
presentation of these data was
incomplete or inappropriate. We
frequently consider line-item median
costs for devices and other packaged
items and services as one data element
among several when we evaluate the
clinical and resource homogeneity of
APCs, particularly when stakeholders
voice concerns that the costs of different
items are driving procedure costs or
influencing hospitals’’ decisions to
provide certain services. An advantage
of the line-item median costs is that
they represent data from all OPPS
claims, and not just the single claims
that we are able to use in ratesetting for
procedures. Therefore, we believe that a
comparison of line-item costs is
particularly appropriate for different
types of neurostimulator pulse
generators because one of the
commenters’’ concerns was that there
are relatively few single claims available
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for ratesetting for the implantation of
spinal neurostimulator pulse generators.
We would expect the device costs on
multiple procedure claims to be
reflective of the hospital costs of these
neurostimulator pulse generators,
because commenters stated that
multiple procedure claims resulted from
the most typical spinal neurostimulator
implantation procedures. Furthermore,
we would not expect there to be
significant packaged costs associated
with the neurostimulator pulse
generators described by these device
HCPCS codes. Therefore, we would
expect the line-item median costs to
accurately reflect the differential costs
of non-rechargeable and rechargeable
neurostimulator technology. We note
that the APC Panel members are wellacquainted with the OPPS ratesetting
methodology, including the use of
single procedure claims and not lineitem median costs for individual items,
to calculate the median costs upon
which OPPS payment rates are based.
TABLE 7—CY 2010 APC CONFIGURATION FOR PAYMENT OF NEUROSTIMULATOR PULSE GENERATOR IMPLANTATION
PROCEDURES
CY 2010 APC
Revised APC Title for
CY 2010
CY 2010
CPT
Code
0039 ............................
Level I Implantation of
Neurostimulator
Generator.
61885
63685
64590
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0315 ............................
Level II Implantation
of Neurostimulator
Generator.
Comment: Several commenters
expressed support for the proposed CY
2010 payment rate for the implantation
of auditory osseointegrated devices,
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
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) and assigned to
APC 0425. Other commenters, however,
stated that the proposed payment rate
for APC 0425 is less than hospitals’
device and service-related costs
associated with the procedures
described by these CPT codes and urged
CMS to consider a slight increase in the
payment for APC 0425.
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61886
CY 2010
CPT
Code
Median
Cost
CY 2010
CPT
Code
Single
Claims
CY 2010
APC
Median
Cost
Insertion
or
replacement
of
cranial
neurostimulator pulse generator or receiver, direct or inductive coupling; with
connection to a single electrode array.
Insertion
or
replacement
of
spinal
neurostimulator pulse generator or receiver, direct or inductive coupling.
Insertion or replacement of peripheral or
gastric neurostimulator pulse generator or
receiver, direct or inductive coupling.
$14,141
1,260
$13,766
15,802
1,262
13,766
12,726
1,978
13,766
Insertion
or
replacement
of
cranial
neurostimulator pulse generator or receiver, direct or inductive coupling; with
connection to two or more electrode arrays.
18,350
1,004
18,350
CY 2010 CPT Code Descriptor
Response: We agree with the
commenters that the payment rate for
APC 0425, calculated from the standard
device-dependent APC ratesetting
methodology, appropriately reflects
hospitals’ relative costs for providing
the procedures assigned to APC 0425 as
reported to us in the claims and cost
report data. We used 1,410 single claims
from CY 2008 to calculate the median
cost upon which the final CY 2010
payment rate for APC 0425 is based. The
final CY 2010 median cost for APC 0425
is approximately $7,932, slightly higher
than the final CY 2009 median cost for
APC 0425 of $7,863. We note that we
were able to use significantly more
single claims in ratesetting for APC 0425
for CY 2010 compared to CY 2009
(1,410 single claims from CY 2008
compared to 668 single claims from CY
2007). We disagree with the commenters
who requested an additional increase in
the payment rate for APC 0425, because
this would artificially and inaccurately
inflate payment rates. A fundamental
principle of the OPPS is that it is based
on relative weights, and as we have
stated in the past (73 FR 68541), it is the
relativity of the costs to one another,
rather than absolute cost, that is
important in setting payment rates. To
deviate from our standard OPPS
ratesetting methodology and increase
the payment rates for certain procedures
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beyond their relatives costs as derived
from claims and cost report data would
skew this relativity.
Comment: Some commenters
supported CMS’ proposal to reassign
CPT code 27446 to APC 0425 and to
delete APC 0681. Other commenters,
however, opposed the consolidation of
these two APCs, arguing that the
procedure described by CPT code 27446
is clinically dissimilar from the
arthroplasty procedures currently
assigned to APC 0425. The commenters
recommended that CMS continue to
maintain APC 0681 for CY 2010 and to
add other total knee arthroplasty
procedures to this APC, along with the
procedure described by CPT code
27446.
Response: We disagree with the
commenters who argued that it is
necessary to maintain APC 0681
specifically for knee arthroplasty
procedures because we do not believe it
is appropriate to maintain an APC that
is not necessary to classify services into
groups that are similar clinically and in
terms of resource utilization. We
continue to believe that CPT code 27446
is most appropriately assigned to APC
0425 for CY 2010, as we proposed,
based on consideration of the
procedure’s clinical and resource
characteristics. As described in section
XI.B. of this final rule with comment
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period, we are not removing any total
knee arthroplasty procedures from the
inpatient list.
Comment: Several commenters
supported the proposed payment rate
for the implantation of cochlear
implants, described by CPT code 69930
(Cochlear device implantation, with or
without mastoidectomy) and assigned to
APC 0259 (Level VII ENT Procedures).
These commenters stated that while
hospitals’ device and service-related
costs for these procedures likely still
exceed the proposed payment rate for
APC 0259, they represent an
improvement in payment relative to CY
2009 that may lead to better access to
care for Medicare beneficiaries.
Response: We appreciate the
commenters’ support of the proposed
payment rate for APC 0259. We believe
that the standard device-dependent APC
ratesetting methodology results in a
payment rate that reflects hospitals’
relative costs for providing the
procedure assigned to this APC as
reported to us in the claims and cost
report data.
Comment: One commenter concurred
with CMS’ proposal that APC 0385
(Level I Prosthetic Urological
Procedures) and APC 0386 (Level II
Prosthetic Urological Procedures)
continue to be recognized as device-
dependent APCs. The commenter
supported CMS’ continued application
of procedure-to-device edits for
procedures assigned to these APCs.
Response: We appreciate the
commenter’s support of the continued
recognition of APC 0385 and 0386 as
device-dependent APCs. We agree that
claims processing edits for devices that
are integral to the performance of
procedures assigned to devicedependent APCs are an important
element of the standard devicedependent APC ratesetting
methodology.
Comment: One commenter urged
CMS not to reduce the payment for the
procedure described by CPT code 62361
(Implantation or replacement of device
for intrathecal or epidural drug infusion;
nonprogrammable pump), which is
assigned to APC 0227 (Implantation of
Drug Infusion Device). The commenter
stated that patient access to this
procedure is limited due to recent
payment cuts.
Response: The final CY 2010 median
cost for APC 0227 of approximately
$13,268 is approximately 10 percent
higher than the median cost of $12,006,
upon which the final CY 2009 payment
rate was based, and approximately 13
percent higher than the median cost of
$11,569, upon which the final CY 2008
60371
payment rate was based. We believe that
the final CY 2010 median cost for APC
0227 of $13,268, which is calculated
using the standard device-dependent
APC methodology, results in a final CY
2010 payment rate that accurately and
appropriately reflects hospitals’’ costs
for providing the service described by
CPT code 62361 and will not result in
any barriers to patient care.
In summary, after consideration of the
public comments we received, we are
finalizing our proposed CY 2010
payment policies for device-dependent
APCs, without modification. The CY
2010 OPPS payment rates for devicedependent APCs are based on their
median costs calculated from CY 2008
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 or
partial credit. We continue to believe
that the median costs calculated from
the single claims that meet these 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 2010 devicedependent APCs are listed in Table 8
below.
TABLE 8—CY 2010 DEVICE-DEPENDENT APCS
CY 2010 Status
indicator
CY 2010 APC Title
0039 .........................................................
0040 .........................................................
0061 .........................................................
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CY 2010 APC
S
S
S
0082
0083
0084
0085
0086
0089
0090
0104
0106
0107
0108
0115
0202
0225
0227
0229
0259
0293
0315
0384
0385
0386
0418
0425
0427
0622
0623
0648
T
T
S
T
T
T
T
T
T
T
T
T
T
S
T
T
T
T
S
T
S
S
T
T
T
T
T
T
Level I Implantation of Neurostimulator Generator
Percutaneous Implantation of Neurostimulator Electrodes
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
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 II Implantation of Neurostimulator Generator
GI Procedures with Stents
Level I Prosthetic Urological Procedures
Level II Prosthetic Urological Procedures
Insertion of Left Ventricular Pacing Electrode
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
.........................................................
.........................................................
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TABLE 8—CY 2010 DEVICE-DEPENDENT APCS—Continued
CY 2010 Status
indicator
CY 2010 APC
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0652
0653
0654
0655
0656
0674
0680
.........................................................
.........................................................
.........................................................
.........................................................
.........................................................
.........................................................
.........................................................
T
T
T
T
T
T
S
(2) Blood and Blood Products
Since the implementation of the OPPS
in August 2000, we have made separate
payments for blood and blood products
through APCs rather than packaging
payment for them into payments for the
procedures with which they are
administered. Hospital payments for the
costs of blood and blood products, as
well as for 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 2010 OPPS/ASC proposed
rule (74 FR 35269), we proposed to
continue to establish payment rates for
blood and blood products 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
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
differences 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 2010 payment rates for blood and
blood products were based using the
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CY 2010 APC Title
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
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.
We stated in the CY 2010 OPPS/ASC
proposed rule (74 FR 35269) that we
continue to believe the hospital-specific,
blood-specific CCR methodology better
responds to the absence of a bloodspecific CCR for a hospital than
alternative methodologies, such as
defaulting to the overall hospital CCR or
applying an average blood-specific CCR
across hospitals. Because this
methodology takes into account the
unique charging and cost accounting
structure of each provider, we believe
that it yields more accurate estimated
costs for these products. We indicated
that we believe continuing with this
methodology in CY 2010 would 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
blood products in general.
Comment: One commenter expressed
appreciation for CMS’ recognition of the
complexities of calculating payment
rates for blood and blood products and
the accommodations CMS has made
through the blood and blood product
ratesetting methodology to ensure the
calculated rates are as fair as possible.
However, several commenters stated
that the proposed payment rates for
many blood and blood products are less
than the costs hospitals incur acquiring,
managing, and processing them, and
that the claims-based cost data for blood
and blood products are error-prone and
subject to significant and unexplained
fluctuations. They noted that the
payment decreases for several blood and
blood products seem inexplicable
because prices for blood have been
increasing due to new technologies and
tests required to ensure the continued
safety of the blood supply and
increasingly expensive donor
recruitment and retention efforts.
According to the commenters, a
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comparison of the proposed APC
payment changes for blood and blood
products to the producer price index
(PPI) for blood and organ banks, which
increased 3.1 percent from July 2008 to
July 2009, indicates that the blood
product payment rates in the CY 2010
OPPS/ASC proposed rule do not reflect
overall pricing trends in the blood
banking industry. The commenters
asked CMS to adjust the CY 2010
payment rates for blood and blood
products by increasing all of the CY
2009 payment rates by 3.1 percent, or by
implementing a 3.1 percent payment
floor for CY 2010 payment rates
compared to CY 2009 payment rates for
blood and blood products. One
commenter particularly urged CMS to
apply a 3 percent minimum increase in
payment for the highest volume blood
product, described by HCPCS code
P9016 (Red blood cells, leukocytes
reduced, each unit). The commenters
asserted that the use of the PPI for blood
and organ banks in calculating hospital
payment is not unprecedented. They
stated that in the CY 2005 OPPS final
rule, CMS used the PPI for blood and
derivatives for human use in calculating
the payment rates for low-volume blood
products. They also pointed out that
CMS recognized the value of the PPI for
blood and organ banks by using it to
update blood and blood product prices
in the market basket under the IPPS for
CY 2010.
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 use the PPI
for blood and organ banks as a
benchmark for updating the payment
rates for blood and blood products from
year to year, because it is not our
standard process under the OPPS for
any item or service to update payment
rates by implementing across-the-board,
product-specific inflation updates to the
payment rates that were in place the
year before. Rather, we annually update
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payment groups and payment weights
using the most recently available
hospital claims and cost report data.
This process allows us to recalibrate the
payment groups and payment weights
in response to changes in hospitals’
costs from year to year. A fundamental
principle of the OPPS is that it is based
on relative weights, and as we have
stated in the past (73 FR 68541), it is the
relativity of the costs to one another,
rather than absolute cost, that is
important in setting payment rates. To
deviate from our standard OPPS
ratesetting methodology and update the
payment rates for blood and blood
products by the PPI would skew this
relativity.
We also note that, as discussed in
section II.B. of this final rule with
comment period, we are required by law
to update the conversion factor used to
determine payment rates under the
OPPS. For CY 2010, the update is equal
to the hospital inpatient market basket
increase. The PPI for blood and organ
banks is one of several price proxies
used to calculate the hospital inpatient
market basket (74 FR 43847), which
represents the change in price over time
of the same mix (quantity and intensity)
of goods and services purchased to
provide hospital services. In this way,
the PPI for blood and blood products is
already incorporated in the CY 2010
payment rates for blood and blood
products.
Comment: One commenter noted that
the proposed CY 2010 median costs for
several blood and blood products
fluctuated significantly relative to CY
2009. The commenter expressed
concern about potentially large payment
decreases and noted that, in the past,
CMS dampened payment decreases for
blood and blood products to limit
product losses. The commenter
requested that CMS disclose the source
of the fluctuations in CY 2010 median
costs for blood and blood products and
implement a dampening policy to
mitigate significant payment
fluctuations, not only for blood and
blood products but for all other services.
Response: As stated previously, we
continue to believe that using bloodspecific 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 implement a dampening
policy to mitigate significant payment
fluctuations, for blood and blood
products or for any other items and
services payable under the OPPS, as
described in section II.A.2.c. of this final
rule with comment period. As we have
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stated in the past (73 FR 68541), 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. The
final CY 2010 median costs for more
than two-thirds of all blood and blood
products changed by a margin of less
than 10 percent compared to the CY
2009 median costs. Of the remaining
blood and blood products, 8
demonstrated decreases in median costs
of greater than 10 percent, and 5
demonstrated increases in median costs
of greater than 10 percent. We
determined that the fluctuations in
median costs for these 13 blood and
blood products were due to
contributions of additional claims, the
addition or removal of individual
hospitals furnishing particular blood
and blood products, 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
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 general policy to judge the
accuracy of hospital coding and
charging for purposes of ratesetting.
Comment: One commenter
recommended that CMS recognize
plasma protein fraction (PPF) products
as drugs under the OPPS and assign
status indicator ‘‘K’’ (Nonpass-Through
Drugs and Nonimplantable Biologicals,
Including Therapeutic
Radiopharmaceuticals) to HCPCS codes
P9043 (Infusion, plasma protein fraction
(human), 5%, 50 ml) and P9048
(Infusion, plasma protein fraction
(human), 5%, 250 ml), rather than
assigning them status indicator ‘‘R’’
(Blood and Blood Products). The
commenter also requested that CMS
instruct providers to use the appropriate
infusion CPT codes for administration
of PPF, rather than blood transfusion
codes. According to the commenter, PPF
is similar clinically to albumin in terms
of how it is derived and the patients for
whom it is indicated. The commenter
also stated that, according to the AABB,
both albumin and PPF are blood
derivatives that should be billed with
pharmacy revenue codes. According to
the commenter, the AABB also indicates
that the administration of blood
derivatives, including PPF, should be
billed with injection or infusion CPT
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60373
codes rather than blood transfusion CPT
codes.
Response: We did not propose to
change the status indicators for the PPF
products described by HCPCS codes
P9043 and P9048 from ‘‘R’’ to ‘‘K’’ for
CY 2010. Because changing the status
indicators for these products as the
commenter recommended could have
significant payment implications, we
believe we should not consider such a
potential change in policy without
seeking input from all interested
stakeholders through our annual
rulemaking cycle. Specifically, changing
the status indicator from ‘‘R’’ to ‘‘K’’
would require us to calculate the
payment rates for PPF using mean unit
cost from hospital claims, as we
currently do for albumin products,
rather than using our standard bloodspecific CCR methodology for blood and
blood products.
We last addressed the issue of
whether plasma-derived therapies and
their recombinant analogs should be
considered blood and blood products
for purposes of payment under the
OPPS in the CY 2003 OPPS final rule
with comment period (67 FR 66774) and
the CY 2004 OPPS final rule with
comment period (68 FR 63455). We
stated that, because these products are
highly processed and not manufactured
by local blood banks, they do not have
the same access and safety concerns as
other blood and blood products.
Therefore, we did not consider any
plasma-derived products and their
recombinant analogs, including albumin
and immune globulins, to fall under the
category of blood and blood products
(67 FR 66774).
We are requesting comments on this
final rule with comment period that
address whether PPF should be
recognized as a blood and blood
product, designated with status
indicator ‘‘R,’’ or as a nonpass-through
drug and biological, designated with
status indicator ‘‘K.’’ Specifically, we
are interested in how PPF is derived and
manufactured, and whether the same
access and safety concerns that apply to
the blood and blood products
recognized under the OPPS for payment
purposes also apply to PPF. Finally, we
are interested in the relationship
between albumin and PPF, from
clinical, manufacturing, and safety
perspectives, and whether there would
be a rationale for treating these products
similarly for payment purposes under
the OPPS. We will consider these
comments as we prepare for the CY
2011 annual rulemaking cycle.
Comment: One commenter asked if
the product ‘‘prepooled cryoprecipitate’’
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would be added to the list of blood and
blood products.
Response: The existing HCPCS code
that describes cryoprecipitate products,
P9012 (Cryoprecipitate, each unit), is
recognized under the OPPS for payment
purposes as a blood and blood product.
We note there is an established process
in place for requesting a revision to the
Level II HCPCS codes if stakeholders
believe the current codes cannot
adequately address all clinical
circumstances. The Level II HCPCS
coding system is a comprehensive and
standardized system that classifies
similar products that are medical in
nature into categories for the purpose of
efficient claims processing. The process
and criteria for revising Level II HCPCS
codes is available on the CMS Web site
at: https://www.cms.hhs.gov/
MedHCPCSGenInfo/02_HCPCSCODING
PROCESS.asp#TopOfPage.
After consideration of the public
comments we received, we are
finalizing, without modification, our
proposal to calculate the median costs
upon which the CY 2010 payment rates
for blood and blood products are based
using the blood-specific CCR
methodology that we have utilized since
CY 2005. We believe that continuing
this methodology in CY 2010 results 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.
We refer readers to Addendum B to
this final rule with comment period for
the final CY 2010 payment rates for
blood and blood products, which are
identified with status indicator ‘‘R.’’ For
more detailed discussion of the bloodspecific 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).
(3) Single Allergy Tests
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35269), 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 2010.
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,
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14:52 Nov 19, 2009
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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
2010 OPPS/ASC proposed rule (74 FR
35269), our CY 2008 claims data
available for that proposed 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 $55,
significantly higher than the CY 2009
median cost of APC 0381 of
approximately $23 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
single allergy tests since CY 2006, we
proposed to calculate a ‘‘per unit’’
median cost for APC 0381, based upon
530 claims containing multiple units or
multiple occurrences of a single CPT
code. The proposed CY 2010 median
cost for APC 0381 using the ‘‘per unit’’
methodology was approximately $29.
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 2010 proposal for
payment of single allergy tests.
Therefore, we are finalizing our CY 2010
proposal, without modification, to
calculate a ‘‘per unit’’ median cost for
APC 0381 as described above in this
section. The final CY 2010 median cost
of APC 0381 is approximately $29.
(4) Echocardiography Services
In CY 2008, we implemented a policy
whereby payment for all contrast agents
is packaged 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 to 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
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payable echocardiography procedures
that may be performed with contrast
agents by isolating single and ‘‘pseudo’’
single echocardiography 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 Mmode 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 2-dimensional 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).
After reviewing HCPCS code-specific
median costs, we determined that all
echocardiography procedures that may
be performed with contrast agents are
reasonably similar both clinically and in
terms of resource use. In CY 2008, we
created APC 0128 (Echocardiogram with
Contrast) to provide payment for
echocardiography procedures that are
performed with a contrast agent. We
refer readers to the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66643 through 66646) for more
information on this methodology.
In order for hospitals to identify and
receive appropriate payment for
echocardiography procedures performed
with contrast beginning in CY 2008, we
created eight new HCPCS codes (C8921
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through C8928) that corresponded to the
related CPT echocardiography codes
and assigned them to the newly created
APC 0128. We instructed hospitals to
report the CPT codes when performing
echocardiography procedures without
contrast and to report the new HCPCS
C-codes when performing
echocardiography procedures with
contrast, or without contrast followed
by with contrast. As is our standard
policy with regard to new codes, the
APC assignment of these codes was then
open to comment in that final rule.
We used the same process to calculate
median costs for these codes for CY
2009 as we used for CY 2008 to
separately identify echocardiography
services provided with contrast and
those provided without contrast because
the data reported under these new codes
were not yet available for CY 2009
ratesetting.
In addition, for CY 2009, 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 new CPT code 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)
includes the services described in CY
2008 by three CPT codes: 93307; 93320
(Doppler echocardiography, pulsed
wave and/or continuous wave with
spectral display; complete); and 93325
(Doppler echocardiography color flow
velocity mapping). Therefore, the
service described in CY 2009 by new
CPT code 93306 was reported in the CY
2008 data with three CPT codes,
specifically CPT codes 93307, 93320,
and 93325. In CY 2008, the hospital
received separate payment for CPT code
93307 through APC 0269 (Level II
Echocardiogram without Contrast
Except Transesophageal), into which
payment for the other two services was
packaged. The revised CY 2009
descriptor of CPT code 93307 explicitly
excludes services described by CPT
codes 93320 and 93325.
To estimate the hospital costs of CPT
codes 93306 and 93307 based on their
CY 2009 descriptors and the
corresponding HCPCS codes C8929 and
C8923 for CY 2009, we used claims data
from CY 2007. As described in the CY
2009 OPPS/ASC final rule with
comment period (73 FR 68542 through
68544), we manipulated our CY 2007
single and ‘‘pseudo’’ single claims data
to simulate the new CY 2009 definitions
of these services. Specifically, we
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selected claims for CPT code 93307 on
which CPT codes 93320 and 93325 were
also present and we treated the summed
costs on these claims as if they were a
single procedure claim for CPT code
93306. Similarly, we selected single
claims for CPT code 93307 to reflect the
newly revised descriptor for CY 2009;
that is, we included those claims where
CPT code 93307 was not billed with
packaged CPT code 93320 or CPT code
93325 on the same claim. We then
applied our CY 2009 methodology for
calculating HCPCS code-specific
median costs for these
echocardiography procedures with and
without contrast by dividing the new set
of claims for CPT codes 93306 and
93307 into those billed with and
without contrast agents. We assigned
the costs for simulated CPT codes 93306
and 93307 reported without contrast to
those CPT codes. We then assigned the
costs for simulated CPT codes 93306
and 93307 reported with contrast to 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) and 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), respectively. In the
CY 2009 OPPS/ASC final rule with
comment period (73 FR 68542 through
68544), we assigned these CPT and
HCPCS codes to APCs for CY 2009
based on their simulated median costs
and clinical characteristics. New CY
2009 CPT code 93306 and HCPCS code
C8929 were assigned comment indicator
‘‘NI’’ in that final rule with comment
period, to signify that they were new
codes whose interim final OPPS
treatment was open to comment on that
final rule with comment period.
The CY 2010 OPPS/ASC proposed
rule was the first opportunity to have
claims data available from hospitals for
echocardiography services performed
with contrast (or without contrast
followed by with contrast) and reported
with HCPCS codes C8921 through
C8928. With the exception of HCPCS
code C8923, which had a significant
change in its code descriptor for CY
2009, in the CY 2010 OPPS/ASC
proposed rule (74 FR 35271), we
proposed to use our standard
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60375
methodology to set the CY 2010 OPPS
payment rates for these
echocardiography services performed
with contrast, taking into consideration
their HCPCS code-specific median costs
from CY 2008 claims.
For CY 2010 ratesetting, we proposed
to employ an alternative ratesetting
methodology for CPT codes 93306 and
93307 and HCPCS codes C8929 and
C8923 that is similar to the approach we
used for CY 2009 in order to account for
the new codes and revised code
descriptors for which CY 2008 data are
unavailable. However, in the case of the
proposed CY 2010 cost estimation, our
CY 2008 claims for CPT code 93307
were only for services performed
without contrast, and we have CY 2008
claims for HCPCS C8923 for the
comparable services performed with
contrast. Specifically, we selected
claims for CPT code 93307 on which
CPT codes 93320 and 93325 were also
present and we treated the summed
costs on these claims as if they were a
single procedure claim for CPT code
93306 in order to simulate the median
cost for CPT code 93306, for which CY
2008 claims data are not available. We
then selected single claims for CPT code
93307 to reflect the newly revised
descriptor for CY 2009; that is, we
included those claims where CPT code
93307 was not billed with either
packaged CPT code 93320 or CPT code
93325 on the same claim in order to
simulate an appropriate CY 2010
proposed median cost for CPT code
93307. We assigned the costs of HCPCS
code C8923 when reported with CPT
codes 93320 and 93325 to HCPCS code
C8929 and the costs of HCPCS code
C8923 when reported without CPT code
93320 or 93325 to HCPCS code C8923.
Following publication of the CY 2009
OPPS/ASC final rule with comment
period, several stakeholders brought a
number of concerns to our attention,
including the interim APC assignment
of new CPT code 93351
(Echocardiography, transthoracic, realtime with image documentation (2D),
includes M-mode recording, when
performed, during rest and
cardiovascular stress test using
treadmill, bicycle exercise and/or
pharmacologically induced stress, with
interpretation and report; including
performance of continuous
electrocardiographic monitoring, with
physician supervision) and the
corresponding new HCPCS code C8930
(Transthoracic echocardiography, with
contrast, or without contrast followed
by with contrast, real-time with image
documentation (2D), includes M-mode
recording, when performed, during rest
and cardiovascular stress test using
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treadmill, bicycle exercise and/or
pharmacologically induced stress, with
interpretation and report; including
performance of continuous
electrocardiographic monitoring, with
physician supervision). These
stakeholders noted that new CY 2009
CPT code 93351 was created to include
the services reported previously by CPT
codes 93015 (Cardiovascular stress test
using maximal or submaximal treadmill
or bicycle exercise, continuous
electrocardiographic monitoring, and/or
pharmacological stress; with physician
supervision, with interpretation and
report) and 93350 (Echocardiography,
transthoracic, real-time with image
documentation (2D), includes M-mode
recording, when performed, during rest
and cardiovascular stress test using
treadmill, bicycle exercise and/or
pharmacologically induced stress, with
interpretation and report). Because new
CY 2009 CPT code 93351 was meant to
include the services previously reported
with both the CPT codes for a
transthoracic echocardiogram during
rest and stress (CPT code 93350 is
recognized under the OPPS) and a
cardiovascular stress test (CPT code
93017 is recognized under the OPPS,
rather than CPT code 93015), these
stakeholders disagreed with our
assignments of both CPT codes 93350
and 93351 to APC 0269 for CY 2009.
Upon review of these concerns and
our CY 2008 data, in the CY 2010 OPPS/
ASC proposed rule (74 FR 35271), we
proposed for CY 2010 to use an
alternative methodology to simulate
median costs for CPT code 93351 and
corresponding HCPCS code C8930, for
which CY 2008 claims data are
unavailable, and for CPT code 93350
and corresponding HCPCS code C8928
(Transthoracic echocardiography with
contrast, or without contrast followed
by with contrast, real-time with image
documentation (2D), includes M-mode
recording, when performed, during rest
and cardiovascular stress test using
treadmill, bicycle exercise and/or
pharmacologically induced stress, with
interpretation and report). That is, we
proposed to use claims that contain both
CPT codes 93350 and 93017
(Cardiovascular stress test using
maximal or submaximal treadmill or
bicycle exercise, continuous
electrocardiographic monitoring, and/or
pharmacological stress; tracing only,
without interpretation and report) to
simulate the median cost for CPT code
93351. We also proposed to use the
remaining claims that contain CPT code
93350 but that do not contain CPT code
93017 to develop the proposed CY 2010
median cost for CPT code 93350. For
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our proposed rule analysis, we
identified over 74,000 CY 2008 claims
with both CPT code 93350 and CPT
code 93017 on the same date of service
and no other separately paid services
appearing on the same date after
applying our bypass processing logic,
discussed in section II.A.1.b. of the
proposed rule (74 FR 35240 through
35241). We treated these modified
claims containing both CPT codes 93350
and 93017 as a single service and we
calculated a proposed median cost of
approximately $604. Therefore, for CY
2010, we proposed to reassign CPT code
93351 to revised APC 0270 (Level III
Echocardiogram without Contrast),
which had a proposed APC median cost
of approximately $596. We proposed to
continue to assign CPT code 93350 to
APC 0269, which had a proposed APC
median cost of approximately $456,
based on its proposed HCPCS codespecific median cost of approximately
$406 based on approximately 11,000
single claims. Furthermore, we
proposed to use claims for HCPCS code
C8928 that are reported with CPT code
93017 on the same claim to simulate the
CY 2010 median cost for HCPCS code
C8930. We identified over 4,000 claims
in the proposed rule data with both
HCPCS code C8930 and CPT code 93017
on the same date of service and no other
separately paid services appearing on
the same date after applying our bypass
processing logic, discussed in section
II.A.1.b. of the proposed rule (74 FR
35240 through 35241), that we modified
to treat HCPCS code C8930 and CPT
code 93017 as a single service. We
calculated a HCPCS code-specific
proposed median cost of approximately
$706. Therefore, we proposed to
continue to assign HCPCS code C8930
to APC 0128 with a proposed APC
median cost of approximately $660. We
also proposed to continue to assign
HCPCS code C8928 to APC 0128, based
on its HCPCS code-specific proposed
median cost of approximately $595
based on approximately 1,000 single
claims.
Comment: One commenter on the CY
2009 OPPS/ASC final rule with
comment period addressed the interim
final treatment of new CPT code 93306
for CY 2009. The commenter requested
that CMS not recognize CPT code 93306
under the OPPS because this code
represents the combination of three
services already described by existing
CPT codes 93307, 93320, and 93325.
Alternatively, the commenter
recommended that CMS could instruct
hospitals to continue billing CPT codes
93320 and 93325 in association with
CPT code 93306 in order to encourage
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consistent reporting of services
described by CPT codes 93320 and
93325 when they are furnished with any
echocardiography service. The
commenter believed that requiring the
use of CPT code 93306 may confuse
hospitals, as other echocardiography
services require the separate reporting of
CPT codes 93320 and 93325 when these
additional procedures are performed.
Because there are already existing codes
for the services described by CPT code
93306 and hospitals could
inappropriately stop reporting CPT
codes 93320 and 93325 in association
with other echocardiography services,
the commenter requested that CMS not
recognize CPT code 93306 for payment
under the OPPS. According to the
commenter, under all circumstances,
hospitals would continue to report CPT
code 93320 or CPT code 93325 when
they are performed with any
echocardiography procedure, a practice
preferred by the commenter. Similarly,
the commenter recommended that CMS
not recognize the corresponding HCPCS
code C8929 that describes CPT code
93306 when furnished with contrast
because the contrast echocardiography
procedure could also be reported using
existing HCPCS code C8921 and CPT
codes 93320 and 93325.
Response: As is our standard
methodology, we review new CPT codes
annually and assign status indicators to
all new codes and provide APC
assignments, if applicable, for codes that
describe services that may be performed
in the hospital outpatient department
(which includes provider-based clinics
located on and off campus). We
consider CPT code 93306 to be part of
the standard CPT code set hospitals use
for reporting services under the OPPS,
and the service described by the code is
one that we believe could be furnished
to a hospital outpatient and potentially
covered and, therefore, paid by
Medicare under the OPPS. We
incorporated CPT code 93306 in the CY
2009 OPPS/ASC final rule with
comment period, assigning it a
separately payable status indicator and
APC, consistent with our belief that the
service described by this code could be
appropriately reported by hospitals
when they furnish the service in the
HOPD. Furthermore, as described in the
CY 2009 OPPS/ASC final rule with
comment period (73 FR 68543), we used
a special cost estimation methodology to
estimate the expected cost of CPT code
93306 based on hospital claims data for
the individual predecessor codes in
order to inform our interim final
assignment of CPT code 93306 to a
clinical APC for CY 2009.
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Regarding the commenter’s alternative
suggestion that we instruct hospitals to
continue to report CPT codes 93320 and
93325 when performed in association
with the procedure described by CPT
code 93306, we will not instruct
hospitals to continue to report CPT
codes 93320 and 93325 when billing for
CPT code 93306 because CPT code
93306 incorporates the services
described by CPT codes 93320 and
93325 in its code descriptor. Billing
separately for these services when
reporting CPT 93306 would not be
consistent with correct coding
principles and could create greater
confusion and unnecessary burden for
hospitals. Whenever possible, hospitals
have repeatedly encouraged us to follow
standard coding guidelines in order to
reduce their administrative burden in
reporting services differently for
Medicare, and our recognition of CPT
code 93306 for payment under the OPPS
is consistent with hospitals’ general
request to us.
Finally, as we are continuing to
instruct hospitals to use CPT code
93306 for CY 2010, it continues to be
appropriate for hospitals to bill using
HCPCS code C8929 when furnishing the
service described by CPT code 93306
with contrast. In the case of CPT code
93306 and other CPT codes for
echocardiography services, we have
developed parallel HCPCS C-codes to
report each procedure when furnished
with contrast in order to provide
payment through separate APCs for
those echocardiography services
furnished with and without contrast.
Comment: Several commenters on the
CY 2010 OPPS/ASC proposed rule
expressed support for the revisions to
the echocardiography APCs included in
the CY 2010 OPPS/ASC proposed rule.
One commenter noted appreciation for
the proposed reassignment of CPT code
93351 from APC 0269 to APC 0270.
However, one commenter on the CY
2009 OPPS/ASC final rule with
comment period suggested that the new
CY 2009 CPT code 93351 should not be
recognized for payment under the
OPPS. The commenter reasoned that the
comprehensive service described by
CPT code 93351 is comprised of two
services previously reported with CPT
codes 93350 and 93015: CPT code
93015 includes physician supervision
and interpretation, which are not
hospital outpatient services; and CPT
code 93015 is reported by nonhospital
practitioners and is not recognized for
payment under the OPPS.
In addition, a commenter on the CY
2010 OPPS/ASC proposed rule stated
that a more appropriate treatment of
CPT code 93351 under the OPPS would
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be to not recognize this code for
payment under the OPPS but, rather, to
continue to recognize for payment
several existing CPT codes which, when
reported in combination, would
describe the service that would
otherwise be reported with CPT code
93351 alone. The commenter believed
that CPT code 93351 was created
specifically for services performed in
nonfacility settings and that the intent
of the CPT Editorial Committee was to
limit the use of the code to nonfacility
settings only. The commenter stated that
correspondence from CMS indicated
that CPT code 93351 would be billable
only when provided in a physician’s
office or independent laboratory
settings.
Response: As is our standard
methodology, we review new CPT codes
annually and assign status indicators to
all new codes and provide APC
assignments, if applicable, for codes that
describe services that may be performed
in the HOPD (which includes providerbased clinics located on and off
campus). The CPT code descriptor for
CPT code 93351 makes no mention that
the code is restricted from use in the
HOPD, or that its use is limited to
nonfacility settings. Further, there are
no additional CPT instructions that
would limit the reporting of CPT code
93351 to nonfacility or nonhospital
settings. We consider this CPT code to
be part of the standard CPT code set
hospitals use for reporting services
under the OPPS, and the service
described by the code is one that we
believe could be furnished to a hospital
outpatient and potentially covered and,
therefore, paid by Medicare under the
OPPS. CPT code 93351 describes a
service that would previously have been
reported with CPT codes 93350 and
93017 under the OPPS. While the
commenter was correct that we do not
recognize CPT code 93015 for payment
under the OPPS, a code that describes
a cardiovascular stress test with
interpretation and report, we do
recognize CPT code 93017, which
describes the tracing only for the
cardiovascular stress test. We
incorporated CPT code 93351 in the CY
2009 OPPS/ASC final rule with
comment period, assigning it a
separately payable status indicator and
APC, consistent with our belief that the
service described by this code could be
appropriately reported by hospitals
when they furnish the service in the
HOPD. Furthermore, we established
professional component (PC) and
technical component (TC) payments
under the MPFS for CPT code 93351,
also consistent with our belief that the
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60377
CPT code may be reported for services
in facility settings, such as independent
laboratory settings. We have
communicated no information to the
public that states that Medicare hospital
outpatient payment would not be made
if this CPT code were reported by a
hospital for services furnished to
hospital outpatients.
We proposed a methodology for
identifying the hospital outpatient
claims and isolating the hospital charges
that would be associated with this
procedure for CY 2010 in order to
develop an appropriate hospital
outpatient payment for the associated
facility resources for the existing
services that would be reported and
paid under the new CPT code.
Specifically, we proposed to use claims
that contain both CPT codes 93350 and
93017 to simulate the median cost for
CPT code 93351 and proposed to
reassign CPT code 93351 from APC
0269 to revised APC 0270 for CY 2010
based on its simulated median cost. We
continue to believe that this CPT code
may be reported for OPPS services
described by the code, and that our
proposed CY 2010 cost estimation
methodology accurately simulates a
median cost for this new code that
reflects the associated hospital resources
for the component services that are
newly described by this single CPT
code.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to reassign CPT
code 93351 to APC 0270 based on a
simulated CPT-specific median cost
identified from over 80,000 CY 2008
claims with both CPT code 93350 and
CPT code 93017 on the same date of
service and no other separately paid
services appearing on the same date
after applying our bypass processing
logic, as discussed above. We calculated
a final CPT-specific median cost of
approximately $605 for CPT code 93351
and a final CY 2010 APC median cost
for APC 0270 of approximately $591.
Comment: One commenter on the CY
2009 OPPS/ASC final rule with
comment period requested that CMS
delete HCPCS code C8930
(Transthoracic echocardiography, with
contrast, or without contrast followed
by with contrast, real-time with image
documentation (2D), includes M-mode
recording, when performed, during rest
and cardiovascular stress test using
treadmill, bicycle exercise and/or
pharmacologically induced stress, with
interpretation and report; including
performance of continuous
electrocardiographic monitoring, with
physician supervision) as the services
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described by this code could be reported
using CPT code 93017 (Cardiovascular
stress test using maximal or submaximal
treadmill or bicycle exercise,
continuous electrocardiographic
monitoring, and/or pharmacological
stress; tracing only, without
interpretation and report) and HCPCS
code C8928 (Transthoracic
echocardiography with contrast, or
without contrast followed by with
contrast, real-time with image
documentation (2D), includes M-mode
recording, when performed, during rest
and cardiovascular stress test using
treadmill, bicycle exercise and/or
pharmacologically induced stress, with
interpretation and report).
Response: As described above, we are
continuing to recognize the service
described by CPT code 99351, which is
the noncontrast echocardiography
procedure that is parallel to HCPCS
code C8930 for the same procedures
provided with contrast. As previously
noted, we have developed parallel
HCPCS C-codes to report each
echocardiography procedure when
furnished with contrast in order to
provide payment through separate APCs
for those echocardiography services
furnished with and without contrast.
While we understand that the service
reported under HCPCS code C8930 may
be reported using a combination of a
CPT code and a HCPCS C-code, we do
not believe that this would be
appropriate because the noncontrast
echocardiography service is reported
with a single CPT code. Hospitals are
generally instructed to use the HCPCS
code that most appropriately and
specifically describes the service that
was provided, including not unbundling
component services that could
otherwise be separately reported. In this
instance, HCPCS code C8930 would be
the most specific code that describes the
full service provided when the
component services that would
otherwise be reported by CPT code
93017 and HCPCS code C8928 are
provided together. Our CY 2010
ratesetting methodology for HCPCS code
C8928 is based on claims data and
specifically excludes those cases when
the service was furnished along with the
procedure described by CPT code
93017. On the other hand, our CY 2010
ratesetting methodology for HCPCS code
C8930 specifically includes cases where
the services described by HCPCS code
C8928 and CPT code 93017 were
provided together. In that way, we are
able to base CY 2010 payment for all of
these services on their actual or
simulated hospital costs in the context
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of the CPT and HCPCS C-codes that will
be reported in CY 2010.
After consideration of the public
comment we received, we are finalizing
our CY 2010 proposal, without
modification, to continue to recognize
HCPCS code C8930 for OPPS payment.
For CY 2010, HCPCS code C8930
continues to be assigned to APC 0128,
with a final CY 2010 APC median cost
of approximately $645.
Comment: One commenter on the CY
2009 OPPS/ASC final rule with
comment period requested that CMS not
recognize CPT code 93352 (Use of
echocardiographic contrast agent during
stress echocardiography), as the OPPS
has already developed Level II HCPCS
C-codes to identify echocardiography
procedures performed with contrast.
Response: During our review of CPT
code 93352 for the CY 2009 OPPS/ASC
final rule with comment period, we
assigned an interim final status
indicator ‘‘M’’ (Not paid under the
OPPS) to CPT code 93352 for CY 2009.
In our CY 2010 OPPS/ASC proposed
rule, we proposed to continue this
status indicator assignment for CY 2010.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to assign status
indicator ‘‘M’’ to CPT code 93352.
Comment: A few commenters
requested that CPT code 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)
not be reassigned to APC 0269 as
proposed for CY 2010. Instead, these
commenters requested that CPT code
93318 continue to be assigned to APC
0270 for CY 2010. Commenters stated
that CPT code 93318 is clinically similar
to CPT code 93312 (Echocardiography,
transesophageal, real time with image
documentation (2D) (with or without Mmode recording); including probe
placement, image acquisition,
interpretation and report), and because
CPT code 93312 is assigned to APC
0270, CPT code 93318 should be
assigned to APC 0270 as well. While
these commenters noted that the
reassignment of CPT code 93318 to APC
0269 would be most consistent with its
CPT-specific median cost presented in
the proposed rule, they stated that the
unexplained volatility in the cost of CPT
code 93318 suggests that clinical
homogeneity should be the deciding
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factor when assigning this service to an
APC.
Response: As is our standard process,
for the CY 2010 proposed rule, we
reviewed each APC for clinical
cohesiveness and resource homogeneity.
As the commenters noted, we proposed
to reassign CPT code 93318 to APC 0269
as we believed that the proposed CPTspecific median cost more closely
matched the median cost of APC 0269.
While we continue to believe that the
CPT-specific median cost of CPT 93318
(approximately $472) closely resembles
the median cost of APC 0269
(approximately $447), upon further
review, we agree with the commenter
that the clinical characteristics of the
procedure described by CPT code 93318
are similar to the procedure described
by CPT code 93312. We also note that
we have only 344 single and 593 total
claims for CPT code 93318 from only
188 providers in comparison to 29,987
single and 52,342 total claims for CPT
code 93312 from 2,093 providers. We
believe the limited claims data from
relatively few providers contribute to
the variability in cost observed for CPT
code 93318 and agree with the
commenters that this procedure should
remain assigned to APC 0270 for CY
2010.
After consideration of the public
comments we received, we are not
finalizing our proposal to reassign CPT
code 93318 to APC 0269. Instead, for CY
2010, we are continuing to assign CPT
code 93318 to APC 0270, with a final
CY 2010 APC median cost of
approximately $591.
Comment: Several commenters
supported the continuation of separate
APCs for payment of echocardiography
procedures with contrast and without
contrast. While these commenters were
generally supportive of the proposed
ratesetting methodology, they were
concerned that the proposed payment
rate for APC 0128 of approximately
$683 was insufficient to cover the costs
associated with providing the
echocardiogram and the related contrast
materials and services for HCPCS codes
C8921 (Transthoracic echocardiography
with contrast, or without contrast
followed by with contrast, for congenital
cardiac anomalies; complete); C8925
(Transesophageal echocardiography
(TEE) with contrast, or without contrast
followed by with contrast, real time
with image documentation (2D) (with or
without M-mode recording); including
probe placement, image acquisition,
interpretation and report); C8926
(Transesophageal echocardiography
(TEE) with contrast, or without contrast
followed by with contrast, for congenital
cardiac anomalies; including probe
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placement, image acquisition,
interpretation and report); and C8930
(Transthoracic echocardiography, with
contrast, or without contrast followed
by with contrast, real-time with image
documentation (2D), includes M-mode
recording, when performed, during rest
and cardiovascular stress test using
treadmill, bicycle exercise and/or
pharmacologically induced stress, with
interpretation and report; including
performance of continuous
electrocardiographic monitoring, with
physician supervision). Specifically, the
commenters noted that the noncontrast
equivalent procedures (described by
CPT codes 93303, 93312, 93315, and
93351) were all proposed for assignment
to APC 0270, with a proposed payment
rate of approximately $600. The
commenters believed that the difference
between the proposed payment rate for
these procedures with contrast and
without contrast is too small to cover
the cost of the contrast material used in
these procedures. The commenters
suggested that CMS reassign HCPCS
codes C8921, C8925, C8926, and C8930
to a new APC for echocardiography
procedures performed with contrast or
that CMS provide separate payment for
the contrast material used in these
procedures.
Response: The final payment
differential between APC 0270, where
CPT codes 99303, 99312, 99315, and
99351 are assigned, and APC 0128,
where the corresponding HCPCS codes
for the same procedures with contrast
(HCPCS codes C8921, C8925, C8926,
and C8930) are assigned, is the
difference between approximately $645
and approximately $591 of $54. We
believe this differential provides an
appropriate higher payment to those
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hospitals that furnish these procedures
with contrast and appropriately
accounts for the cost of the contrast
material, which is required for all of the
services assigned to APC 0128. HCPCS
codes C8921, C8925, C8926, and C8930
have median costs that range from a low
of approximately $178 to a high of
approximately $712. Each of these
HCPCS codes was reported by fewer
than 170 providers in CY 2008. The
median costs of these services span
most of the range of median costs of
HCPCS codes assigned to APC 0128,
and they do not form a cluster of high
cost procedures in the APC such that
they would warrant assignment to a new
clinical APC. In contrast, the median
costs of CPT codes 99303, 99312, 99315,
and 99351 span a much narrower range,
from a low of approximately $505 to a
high of approximately $605. Two of
these CPT codes were reported by more
than 1,500 providers in CY 2008.
Clearly, fewer providers are reporting
the echocardiogram procedures with
contrast, and we expect that the hospital
cost distribution for that subset of
hospitals could be different than the
cost distribution of the large number of
providers reporting the procedures
without contrast. Therefore, no
conclusions can be drawn about the
aggregate OPPS payment to that subset
of hospitals for all of their
echocardiogram services in comparison
to the aggregate echocardiogram costs of
the subset of hospitals specifically based
on the payment rates for APCs 0128 and
0270. The OPPS is a prospective
payment system that relies on hospital
charge and cost report data from the
hospitals that furnish the services in
order to determine relative costs.
Therefore, we believe that our
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60379
prospective payment rates calculated
based on the costs of those providers
furnishing the procedures in CY 2008
provide appropriate payment to the
providers that will furnish the services
in CY 2010.
In summary, after consideration of the
public comments we received, we are
finalizing our CY 2010 proposals for
payment of echocardiography
procedures with and without contrast,
with modifications. We are finalizing
our proposed methodologies for
simulating the median costs of CPT
codes 93306, 93307, 93351, and 93350
for which there are no CY 2008 hospital
claims data for these specific CPT codes,
as discussed above. In addition, we are
finalizing our proposed methodologies
for simulating the median costs of
HCPCS codes C8929, C8923, C8930, and
C8928 for which there are no CY 2008
hospital claims data for these specific
HCPCS codes, as discussed above. We
are not finalizing our proposal to
reassign CPT code 93318 to APC 0269;
instead, we are maintaining the
assignment of CPT code 93318 to APC
0270 for CY 2010. Finally, we are
finalizing our proposal to assign HCPCS
codes C8921, C8925, C8926, and C8930
to APC 0128 for CY 2010.
Table 9 below shows CY 2010 CPT
codes for billing echocardiography
services without contrast, their final
APC assignments for CY 2010, and the
corresponding HCPCS codes for use
when echocardiography services are
performed with contrast (or without
contrast followed by with contrast),
along with their final APC assignments
for CY 2010.
BILLING CODE 4120–01–P
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BILLING CODE 4120–01–C
Finally, in the CY 2010 OPPS/ASC
proposed rule (74 FR 35275), for CY
2010, based upon our proposed APC
configurations, we also proposed to
revise the titles of our existing series of
echocardiography APCs to more
accurately describe the groups of
services identified by CPT codes 93303
through 93352 and HCPCS codes C8921
through C8930 that are assigned to these
APCs. We proposed to rename APCs
0269, 0270, and 0697 as described in
Table 7 of the proposed rule.
Comment: One commenter supported
the proposed revisions to the
echocardiography APC titles and
configurations.
60383
Response: We appreciate the support
for our proposal.
We are finalizing our proposal to
rename APCs 0269, 0270, and 0697
without modification. Therefore, we are
adopting as final the titles of these APCs
as reflected in Table 10 below:
Final
CY 2010
approximate
APC median cost
Final
CY 2010 APC
CY 2010 APC title
0128 ..................
0269 ..................
Echocardiogram With Contrast ......................................................................................................................
Level II Echocardiogram Without Contrast ....................................................................................................
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447
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TABLE 10—CY 2010 ECHOCARDIOGRAPHY APCS
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TABLE 10—CY 2010 ECHOCARDIOGRAPHY APCS—Continued
Final
CY 2010
approximate
APC median cost
CY 2010 APC title
0270 ..................
0697 ..................
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Final
CY 2010 APC
Level III Echocardiogram Without Contrast ...................................................................................................
Level I Echocardiogram Without Contrast .....................................................................................................
(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 with comment period at 72 FR
66636.) Prior to the 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 (other than implantable
biologicals), and radiopharmaceuticals.
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. All nuclear medicine
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
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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 that include
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
radiolabeled product and procedure
HCPCS codes that are included in these
edits can be viewed on the CMS Web
site at: https://www.cms.hhs.gov/
HospitalOutpatientPPS/01_
overview.asp.
The CY 2008 OPPS claims that are
subject to the procedure-to-radiolabeled
product edits were not available for
setting payment rates in CY 2009.
Therefore, as described in the CY 2009
OPPS/ASC final rule with comment
period (73 FR 68545), we continued to
use our established CY 2008
methodology for setting the payment
rates for APCs that included nuclear
medicine procedures for CY 2009. We
used an updated list of radiolabeled
products, including but not limited to
diagnostic radiopharmaceuticals, from
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262
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
to calculate median costs for nuclear
medicine procedures and their
associated APCs. 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 ensured
that the costs of diagnostic
radiopharmaceuticals were included in
the CY 2009 ratesetting process for these
APCs.
As discussed in section II.A.4.b.(1) of
the proposed rule (74 FR 35287) and
this final rule with comment period,
during the September 2007 APC Panel
meeting, the APC Panel requested that
CMS evaluate the impact of expanded
packaging on beneficiaries. Also, during
the March 2008 APC Panel meeting, the
APC Panel requested that CMS report to
the APC Panel at the first meeting in CY
2009 the impact of packaging on net
payments for patient care. In response to
these requests, we shared data with the
APC Panel at the February 2009 APC
Panel meeting that compared the
frequency of the billing of diagnostic
radiopharmaceuticals billed under the
OPPS in CY 2007, before the packaging
of all diagnostic radiopharmaceuticals
went into effect, to the frequency of the
billing of those same products in CY
2008, their first year of packaged
payment. We also reviewed information
about the aggregate payment for
diagnostic radiopharmaceuticals and
nuclear medicine procedures during
those same 2 years. A summary of these
data analyses is provided in section
II.A.4.b.(1) of this final rule with
comment period.
In addition to these aggregate analyses
of total frequency and payment, we also
presented our analyses of the number of
hospitals performing nuclear medicine
scans and the specific diagnostic
radiopharmaceuticals appearing with
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cardiac and tumor imaging nuclear
medicine procedures, excluding
positron emission tomography (PET)
scans, by classes of hospitals between
the CY 2007 claims processed through
September 30, 2007 and the CY 2008
claims processed through September 30,
2008. At the March 2008 APC Panel
meeting, the APC Panel also
recommended that we evaluate the
usage and frequency, geographic
distribution, and size and type of
hospitals performing nuclear medicine
studies using radioisotopes to assess
beneficiaries’ access and that we present
these analyses at the first APC Panel
meeting in CY 2009. The number of all
hospitals reporting any nuclear
medicine procedure declined by 2
percent between the CY 2007 claims
data and the CY 2008 claims data.
Across several classes of hospitals
(urban and rural, teaching and
nonteaching, and small and large OPPS
service volume), the number of
hospitals billing any nuclear medicine
procedure declined by up to 4 percent
over that same time period. With regard
to the specific diagnostic
radiopharmaceuticals reported with
cardiac and tumor imaging nuclear
medicine procedure, we generally
observed comparable distributions of
radiopharmaceuticals between the CY
2007 claims data and the CY 2008
claims data. However, the utility of this
analysis was limited due to the
introduction of the procedure-toradiolabeled product claims processing
edits discussed above. There are nuclear
medicine procedures reported with a
diagnostic radiopharmaceutical HCPCS
code on the CY 2008 claims that would
have not necessarily been billed with a
diagnostic radiopharmaceutical HCPCS
code on the CY 2007 claims.
Specifically, we observed an increase in
billing for many radiopharmaceuticals,
some new and costly, between the CY
2007 claims data and the CY 2008
claims data. We do not know how much
of this was attributable to changes in
hospitals’ use of radiopharmaceuticals
or to the CY 2008 introduction of the
procedure-to-radiolabeled product edits
that require a radiolabeled product on
the claim for payment of the nuclear
medicine procedure. With the exception
of the notable increases in the
frequencies of certain
radiopharmaceutical HCPCS codes that
potentially resulted from the
introduction of these edits, in general,
hospital billing patterns for diagnostic
radiopharmaceuticals associated with
cardiac and tumor imaging nuclear
medicine scans did not change
dramatically between CY 2007 and CY
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14:52 Nov 19, 2009
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2008 for all hospitals and classes of
hospitals. We concluded that very few
hospitals stopped providing nuclear
medicine procedures as a result of our
CY 2008 policy to package payment for
diagnostic radiopharmaceuticals and
that, in general, hospitals did not
decrease their use of expensive
radiopharmaceuticals.
As a result of the discussions of the
APC Panel following our presentation of
the analyses of the impact of packaging
payment for all diagnostic
radiopharmaceuticals in the OPPS, the
APC Panel further recommended that
CMS continue to analyze the impact on
beneficiaries of increased packaging of
diagnostic radiopharmaceuticals and
provide more detailed analyses at the
next APC Panel meeting. Further, the
APC Panel requested that, in the more
detailed analyses of packaging of
diagnostic radiopharmaceuticals by type
of nuclear medicine scan, CMS analyze
the data according to the specific CPT
codes billed with the diagnostic
radiopharmaceuticals. We stated in the
CY 2010 OPPS/ASC proposed rule (74
FR 35277) that we are accepting the
APC Panel’s recommendation and
would provide additional data to the
APC Panel at an upcoming meeting. We
did not share additional data related to
diagnostic radiopharmaceuticals with
the APC Panel at the most recent August
2009 meeting because we believe the
APC Panel’s discussions would benefit
from analyses of an additional year of
claims data after CY 2008. Therefore, we
plan to incorporate analysis of CY 2009
claims into the information we will
present to the APC Panel for its review
at the winter 2010 meeting.
At the February 2009 meeting of the
APC Panel, the Panel commended CMS
for its effort to date to tailor the
resource-based APC system to facilitate
appropriate payment for diagnostic and
therapeutic radiopharmaceuticals. The
APC Panel recommended that CMS
continue its dialogue with professional
societies, vendors, and other
stakeholders to improve the accuracy of
APC payments for these complex items
and services, including consideration of
developing composite APCs. We
appreciate the support of the APC Panel,
and we are accepting the APC Panel’s
recommendation to continue to
communicate with interested
stakeholders regarding payment for
radiopharmaceuticals and the associated
procedures. We regularly accept
meetings from interested parties
throughout the year, and we encourage
stakeholders to continue a dialogue with
us during the rulemaking cycle and
throughout the year. Our response to the
APC Panel’s recommendation regarding
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60385
composite APCs is included in our
response to the public comments
summarized below.
For CY 2010 ratesetting, we are able
to use CY 2008 OPPS claims that were
subject to the procedure-to-radiolabeled
product claims processing edits
incorporated into the I/OCE prior to
payment of claims in order to develop
single and ‘‘pseudo’’ single claims for
nuclear medicine procedures according
to our standard methodology. We
believe that using the CY 2008 claims
data for these services without further
editing for the presence of a
radiolabeled product is now appropriate
for CY 2010 because these claims reflect
all possible relationships between the
nuclear medicine procedures and their
associated radiolabeled products that
we have accommodated for payment of
nuclear medicine procedures. Moreover,
as we indicated in the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68548 through 68549), in the rare
circumstance where a diagnostic
radiopharmaceutical is not provided in
association with a nuclear medicine
procedure, for example, because a
beneficiary receives 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
again for the study, we believe it is
appropriate to use these claims for
ratesetting purposes. We believe that
just as these situations are
representative of the performance of a
nuclear medicine scan, it is also
appropriate to include them for
ratesetting purposes.
Comment: A number of commenters
opposed CMS’ proposed policy to
package payment for all diagnostic
radiopharmaceuticals into payment for
their associated nuclear medicine
procedures. They noted that the
majority of diagnostic
radiopharmaceuticals are not
interchangeable and, for that reason,
CMS’ policy of packaging payment for
all diagnostic radiopharmaceuticals into
their associated nuclear medicine
procedures does not foster hospital
efficiencies. Some commenters
expressed concern that packaging
diagnostic radiopharmaceuticals into
payment for associated nuclear
medicine procedures results in
overpayment of many procedures,
especially those using existing low-cost
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
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package payment for diagnostic
radiopharmaceuticals into payment for
their associated nuclear medicine
procedures, CMS 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 certain combinations of a tumor
imaging scan and specific 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: As we discussed in the CY
2009 OPPS/ASC final rule with
comment period (73 FR 68547), 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
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) and in the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68546), 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
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14:52 Nov 19, 2009
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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 (72 FR 66639).)
Therefore, in accordance 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, as we discussed
in the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68546), 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 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
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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. Specifically, a
diagnostic radiopharmaceutical would
never be separately payable under the
OPPS when furnished alone, so the
combination of a diagnostic
radiopharmaceutical and a nuclear
medicine procedure would not meet the
definition of a composite APC as
described above. 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. Therefore,
we are not accepting the APC Panel’s
recommendation to explore developing
composite APCs for diagnostic
radiopharmaceuticals and nuclear
medicine procedures.
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) and the
CY 2009 OPPS/ASC final rule with
comment period (73 FR 68546), we note
that a 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
the average.
We discussed in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66640) and the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68546) the issue of variability in
radiopharmaceutical costs or other
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
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scans in this case, including packaged
costs. We have performed our standard
review of the APCs using updated CY
2008 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 III.B.3. of this final
rule with comment period.)
Comment: Several commenters
expressed concern that CMS was relying
on edits in the claims processing system
in order to identify those claims that
would be used for CY 2010 ratesetting
purposes. These commenters suggested
that CMS continue to require a
diagnostic radiopharmaceutical in order
to use a nuclear medicine claim for
ratesetting purposes for at least another
2 years in order to ensure that the
claims editing process is working
properly and that all hospital costs are
reflected in the median costs of nuclear
medicine procedures.
One commenter noted that CMS’
methodology for setting payment rates
for nuclear medicine services may be
flawed. This commenter contended that
CMS should not solely rely on the
claims processing edits in order to
determine which claims are to be used
for ratesetting purposes. The commenter
suggested that, even though CMS is
using claims that have passed the
nuclear medicine-to-radiolabeled
product edits, CMS’ ratesetting
methodology may exclude the cost of
diagnostic radiopharmaceuticals when
calculating median costs for associated
nuclear medicine procedures.
Specifically, the commenter stated that
the program logic that creates ‘‘pseudo’’
single procedure claims may separate a
nuclear medicine scan and the
associated diagnostic
radiopharmaceutical when the
diagnostic radiopharmaceutical appears
on a different day and, therefore, CMS
would not package the cost of the
diagnostic radiopharmaceutical when
setting the median cost for the nuclear
medicine procedure. The commenter
added that CMS’ ratesetting
methodology for ‘‘pseudo’’ single
procedure claims relies on the date of
service to identify associated packaged
costs. Therefore, the commenter
requested that CMS use only single and
‘‘pseudo’’ single nuclear medicine
procedure claims that also contain a
diagnostic radiopharmaceutical in order
to set payment rates for nuclear
medicine procedures. More specifically,
several commenters requested that CMS
not reassign CPT code 78803
(Radiopharmaceutical localization of
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14:52 Nov 19, 2009
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tumor or distribution of
radiopharmaceutical agent(s);
tomographic (SPECT)) to APC 0414
(Level II Tumor/Infection Imaging) as
proposed, but instead assign CPT code
78803 to APC 0408 (Level III Tumor/
Infection Imaging). One commenter
believed that the use of ‘‘pseudo’’ single
procedure claims to calculate payment
rates may have neglected to include the
cost of the radiopharmaceutical or other
scans that may have been performed on
other dates of service and reported on
other claims.
Response: As we indicated in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 42669), we are
aware that several diagnostic
radiopharmaceuticals may be used for
multiple day studies; that is, a particular
diagnostic radiopharmaceutical may be
administered on one day and a related
diagnostic nuclear medicine procedure
may be performed on a subsequent day.
While we understand that multiple-day
episodes for diagnostic
radiopharmaceuticals and the related
diagnostic nuclear medicine procedures
occur, we found the occurrence of
nuclear medicine scans on a different
date of service to be a small proportion
of all diagnostic nuclear medicine
imaging procedures appearing with the
radiopharmaceutical. Specifically, our
analysis at that time indicated that,
roughly, 15 diagnostic
radiopharmaceuticals have a half-life
longer than one day such that they
could support diagnostic nuclear
medicine scans on different days.
Excluding the 5 percent of diagnostic
radiopharmaceutical claims that had no
matching diagnostic nuclear medicine
scan for the same beneficiary, we found
that a diagnostic nuclear medicine scan
was reported on the same day as a
coded diagnostic radiopharmaceutical
90 percent or more of the time for 10 of
these 15 diagnostic
radiopharmaceuticals. Further, we
found that between 80 and 90 percent
of single bills for each of the remaining
5 diagnostic radiopharmaceuticals had a
diagnostic nuclear medicine scan on the
same day.
Moreover, as the commenter noted,
the potential separation of a diagnostic
radiopharmaceutical and the associated
nuclear medicine procedure would only
be relevant to the ‘‘pseudo’’ single
procedure claims. In the ‘‘natural’’
single bills we use for ratesetting, we
package costs across dates of service.
Overall, in examining the CY 2008
claims data available for this final rule
with comment period, we observed that
‘‘natural’’ single claims constituted a
majority of all single procedure claims
used to calculate median costs for APCs
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60387
with nuclear medicine procedures.
Further, we acknowledge that we expect
to lose packaged costs on a small
proportion of claims when we create
‘‘pseudo’’ single procedure claims by
splitting claims based on dates of
service. This is an inevitable
consequence of the ‘‘pseudo’’ single
procedure claim creation process. We
believe that the tradeoff is a minor one
given the significant benefit of
additional claims data, and the vast
majority of commenters generally
supported our ‘‘pseudo’’ single
procedure claim methodology. Finally,
we note that the nuclear medicine
procedure-to-radiolabeled product I/
OCE claims processing edits (https://
www.cms.hhs.gov/
HospitalOutpatientPPS/
02_device_procedure.asp) to which the
commenters referred include
therapeutic radiopharmaceuticals and
brachytherapy sources. Claims that pass
these claims processing edits and enter
into the ratesetting methodology
without a diagnostic
radiopharmaceutical reported on the
claim are factored into ratesetting for
nuclear medicine procedures as we do
not expect that every nuclear medicine
procedure would be billed with a
diagnostic radiopharmaceutical,
although we do expect each to be billed
with a radiolabeled product. We note
that the only time that we would not
expect a nuclear medicine procedure to
be billed with a radiolabeled product on
an outpatient claim would be in the rare
circumstance where a therapeutic
radiopharmaceutical is provided in an
inpatient setting and a nuclear medicine
procedure associated with this
radiopharmaceutical is subsequently
furnished in the HOPD. In this specific
circumstance, we would expect that
hospitals would bill HCPCS code C9898
(Radiolabeled product provided during
a hospital inpatient stay) in place of the
radiolabeled product. Nuclear medicine
scans are sometimes performed after the
application of brachytherapy sources or
the provision of a therapeutic
radiopharmaceutical and in these cases
the administration of an additional
source of radioactivity (a diagnostic
radiopharmaceutical) may not be
required. While brachytherapy sources
and therapeutic radiopharmaceuticals
would be paid separately under the
OPPS, we believe it is appropriate for us
to include the costs of the scans that
include a brachytherapy source or
therapeutic radiopharmaceutical (or
where a therapeutic
radiopharmaceutical used for the scan
was furnished to an inpatient) but lack
a diagnostic radiopharmaceutical in
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calculating the median cost of the
nuclear medicine procedure because
these claims represent the hospital costs
for the scans furnished under these
circumstances. We previously discussed
this issue in the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68647 through 68648).
We believe that the single and
‘‘pseudo’’ single procedure claims
resulting from our standard ratesetting
methodology accurately capture the cost
of providing nuclear medicine scans
under a variety of clinical scenarios for
several reasons discussed above and
summarized again here. First, previous
analyses demonstrated that a significant
percentage of nuclear medicine
procedures are reported on the same day
as diagnostic radiopharmaceuticals with
an extended half-life and, in these cases,
our ratesetting methodology would
capture these diagnostic
radiopharmaceutical costs. We
acknowledge that diagnostic
radiopharmaceuticals with an extended
half-life may be administered on a
different day than the performance of
the accompanying nuclear medicine
scan. However, administration of the
diagnostic radiopharmaceutical on a
different day does not mean that these
costs are not captured in our APC
median costs for nuclear medicine
procedures. The majority of the single
procedure claims that we use to
estimate APC median cost for APCs
with nuclear medicine scans are
‘‘natural’’ single procedure claims that
package all identified packaged costs
(including diagnostic
radiopharmaceuticals) into the nuclear
medicine procedures, irrespective of the
dates of service. While our standard
ratesetting methodology also relies on
‘‘pseudo’’ single procedure claims that,
by definition, represent only a single
service date and potentially eliminate
the cost of a packaged diagnostic
radiopharmaceutical with an extended
half-life billed on a different date of
service than the nuclear medicine scan,
the potential to ignore packaged costs
on other dates of service is true for all
procedures for which we use ‘‘pseudo’’
single procedure claims in ratesetting.
This small loss of packaging is a tradeoff
in adopting our methodology for
breaking down multiple procedure
claims through the bypass process, as
discussed in section II.A.1.b. of this
final rule with comment period. Finally,
not all claims for nuclear medicine
procedures should include a diagnostic
radiopharmaceutical because they may
include another type of radiolabeled
product (such as a brachytherapy source
or therapeutic radiopharmaceutical),
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and these additional radiolabeled
products are not packaged. In short, we
believe that, overall, the single
procedure claims for nuclear medicine
scans, both ‘‘natural’’ and ‘‘pseudo’’
single procedure claims, together
appropriately represent the full cost of
providing various nuclear medicine
procedures and result in accurate APC
median costs. Therefore, our standard
OPPS ratesetting methodology of using
median costs calculated from claims
data according to our standard
methodology from those claims that
passed the I/OCE claims processing
edits adequately captures the costs of
diagnostic radiopharmaceuticals
associated with diagnostic nuclear
medicine procedures that are not
provided on the same date of service.
Specifically with regard to our
proposed reassignment of CPT code
78803, with a CPT code-specific median
cost of approximately $561, to APC
0414, with an APC median cost of
approximately $506, we note that we
have almost 3,000 single claims upon
with the median cost of CPT code 78803
is based. This CPT code-specific median
cost is significantly lower than the
median cost of APC 0408 of
approximately $954, the APC
assignment requested by the
commenters and the highest level APC
in the tumor/infection imaging series.
Therefore, we believe the most
appropriate CY 2010 APC assignment
for CPT code 78803 is APC 0414, as we
proposed for CY 2010. As stated above,
we believe that our standard ratesetting
methodology adequately incorporates
the packaged diagnostic
radiopharmaceutical costs associated
with nuclear medicine procedures,
including the procedure described by
CPT code 78803.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to package the
costs of all diagnostic
radiopharmaceuticals into payment for
the associated nuclear medicine
procedures utilizing our standard OPPS
ratesetting methodology that is applied
to claims that passed the nuclear
medicine procedure-to-radiolabeled
product I/OCE claims processing edits
in CY 2008. We also are finalizing our
CY 2010 proposal, without
modification, to reassign CPT code
78003 to APC 0414, with an APC
median cost of approximately $506.
Comment: A number of commenters
cited concerns regarding the proposed
APC assignments and proposed
payment rates for a number of nuclear
medicine procedures. These
commenters believed that the proposed
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APC assignments of certain nuclear
medicine procedures led to clinically
diverse procedures being grouped
together for payment purposes.
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
(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
2008 claims data. The CPT code-specific
median cost of CPT code 78645 is
approximately $246 based on 434 single
claims, which is reasonably close to the
median cost of APC 0403 of
approximately $195, 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 a significantly higher APC median
cost of approximately $573. Based on
this review of the costs and clinical
characteristics of other services assigned
to these nervous system imaging APCs,
we continue to believe CPT code 78645
is most appropriately assigned to APC
0403 as we proposed.
There is a single APC for
nonmyocardial PET scans, APC 0308,
with an APC median cost of
approximately $1,028. The median costs
of all CPT codes assigned to that APC,
including CPT codes for positron
emission tomography (PET) scans and
PET/computed tomography (CT) scans
and CPT code 78608 for a metabolic
evaluation of the brain using PET range
from approximately $849 to $1,093,
demonstrating very significant resource
similarity across all of these procedures.
Therefore, we do not agree with the
commenter 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.
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With regard to the thyroid scans
described by CPT codes 78000 and
78001, these procedures have CPT codespecific median costs of approximately
$91 and $121 based on 1,167 and 982
single claims, respectively. The CPT
code-specific median costs of these two
procedures are very close to the median
cost of APC 0389 of approximately
$112, where we proposed to assign them
for CY 2010. CPT codes 78000 and
78001 are the only services assigned to
this APC with significant volume, and
the APC median cost is mostly a
reflection of the costs of procedures
reported with two codes. In contrast, the
median cost of APC 0392, their
recommended placement according to
the commenter, is approximately $179,
substantially greater than the median
costs of the two thyroid studies.
Furthermore, if we were to reassign CPT
codes 78000 and 78001 to APC 0392 as
the commenter suggested, the median
cost of APC 0392 would decrease to
reflect the costs of these two procedures
because, based on number of single
claims for CPT codes 78000 and 78001,
their costs would significantly affect the
median cost of the APC. Therefore, we
do not believe any changes to the
proposed APC assignments of CPT
codes 78000 or 78001 are justified.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposals,
without modification, to assign CPT
code 78645 to APC 0403, CPT code
79608 to APC 0308, CPT code 78000 to
APC 0389, and CPT code 78001 to APC
0389. The approximate APC median
costs of these APCs are as follows: APC
0403 at $195; APC 0308 at $1,028; and
APC 0389 at $112.
Comment: A few commenters
requested that CMS not reassign CPT
code 78807 (Radiopharmaceutical
localization of inflammatory process;
tomographic (SPECT)) to APC 0406
(Level I Tumor/Infection Imaging) as
proposed. These commenters noted that
CPT code 78807 is more clinically
similar to CPT codes 78805
(Radiopharmaceutical localization of
inflammatory process; limited area) and
78806 (Radiopharmaceutical
localization of inflammatory process;
whole body) that are assigned to APC
0414. Therefore, the commenters
requested that CMS continue to assign
CPT code 78807 to APC 0414 for CY
2010.
Response: We proposed to assign CPT
code 78807, with a CPT code-specific
median cost of approximately $371
based on 251 single claims, to APC
0406, with an APC median cost of
approximately $287. The significant
individual services included in APC
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0406 have a range of median costs, from
approximately $232 to approximately
$371. APC 0406 includes a number of
tumor or infection imaging nuclear
medicine procedures. Comparatively,
APC 0414, where the commenters
requested that we assign CPT code
78807, has an APC median cost of
approximately $506 and includes
significant services with CPT codespecific median costs from
approximately $382 to approximately
$561. CPT codes 78805 and 78806 are
both assigned to APC 0414 and have
CPT code-specific median costs of
approximately $477 and $538,
respectively, significantly higher than
the median cost of CPT code 78807.
Therefore, we do not believe that there
is a reason to assign CPT code 78807 to
APC 0414, which principally includes
services with significantly higher
median costs than CPT code 78807. We
note that CPT code 78807 is a SPECT
scan to localize an inflammatory
process, while the other two codes do
not describe services that use SPECT
technology. Therefore, we do not
believe that CPT code 78807 is
sufficiently similar to CPT codes 78805
and 78806 from clinical or resource
perspectives to warrant assignment to
the mid-level tumor/infection imaging
APC along with the other two services.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to assign CPT
code 78807 to APC 0406, with an APC
median cost of approximately $287.
Comment: Several commenters
requested that CMS: (1) Not reassign
CPT code 78610 (Brain imaging,
vascular flow only) to APC 0403 as
proposed but instead assign CPT code
78610 to APC 0402; (2) not reassign CPT
code 78601 (Brain imaging, less than 4
static views; with vascular flow) to APC
0402 as proposed but instead assign
CPT code 78601 to APC 0403; and (3)
not reassign CPT code 78003
(Radiopharmaceutical localization of
tumor or distribution of
radiopharmaceutical agent(s);
tomographic (SPECT)) to APC 0389 as
proposed but instead assign CPT code
78003 to APC 0392.
Response: We proposed to assign CPT
code 78610, with a CPT-specific median
cost of approximately $211, to APC
0403, with an APC median cost of
approximately $195. The significant
services included in APC 0403 have a
range of median costs, from
approximately $156 to approximately
$246. Comparatively, APC 0402, where
the commenters requested that we
assign CPT code 78610, has an APC
median cost of approximately $573 and
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60389
includes significant services with CPT
code-specific median costs from
approximately $540 to approximately
$587. We do not believe that
reassignment of CPT code 78610 to APC
0402 would be appropriate, given the
procedure’s relatively low median cost,
although we recognize that we have few
claims for the procedures. We continue
to believe that payment for the resources
required to provide CPT code 78610 is
appropriately reflected through the
procedure’s assignment to APC 0403.
We proposed to assign CPT code
78601, with a CPT code-specific median
cost of approximately $436, to APC
0402 with an APC median cost of
approximately $573. The significant
services included in APC 0402 have a
range of median costs from
approximately $540 to approximately
$587. Comparatively, APC 0403, where
the commenters requested that we
assign CPT code 78601, has an APC
median cost of approximately $195 and
includes significant services with CPT
code-specific median costs ranging from
approximately $156 to approximately
$246. Although we have few claims for
CPT code 78601, we continue to believe
it is most appropriately assigned to APC
0402 for CY 2010.
We proposed to assign CPT code
78003, with a CPT code-specific median
cost of approximately $82, to APC 0389
with an APC median cost of
approximately $112. There are two
services included in APC 0389 that have
a significant volume, CPT codes 78000
and 78001. These two CPT codes both
have higher CPT code-specific median
costs than CPT code 78003,
approximately $91 and $121,
respectively. Comparatively, APC 0392,
where the commenters requested that
we assign CPT code 78003, has an APC
median cost of approximately $179.
Based on its median cost, we continue
to believe that the resources required for
CPT code 78003 are appropriately
reflected through its assignment to APC
0389.
Comment: A few commenters
expressed their appreciation that the CY
2010 OPPS/ASC proposed rule included
a proposed increase in payment for PET
services compared to CY 2009 payment
rates. These commenters also noted
their concerns that hospital claims data
for PET services are not predictable and
that volatile data over the last several
years may limit access to PET services.
Some commenters urged CMS to use
external data when setting payment
rates for these services, while others
suggested that CMS continue to monitor
data to ensure that payment for these
services is sufficient to cover the
hospital costs for these resources.
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Response: As we stated in the CY
2009 OPPS/ASC final rule with
comment period (73 FR 68547), 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. Further, the OPPS is a
prospective payment system that relies
on hospital charges and cost report data
from the hospitals that furnish the
services in order to determine relative
costs. Therefore, we believe that our
prospective payment rates, calculated
based on the costs of those providers
furnishing the procedures in CY 2008,
provide appropriate payment to the
providers who will furnish the services
in CY 2010. We continue to believe that
this standard ratesetting methodology
accurately provides payment for PET
services provided to hospital
outpatients.
In summary, after consideration of the
public comments we received, we are
finalizing our CY 2010 proposals,
without modification, for the
configuration of nuclear medicine APCs.
The final CY 2010 median costs for
these APCs, as proposed, are calculated
according to the standard OPPS
ratesetting methodology as applied to
claims for nuclear medicine procedures
that passed the CY 2008 nuclear
medicine procedure-to-radiolabeled
product I/OCE claims processing edits.
These edits ensure that the claims that
are taken through our standard
ratesetting process, as described in
section II.A.2.b. of this final rule with
comment period, that incorporates the
creation of ‘‘natural’’ single and
‘‘pseudo’’ single claims, include the
radiolabeled product necessary for the
performance of the associated nuclear
medicine procedure.
(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
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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
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 public
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 2010 OPPS/ASC
proposed rule (74 FR 35277), we
proposed to continue using the same
methodology to estimate a ‘‘per unit’’
median cost for HCPCS code C1300 for
CY 2010 of approximately $108, using
279,139 claims with multiple units or
multiple occurrences.
We did not receive any public
comments on our proposal to continue
to use our established ratesetting
methodology for calculating the median
cost of APC 0659 for payment of HBOT.
Therefore, we are finalizing, without
modification, our CY 2010 proposal to
continue to use our established
ratesetting methodology for calculating
the median cost of APC 0659 for
payment of HBOT, with a final CY 2010
median cost of approximately $106.
(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 the development of the
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C:\20NOR2.SGM
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 2010 OPPS/ASC proposed
rule (74 FR 35277 through 35278), we
proposed to continue to use our
established ratesetting methodology for
calculating the median cost of APC 0375
(Ancillary Outpatient Services When
Patient Expires) and 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.
We believe that hospitals are
reporting the -CA modifier according to
the policy initially established in CY
2003. We note that the claims frequency
for APC 0375 has been relatively stable
over the past few years. Although the
median cost for APC 0375 has
increased, the median in the CY 2008
data used for development of rates for
CY 2010 was only slightly higher than
that for CY 2009. 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 8 of the
proposed rule (74 FR 35278) showed the
number of claims and the proposed
median costs for APC 0375 for CYs
2007, 2008, and 2009. For CY 2010, we
proposed a median cost for APC 0375 of
approximately $5,784.
We did not receive any public
comments regarding this proposal.
Therefore, we are finalizing our CY 2010
proposal, without modification, to
continue to use our established
ratesetting methodology for calculating
the median cost of APC 0375, which has
a final CY 2010 APC median cost of
approximately $5,911.
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60391
Table 11 below shows the number of
claims and the final median cost for
APC 0375 from CY 2007 to CY 2010.
TABLE 11—CLAIMS FOR ANCILLARY OUTPATIENT SERVICES WHEN PATIENT EXPIRES (-CA MODIFIER) FOR CYS 2007 TO
2010
Number of
claims
Prospective payment year
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CY
CY
CY
CY
2007
2008
2009
2010
...................................................................................................................................................................
...................................................................................................................................................................
...................................................................................................................................................................
...................................................................................................................................................................
e. Calculation of Composite APC
Criteria-Based Median Costs
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
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.
Combining payment for multiple
independent services into a single OPPS
payment in this way enables hospitals
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
relying upon single procedure claims
which may be low in volume and/or
incorrectly coded. Under the OPPS, we
currently have composite APC policies
for extended assessment and
management services, low dose rate
(LDR) prostate brachytherapy, cardiac
electrophysiologic evaluation and
ablation services, mental health
services, and multiple imaging services.
We refer readers to 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).
While 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 the CY 2010
OPPS/ASC proposed rule, we did not
propose any new composite APCs for
CY 2010 so that we may monitor the
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effects of the existing composite APCs
on utilization and payment. In response
to our CY 2009 proposal to apply a
composite payment methodology to
multiple imaging procedures provided
on the same date of service, several
public commenters stated that we
should proceed cautiously as we expand
service bundling. They commented that
we should not implement additional
composite methodologies until adequate
data are available to evaluate the
composite policies’ effectiveness and
impact on beneficiary access to care (73
FR 68561 through 68562).
In response to the concerns of the
public commenters and the APC Panel,
in the CY 2010 OPPS proposed rule (74
FR 35278 through 35279) we reviewed
the CY 2008 claims data for claims
processed through September 30, 2008,
for the services in the following
composite APCs: APC 8000 (Cardiac
Electrophysiologic Evaluation and
Ablation Composite); APC 8001 (Low
Dose Rate Prostate Brachytherapy
Composite); APC 8002 (Level I Extended
Assessment and Evaluation Composite);
and APC 8003 (Level II Extended
Assessment and Evaluation Composite).
Our analyses did not consider inflation,
changes in beneficiary population, or
other comparable variables that can
affect changes in aggregate payment
from year to year. We found that the
average payment for the package of
services in both APC 8000 and APC
8001 increased from CY 2007, when
payments were made for all individual
services, to CY 2008 under the
composite payment methodology. We
also noted that the proposed median
costs for these composite APCs for CY
2010 were higher than the median costs
upon which the CY 2009 payments were
based. We believe that, in part, this is
because we used more claims data for
common clinical scenarios to calculate
the median costs of these APCs than we
were able to use prior to the
implementation of the composite
payment methodology.
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260
183
168
182
APC median
cost
$3,549
4,945
5,545
5,911
With regard to APCs 8002 and 8003,
we compared payment for all visits
appearing with observation services in
CY 2007 with payments for all visits
appearing with observation services in
CY 2008 and found that total payment
for visits and observation services
increased from approximately $197
million to $270 million for claims
processed through September 30 in each
year. We attribute this increase in
payments, in part, to the introduction of
a composite payment for visits and
observation through the extended
assessment and management composite
methodology that occurred for CY 2008
and that did not incorporate the
International Classification of Diseases,
Ninth Edition, Clinical Modification
(ICD–9–CM) diagnosis criteria
previously necessary for separate
payment of observation.
At its February 2009 meeting, the APC
Panel recommended that CMS evaluate
the implications of creating composite
APCs for cardiac resynchronization
therapy (CRT) services with a
defibrillator or pacemaker and report its
findings to the APC Panel. The APC
Panel also recommended at its August
2009 meeting that CMS reconsider
creating a new composite APC or group
of composite APCs for CRT procedures.
While we did not propose any new
composite APCs for CY 2010, we are
accepting both of these APC Panel
recommendations. We will reconsider
creating composite APCs for CRT
services and evaluate the implications
of such a potential policy change, and
report our findings to the APC Panel at
a future meeting. We also will consider
bringing other potential composite APCs
to the APC Panel for further discussion.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35279), we proposed to
continue for CY 2010 our established
composite APC policies for extended
assessment and management, LDR
prostate brachytherapy, cardiac
electrophysiologic evaluation and
ablation, mental health services, and
multiple imaging services, as discussed
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in sections II.A.2.e.(1), II.A.2.e.(2),
II.A.2.e.(3), II.A.2.e.(4), and II.A.2.e.(5),
respectively, of this final rule with
comment period.
Comment: Several commenters
supported the development and
implementation of the composite APC
methodology, remarking that it is
consistent with the principles of a
prospective payment system and
provides more appropriate payment
rates through the use of multiple
procedure claims for certain services.
Many of these commenters also
supported CMS’ decision to monitor the
existing composite APCs’ effects on
beneficiary access, utilization, and
payment for at least another year before
implementing additional composite
APCs.
Other commenters, however,
expressed disappointment that CMS did
not propose additional composite APCs
for CY 2010 in order to improve OPPS
payment accuracy and include more
correctly coded, multiple procedure
claims in ratesetting. Some commenters
recommended the development of
composite APCs for nuclear medicine
tumor or infection imaging services that
encompass multiple days and multiple
procedures, with separate payment for
the associated diagnostic
radiopharmaceuticals.
In addition, many commenters
supported the development of
composite APCs for CRT with
defibrillator (CRT–D) or pacemaker
(CRT–P) implantation. They indicated
that the procedures involved in the
implantation of CRT–D and CRT–P are
separately payable services that, if
coded correctly, are always represented
by the submission of two CPT codes.
According to the commenters, the
number of single procedure CRT claims
available for CY 2010 ratesetting is very
low compared to the total number of
claims submitted for CRT–D and CRT–
P procedures. They argued that the
establishment of a composite APC
methodology for CRT–D and CRT–P
would greatly increase the number of
claims used in ratesetting, thereby
lessening the year-to-year fluctuations
in payment rates for CRT. The
commenters also stated that the APC
Panel advised CMS to use its discretion
in forming one or a group of composite
APCs for CRT without the need to report
back to the APC Panel. They urged CMS
to take this advice and move forward
with the composite APC methodology
for CRT–D and CRT–P for CY 2010.
Response: We appreciate the
commenters’ support of the composite
APC methodology. As stated in the CY
2010 OPPS/ASC proposed rule (74 FR
35279), we will continue to review the
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claims data for the impact of all of the
composite APCs on payments to
hospitals and on services to
beneficiaries and will take such data
into consideration before proposing or
implementing new composite APCs. We
recognize the concerns expressed with
respect to our CY 2009 proposal by the
public commenters that moving ahead
too quickly with any nonstandard OPPS
payment methodology (even one such as
composite APCs that may improve the
accuracy of the OPPS payment rates by
utilizing more complete claims for
common clinical scenarios in
ratesetting) could have unintended
consequences and requires close
monitoring. Because the multiple
imaging composite APCs were
implemented for the first time in CY
2009, we will not have data available for
such monitoring until early CY 2010.
Therefore, we continue to believe that it
is in the best interest of hospitals and
the continuing refinement of the OPPS
that we not implement any new
composite APC policies for at least one
year.
As previously stated, we are accepting
the recommendation made by the APC
Panel at its August 2009 meeting that
we reconsider creating a new composite
APC or group of composite APCs for
CRT–D and CRT–P procedures. We will
evaluate the implications of such a
potential policy change and report our
findings to the APC Panel at a future
meeting. We note that, while the APC
Panel did recommend we reconsider
creating a new composite APC or group
of composite APCs for CRT–D and CRT–
P, the Panel did not specify that we
should move forward with the
composite APC methodology for CRT–D
and CRT–P for CY 2010 without first
reporting back to the APC Panel, as
some commenters indicated. We do not
believe it would be appropriate to
implement new composite APCs for
CRT–D and CRT–P procedures for CY
2010 because neither we nor the public
have had the opportunity to evaluate
fully all of the implications of such a
potential policy change, which may
require complex claims processing logic
or new claims processing edits and may
have significant, unanticipated effects
on the payment rates of other services.
We also note that the total volume of
claims that would qualify for a CRT–P
composite APC in particular would be
very low; in the past, we have explored
composite APCs only for combinations
of services that are commonly
performed together (73 FR 68551).
Because of the complex issues for these
procedures with significant device
costs, we believe that it is particularly
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important that the APC Panel and the
public, through the annual rulemaking
cycle, have the opportunity to comment
on the development of composite APCs
for CRT–D and CRT–P procedures.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to continue our
established composite APC policies for
extended assessment and management,
LDR prostate brachytherapy, cardiac
electrophysiologic evaluation and
ablation, mental health services, and
multiple imaging services, as discussed
in sections II.A.2.e.(1), II.A.2.e.(2),
II.A.2.e.(3), II.A.2.e.(4), and II.A.2.e.(5),
respectively, of this final rule with
comment period.
(1) Extended Assessment and
Management Composite APCs (APCs
8002 and 8003)
In the CY 2010 OPPS/SC proposed
rule (74 FR 35279 through 35280), 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 2008, we created these two
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 referral 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)
clinic visit or direct referral for
observation services 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)
Type A emergency department visit, a
high level (Level 5) Type B 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
Integrated Outpatient Code Editor
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(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 OPPS 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 2010
median costs for these composite APCs.
We did not propose to change these
criteria for the CY 2010 OPPS.
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 the CY 2008 OPPS/ASC final
rule with comment period (72 FR
66812). 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. We did not
propose to change these reporting
requirements for the CY 2010 OPPS.
However, as discussed below, the APC
Panel at its February 2009 meeting
requested that CMS issue guidance
clarifying the correct method for
reporting the starting time for
observation services. The APC Panel
noted that the descriptions of the start
time for observation services located in
the Medicare Claims Processing Manual
(Pub. 100–4), Chapter 4, sections 290.2.2
through 290.5, cause confusion for
hospitals. We accepted this
recommendation and issued clarifying
guidance in the Claims Processing
Manual through Transmittal 1745,
Change Request 6492, issued May 22,
2009 and implemented July 6, 2009.
As noted in detail 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 visit levels in the OPPS
claims data through CY 2006 available
at that time. We stated that we did 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. Similarly,
we stated that we expected that
hospitals would not purposely change
their visit guidelines or otherwise
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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.
When we compared total payments
for all visits appearing with observation
services in CY 2007 to payments in CY
2008, using claims processed through
September 30 in CY 2007 and CY 2008,
we observed a 37 percent increase in
total payments. We believe this increase
is, in part, attributable to the expansion
of payment under the extended
assessment and management composites
to all ICD–9–CM diagnoses. To confirm
this, we calculated the percentage of
visit HCPCS codes billed with HCPCS
code G0378 (Observation services, per
hour) between CY 2007 and CY 2008
and compared the percentage associated
with visit codes included in the
extended assessment and management
composites in each year. If hospitals had
inappropriately changed their visit
reporting behavior to maximize
payment through the new composite
APCs, we would expect to see
significant changes in the percentage of
visit HCPCS codes included in the
composite APCs billed with observation
services relative to all other visit HCPCS
codes billed with observation services
between CY 2007 and CY 2008. We did
not observe a sizable increase in the
proportion of visit HCPCS codes
included in the composite APCs relative
to the proportion of all other visit
HCPCS codes billed with observation
services. For example, the percentage of
claims billed with CPT code 99285
(Emergency department visit for the
evaluation and management of a patient
(Level 5)) and HCPCS code G0378 was
51 percent in the CY 2007 data and 54
percent in the CY 2008 data. Similarly,
the percentage of claims billed with CPT
code 99284 (Emergency department
visit for the evaluation and management
of a patient (Level 4)) and HCPCS code
G0378 decreased only slightly from 28
percent in the CY 2007 data to 27
percent in the CY 2008 data. We
concluded that, although the volume of
visits billed with HCPCS code G0378
increased between CY 2007 and CY
2008, the overall pattern of billing visit
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levels did not change significantly. We
stated that we will continue to carefully
monitor any changes in billing practices
on a service-specific and hospitalspecific level.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35280), we proposed to
continue for CY 2010 the extended
assessment and management composite
APC payment methodology for APCs
8002 and 8003. 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
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 2008 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:
• In the case of composite APC 8002,
HCPCS code G0379 (Direct referral 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. We refer
readers to section XII.E. of the CY 2010
OPPS/ASC proposed rule (74 FR 35370
through 35371) and section XII.E. of this
final rule with comment period for a full
discussion of our proposed revision of
the code descriptor for HCPCS code
G0379 and the final policy for CY 2010.
• 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
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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 (Level 5 Hospital Emergency
Department Visit Provided in a Type B
Emergency Department) provided on the
same date of service or one day before
the date of service for HCPCS code
G0378. (As discussed in detail in the CY
2009 OPPS/ASC final rule with
comment period (73 FR 68684), we
finalized our proposal 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 2010
median costs. The proposed CY 2010
median cost resulting from this process
for composite APC 8002 was
approximately $384, which was
calculated from 14,981 single and
‘‘pseudo’’ single bills that met the
required criteria. The proposed CY 2010
median cost for composite APC 8003
was approximately $709, which was
calculated from 154,843 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 further in section IX. of
the CY 2010 OPPS/ASC proposed rule
(74 FR 35350) and this final rule with
comment period, and consistent with
our CY 2008 and CY 2009 final policies,
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
0630), we 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 results in the most accurate
cost estimates for APCs 0604 through
0617 and 0626 through 0630 for CY
2010.
At the August 2009 meeting of the
APC Panel, the APC Panel
recommended that CMS provide the
Visits and Observation Subcommittee
with an analysis of calendar year 2009
claims data for clinic, ED (Type A and
B), and extended assessment and
management composite APCs at the
next meeting of the APC Panel. The APC
Panel also recommended that CMS
provide the Visits and Observation
Subcommittee with continued analyses
of observation services, as previously
provided to the APC Panel, including
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data on frequency, length of stay, and
common diagnoses, as well as recovery
audit contractor (RAC) data on these
subjects if available. Furthermore, the
APC Panel recommended that CMS
provide the Visits and Observation
Subcommittee with analyses of the most
common diagnoses and services
associated with Type A and Type B ED
visits at the next meeting of the APC
Panel, including analysis by hospitalspecific characteristics. Finally, the APC
Panel recommended that the work of the
Visits and Observation Subcommittee
continue. We accept all of these
recommendations and will present the
available requested data at the winter
2010 meeting of the APC Panel.
In summary, in the CY 2010 OPPS/
ASC proposed rule (74 FR 35279
through 35280), we proposed to
continue to include for CY 2010
composite APC 8002 (Level I Extended
Assessment and Management
Composite) and composite APC 8003
(Level II Extended Assessment and
Management Composite) in the OPPS.
We proposed to continue the extended
assessment and management composite
APC payment methodology and criteria
that we finalized for CY 2009. We also
proposed to calculate the median costs
for APCs 8002 and 8003 using all single
and ‘‘pseudo’’ single procedure claims
from CY 2008 that meet the criteria for
payment of each composite APC. We
did not propose to change the reporting
requirements for observation services
for the CY 2010 OPPS. However, in CY
2009 we did issue further clarifying
guidance in the Medicare Claims
Processing Manual related to
observation start time.
Comment: Several commenters
expressed appreciation for CMS’
issuance of clarifying guidance for
reporting the beginning and ending
times of observation services.
Response: We appreciate these
comments and note again that the
guidance was issued in the Claims
Processing Manual through Transmittal
1745, Change Request 6492, issued May
22, 2009, and implemented July 6, 2009.
Comment: Several commenters
requested clarification of the reporting
of observation services in relation to
maternity care paid under another
payer’s policies and in relation to
changes in patient status from inpatient
to outpatient using Condition Code 44.
One commenter pointed out that
references to ‘‘observation status’’
versus ‘‘inpatient admission’’ are
potentially confusing for beneficiaries
and physicians.
Response: Each of these comments/
questions is outside of the scope of the
proposals in the CY 2010 OPPS/ASC
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proposed rule. However, we will
consider the possibility of addressing
these concerns through other available
mechanisms, as appropriate. We note
that we have continued to emphasize
that observation care is a hospital
outpatient service, ordered by a
physician and reported with a HCPCS
code, like any other outpatient service.
It is not a patient status for Medicare
purposes.
After consideration of the public
comments we received, we are
finalizing, without modification, our CY
2010 proposal to continue to include
composite APC 8002 and composite
APC 8003 in the OPPS and to continue
the extended assessment and
management composite APC payment
methodology and criteria that we
finalized for CY 2009. We also are
calculating the median costs for APCs
8002 and 8003 using all single and
‘‘pseudo’’ single procedure claims from
CY 2008 that meet the criteria for
payment of each composite APC. The
final CY 2010 median cost resulting
from this methodology for composite
APC 8002 is approximately $378, which
was calculated from 17,074 single and
‘‘pseudo’’ single bills that met the
required criteria. The final CY 2010
median cost for composite APC 8003 is
approximately $699, which was
calculated from 176,226 single and
‘‘pseudo’’ single bills that met the
required criteria.
(2) Low Dose Rate (LDR) Prostate
Brachytherapy Composite APC (APC
8001)
LDR prostate brachytherapy is a
treatment for prostate cancer in which
hollow needles or catheters are inserted
into the prostate, followed by
permanent implantation of radioactive
sources into the prostate through the
needles/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 on the same date of
service to the Medicare beneficiary
being 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
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particular, had 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 further 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, reported 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 2010 OPPS/ASC proposed
rule (74 FR 35281), we proposed for CY
2010 to continue paying for LDR
prostate brachytherapy services using
the composite APC methodology
proposed and implemented for CY 2008
and CY 2009. That is, we proposed to
use CY 2008 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
and CY 2009 practice, we proposed not
to use the claims that meet these criteria
in the calculation of the median costs
for APCs 0163 (Level IV
Cystourethroscopy and Other
Genitourinary Procedures) and 0651
(Complex Interstitial Radiation Source
Application), the APCs to which CPT
codes 55875 and 77778 are assigned,
respectively. The median costs for APCs
0163 and 0651 would continue to be
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calculated using single and ‘‘pseudo’’
single procedure claims. 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 2008 claims
data available for the CY 2010 OPPS/
ASC proposed rule, we were able to use
669 claims that contained both CPT
codes 77778 and 55875 to calculate the
median cost upon which the proposed
CY 2010 payment for composite APC
8001 was based. The proposed median
cost for composite APC 8001 for CY
2010 was approximately $3,106. This
was an increase compared to the CY
2009 OPPS/ASC final rule with
comment period in which we calculated
a final median cost for this composite
APC of approximately $2,967 based on
a full year of CY 2007 claims data. The
CY 2010 proposed median cost for this
composite APC was slightly less than
$3,268, the sum of the proposed median
costs for APCs 0163 and 0651
($2,453+$815), the APCs to which CPT
codes 55875 and 77778 map if one
service is billed on a claim without the
other. We stated in the CY 2010 OPPS/
ASC proposed rule (74 FR 35281) that
we believe the proposed CY 2010
median cost for composite APC 8001 of
approximately $3,106, calculated from
claims we believe to be correctly coded,
would result in a reasonable and
appropriate payment rate for this service
in CY 2010.
Comment: Several commenters
requested changes to the bypass list that
could potentially affect the number of
claims used to calculate the median
costs upon which payments for several
APCs involving radiation oncology
services, including APC 8001, are based.
In particular, some commenters
requested CMS add CPT code 77470
(Special treatment procedure (eg, total
body irradiation, hemibody radiation,
per oral, endocavitary or intraoperative
cone irradiation)), CPT code 77328
(Brachytherapy isodose plan; complex
(multiplane isodose plan, volume
implant calculations, over 10 sources/
ribbons used, special spatial
reconstruction, remote afterloading
brachytherapy, over 12 sources), and
CPT code 77295 (Therapeutic radiology
simulation-aided field setting; 3dimensional) to the bypass list in order
to utilize more single claims in
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calculating the median costs of APC
8001 and other APCs for radiation
oncology services. According to one
commenter’s analysis, the addition of
these CPT codes to the bypass list
would result in a 17 percent increase in
the median cost for APC 8001.
Response: As discussed in detail in
section II.A.1.b. of this final rule with
comment period, we are not adding CPT
codes 77470, 77328, and 77295 to the
list of bypass codes for CY 2010
ratesetting, but we are adding several
other CPT codes for radiation oncology
services. The addition of these codes to
the bypass list results in a modest
increase in the number of single claims
used to calculate the median cost upon
which the final payment rate for CY
2010 for APC 8001 is based, but does
not result in a significant increase or
decrease in the median cost itself.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to continue
paying for LDR prostate brachytherapy
services using the composite APC
methodology implemented in CY 2008.
We were able to use 906 claims that
contained both CPT codes 77778 and
55875 to calculate the median cost upon
which the CY 2010 final payment for
composite APC 8001 is based. The final
median cost for composite APC 8001 for
CY 2010 is approximately $3,084. We
note that this is slightly less than
$3,303, the approximate sum of the
median costs for APC 0163 and APC
0651 ($2,418 + $885), 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.
(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),
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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 specified
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 is
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 (72 FR 66656)
identified the CPT codes that are
assigned to groups A and B. For a full
discussion of how we identified the
group A and group B procedures and
established the 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
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the appropriate single procedure APCs
and the composite APC does not apply.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35282), we proposed to
continue for CY 2010 to pay for cardiac
electrophysiologic evaluation and
ablation services using the composite
APC methodology proposed and
implemented for CY 2008 and CY 2009.
Consistent with our CY 2008 and CY
2009 practice, we proposed not to use
the claims that meet the composite
payment criteria in the calculation of
the median costs for APC 0085 and APC
0086, to which the CPT codes in both
groups A and B for composite APC 8000
are otherwise assigned. Median costs for
APCs 0085 and 0086 would continue to
be calculated using single procedure
claims. We continue to believe that the
composite APC methodology 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 2008 claims
data available for the proposed rule, we
were able to use 6,975 claims containing
a combination of group A and group B
codes and calculated a proposed median
cost of approximately $10,105 for
composite APC 8000. This was an
increase compared to the CY 2009
OPPS/ASC final rule with comment
period in which we calculated a final
median cost for this composite APC of
approximately $9,206 based on a full
year of CY 2007 claims data. We stated
in the CY 2010 OPPS/ASC proposed
rule (74 FR 35282) that we believe the
proposed median cost of $10,105
calculated from a high volume of
correctly coded multiple procedure
claims would result 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 9 of the CY
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2010 OPPS/ASC proposed rule (74 FR
35282) listed the groups of procedures
upon which we proposed to base
composite APC 8000 for CY 2010.
Comment: Several commenters
supported CMS’ proposal to continue
using the composite APCs created in CY
2008, in particular the composite APC
for cardiac electrophysiologic
evaluation and ablation services. One
commenter also supported the modest
increase in payment for this APC,
stating that it is reflective of the
increased costs of providing these
important services to patients.
Response: We appreciate commenters’
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
comments we received, we are
finalizing our CY 2010 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 7,599 claims from CY 2008
containing a combination of group A
and group B codes and calculated a final
median cost of approximately $10,026
for composite APC 8000. This is an
increase compared to the CY 2009
OPPS/ASC final rule with comment
period in which we calculated a final
median cost of approximately $9,206
based a full year of CY 2007 claims data.
We believe that the final median cost of
$10,026 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 12 below
lists the groups of procedures upon
which we are basing composite APC
8000 for CY 2010. These CPT codes are
assigned status indicated ‘‘Q3’’ in
Addendum B to this final rule with
comment period to identify their status
as potentially payable through a
composite APC. Their composite APC
assignment is identified in Addendum
M to this final rule with comment
period.
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TABLE 12—GROUPS OF CARDIAC ELECTROPHYSIOLOGIC EVALUATION AND ABLATION PROCEDURES UPON WHICH
COMPOSITE APC 8000 IS BASED
CY 2010
CPT code
Codes used in combinations: At least one in Group A and one in Group B
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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 ................................................................................................................................
(4) Mental Health Services Composite
APC (APC 0034)
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35282 through 35283), we
proposed to continue our longstanding
policy of limiting the aggregate payment
for specified less resource-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 resourceintensive of all outpatient mental health
treatment for CY 2010. 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. We stated in the
CY 2010 OPPS/ASC proposed rule that
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. Therefore, 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.
As discussed in the CY 2010 OPPS/
ASC proposed rule (74 FR 35356
through 35357), for CY 2010 we
proposed to continue using the two
tiered payment approach for partial
hospitalization services that we
implemented in CY 2009: one APC for
days with three services (APC 0172)
(Level I Partial Hospitalization (3
services)) and one APC for days with
four or more services (APC 0173) (Level
II Partial Hospitalization (4 or more
services)) (74 FR 35282 through 35283).
When a CMHC or hospital provides
three units of partial hospitalization
services and meets all other partial
hospitalization payment criteria, we
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proposed that the CMHC or hospital be
paid through APC 0172. When the
CMHC or hospital provides 4 or more
units of partial hospitalization services
and meets all other partial
hospitalization payment criteria, we
proposed that the CMHC or hospital be
paid through APC 0173. We proposed to
set the CY 2010 payment rate for mental
health services composite APC 0034
(Mental Health Services Composite) at
the same rate as we proposed for APC
0173, which is the maximum partial
hospitalization per diem payment. We
stated in the CY 2010 OPPS/ASC
proposed rule that we believe 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. When the
aggregate 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 exceeds the
maximum per diem partial
hospitalization payment, we proposed
that those specified mental health
services would be assigned to APC
0034. We proposed that APC 0034
would continue to have the same
payment rate as APC 0173 and that the
hospital would continue to be paid one
unit of APC 0034. The I/OCE currently
determines, and we proposed for CY
2010 that it would continue to
determine, whether to pay these
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Final
single code
CY 2010 APC
Final
CY 2010 SI
(composite)
93619
0085
Q3.
93620
0085
Q3.
93650
0085
Q3.
93651
0086
Q3.
93652
0086
Q3.
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 by the
hospital on that single date of service.
We also proposed to continue
assigning status indicator ‘‘Q3’’ (Codes
that May be Paid Through a Composite
APC) to the HCPCS codes that are
assigned to composite APC 0034 in
Addendum M, and to continue
assigning status indicator ‘‘S’’
(Significant Procedure, Not Discounted
when Multiple), as adopted for CY 2009,
to APC 0034 for CY 2010 (74 FR 35283).
Comment: One commenter expressed
concern that using claims data from
CMHCs and hospitals to calculate the
payment rate for APC 0173 would result
in reduced access not only for hospitalbased partial hospitalization services
but also for other less intensive mental
health services provided in hospital
outpatient departments. The commenter
stated that CMS should use hospital
data to calculate the payment rates for
hospital services.
Response: As discussed in section X.
of this final rule with comment period,
the final CY 2010 payment rates for
APCs 0172 and 0173 are calculated
using hospital-only cost data for CY
2010, rather than using both hospital
and CMHC cost data. This final policy
results in an increase in the median cost
for APC 0173 from approximately $200
in CY 2009 to approximately $209. 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
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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.
After consideration of the public
comment we received, we are finalizing
our CY 2010 proposal, without
modification, to limit the aggregate
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 2010, we also are finalizing our
proposal, without modification, to
assign status indicator ‘‘Q3’’ to those
HCPCS codes that describe the specified
mental health services to which APC
0034 applies in Addendum B to this
final rule with comment period. Lastly,
we are finalizing our proposal to
continue assigning status indicator ‘‘S’’
(Significant Procedure, Not Discounted
When Multiple) to APC 0034.
(5) Multiple Imaging Composite APCs
(APCs 8004, 8005, 8006, 8007, and
8008)
Prior to CY 2009, hospitals received a
full APC payment for each imaging
service on a claim, regardless of how
many procedures were performed
during a single session using the same
imaging modality. Based on extensive
data analysis, we determined that this
practice neither reflected nor promoted
the efficiencies hospitals can achieve
when performing multiple imaging
procedures during a single session (73
FR 41448 through 41450). As a result of
our data analysis, and in response to
ongoing recommendations from
MedPAC to improve payment accuracy
for imaging services under the OPPS, we
expanded the composite APC model
developed in CY 2008 to multiple
imaging services. Effective January 1,
2009, we provide a single payment each
time a hospital bills more than one
imaging procedure within an imaging
family on the same date of service. We
utilize three imaging families based on
imaging modality for purposes of this
methodology: ultrasound, computed
tomography (CT) and computed
tomographic angiography (CTA), and
magnetic resonance imaging (MRI) and
magnetic resonance angiography (MRA).
The HCPCS codes subject to the
multiple imaging composite policy, and
their respective families, are listed in
Table 8 of the CY 2009 OPPS/ASC final
rule with comment period (73 FR 68567
through 68569).
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While there are three imaging
families, there are five multiple imaging
composite APCs due to the statutory
requirement at section 1833(t)(2)(G) of
the Act that we differentiate payment
for OPPS imaging services provided
with and without contrast. While the
ultrasound procedures included in the
policy do not involve contrast, both CT/
CTA and MRI/MRA scans can be
provided either with or without
contrast. The five multiple imaging
composite APCs established in 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). We
define the single imaging session for the
‘‘with contrast’’ composite APCs as
having at least one or more imaging
procedures from the same family
performed with contrast on the same
date of service. For example, if the
hospital performs an MRI without
contrast during the same session as at
least one other MRI with contrast, the
hospital will receive payment for APC
8008, the ‘‘with contrast’’ composite
APC.
Hospitals continue to use the same
HCPCS codes to report imaging
procedures, and the I/OCE determines
when combinations of imaging
procedures qualify for composite APC
payment or map to standard (sole
service) APCs for payment. We 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. The standard (noncomposite)
APC assignments continue to apply for
single imaging procedures and multiple
imaging procedures performed across
families. For a full discussion of the
development of the multiple imaging
composite APC methodology, we refer
readers to the CY 2009 OPPS/ASC final
rule with comment period (73 FR 68559
through 68569).
As we discussed in the CY 2010
OPPS/ASC proposed rule (74 FR 35283),
during the February 2009 meeting of the
APC Panel, the APC Panel heard from
stakeholders who claimed that a
composite payment is not appropriate
when multiple imaging procedures are
provided on the same date of service but
at different times. Some APC Panel
members expressed concern that the
same efficiencies that may be gained
when multiple imaging procedures are
performed during the same sitting may
not be gained if a significant amount of
time passes between the second and
subsequent imaging procedures, when
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the patient may leave not only the
scanner, but also the radiology
department or hospital. The APC Panel
recommended that CMS continue to
work with stakeholders to examine
different options for APCs for multiple
imaging sessions and multiple imaging
procedures.
We accepted the APC Panel
recommendation that CMS continue to
work with stakeholders to examine
different options for APCs for multiple
imaging sessions and multiple imaging
procedures. However, as we stated in
the CY 2010 OPPS/ASC proposed rule
(74 FR 35283 through 35284), we do not
believe it is appropriate to make
modifications to the multiple imaging
composite policy for CY 2010. We
indicated that we continue to 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 those circumstances would
receive imaging procedures at different
times during a single prolonged hospital
outpatient encounter, and that the
efficiencies that may be gained from
providing multiple imaging procedures
during a single session are achieved in
such ways as not having to register the
patient again, or not having to reestablish new intravenous access for an
additional study when contrast is
required. Furthermore, we stated that
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 their
payment rates.
In summary, in the CY 2010 OPPS/
ASC proposed rule (74 FR 35284), for
CY 2010 we proposed to continue
paying for all multiple imaging
procedures within an imaging family
performed on the same date of service
using the multiple imaging composite
payment methodology, and we
proposed no changes from the final CY
2009 policy. The proposed CY 2010
payment rates for the five multiple
imaging composite APCs (APC 8004,
APC 8005, APC 8006, APC 8007, and
APC 8008) were based on median costs
calculated from the partial year CY 2008
claims available for the proposed rule
that would have qualified for composite
payment under the current policy (that
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is, those claims with more than one
procedure within the same family on a
single date of service). To calculate the
proposed median costs, we used the
same methodology that we used to
calculate the final CY 2009 median costs
for these composite APCs. That is, we
removed any HCPCS codes in the OPPS
imaging families that overlapped with
codes on our bypass list (‘‘overlap
bypass codes’’) 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
proposed multiple imaging composite
APC median costs appeared in Table 11
of the CY 2010 OPPS/ASC proposed
rule (74 FR 35286). 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 in order to
determine 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.’’
We were able to identify 1.7 million
‘‘single session’’ claims out of an
estimated 2.5 million potential
composite cases from our ratesetting
claims data, or well over half of all
eligible claims, to calculate the
proposed CY 2010 median costs for the
multiple imaging composite APCs. The
HCPCS codes subject to the proposed
multiple imaging composite policy and
their respective families were listed in
Table 10 of the proposed rule (74 FR
35284 through 35285).
Comment: Many commenters asserted
that a single composite APC payment is
not appropriate when multiple imaging
services of the same modality are
provided on the same date of service but
at different times. They argued that the
same efficiencies that may be gained
when multiple imaging procedures are
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performed during the same sitting may
not be realized if a significant amount
of time passes between the first and
subsequent imaging procedures, when
the patient may have to be repositioned
or may have to leave not only the
scanner, but also the radiology
department or hospital. The
commenters stated that, in such cases,
facilities must expend equivalent
facility resources in each sitting as if the
sittings occurred on different dates of
service. They noted that not all of these
costs are reflected in claims data and,
therefore, would not be reflected in the
multiple imaging composite APC
payment rates. The commenters
requested that CMS allow hospitals to
report modifier -59 when multiple
imaging services of the same modality
are provided at different times on the
same date of service, and that such cases
be excluded from the multiple imaging
composite payment methodology. They
stated that such an approach is
necessary to recognize the provider
costs when imaging services must be
provided at different sittings due to
clinical need or safety requirements.
One commenter also asked CMS to 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: We do not agree with the
commenters that multiple imaging
procedures of the same modality
provided on the same date of service but
at different times should be exempt
from the multiple imaging composite
payment methodology. As we indicated
in the CY 2010 OPPS/ASC proposed
rule (74 FR 35283 through 35284) and
the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68565), 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
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60399
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 3 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
sittings any differently than they would
report imaging procedures performed
consecutively in one sitting with no
time in between the imaging services.
We also do not agree with the
commenter that it is necessary to create
new CPT codes that describe combined
services to ease the burden of hospital
billing and improve claims data for
ratesetting. As we stated in the CY 2009
OPPS/ASC final rule with comment
period (73 FR 68565), 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 multiple
imaging services by reporting multiple
HCPCS codes, and for ratesetting, we
use the charges reported to us by
hospitals on claims for those multiple
imaging services to calculate composite
APC payment rates. The I/OCE
determines whether composite APC
payment applies to a claim, so the
composite payment policy creates no
additional administrative burden for
hospitals.
Comment: Several commenters
asserted that the multiple imaging
composite payment methodology could
have a disproportionately negative effect
on cancer centers and trauma units,
where patients frequently require more
than two imaging services during a
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hospital encounter. They argued that the
use of a single composite APC payment
for an imaging modality regardless of
the number of services provided is only
appropriate if the underlying claims
data used to set the ‘‘average’’ payment
rate reflect an average number of
services furnished by all providers.
According to the commenters, certain
providers, such as cancer centers and
trauma hospitals, face systematic
underpayment of multiple imaging
services due to their unique patient
population because they routinely
provide a greater than average number
of imaging services in one sitting or
multiple sittings on the same date of
service. The commenters stated that, at
the same time, all other hospitals
experience systematic overpayment.
Response: We do not agree with the
commenters that the underlying claims
data used to calculate the median costs
upon which the payment rates for the
multiple imaging composite APCs are
inappropriate for payment of all
hospitals, or that the multiple imaging
composite payment methodology is
likely to have a disproportionately
negative effect on cancer centers and
trauma units. In the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68562 through 68563), we explored data
from CY 2007 claims in response to
similar concerns from commenters and
a recommendation by the APC Panel at
its August 2008 meeting. 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 patients with noncancer
diagnoses, consistent with commenters’
concerns. We observed that, for several
of the more commonly reported cancer
diagnoses, more than half of the patients
received more than two imaging
procedures on the same day, while
generally lower proportions of patients
with noncancer diagnoses received
more than two imaging procedures on a
single date of service. We did not
observe the same pattern for trauma
diagnoses. As we stated in the CY 2009
OPPS/ASC final rule with comment
period (73 FR 68562), 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.
We continue to believe that OPPS
hospitals demonstrate sufficient
variability in the number of imaging
procedures they provide to a single
patient on the same day that it is
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unlikely any particular class of hospital
would experience disproportionate
financial effects from the multiple
imaging composite payment
methodology. For CY 2009, the first year
of implementation of the multiple
imaging composite APC methodology,
the modeled impacts of payment
changes by class of hospital due to APC
recalibration (where the effects of the
multiple imaging composite payment
methodology and other APC
recalibration would be observed), were
very modest across classes of hospital,
ranging from ¥2.5 percent to +1.9
percent (73 FR 68799 through 68800).
The goal of the multiple imaging
composite payment methodology is to
establish incentives for efficiency
through larger payment bundles based
on the practice patterns of OPPS
hospitals as a whole. We acknowledge
that there may be a small number of
dedicated cancer centers that, relative to
other hospitals paid under the OPPS,
may provide a higher proportion of
imaging services to cancer patients that
involve three or more scans. However,
as discussed above, our prior analyses
do not lead us to believe that any class
of hospitals would experience
significantly negative effects from the
multiple imaging composite payment
methodology. We note that we establish
national payment policies for the OPPS
and, while certain policies may have
greater or lesser impact on individual
hospitals, on average we believe that the
total OPPS payment to a hospital for all
of its services is appropriate. Our
modeled estimates of changes in total
payment for classes of hospitals
between CY 2008 and CY 2009 support
this conclusion. We do not believe it
would be appropriate to establish
national policy based on considerations
of the service mix of individual
hospitals, or to exclude individual
hospitals from national policy because
of the impact a specific policy may have
on one component of a hospital’s
operations as a result of a particular
hospital’s service mix. Furthermore, we
note that several cancer centers are held
permanently harmless under section
1833(t)(7)(D)(ii) of the Act in order to
account for the fact that they may be
more costly and have different practice
patterns than other hospitals paid under
the OPPS.
Comment: Some commenters
questioned the adequacy of the
proposed multiple imaging composite
APC payment rates for sessions
involving three or more imaging
procedures, and expressed general
concern that multiple imaging
composite payment methodology would
limit beneficiary access to imaging
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services. For example, these
commenters asserted that the multiple
imaging composite payment
methodology could create incentives for
hospitals to require patients who need
more than two imaging procedures to
return for additional sittings on other
days if the costs for sessions in which
more than two procedures are
performed far exceed the multiple
imaging composite APC payment rates.
Response: As we stated in the CY
2009 OPPS/ASC final rule with
comment period (73 FR 68562), we do
not believe that, in aggregate, OPPS
payment for multiple imaging services
will be inadequate under the multiple
imaging composite payment
methodology so as to limit beneficiary
access, 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 2008
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.
We also do not agree with the
commenters that the multiple imaging
composite payment methodology will
result in hospitals requiring patients
who need more than two imaging
procedures to return for additional
sittings on other days. As we stated in
the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68562), 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 followup to
the point of making them return to the
hospital on separate days to receive
medically necessary diagnostic studies.
However, we again 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
imaging services across multiple days
for individual beneficiaries, we could
refer it for review by the Quality
Improvement Organizations (QIOs) with
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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.
Comment: Several commenters urged
CMS to standardize cost reporting for
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. One
commenter was concerned that
observed efficiencies in the multiple
imaging composite APC 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. According to the commenter,
CMS should implement separate cost
centers for CT and MRI procedures and
the revised revenue code-to-cost center
crosswalk, as recommended in the July
2008 report by RTI International (RTI)
entitled, ‘‘Refining Cost to Charge Ratios
for Calculating APC and DRG Relative
Payment Weights.’’ The commenter
stated that the creation of the new
standard cost centers and the adoption
of the revised revenue code-to-cost
center crosswalk would provide much
more accurate charge and cost data for
these imaging modalities, and that the
true efficiencies associated with
providing multiple imaging procedures
in a single session may only be
discernable once these data are
available. The commenter also remarked
that the adoption of these changes
would result in significant shifts in the
underlying CCRs for all APCs, thereby
impacting all relative weights and
payment rates across all services over
time.
Response: We published information
regarding the proposed draft hospital
cost report CMS–2552–10 in the Federal
Register on July 2, 2009 and the
proposed agency information collection
activities were open for a 60-day review
and comment period (74 FR 31738). The
comment period ended August 31, 2009.
The proposed cost report can be viewed
at: https://www.cms.hhs.gov/Paperwork
ReductionActof1995/PRAL/itemdetail.
asp?filterType=none&filterByDID=-99&
sortByDID=2&sortOrder=descending&
itemID=CMS1224069&intNumPer
Page=10. We will consider all
comments received during the comment
period in our determination of whether
to create new modality-specific standard
diagnostic radiology cost centers.
As noted in our response to a
comment regarding the
recommendations included in RTI’s July
2008 report entitled, ‘‘Refining Cost to
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Charge Ratios for Calculating APC and
DRG Relative Payment Weights’’ (73 FR
68526), the current cost report form
already includes nonstandard cost
centers for CT Scanning and MRI. We
also explained that under 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 if the
corresponding cost and charge
information is accumulated separately
in the provider’s accounting system. We
believe the nonstandard cost center
information for CT Scanning and MRI
that we currently collect reflects costs
and charges for CT Scanning and MRI
and we use these data to estimate
median costs for ratesetting.
In the meantime, we believe it is fully
appropriate to continue the multiple
imaging composite payment
methodology, which we believe
improves the accuracy of OPPS payment
rates and promotes efficiency among
hospitals. As we stated in the CY 2009
OPPS/ASC final rule with comment
period (73 FR 68563), 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. Should
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: One commenter stated that
the differential in the CY 2010 proposed
payment rates for APC 8007 and APC
8008 appears adequate to account for
the substantial differences in costs
between magnetic resonance procedures
when performed with and without
contrast. The commenter asked CMS to
evaluate the claims available for the CY
2010 OPPS/ASC final rule with
comment period to ensure that payment
rates for the two APCs reflect the
incremental costs for the contrast agent
and contrast administration included in
APC 8008.
Response: We agree with the
commenter regarding the
appropriateness of the proposed
differential in payment rates for APC
8007 and APC 8008 for CY 2010. The
median costs upon which the CY 2010
final payment rates for APC 8007 and
APC 8008 are based ($706 and $986,
respectively) also appropriately reflect
differences in costs for MRI and MRA
imaging sessions with and without the
administration of contrast.
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Comment: One commenter stated that
there was a discrepancy in CMS’
estimated volume of APC 8005 single
claims for the CY 2010 OPPS/ASC
proposed rule. The commenter
indicated that CMS’ estimated volume
of APC 8005 single claims increased by
approximately one-third from the CY
2007 claims used in CY 2009 ratesetting
to the CY 2008 claims available for the
CY 2010 OPPS/ASC proposed rule. The
commenter noted that this increase was
inconsistent with the commenter’s data
analysis, which indicated that the total
volume of single claims for APC 8005
did not increase significantly over this
same time period.
Response: We reviewed the CY 2007
‘‘single session’’ claims data used in
ratesetting for APC 8005 for the CY 2009
OPPS/ASC final rule with comment
period, and the CY 2008 ‘‘single
session’’ claims data used in ratesetting
for APC 8005 for the CY 2010 OPPS/
ASC proposed rule. For the CY 2009
final rule, we identified 429,525 ‘‘single
session’’ claims out of 809,483 potential
composite cases to calculate the median
cost for APC 8005. For the CY 2010
OPPS/ASC proposed rule, we identified
423,890 ‘‘single session’’ claims out of
810,469 potential composite cases to
calculate the median cost for APC 8005.
These published data do not
demonstrate an increase of
approximately one-third in the volume
of ‘‘single session’’ claims from the CY
2007 claims used to calculate the
median costs upon which the CY 2009
final payment rates are based compared
to the CY 2008 claims used to calculate
the median costs upon which the CY
2010 proposed payment rates are based,
as the commenter indicated. For this
final rule with comment period, we
identified 455,191 ‘‘single session’’
claims (an increase of approximately 6
percent compared to CY 2009) out of
882,581 potential composite cases (an
increase of approximately 9 percent
compared to CY 2009) to calculate the
median cost of APC 8005.
Comment: Many commenters
requested that CMS thoroughly evaluate
the impact of the multiple imaging
composite payment methodology and
commended CMS for not proposing to
expand the multiple imaging composite
payment methodology for CY 2010.
Commenters asked CMS to review
claims data to ensure that hospitals are
being adequately paid for providing
multiple imaging services, that patients
are not being required by hospitals to
return to the hospital on multiple days
for imaging services, and that certain
types or classes of hospitals are not
being negatively affected before moving
forward with any additional imaging
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composite policies. One commenter
noted that while CMS will have data
available from CY 2009 to analyze for
the winter 2010 APC Panel meeting, the
commenter believed that such analyses
would be more meaningful if claims
data through CY 2012 are use to show
impacts and a change in hospital
behavior under the composite payment
policy. Commenters also stated that any
expansion of the multiple imaging
composite payment methodology
should be subject to full public
comment.
Response: We appreciate the
commenters’ support of our proposal
not to implement any significant
changes to the composite APC
methodology for CY 2010 so that we
may monitor the effects of the existing
composite APCs on utilization and
payment. We also appreciate the
commenters’ thoughtful suggestions for
data analysis that can be performed
toward that end once CY 2009 claims
data become available and in the longer
term. We will take commenters’
suggestions into consideration as we
review the CY 2009 claims data for the
impact of the multiple imaging
composite APCs on payments to
hospitals and on services to
beneficiaries.
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After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to continue
paying for all multiple imaging
procedures within an imaging family
performed on the same date of service
using the multiple imaging composite
payment methodology. The CY 2010
payment rates for the five multiple
imaging composite APCs (APC 8004,
APC 8005, APC 8006, APC 8007, and
APC 8008) are based on median costs
calculated from the CY 2008 claims that
would have qualified for composite
payment under the current policy (that
is, those claims with more than one
procedure within the same family on a
single date of service). Using the same
ratesetting methodology described in
the CY 2010 OPPS/ASC proposed rule
(74 FR 35284), we were able to identify
1.8 million ‘‘single session’’ claims out
of an estimated 2.7 million potential
composite cases from our ratesetting
claims data, or well over half of all
eligible claims, to calculate the final CY
2010 median costs for the multiple
imaging composite APCs.
Table 13 below lists the HCPCS codes
subject to the final multiple imaging
composite policy and their respective
families for CY 2010. We note that we
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have updated Table 13 to reflect HCPCS
coding changes for CY 2010.
Specifically, we added CPT code 74261
(Computed tomographic (CT)
colonography, diagnostic, including
image postprocessing; without contrast
material) and CPT code 74262
(Computed tomographic (CT)
colonography, diagnostic, including
image postprocessing, with contrast
materials(s) including non-contrast
images, if performed) to the CT and CTA
family, and removed CPT code 0067T
(Computed tomographic (CT)
colonography (ie, virtual colonoscopy);
diagnostic), which was replaced by
these CPT codes. The HCPCS codes
listed in Table 13 are assigned status
indicated ‘‘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 14 below lists
the imaging services subject to the
composite methodology that overlap
with HCPCS codes on the CY 2010
bypass list.
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3. Calculation of OPPS Scaled Payment
Weights
Using the APC median costs
discussed in sections II.A.1. and II.A.2.
of this final rule with comment period,
we calculated the final relative payment
weights for each APC for CY 2010
shown in Addenda A and B to this final
rule with comment period. In years
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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.
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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 clinic visit APCs.
We selected APC 0606 as the base
because APC 0606 was the mid-level
clinic visit APC (that is, Level 3 of five
levels). Therefore, for CY 2010, to
maintain consistency in using a median
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for calculating unscaled weights
representing the median cost of some of
the most frequently provided services,
we proposed to continue to use the
median cost of the mid-level clinic visit
APC, APC 0606, to calculate unscaled
weights. Following our standard
methodology, but using the proposed
CY 2010 median cost for APC 0606, for
CY 2010 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 proposed unscaled relative
payment weight for each APC. The
choice of the APC on which to base the
proposed relative weights for all other
APCs did 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 the estimated
aggregate weight under the OPPS for CY
2010 is neither greater than nor less
than the estimated aggregate weight that
would have been made without the
changes. To comply with this
requirement concerning the APC
changes, we proposed to compare the
estimated aggregate weight using the CY
2009 scaled relative weights to the
estimated aggregate weight using the CY
2010 unscaled relative weights. For CY
2009, we multiply the CY 2009 scaled
APC relative weight applicable to a
service paid under the OPPS by the
volume of that service from CY 2008
claims to calculate the total weight for
each service. We then add together the
total weight for each of these services in
order to calculate an estimated aggregate
weight for the year. For CY 2010, we
perform the same process using the CY
2010 unscaled weights rather than
scaled weights. We then calculate the
weight scaler by dividing the CY 2009
estimated aggregate weight by the CY
2010 estimated aggregate weight. The
service mix is the same in the current
and prospective years because we use
the same set of claims for service
volume in calculating the aggregate
weight for each year. For a detailed
discussion of the weight scaler
calculation, we refer readers to the
OPPS claims accounting document
available on the CMS Web site at:
https://www.cms.hhs.gov/
HospitalOutpatientPPS/. We included
payments to CMHCs in our comparison
of estimated unscaled weight in CY
2010 to estimated total weight in CY
2009 using CY 2008 claims data and
holding all other things constant. Based
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on this comparison, we adjusted the
unscaled relative weights for purposes
of budget neutrality. In our proposal for
CY 2010, the proposed CY 2010
unscaled relative payment weights were
adjusted by multiplying them by a
proposed weight scaler of 1.2863 to
ensure budget neutrality of the proposed
CY 2010 relative weights.
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.B.3. of the proposed rule (74 FR 35324
through 35333) and this final rule with
comment period) was included in the
proposed budget neutrality calculations
for the CY 2010 OPPS.
We did not receive any public
comments on the proposed
methodology for calculating scaled
weights from the median costs for the
CY 2010 OPPS. Therefore, we are
finalizing our proposed methodology,
without modification, including
updating of the budget neutrality scaler
for this final rule with comment period.
Under this methodology, the final
unscaled payment weights were
adjusted by a weight scaler of 1.3222 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 II.A.2. of this final rule with
comment period.
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 cost of
providing a service or bundle of services
for a particular patient, but with the
exception of outlier cases, the payment
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 long-
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term 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 that payment is
adequate to enable the hospital to
provide quality care and establishing
incentives for efficiency through larger
units of payment. 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 assign status indicator ‘‘N’’ to
those HCPCS codes that we believe are
always integral to the performance of
the primary modality; therefore, we
always package their costs into the costs
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of the separately paid primary services
with which they are billed. Services
assigned status indicator ‘‘N’’ are
unconditionally packaged.
We assign status indicator ‘‘Q1’’
(‘‘STVX-Packaged Codes’’), ‘‘Q2’’ (‘‘TPackaged Codes’’), or ‘‘Q3’’ (Codes that
may be paid through a composite APC)
to each conditionally packaged HCPCS
code. An ‘‘STVX-packaged code’’
describes a HCPCS code whose payment
is packaged when one or more
separately paid primary services with
the status indicator of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or
‘‘X’’ are furnished in the hospital
outpatient encounter. A ‘‘T-packaged
code’’ describes a code whose payment
is packaged when one or more
separately paid surgical procedures with
the status indicator of ‘‘T’’ are provided
during the hospital encounter. ‘‘STVXpackaged codes’’ and ‘‘T-packaged
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’’
are conditionally packaged. We refer
readers to section XIII.A.1. of this final
rule with comment period for a
complete listing of status indicators.
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.’’
In addition, in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66650 through 66659), we finalized
additional packaging for the CY 2008
OPPS, which included the
establishment of 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).
In the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68559
through 68569), we expanded the
composite APC model to one new
clinical area, multiple imaging services.
We created five multiple imaging
composite APCs for payment in CY
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2009 that incorporate statutory
requirements to differentiate between
imaging services provided with contrast
and without contrast as required by
section 1833(t)(2)(G) of the Act. The
multiple imaging composite APCs 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). We
discuss composite APCs in more detail
in section II.A.2.e. of this final rule with
comment period.
Hospitals include charges for
packaged services on their claims, and
the estimated 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 the CPT
Editorial Panel 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.
b. Packaging Issues
(1) Packaged Services Addressed by the
February 2009 APC Panel
Recommendations
The Packaging Subcommittee of the
APC Panel was established to review
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.
During the September 2007 APC
Panel meeting, the APC Panel requested
that CMS evaluate the impact of
expanded packaging on beneficiaries.
During the March 2008 APC Panel
meeting, the APC Panel requested that
CMS report to the Panel at the first
Panel meeting in CY 2009 regarding the
impact of packaging on net payments for
patient care. In response to these
requests, we shared data with the APC
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Panel at the February 2009 APC Panel
meeting that compared the frequency of
specific categories of services billed
under the OPPS in CY 2007, before the
expanded packaging went into effect, to
the frequency of those same categories
of services in CY 2008, their first year
of packaged payment. In each category,
the HCPCS codes that we compared are
the ones that we identified in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66659 through
66664) as fitting into one of the seven
packaging categories listed in section
II.A.4.a. of this final rule with comment
period. The data shared with the APC
Panel at the February 2009 APC Panel
meeting compared CY 2007 claims
processed through September 30, 2007
to CY 2008 claims processed through
September 30, 2008. We did not make
any adjustments for inflation, changes
in Medicare population, or other
variables that potentially influenced
billing between CY 2007 and CY 2008.
These data represent about 60 percent of
the full year data. A summary of these
data analyses is provided below.
Analysis of the diagnostic
radiopharmaceuticals category showed
that the frequency of the reporting of
diagnostic radiopharmaceuticals
increased by 1 percent between the first
9 months of CY 2007 and the first 9
months of CY 2008. In CY 2007, some
diagnostic radiopharmaceuticals were
packaged and others were separately
payable, depending on whether their
per day mean costs fell above or below
the $55 drug packaging threshold for CY
2007. All diagnostic
radiopharmaceuticals were uniformly
packaged in CY 2008. Two percent more
hospitals reported one or more
diagnostic radiopharmaceuticals during
CY 2008 as compared to CY 2007.
Effective for CY 2008, we first required
reporting of a radiolabeled product
(including diagnostic
radiopharmaceuticals) when billing a
nuclear medicine procedure, and we
believe that the increases in frequency
and the number of reporting hospitals
reflect hospitals meeting this reporting
requirement.
We also found that nuclear medicine
procedures (into which diagnostic
radiopharmaceuticals were packaged)
and associated diagnostic
radiopharmaceuticals were billed
approximately 3 million times during
the first 9 months of both CY 2007 and
CY 2008. Further analysis revealed that
we paid hospitals over $637 million for
nuclear medicine procedures and
diagnostic radiopharmaceuticals during
the first 9 months of CY 2007, when
diagnostic radiopharmaceuticals were
separately payable, and over $619
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million for nuclear medicine procedures
and diagnostic radiopharmaceuticals
during the first 9 months of CY 2008,
when payment for diagnostic
radiopharmaceuticals was packaged.
This represented a 3 percent decrease in
aggregate payment between the first 9
months of CY 2007 and the first 9
months of CY 2008.
Using the same data, we calculated an
average payment per service or item
billed (including nuclear medicine
procedures and packaged or separately
payable diagnostic
radiopharmaceuticals) of $203 in CY
2007 and $198 in CY 2008 for nuclear
medicine procedures. This represented
a decrease of 2 percent in average
payment per item or service billed
between CY 2007 and CY 2008. It is
unclear how much of the decrease in
estimated aggregate or average per
service or item billed payment may be
due to packaging payment for diagnostic
radiopharmaceuticals (and other
services that were newly packaged for
CY 2008) and how much may be due to
the usual annual APC recalibration and
typical fluctuations in service
frequency. However, we believe that all
of these factors likely contributed to the
slight decrease in aggregate payment in
CY 2008, as compared to CY 2007.
Overall, the observed changes between
CY 2007 and CY 2008 were very small
and indicated that there has been very
little change in frequency or aggregate
payment in this clinical area between
CY 2007 and CY 2008.
We similarly analyzed 9 months of CY
2007 and CY 2008 data related to all
services that were packaged during CY
2008 because they were categorized as
guidance services. Analysis of the
guidance category (which includes
image-guided radiation therapy
services) showed that the frequency of
guidance services increased by 2
percent between the first 9 months of
CY 2007 and the first 9 months of CY
2008. One percent fewer hospitals
reported one or more guidance services
during CY 2007 as compared to CY
2008.
We further analyzed 9 months of CY
2007 and CY 2008 claims data for
radiation oncology services that would
be accompanied by radiation oncology
guidance. We found that radiation
oncology services (including radiation
oncology guidance services) were billed
approximately 4 million times in CY
2007 and 3.9 million times in CY 2008,
representing a decrease in frequency of
approximately 5 percent between CY
2007 and CY 2008. These numbers
represented each instance where a
radiation oncology service or a radiation
oncology guidance service was billed.
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Our analysis indicated that hospitals
were paid over $818 million for
radiation oncology services and
radiation oncology guidance services
under the OPPS during the first 9
months of CY 2007, when radiation
oncology guidance services were
separately payable. During the first 9
months of CY 2008, when payments for
radiation oncology guidance were
packaged, hospitals were paid over $740
million for radiation oncology services
under the OPPS. This $740 million
included packaged payment for
radiation oncology guidance services
and represented a 10 percent decrease
in aggregate payment from CY 2007 to
CY 2008. Using the first 9 months of
data for both CY 2007 and CY 2008, we
calculated an average payment per
radiation oncology service or item billed
of $201 in CY 2007 and $190 in CY
2008, representing a decrease of 5
percent from CY 2007 to CY 2008. It is
unclear how much of the decrease in
aggregate payment and the decrease in
average payment per service provided
may be due to packaging payment for
radiation oncology guidance services
(and other services that were newly
packaged for CY 2008) and how much
may be due to the usual annual APC
recalibration and typical fluctuations in
service frequency. This analysis is
discussed in further detail below, under
‘‘Recommendation 1’’ in this section of
this final rule with comment period. In
that analysis, we demonstrated that the
volume of some packaged radiation
oncology guidance services increased
during the period, leading us to
conclude that, irrespective of the
decline in the frequency of radiation
oncology services in general, hospitals
did not appear to be changing their
practice patterns specifically in
response to packaged payment for
radiation oncology guidance services.
We similarly analyzed 9 months of CY
2007 and CY 2008 data related to all
services that were packaged during CY
2008 because they were categorized as
intraoperative services. Analysis of the
intraoperative category (which includes
intravascular ultrasound (IVUS),
intracardiac echocardiography (ICE),
and coronary fractional flow reserve
(FFR)) showed minimal changes in the
frequency and the number of reporting
hospitals between CY 2007 and CY
2008.
We found that cardiac catheterization
and other percutaneous vascular
procedures that would typically be
accompanied by IVUS, ICE and FFR
(including IVUS, ICE, and FFR) were
billed approximately 375,000 times in
CY 2007 and approximately 400,000
times in CY 2008, representing an
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increase of 8 percent in the number of
services and items billed between CY
2007 and CY 2008. Further analysis
revealed that the OPPS paid hospitals
over $912 million for cardiac
catheterizations, other related services,
and IVUS, ICE, and FFR in CY 2007,
when IVUS, ICE, and FFR were
separately payable. In the first 9 months
of CY 2008, the OPPS paid hospitals
approximately $1.1 billion for cardiac
catheterization and other percutaneous
vascular procedures and IVUS, ICE, and
FFR, when payments for IVUS, ICE, and
FFR were packaged. This represented a
25 percent increase in payment from CY
2007 to CY 2008. Using the 9 months of
data for both CY 2007 and CY 2008, we
calculated an average payment per
service or item provided of $2,430 in CY
2007 and $2,800 in CY 2008 for cardiac
catheterization and other related
services. This represented an increase of
15 percent in average payment per item
or service from CY 2007 to CY 2008.
We could not determine how much of
the 25 percent increase in aggregate
payment for these services may be due
to the packaging of payment for IVUS,
ICE, and FFR (and other services that
were newly packaged for CY 2008) and
how much may be due to the usual
annual APC recalibration and typical
fluctuations in service frequency.
However, we believe that all of these
factors contributed to the increase in
payment between these 2 years.
The three remaining packaging
categories (excluding observation
services, which are further discussed in
section II.A.2.e.(1) of this final rule with
comment period), contrast agents, image
processing services, and imaging
supervision and interpretation services,
showed minimal changes in frequency
between CY 2007 and CY 2008, ranging
from a 2 percent increase to a 1 percent
decrease in frequency. Similarly, when
examining the number of hospitals
reporting these services, the data
showed similar numbers of hospitals
reporting these services in CY 2007,
when these services were separately
payable, and CY 2008, when they were
packaged. Specifically, the percentage
change in the number of reporting
hospitals for these categories between
CY 2007 and CY 2008 ranged from 0
percent to a decrease of 1 percent.
In summary, these preliminary data
indicated that hospitals in aggregate did
not appear to have significantly changed
their service reporting patterns as a
result of the expanded packaging
adopted for the OPPS beginning in CY
2008.
The APC Panel’s Packaging
Subcommittee reviewed the packaging
status of several CPT codes and reported
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its findings to the APC Panel at its
February 2009 meeting. The full report
of the February 18 and 19, 2009 APC
Panel meeting can be found on the CMS
Web site at: https://www.cms.hhs.gov/
FACA/05_AdvisoryPanelonAmbulatory
PaymentClassificationGroups.asp. The
APC Panel accepted the report of the
Packaging Subcommittee, heard several
presentations related to packaged
services, discussed the deliberations of
the Packaging Subcommittee, and
recommended that—
1. CMS pay separately for radiation
therapy guidance services performed in
the treatment room for 2 years and then
reevaluate packaging on the basis of
claims data. (Recommendation 1)
2. CMS continue to analyze the
impact of increased packaging on
beneficiaries and provide more detailed
versions of the analyses presented at the
February 2009 meeting of services
initially packaged in CY 2008 at the
next Panel meeting. In addition, the
Panel requested that, in the more
detailed analyses of radiation oncology
services that would be accompanied by
radiation oncology guidance, CMS
stratify the data according to the type of
radiation oncology service, specifically,
intensity modulated radiation therapy,
stereotactic radiosurgery,
brachytherapy, and conventional
radiation therapy. (Recommendation 2)
3. CMS continue to analyze the
impact on beneficiaries of increased
packaging of diagnostic
radiopharmaceuticals and provide more
detailed analyses at the next Panel
meeting. In addition, the Panel
requested that, in the more detailed
analyses of packaging of diagnostic
radiopharmaceuticals by type of nuclear
medicine scan, CMS break down the
data according to the specific CPT codes
billed with the diagnostic
radiopharmaceuticals.
(Recommendation 3)
4. CPT code 36592 (Collection of
blood specimen using established
central or peripheral catheter, venous,
not otherwise specified) remain
assigned to APC 0624 (Phlebotomy and
Minor Vascular Access Device
Procedures) for CY 2010.
(Recommendation 4)
5. The Packaging Subcommittee
continue its work until the next APC
Panel meeting. (Recommendation 5)
In the proposed rule, we addressed
each of these recommendations in turn
in the discussion that follows.
Recommendation 1
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35289), we did not propose
to pay separately for radiation therapy
guidance services provided in the
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treatment room for CY 2010, which
would have been consistent with the
APC Panel’s recommendation. Instead,
we proposed to maintain the packaged
status of radiation therapy guidance
services performed in the treatment
room for CY 2010.
As discussed below in this section,
during the February 2009 APC Panel
meeting, we presented data that
estimated that aggregate payment for
radiation oncology services, including
the payment for radiation oncology
guidance services, decreased by
approximately 10 percent between the
first 9 months of CY 2007 (before the
expanded packaging went into effect)
and the first 9 months of CY 2008 (after
the expanded packaging went into
effect). This decline may be attributable
to many factors, including lower
payment rates for common radiation
oncology services in CY 2008
specifically and generally reduced
volume for separately paid radiation
oncology services. The APC Panel
expressed concern that this aggregate
payment decrease could inhibit patient
access to technologically advanced and
clinically valuable radiation oncology
guidance services whose payment
became packaged effective January 1,
2008.
While we presented data to the APC
Panel comparing payment between CY
2007 and CY 2008 in response to past
APC Panel recommendations, we note
that we made changes to the bypass list
for CY 2009 to ensure that we more fully
captured all packaged costs on each
claim, which resulted in significantly
increased payment rates for many of
these radiation oncology services for CY
2009, as compared to the CY 2008
payment rates for these services.
Specifically, as discussed in detail in
the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68575), in
response to public comments received,
several radiation oncology CPT codes
had been included on the bypass list for
the CY 2008 OPPS, although they failed
to meet the empirical criteria for
inclusion on the bypass list. For CY
2009, we removed from the bypass list
those radiation oncology codes that did
not meet the empirical criteria. As a
result of these changes to the bypass list,
the CY 2009 median costs for several
common radiation oncology APCs
increased by more than 9 percent as
compared to the CY 2008 median costs,
while the median costs for some of the
other lower volume radiation oncology
APCs, most notably the brachytherapy
source application APCs, declined. For
example, as noted in the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68575), these changes to the bypass
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60411
list resulted in payment for the common
combination of intensity modulated
radiation therapy (IMRT) and imageguided radiation therapy (IGRT)
increasing from $348 in CY 2008 to
$411 in CY 2009. Notably, the CY 2007
total payment rate for this combination
of services, before the expanded
packaging went into effect, was $403.
We do not yet have CY 2009 claims
data reflecting utilization based on the
payment rates in effect for CY 2009.
However, we do not expect that an
overall per-service payment comparison
between CY 2007 and CY 2009 would
likely demonstrate a significant decrease
in payment for radiation oncology
services because we have adopted a
significant increase in the CY 2009
payment rates for the most common
radiation oncology services. In addition,
we note that CY 2010 proposed rule
data indicated that the CY 2010 APC
median costs applicable to most
radiation oncology services experienced
increases of approximately 2 to 15
percent when compared to their CY
2009 final rule median costs. Although
a small number of other lower volume
radiation oncology APCs, most notably
the brachytherapy and stereotactic
radiosurgery APCs, experienced
declines in median costs, we do not
expect that an overall per-service
payment comparison between CY 2007
and CY 2010 would likely demonstrate
a significant decrease in payment for
radiation oncology services over this
time period.
While we understand that the CY
2007 to CY 2008 aggregate payment
comparison provided to the APC Panel
during the February 2009 meeting may
have contributed to the APC Panel’s
particular concern about payment for
radiation oncology services for CY 2010,
we do not believe that packaging
payment for radiation oncology
guidance services has primarily caused
this decline. In addition, we do not
believe that beneficiaries’ access to
these services has been limited as a
result of packaging payment for
radiation oncology guidance services. In
the data presented to the APC Panel at
the February 2009 meeting, the number
of all packaged guidance services
provided during the first 9 months of
CY 2008 represented a 2 percent
increase from the number of guidance
services provided during the first 9
months of CY 2007. Further, although
the CY 2008 volume of the radiation
oncology guidance codes that we newly
packaged for CY 2008 varied, with some
of the services experiencing increases in
volume and others experiencing
decreases in volume, in aggregate, the
reporting of radiation oncology
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guidance services increased by 4
percent in the first 9 months of claims
for CY 2008, as compared to the first 9
months of CY 2007, and the number of
hospitals reporting these services also
increased. This further supports our
belief that, irrespective of the decline in
the frequency of radiation oncology
services in general, hospitals do not
appear to be changing their practice
patterns specifically in response to
packaged payment for radiation
oncology guidance services.
Therefore, in the CY 2010 OPPS/ASC
proposed rule (74 FR 35289), we did not
propose to pay separately for radiation
therapy guidance services performed in
the treatment room for 2 years as the
APC Panel recommended. Instead, for
CY 2010, we proposed to maintain the
packaged status of all radiation therapy
guidance services, including those
radiation therapy guidance services
performed in the treatment room.
A summary of the public comments
and our response on the CY 2010
proposal to package payment for
radiation therapy guidance services are
included in section II.A.4.b.(2) of this
final rule with comment period.
Recommendation 2
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35290), we stated that we
are accepting the APC Panel
recommendation to continue to analyze
the impact of increased packaging on
beneficiaries and to share more data
with the APC Panel. We noted that we
would carefully consider which
additional data would be most
informative for the APC Panel and
would discuss these data with the APC
Panel at the next CY 2009 APC Panel
meeting and/or the first CY 2010 APC
Panel meeting. We did not share
additional packaging data with the APC
Panel at the most recent August 2009
meeting because we believe the APC
Panel’s discussions would benefit from
analyses of an additional year of claims
data after CY 2008. Therefore, we plan
to incorporate analysis of CY 2009
claims into the information we will
bring to the APC Panel for its review at
the winter 2010 meeting. Similarly, in
the proposed rule, we noted that we
would determine what additional
detailed data related to radiation
oncology services would be helpful to
the APC Panel and would share these
data at the next CY 2009 APC Panel
meeting and/or the first CY 2010 APC
Panel meeting. We did not share
additional data related to radiation
oncology services with the APC Panel at
the most recent August 2009 meeting
because we believe the APC Panel’s
discussions would benefit from analyses
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of an additional year of claims data after
CY 2008. Therefore, we plan to
incorporate analysis of CY 2009 claims
into the information we will bring to the
APC Panel for its review at the winter
2010 meeting.
A summary of the public comments
and our response regarding the impact
of the CY 2010 packaging proposal are
included in section II.A.4.b.(2) of this
final rule with comment period.
Recommendation 3
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35290), we stated that we
are accepting the APC Panel’s
recommendation that CMS continue to
analyze the impact on beneficiaries of
increased packaging of diagnostic
radiopharmaceuticals and provide more
detailed analyses at the next APC Panel
meeting. In these analyses of diagnostic
radiopharmaceuticals by type of nuclear
medicine scan, the APC Panel further
recommended that CMS analyze the
data according to the specific CPT codes
billed with the diagnostic
radiopharmaceuticals. This APC Panel
recommendation is discussed in detail
in section II.A.2.d.(5) of this final rule
with comment period. In the proposed
rule, we noted that we are accepting the
APC Panel’s recommendation and
would provide additional data to the
APC Panel at an upcoming meeting. We
did not share additional data related to
diagnostic radiopharmaceuticals and
nuclear medicine scans with the APC
Panel at the most recent August 2009
meeting because we believe the APC
Panel’s discussions would benefit from
analyses of an additional year of claims
data after CY 2008. Therefore, we plan
to incorporate analysis of CY 2009
claims into the information we will
bring to the APC Panel for its review at
the winter 2010 meeting.
A summary of the public comments
and our response on the CY 2010
proposal to package payment for
diagnostic radiopharmaceuticals into
payment for the associated nuclear
medicine procedures are included in
sections II.A.2.d.(5) and V.B.2.d. of this
final rule with comment period.
Recommendation 4
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35290), we proposed to
continue for CY 2010 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 to assign it to APC 0624
(Phlebotomy and Minor Vascular Access
Device Procedures), the same APC to
which CPT code 36591 (Collection of
blood specimen from a completely
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implantable venous access device) is
currently assigned as the APC Panel
recommended. 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. For CY 2009, in
response to public comments, we
proposed to treat CPT code 36592 as a
conditionally packaged code, with
assignment to APC 0624. In the CY 2009
OPPS/ASC final rule with comment
period (73 FR 68576), we discussed the
public comments we received regarding
our proposed treatment of CPT code
36592. Several of these commenters
supported our proposal to treat CPT
code 36592 as a conditionally packaged
code with assignment to APC 0624. We
stated in the CY 2009 OPPS/ASC final
rule with comment period that when
cost data for CPT code 36592 became
available for the CY 2010 OPPS annual
update, we would reevaluate whether
assignment to APC 0624 continued to be
appropriate.
Based on our analysis of claims data,
our clinical understanding of the
service, and our discussion with the
APC Panel Packaging Subcommittee, in
the CY 2010 OPPS/ASC proposed rule
(74 FR 35290), we proposed to maintain
the assignment of CPT code 36592 to
APC 0624 for CY 2010, consistent with
the APC Panel recommendation, and we
proposed to continue to treat CPT code
36592 as an ‘‘STVX packaged code’’ and
assign it to APC 0624. We noted that we
expect hospitals to follow the CPT
guidance related to CPT codes 36591
and 36592 regarding when these
services should be appropriately
reported.
We received no public comments on
the CY 2010 proposal to maintain the
assignment of CPT code 36592 to APC
0624 and treat it as an ‘‘STVX packaged
code,’’ so we are finalizing our proposal,
without modification.
Recommendation 5
In response to the APC Panel’s
recommendation for the Packaging
Subcommittee to remain active until the
next APC Panel meeting, in the CY 2010
OPPS/ASC proposed rule (74 FR 35290)
we noted that we have accepted this
recommendation and the APC Panel
Packaging Subcommittee remains
active. We stated that additional issues
and new data concerning the packaging
status of codes would 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.
We also encourage recommendations of
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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.
The Packaging Subcommitee has
remained active; the Subcommittee’s
last meeting to discuss packaging issues
was the August 2009 meeting.
(2) Packaged Services Addressed by the
August 2009 APC Panel
Recommendations
The APC Panel met again on August
5 and 6, 2009 to hear public
presentations on the proposals set forth
in the CY 2010 OPPS/ASC proposed
rule. The APC Panel’s Packaging
Subcommittee reviewed the packaging
status of several CPT codes and reported
its findings to the APC Panel. The full
report of the August 5 and 6, 2009 APC
Panel meeting can be found on the CMS
Web site at: https://www.cms.hhs.gov/
FACA/05_Advisory
PanelonAmbulatoryPayment
ClassificationGroups.asp. The APC
Panel accepted the report of the
Packaging Subcommittee, heard several
presentations related to packaged
services, discussed the deliberations of
the Packaging Subcommittee, and
recommended that—
1. CMS submit to the Packaging
Subcommittee, for its ongoing review,
common clinical scenarios involving
currently packaged HCPCS codes and
recommendations of specific services or
procedures for which payment would be
most appropriately packaged under the
OPPS. (Recommendation 6)
2. When CMS changes the dollar
amount of the drug packaging threshold
and determines that some drugs within
a single therapeutic class fall on either
side of the packaging threshold, CMS
consider packaging all of the drugs
within that class on the basis of
feedback from providers, the APC Panel,
and stakeholders. (Recommendation 7)
3. CMS continue to study the impact
of increased packaging on beneficiaries.
(Recommendation 8)
4. The work of the APC Packaging
Subcommittee continue.
(Recommendation 9)
With respect to these August 2009
APC Panel recommendations, we are
accepting recommendations 6, 8, and 9.
We are continuing the work of the APC
Panel Packaging Subcommitee, and we
appreciate the Packaging Subcommitee’s
expertise and experience regarding
packaging under the OPPS and the
valuable advice the Subcommittee
continues to provide to us. We will
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14:52 Nov 19, 2009
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continue to bring to the Subcommittee’s
attention clinical scenarios identified by
us or the public regarding services that
are currently packaged or are candidates
for future packaging under the OPPS. As
discussed above, we also will continue
to study the impact of increased
packaging on Medicare beneficiaries, as
the APC Panel has previously
recommended to us. We did not share
additional packaging data with the APC
Panel at the most recent August 2009
meeting because we believe the APC
Panel’s discussions would benefit from
analyses of an additional year of claims
data after CY 2008. Therefore, we plan
to incorporate analysis of CY 2009
claims into the information we will
bring to the APC Panel for its review at
the winter 2010 meeting. Finally, our
response to recommendation 7
regarding the packaging of payment for
all drugs in the same therapeutic class
is discussed in section V.B.2.c. of this
final rule with public comment.
Comment: Many commenters
expressed a wide range of views on the
existing policies for packaging payment
for categories of services that CMS
proposed to continue for CY 2010. One
commenter claimed that while
packaging provides an incentive for
providers to deliver services in the most
efficient, cost-effective manner possible,
payment bundles that are too small do
not enhance efficiencies, while payment
bundles that are too large may carry
excessive copayments for patients who
need only a small proportion of services
in the bundle. Another commenter
suggested that CMS’ packaging policy is
likely to lead to less efficient use of
resources, limited access to innovative
treatment options, and greater
instability in payments because, unlike
the incentives from packaging under the
IPPS, under the OPPS, the hospital
would receive greater payment by
bringing the outpatient back for a
second visit or admitting the patient for
inpatient care than by utilizing a more
costly approach to providing an
outpatient service that would be paid
the same, regardless of the approach.
The commenter also stated that when an
APC’s payment rate is significantly less
than the cost of a technology, hospitals
have a strong disincentive to use that
technology, even if it could reduce the
costs of care at a later date and provide
better care to the patient.
Several commenters asserted that the
implications of OPPS packaging policies
are unknown due to a lack of
transparency in the OPPS ratesetting
process and methodology used to
determine payment for packaged
services, potentially leading to
inappropriate payment and
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60413
underutilization of image-guidance
services. The commenters believed that
packaging payment for image-guidance
leads to hospitals discouraging
physicians from using guidance services
and that, therefore, CMS should not
package payment for image-guidance
services. Several commenters urged
CMS to consider establishing a 2 to 3
year data collection period during
which separate payment would be made
for new technology or new applications
of existing technology. The commenters
further suggested that the data could
then be used to evaluate the impact of
packaging on clinical utilization and
payment and could also be used to
determine whether to package or
maintain separate payment for the
services in the future. Another
commenter recommended that CMS
adopt a threshold policy that would be
similar to the existing policy used to
identify packaged drugs, under which
separate payment would be made for all
services with a median cost in excess of
a nominal threshold amount.
Response: We continue to believe that
packaging creates incentives for
hospitals and their physician partners to
work together to establish appropriate
protocols that eliminate unnecessary
services where they exist and
institutionalize approaches to providing
necessary services more efficiently.
With respect to new services or new
applications of existing technology, we
believe that packaging payment for
ancillary and dependent services creates
appropriate incentives for hospitals to
seriously consider whether a new
service or a new technology offers a
benefit that is sufficient to justify the
cost of the new service or technology.
Where this review results in reductions
in services that are only marginally
beneficial or hospitals’ choices not to
utilize certain technologies, we believe
that this could improve, rather than
harm, the quality of care for Medicare
beneficiaries because every service
furnished in a hospital carries some
level of risk to the patient. Moreover, we
believe that hospitals strive to provide
the best care they can to the patients
they serve so that when new
technologies are proven to improve the
quality of care, their utilization will
increase appropriately, whether the
payment for them is packaged or not.
However, we are aware that there are
financial pressures on hospitals that
might motivate some providers to split
services among different hospital
encounters in such a way as to
maximize payments. While we do not
expect that hospitals would routinely
change the way they furnish services or
the way they bill for services in order
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to maximize payment, we recognize that
it would be possible and we consider
that possibility as we annually review
hospital claims data. We will to
continue examine claims data for
patterns of fragmented care, and if we
find a pattern in which a hospital
appears to be dividing care across
multiple days, we will refer it for
investigation to the QIO or to the
program safeguard contractor, as
appropriate to the circumstances we
find.
In section II.A.1. of this final rule with
comment period, we discuss the
established methodology we use to
incorporate the costs of packaged
services into payment for the associated
independent procedures. In response to
those commenters with concerns about
transparency of the ratesetting process
that incorporates packaged costs, in
general, we package the costs of services
into the payment for the major
separately paid procedure on the same
claim on which the packaged service
appears. Hence, it is the practice of
hospitals with regard to reporting and
charging for packaged services that
determines the separately paid service
into which the cost of a packaged
service is incorporated and the amount
of packaged cost included the payment
for that separately paid procedure.
Regarding the recommendation that
we establish a cost threshold that would
guide the packaging of services, we do
not agree that this approach would
result in appropriate packaging of costs
for dependent ancillary services. A
threshold policy could create incentives
for hospitals to increase charges to
ensure that payment for certain services
was made separately, and the result
would be contrary to the creation of
incentives for prudent assessment of the
costs and benefits of these services.
Furthermore, as we stated in the CY
2009 OPPS/ASC final with comment
period (73 FR 68572), it is not clear
whether one set of packaging principles
or one threshold could apply to the
wide variety of services under the
OPPS. Finally, to adopt a policy that
would only package services that are
low cost ancillary and supportive
services would essentially negate the
concept of averaging that is an
underlying premise of a prospective
payment system because hospitals
would not have a particular incentive to
provide care more efficiently.
We believe it is important to continue
to advance value-based purchasing by
Medicare in the hospital outpatient
setting by furthering the focus on value
of care rather than volume. While we
acknowledge the concerns of the
commenters and, as discussed below,
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are committed to considering the impact
of packaging payment on Medicare
beneficiaries further in the future, we
must balance the concerns of the
commenters with our goal of continuing
to encourage efficient use of hospital
resources. As we noted in the CY 2009
OPPS/ASC final rule with comment
period in our response to comments on
the CY 2009 OPPS/ASC proposed rule
(73 FR 68572) and as we note in our
responses to public comments on the
CY 2010 OPPS/ASC proposed rule, the
suggestions and packaging criteria
recommended by most commenters are
focused almost exclusively on
preventing packaging, rather than on
determining when packaging would be
appropriate. We also welcome
suggestions from the public on
approaches to packaging that would
encourage efficient use of hospital
resources.
Comment: Several commenters
commended CMS for reviewing and
accepting the APC Panel’s February
2009 recommendation that CMS
continue to analyze the impact of
increased packaging on Medicare
beneficiaries. The commenters
expressed concern about CMS’ current
packaging policy and urged CMS to
conduct a more detailed review of the
hospital claims data in order to verify
that current OPPS packaging policies
and methodologies are accomplishing
CMS’ goals. A few commenters offered
recommendations for additional data
analyses for CMS to consider in the
ongoing efforts to study the impact of
increased packaging under the OPPS.
The commenters recommended that
CMS compare utilization of currently
packaged services billed and paid
separately under the OPPS in CY 2007,
before the packaging of additional
categories of services went into effect, to
the frequency of those same services
that were packaged in CY 2008 and
later, after the packaging of additional
categories of services went into effect.
The commenters requested that CMS
conduct these studies at the CPT code
level. The commenters also
recommended that CMS conduct a
hospital-level review of the data, in
addition to an overall review, and
compare overall utilization by packaged
HCPCS code for CYs 2005 and 2006 to
CYs 2007, 2008, and 2009. Another
commenter, in support of a providerlevel review of the data, asserted that
reviewing the data for packaged services
at a national aggregate level can easily
mask the behavioral changes of classes
of hospitals and, therefore, concluded
that more detailed analysis is needed to
determine the impact of the policy.
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Several commenters requested that CMS
present its analyses in the final rule
with comment period and at upcoming
APC Panel meetings and consult with
relevant stakeholders before proposing
any additional packaging changes. The
commenters also recommended that
CMS make the data underlying
payments for packaged services,
including utilization rates and median
costs, publicly available to enhance the
transparency of its decision making so
that stakeholders could assess whether
the payment rates truly reflect the costs
of providing the bundle of services.
Response: We agree that it is
important to examine our claims data to
assess the impact of packaging to the
extent we can do so. During the
September 2007 APC Panel meeting, the
APC Panel requested that CMS evaluate
the impact of expanded packaging on
Medicare beneficiaries. At the March
2008 APC Panel meeting, the APC Panel
requested that CMS report to the APC
Panel at the first meeting in CY 2009
regarding the impact of packaging on
net payments for patient care. In
response to these requests, we shared
the first available CY 2008 claims data
with the APC Panel at the February
2009 APC Panel meeting. In that
analysis, we compared the frequency of
specific categories of services we newly
packaged for CY 2008 as they were
billed under the OPPS in CY 2007,
before expanded packaging went into
effect, to the frequency of those same
categories of services in CY 2008, their
first year of packaged payment. In each
category, the HCPCS codes that we
compared are the ones that we
identified in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66659 through 66664) as fitting into one
of the seven packaging categories listed
in section II.A.4.a. of this final rule with
comment period. The data shared with
the APC Panel at the February 2009 APC
Panel meeting compared CY 2007
claims processed through September 30,
2007, to CY 2008 claims processed
through September 30, 2008, and
represented about 60 percent of the full
year data. We did not make any
adjustments for inflation, changes in
Medicare population, or other variables
that potentially influenced billing
between CY 2007 and CY 2008. A
summary of these data analyses was
included in the CY 2010 OPPS/ASC
proposed rule (74 FR 35287 through
35289) and is reiterated above.
We note that we plan to present
subsequent analyses that compare CY
2007 claims processed through
September 30, 2007, to CY 2008 claims
processed through September 30, 2008,
and to CY 2009 claims processed
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through September 30, 2009, to the APC
panel at the APC Panel’s winter 2010
meeting. We do not anticipate providing
analyses using claims for services
furnished during CY 2005 or CY 2006
because the packaging of the seven
categories of services was effective for
services furnished on and after January
1, 2008, and, therefore, we view CY
2007, the year immediately preceding
the year that the packaging expansion
went into effect, to be the base year for
our comparisons. In addition, we do not
anticipate providing the analyses at a
provider-specific level or at a HCPCS
code level. It is not clear to us how we
would be able to use an analysis at the
provider-specific level or the HCPCS
code level or what value such an
analysis would have in the context of
national packaging policies for the
OPPS.
We note that we make available a
considerable amount of data for public
analysis each year through the
supporting data files that are posted on
the CMS Web site in association with
the display of the proposed and final
rules. In addition, we make available the
public use files of claims and a detailed
narrative description of our data process
for the annual OPPS/ASC proposed and
final rules that the public can use to
perform any desired analyses.
Therefore, commenters are able to
examine and analyze these data to
develop specific information to support
their requests for changes to payments
under the OPPS, whether with regard to
separate payment for a packaged service
or other issues. We understand that the
OPPS is a complex payment system and
that it may be difficult to determine the
quantitative amount of packaged cost
included in the median cost for every
independent service. However, based on
the complex and detailed public
comments on prior proposed rules that
we have received, some commenters
have performed meaningful analyses at
a detailed and service-specific level
based on the public claims data
available.
With regard to the commenters’
request that we not expand OPPS
packaging until after we have produced
data on the impact of packaging policy
changes and consulted with
stakeholders, we note that we establish
all significant OPPS payment policies,
including the packaging status of each
HCPCS code, through the annual
rulemaking process. Integral to this
process is a detailed explanation of the
claims data on which we base our
proposals and the availability of the
claims from which we develop those
data for the use of the public to perform
any level of analysis they choose.
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Moreover, the OPPS/ASC annual
rulemaking process provides a 60-day
public comment period, as well as
public presentations and discussion of
the proposals at the summer APC Panel
meeting. We also reply to all public
comments that are within the scope of
the OPPS/ASC proposed rule when we
issue the OPPS/ASC final rule with
comment period. In addition, we
regularly meet with parties throughout
the year who want to share their views
on topics of interest to them. All of
these activities and discussions provide
significant information and
opportunities for the public to influence
and inform policy changes that we may
be considering.
Comment: Some commenters
expressed concern about the impact that
packaging payment for services
described by separate HCPCS codes
could have on the submission of claims
data by hospitals for those packaged
codes and, therefore, with the validity of
conclusions that could be drawn from
impact analyses performed by CMS.
One commenter questioned CMS’
assumption that the OPPS packaging
policies would allow continued
collection of the data necessary to set
appropriate, stable payment rates in the
future. The commenter believed that
greater packaging may eliminate
hospitals’ incentive to code for items
and services for which separate
payment is not made. The commenter
further argued that CMS’ past
experiences with packaging payment for
ancillary items and services indicate
that hospitals do not report HCPCS
codes for items and services that do not
directly affect hospital payment.
Similarly, the commenter explained
that, under the IPPS, hospitals report
only the data required to assign a case
to the highest paying appropriate
diagnosis-related group (DRG), even
though other data might affect payment
in the long term. The commenter saw no
reason to believe that the current OPPS
packaging approach would have a
different outcome unless CMS gives
clear instructions that hospitals should
continue coding for all items and
services used in the care of patients and
provides an incentive to report
packaged items and services.
Several commenters argued that the
costs of new services are not reflected in
the historical claims data CMS uses to
set payment rates. The commenters
believed that if CMS were to package
payment for a new imaging service
under the same criteria proposed for
many existing imaging services, not
only would CMS have no basis for
determining how much the new service
costs in its first 2 years of availability,
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60415
but also CMS would provide no
incentive to hospitals to report codes
and charges for the new service for use
in future OPPS ratesetting. The
commenters further asserted that the
resulting incomplete data would lead to
inappropriate payments for independent
services that, in turn, would limit access
to care and would discourage continued
innovation to improve patient care.
Response: We do not believe that
there will be a significant change in
what hospitals report and charge for the
outpatient services they furnish to
Medicare beneficiaries and other
patients as a result of our current
packaging methodology. Medicare cost
reporting standards specify that
hospitals must impose the same charges
for Medicare patients as for other
patients. We are often told by hospitals
that many private payers pay based on
a percentage of charges and that, in
accordance with Medicare cost
reporting rules and generally accepted
accounting principles, hospital
chargemasters do not differentiate
between the charges to Medicare
patients and other patients. Therefore,
we have no reason to believe that
hospitals will stop reporting HCPCS
codes and charges for packaged services
they provide to Medicare beneficiaries.
As we stated in the CY 2009 OPPS/ASC
final rule with comment period (74 FR
68575), 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
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 cost of the packaged service
being incorporated into the cost we
estimate for the separately paid service.
If a HCPCS code is not reported when
a packaged service is provided, we
acknowledge that it can be challenging
to specifically track the utilization
patterns and resource cost of the
packaged service itself. However, we
have no reason to believe that hospitals
have not considered the cost of the
packaged service in reporting charges
for the independent, separately paid
service.
We expect that hospitals, as other
prudent businesses, have a quality
review process that ensures that they
accurately and completely report the
services they furnish, with appropriate
charges for those services to Medicare
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and all other payers. We encourage
hospitals to report all HCPCS codes that
describe packaged services that were
furnished, unless the CPT Editorial
Panel or CMS provides other guidance.
To the extent that hospitals include
separate charges for packaged services
on their claims, the estimated costs of
those packaged services are then added
to the costs of separately paid
procedures on the same claims and used
in establishing payment rates for the
separately paid services.
Comment: One commenter argued
that CMS’ packaging methodology for
guidance services used in radiation
oncology procedures is not transparent.
Specifically, the commenter claimed
that CMS packaged payment for the
radiation oncology image-guidance
services (shown in Table 15) into the
payment for independent radiation
therapy services (shown in Table 16)
without publishing its packaging
methodology. The commenter further
stated that the lack of transparency
regarding CMS’ packaging methodology
is of concern to the radiation oncology
community, and that it would be
helpful if CMS published the
information used in the APC Panel’s
determination of packaging and
payment rates.
TABLE 15—PACKAGED RADIATION ONCOLOGY GUIDANCE SERVICES
CY 2010 CPT code
77421
77014
77417
76950
CY 2010 Long descriptor
..............................................
..............................................
..............................................
..............................................
Stereoscopic X ray guidance for localization of target volume for the delivery of radiation therapy.
Computed tomography guidance for placement of radiation fields.
Therapeutic radiology port film(s).
Ultrasonic guidance for aspiration of ova, imaging supervision and interpretation.
TABLE 16—SEPARATELY PAID RADIATION THERAPY SERVICES
CY 2010 CPT code
CY 2010 Long descriptor
77402 ...................................
Radiation treatment delivery, single treatment area, single port or parallel opposed ports, simple blocks or no
blocks; up to 5MeV.
Radiation treatment delivery, single treatment area, single port or parallel opposed ports, simple blocks or no
blocks; 6–10MeV.
Radiation treatment delivery, single treatment area, single port or parallel opposed ports, simple blocks or no
blocks; 11–19 MeV.
Radiation treatment delivery, single treatment area, single port or parallel opposed ports, simple blocks or no
blocks; 20 MeV or greater.
Radiation treatment delivery, 2 separate treatment areas, 3 or more ports on a single treatment area, use of multiple blocks; up to 5 MeV.
Radiation treatment delivery, 2 separate treatment areas, 3 or more ports on a single treatment area, use of multiple blocks; 6–10 MeV.
Radiation treatment delivery, 2 separate treatment areas, 3 or more ports on a single treatment area, use of multiple blocks; 11–19 MeV.
Radiation treatment delivery, 2 separate treatment areas, 3 or more ports on a single treatment area, use of multiple blocks; 20 MeV or greater.
Radiation treatment delivery, 3 or more separate treatment areas, custom blocking, tangential ports, wedges, rotational beam, compensators, electron beam; up to 5 MeV.
Radiation treatment delivery, 3 or more separate treatment areas, custom blocking, tangential ports, wedges, rotational beam, compensators, electron beam; 6–10 MeV.
Radiation treatment delivery, 3 or more separate treatment areas, custom blocking, tangential ports, wedges, rotational beam, compensators, electron beam; 11–19 MeV.
Radiation treatment delivery, 3 or more separate treatment areas, custom blocking, tangential ports, wedges, rotational beam, compensators, electron beam; 20 MeV or greater.
Therapeutic radiology port film(s).
Intensity modulated treatment delivery, single or multiple fields/arcs, via narrow spatially and temporally modulated beams, binary, dynamic MLC, per treatment session.
77403 ...................................
77404 ...................................
77406 ...................................
77407 ...................................
77408 ...................................
77409 ...................................
77411 ...................................
77412 ...................................
77413 ...................................
77414 ...................................
77416 ...................................
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77417 ...................................
77418 ...................................
Response: Although the APC Panel
provides valuable advice with regard to
the establishment of OPPS payment
policies and payment rates, the APC
Panel does not, as the commenter
suggested, determine what services are
packaged under the OPPS or establish
OPPS payment rates. We adopt the
OPPS payment policies regarding
packaging and other issues and establish
payment rates through the annual
rulemaking cycle.
In general, payment for a packaged
HCPCS code is included in the payment
for the independent service with which
it is associated, to the extent that the
cost of the packaged service is reflected
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on the single procedure claims that are
used to calculate the median cost for the
independent, separately paid service.
We intend to further examine the
packaging of image-guidance for
radiation therapy in the analyses of the
impact of packaging that we plan to
discuss with the APC Panel at the
winter 2010 meeting. However, as we
describe earlier in this section, we make
available a considerable amount of data
for public analysis each year, provide
the claims we use to calculate median
costs, and provide a detailed narrative
description of our data process that the
public can use to analyze any topic of
interest to them.
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Comment: One commenter supported
CMS’ goal of increased efficiency in
hospital outpatient care. However, the
commenter was concerned that
packaging payment for services too soon
could create access problems for
technologies that would otherwise
improve patient outcomes and reduce
costs. The commenter urged CMS to
reinstate separate payment in CY 2010
for ICE, FFR, and IVUS until a thorough
analysis has been performed on the
impact of packaging payment for these
services, including the rate of change in
their utilization over time and market
penetration.
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Response: As discussed earlier in this
section, in response to the request from
the APC Panel that CMS evaluate the
impact of expanded packaging on
Medicare beneficiaries, we analyzed 9
months of CY 2007 and CY 2008 data
related to all services that were
packaged during CY 2008. Analysis of
the intraoperative category (which
includes IVUS, ICE, and FFR) showed
minimal changes in the frequency and
the number of hospitals reporting these
packaged services between CY 2007 and
CY 2008. The IVUS, ICE, and FFR
services studied specifically included
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).
As discussed previously, in February
2009 we presented an analysis to the
APC Panel that showed an increase of
8 percent in the number of services
billed and an increase in aggregate
payment of 25 percent in CY 2008,
when IVUS, ICE and FFR were
packaged, in comparison to CY 2007
when IVUS, ICE and FFR were paid
separately. Additionally, we intend to
continue our analysis of the impact of
greater packaging on Medicare
beneficiaries and to present additional
data to the APC Panel at the winter 2010
meeting.
We note that IVUS, ICE, and FFR
services are existing, established
technologies and that hospitals have
provided some of these services in the
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HOPD since the implementation of the
OPPS in CY 2000. IVUS, FFR, and ICE
are all dependent services that are
always provided in association with
independent services. Given the
increase in the number of services
furnished and the associated payment
between CY 2007 and CY 2008, we have
seen no evidence from our claims data
that beneficiary access to care is being
harmed by packaging payment for IVUS,
ICE, and FFR services. We believe that
packaging creates appropriate incentives
for hospitals and their physician
partners to carefully consider the
technologies that are used in the care of
patients, in order to ensure that
technologies are selected for use in each
case based on their expected benefit to
a particular Medicare beneficiary.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposals,
without modification, to packaged
payment for the seven categories of
services, including guidance services,
image processing services,
intraoperative services, imaging
supervision and interpretation services,
diagnostic radiopharmaceuticals,
contrast media, and observation
services. We refer readers to section
V.B.2.d. of this final rule with comment
period for further discussion of our final
policy to package payment for contrast
agents and diagnostic
radiopharmaceuticals. We refer readers
to section II.A.2.e.(1) for further
discussion of our final policy to pay for
observation services through extended
assessment and management composite
APCs under certain circumstances. We
plan to discuss with the APC Panel
additional analyses of the impact of
packaging these categories of services at
the winter 2010 APC Panel meeting.
(3) Other Service-Specific Packaging
Issues
The APC Panel also recommended
that CMS reassign CPT code 76098
(Radiological examination, surgical
specimen) from APC 0317 (Level II
Miscellaneous Radiology Procedures) to
APC 0260 (Level I Plain Film), and to
place CPT code 76098 on the bypass
list. Based on our analysis of the CY
2010 claims containing CPT 76098 and
clinical review of the services being
furnished, in the CY 2010 OPPS/ASC
proposed rule (74 FR 35241), we
proposed to treat CPT code 76098 as a
‘‘T- packaged’’ code for CY 2010 with
continued assignment to APC 0317. As
discussed above, a ‘‘T-packaged code,’’
identified with status indicator ‘‘Q2,’’
describes a code whose payment is
packaged when one or more separately
paid surgical procedures with a status
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60417
indicator of ‘‘T’’ are provided during the
hospital encounter. The assignment of
status indicator ‘‘Q2’’ to CPT code
76098 would result in more claims data
being available to set the median costs
for the surgical procedures with which
CPT code 76098 is most commonly
billed (for example, CPT code 19101
(Biopsy of breast, percutaneous, needle
core, not using image guidance; open
incisional)), while continuing to provide
appropriate separate payment that
reflects the costs of the service,
including its packaged costs, when it is
not billed with a surgical procedure.
Further discussion related to the
proposal is included in section II.A.1.b.
of this final rule with comment period.
Comment: One commenter requested
that CPT code 76098 remain separately
payable instead of conditionally
packaged. The commenter
acknowledged that radiological
examination of a surgical specimen is
performed in conjunction with a
surgical procedure most of the time but
asserted that when the service is
conditionally packaged, surgical
procedure payment would not cover the
cost of the radiological examination of
a surgical specimen.
Response: We continue to believe that
when CPT code 76098 is furnished on
the same date of service as a major
separately payable procedure, CPT code
76098 is a dependent service that is
ancillary and supportive to the
independent service with which it is
performed and that, therefore, it is most
appropriate to package the cost of CPT
code 76098 into the payment for the
independent, separately paid procedure.
The full cost of CPT code 76098 is
packaged into the cost of the
independent, separately paid procedure
to the extent that the hospital’s charge
for the packaged service, when reduced
to cost by the hospital’s applicable CCR,
results in an accurate reflection of the
cost of the packaged service. As we
stated in the CY 2009 OPPS/ASC final
rule with comment period (74 FR
68575), 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
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
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service. We note that further discussion
of CPT code 76098 as it relates to the
commenters’ requests to add this code
to the bypass list is included in section
II.A.1.b. of this final rule with comment
period.
After consideration of the public
comment we received, we are finalizing
our CY 2010 proposal, without
modification, to assign CPT code 76098
status indicator ‘‘Q2’’ to signify that the
service is packaged when it is reported
with a separately paid procedure that
has a status indicator of ‘‘T’’ on the
same date of service and separately paid
under APC 0317 when it is not reported
on the same date of service with a
separately paid surgical procedure that
has a status indicator of ‘‘T.’’ The final
CY 2010 APC median cost of APC 0317
is approximately $374.
Comment: A number of commenters
disagreed with CMS’ proposal to
package electrodiagnostic guidance for
chemodenervation procedures. The
commenters asserted that paying
chemodenervation procedures at the
same rate, regardless of the use of
electrodiagnostic guidance, may
discourage providers from using
guidance to place a needle filled with a
potentially fatal substance like
botulinum toxin. They urged CMS to
consider providing a separate payment
for electrodiagnostic needle guidance to
ensure that quality of care is not
compromised.
Response: While the commenters did
not identify specific chemodenervation
guidance CPT codes, we note that the
costs of chemodenervation guidance
services, 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)) are reflected in the
median costs of the independent,
separately paid chemodenervation
procedures as a function of the
frequency that chemodenervation
services are reported with a particular
guidance CPT code. We recognize that,
in some cases, supportive and ancillary
dependent services are furnished at a
high frequency with independent
services, and in other cases, they are
furnished with independent services at
a low frequency. Nonetheless, we
believe that packaging should reflect the
reality of how these services are
furnished. Moreover, we believe that
hospitals make prudent and appropriate
patient care decisions with regard to
when they furnish packaged services.
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After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to
unconditionally package payment for
chemodenervation guidance services
described by CPT codes 95873 and
95874. These CPT codes are, therefore,
assigned status indicator ‘‘N’’ in
Addendum B to this final rule with
comment period.
Comment: One commenter objected to
the assignment of status indicator ‘‘N’’
to a number of guidance procedures and
requested that CMS conditionally
packaged these services so that they
could be paid separately if they are the
only services furnished in a hospital
encounter. The commenter believed that
it is not appropriate that the hospital
receives no payment when these
services are furnished in preparation for
a surgical procedure that is canceled
after the services have been furnished
but before the patient is taken to the
operating room. The procedures of
concern to the commenter include 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)); 19295
(Image guided placement, metallic
localization clip, percutaneous, during
breast biopsy (List separately in
addition to code for primary
procedure)); 77031 (Stereotactic
localization guidance for breast biopsy
or needle placement (e.g., for wire
localization or for injection), each
lesion, radiological supervision and
interpretation)); 77032 (Mammographic
guidance for needle placement, breast
(e.g., for wire localization or for
injection), each lesion, radiological
supervision and interpretation); and
76942 (Ultrasonic guidance for needle
placement (e.g., biopsy, aspiration,
injection, localization device), imaging
supervision and interpretation).
Response: We appreciate the
commenter’s submission of this clinical
scenario for our review. The APC Panel
Packaging Subcommittee provides
substantive advice to us on the
packaging of services, either
conditionally or unconditionally under
the OPPS, and the Subcommittee
members bring broad and deep expertise
and experience to their review of
clinical scenarios. Therefore, we will
review these services and the scenario
described by the commenter with the
APC Panel’s Packaging Subcommittee at
the winter 2010 APC Panel meeting.
After review of the public comment
we received, we are finalizing our CY
2010 proposal, without modification, to
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unconditionally package payment for
CPT codes 19290, 19291, 19295, 77031,
77032, and 76942. These CPT codes are
assigned status indicator ‘‘N’’ in
Addendum B to this final rule with
comment period. We will review the
OPPS treatment of these CPT codes with
the APC Panel Packaging Subcommittee
at the winter 2010 APC Panel meeting.
Comment: One commenter suggested
that it is very challenging for hospitals
to determine they were paid correctly
for services furnished because of CMS’
‘‘Q’’ status indicators and the
complexity of determining which
HCPCS codes should be separately paid.
The commenter asked that CMS make
the claims processing system more
transparent.
Response: We acknowledge that the
OPPS is a complex payment system and
that it is difficult to determine the
correct payment for a service that is
subject to conditional packaging.
Addendum D1 to this final rule with
comment period describes how services
that appear in Addendum B with status
indicators ‘‘Q1,’’ ‘‘Q2,’’ and ‘‘Q3’’ are
treated in claims processing. In the case
of conditionally packaged codes with
status indicators ‘‘Q1’’ or ‘‘Q2,’’ where
the criteria for separate payment are not
met, these codes are treated as packaged
services. We assign status indicators
‘‘Q1’’ and ‘‘Q2’’ to conditionally
packaged services to indicate that they
are usually packaged, except for special
circumstances when they are separately
payable. Through the I/OCE claims
processing logic, the status indicator of
a conditionally packaged service
reported on a claim is changed either to
‘‘N’’ or the status indicator of the APC
to which the code is assigned for
separate payment, depending upon the
presence or absence of other OPPS
services also reported on the claim with
the same date of service. Status
indicator ‘‘Q3’’ indicates that the code is
a member of a composite APC.
Addendum M includes the HCPCS
codes for all services that are paid either
through single code APCs or composite
APCs when the criteria for composite
APC payment are met. A full discussion
of the composite criteria for each
composite APC (to which status
indicator ‘‘Q3’’ applies) is included in
section II.A.2.e. of this final rule with
comment period.
In addition to the availability of these
resources that describe whether a
service is separately payable or
packaged (in the case of services with
status indicators ‘‘Q1’’ or ‘‘Q2’’) or a
member of a composite APC (in the case
of services with status indicator ‘‘Q3’’),
the quarterly I/OCE and the OPPS Pricer
that are used by the Fiscal Intermediary
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Standard System (FISS) to process
claims paid under the OPPS are both
available to the public each calendar
quarter. The I/OCE instructions and
specifications that are utilized for OPPS
and non-OPPS payment for hospital
outpatient services are available
quarterly for download on the CMS Web
site at: https://www.cms.hhs.gov/
OutpatientCodeEdit/02_OCEQtr
ReleaseSpecs.asp#TopOfPage. Providers
interested in purchasing the I/OCE
software should visit the authorized
distributor’s Web site at https://
www.ntis.gov/products/oceapc.aspx for
more information on how to obtain the
software. There is no OPPS Pricer
application for personal computers at
this time. However, providers can
download the files that contain the
logic, rates, wage indices, and off-set
amounts used by the OPPS Pricer
program to calculate APC rates,
copayments, and deductibles from the
CMS Web site at: https://
www.cms.hhs.gov/PCPricer/
08_OPPS.asp.
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.
Under the authority in section
1833(t)(3)(C)(iv) of the Act, for CY 2010,
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
2010 published in the FY 2010 IPPS/
LTCH PPS final rule (74 FR 44002) is
2.1 percent. To set the OPPS conversion
factor for CY 2010, we increased the CY
2009 conversion factor of $66.059, as
specified in the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68584 through 68585), by 2.1 percent.
Hospitals that fail to meet the reporting
requirements of the Hospital Outpatient
Quality Data Reporting Program (HOP
QDRP) 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
2010 to ensure that any revisions we
made 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
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0.9997 for wage index changes by
comparing total payments from our
simulation model using the FY 2010
IPPS final wage index values to those
payments using the current (FY 2009)
IPPS wage index values. For CY 2010,
we did not propose a change to our rural
adjustment policy. Therefore, the budget
neutrality factor for the rural adjustment
is 1.0000.
For this final rule with comment
period, we estimated that pass-through
spending for both drugs and biologicals
and devices for CY 2010 will equal
approximately $45.5 million, which
represents 0.14 percent of total
projected CY 2010 OPPS spending.
Therefore, the conversion factor was
also adjusted by the difference between
the 0.11 percent estimate of passthrough spending set aside for CY 2009
and the 0.14 percent estimate of CY
2010 pass-through spending. Finally,
estimated payments for outliers remain
at 1.0 percent of total OPPS payments
for CY 2010.
The market basket increase update
factor of 2.1 percent for CY 2010, the
required wage index budget neutrality
adjustment of approximately 0.9997,
and the adjustment of 0.03 percent of
projected OPPS spending for the
difference in the pass-through spending
set aside resulted in a full market basket
conversion factor for CY 2010 of
$67.406. To calculate the CY 2010
reduced market basket conversion factor
for those hospitals that fail to meet the
requirements of the HOP QDRP for the
full CY 2010 payment update, we made
all other adjustments discussed above,
but used a reduced market basket
increase update factor of 0.1 percent.
This resulted in a reduced market basket
conversion factor for CY 2010 of
$66.086 for those hospitals that fail to
meet the HOP QDRP requirements.
We did not receive any public
comments on the calculation of the
conversion factor. Therefore, we are
finalizing our CY 2010 proposal,
without modification, to update the
OPPS conversion factor by the FY 2010
IPPS market basket increase update
factor of 2.1 percent, resulting in a final
full conversion factor of $67.406 and in
a reduced conversion factor of $66.086
for those hospitals that fail to meet the
HOP QDRP reporting requirements for
the full CY 2010 payment update.
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
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60419
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
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, in the CY 2010 OPPS/ASC
proposed rule (74 FR 35291), we did not
propose to revise this policy for the CY
2010 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 2010 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 care short-stay hospital
under the IPPS also applies 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 2010 version of the
IPPS wage indices used to pay IPPS
hospitals to adjust the CY 2010 OPPS
payment rates and copayment amounts
for geographic differences in labor cost
for all providers that participate in the
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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 2010 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),
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. For the FY
2010 wage indices, these changes
include a continuing transition to the
new reclassification threshold criteria
that were finalized in the FY 2009 IPPS
final rule (73 FR 48568 through 48570),
updated 2007–2008 occupational mix
survey data, and a continuing transition
to state-level budget neutrality for the
rural and imputed floors. We refer
readers to the FY 2010 IPPS/LTCH PPS
final rule (74 FR 43823) for a detailed
discussion of all final changes to the FY
2010 IPPS wage indices. 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 2010
OPPS/ASC proposed rule (74 FR 35291)
include all reclassifications that are
approved by the Medicare Geographic
Classification Review Board (MGCRB)
for FY 2010.
As noted in the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68585), after issuance of the CY 2009
OPPS/ASC proposed rule, section 124 of
Public Law 110–275 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 CY 2009 proposed rule
because Public Law 110–275 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 adopted all section 508
geographic reclassifications through
September 30, 2009. Similar to our
treatment of section 508
reclassifications extended under Public
Law 110–173 as described in the CY
2009 OPPS/ASC final rule with
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comment period (73 FR 68586),
hospitals with section 508
reclassifications revert to their home
area wage index, with out-migration
adjustment if applicable, or a current
MGCRB reclassification, from October 1,
2009 to December 31, 2009. As we did
for CY 2008, we also have extended 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
Public Law 110–275 (73 FR 57888).
Because the provisions of section 124 of
Public Law 110–275 expire in 2009 and
are not applicable to FY 2010, we did
not make any proposals related to those
provisions for the OPPS wage indices
for CY 2010.
For purposes of the OPPS, we
proposed to continue our policy in CY
2010 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 FY 2010
IPPS final rule (74 FR 44118 through
44125), as subsequently corrected at 74
FR 51506, 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 corrected, as
Addendum L to this final rule with
comment period, with the addition of
non-IPPS hospitals that will receive the
section 505 out-migration adjustment
under the CY 2010 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.
Therefore, we proposed to use the final
FY 2010 IPPS wage indices for
calculating the OPPS payments in CY
2010. 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 FY 2010 IPPS
final wage indices referenced in this
discussion of the wage index. We refer
readers to the CMS Web site for the
OPPS at: https://www.cms.hhs.gov/
HospitalOutpatientPPS/. At this link,
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readers will find a link to the FY 2010
IPPS final wage index tables.
Comment: Several commenters
expressed support for the CMS proposal
to extend the IPPS wage indices to the
OPPS in CY 2010, consistent with prior
year policies under the OPPS.
Response: We appreciate the support
expressed by commenters for our
proposed CY 2010 wage index policies.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to use the final
FY 2010 IPPS wage indices to adjust the
OPPS standard payment amounts for
labor market differences.
D. Statewide Average Default CCRs
In addition to using CCRs to estimate
costs from charges on claims for
ratesetting, CMS uses overall hospitalspecific CCRs calculated from the
hospital’s most recent cost report to
determine outlier payments, payments
for pass-through devices, and monthly
interim transitional corridor payments
under the OPPS during the PPS year.
Medicare contractors cannot calculate a
CCR for some hospitals 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 all-inclusive rate status
(Medicare Claims Processing Manual,
Pub. 100–04, Chapter 4, Section 10.11).
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35292), we proposed to
update the default ratios for CY 2010
using the most recent cost report data.
We discuss our policy for using default
CCRs, including setting the ceiling
threshold for a valid CCR, in the CY
2009 OPPS/ASC final rule with
comment period (73 FR 68594 through
68599) in the context of our adoption of
an outlier reconciliation policy for cost
reports beginning on or after January 1,
2009.
For CY 2010, we used our standard
methodology of calculating the
statewide average default CCRs using
the same hospital overall CCRs that we
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use to adjust charges to costs on claims
data for setting the CY 2010 proposed
OPPS relative weights. Table 12 that
was published in the CY 2010 OPPS/
ASC proposed rule (74 FR 35293
through 35294) listed the proposed CY
2010 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 overall CCR for the cost
centers relevant to outpatient services
from the most recent pair of final settled
and submitted cost reports. We then
weighted each hospital’s CCR by the
volume of separately paid line-items on
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hospital claims corresponding to the
year of the majority of cost reports used
to calculate the overall CCRs. We refer
readers to 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 our trimming criteria.
For this CY 2010 OPPS/ASC final rule
with comment period, approximately 44
percent of the submitted cost reports
utilized in the default ratio calculations
represented data for cost reporting
periods ending in CY 2008 and 55
percent were for cost reporting periods
ending in CY 2007. For Maryland, we
used an overall weighted average CCR
for all hospitals in the nation as a
substitute for Maryland CCRs. Few
hospitals in Maryland are eligible to
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60421
receive payment under the OPPS, which
limits the data available to calculate an
accurate and representative CCR. In
general, observed changes in the
statewide average default CCRs between
CY 2009 and CY 2010 are modest and
the few significant changes are
associated with areas that have a small
number of hospitals.
We did not receive any public
comments concerning our CY 2010
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 for setting the CY 2010 proposed
OPPS relative weights. Therefore, we
are finalizing the statewide average
default CCRs as shown in Table 17
below for OPPS services furnished on or
after January 1, 2010.
BILLING CODE 4120–01–P
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BILLING CODE 4120–01–C
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
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additional payment adjustment (called
either transitional corridor payments or
transitional outpatient payment (TOPs))
if the payments it received for covered
OPD services under the OPPS were less
than the payments it would have
received for the same services under the
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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 and were intended 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
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 was less than the provider’s
pre-BBA amount, the amount of
payment was increased by 95 percent of
the amount of the difference between
the two payment systems for CY 2006,
by 90 percent of the amount of that
difference for CY 2007, and by 85
percent of the amount of that difference
for CY 2008.
For CY 2006, we implemented section
5105 of Public Law 109–171 through
Transmittal 877, issued on February 24,
2006. In the Transmittal, we did not
specifically address whether TOPs
apply to essential access community
hospitals (EACHs), which are
considered to be SCHs under section
1886(d)(5)(D)(iii)(III) of the Act.
Accordingly, under the statute, EACHs
are treated as SCHs. In the CY 2007
OPPS/ASC final rule with comment
period (71 FR 68010), we stated that
EACHs were not eligible for TOPs under
Public Law 109–171. However, we
stated they were eligible for the
adjustment for rural SCHs. In the CY
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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 of 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.
For CY 2009, we revised our
regulations at §§ 419.70(d)(2) and (d)(4)
and added a new paragraph (d)(5) to
incorporate the provisions of section
147 of Public Law 110–275. In addition,
we made other technical changes to
§ 419.70(d)(2) to more precisely capture
our existing policy and to correct an
inaccurate cross-reference. We also
made technical corrections to the crossreferences in paragraphs (e), (g), and (i)
of § 419.70. In the CY 2010 OPPS/ASC
proposed rule (74 FR 35295), for CY
2010, we proposed to make a technical
correction to the heading of
§ 419.70(d)(5) to correctly identify the
policy as described in the subsequent
regulation text. The paragraph heading
should indicate that the adjustment
applies to small SCHs, rather than to
rural SCHs.
Effective for services provided on or
after January 1, 2010, rural hospitals and
SCHs (including EACHs) having 100 or
fewer beds will no longer be eligible for
hold harmless TOPs, in accordance with
section 147 of Public Law 110–275.
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,
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brachytherapy sources, and devices 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 areas and
hospitals in 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 separately payable drugs and
biologicals, brachytherapy sources, and
devices 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,
including EACHs, again in CY 2008 and
CY 2009. Further, in the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68590), we updated 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.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35295), for the CY 2010
OPPS, we proposed to continue our
policy of a budget neutral 7.1 percent
payment adjustment for rural SCHs,
including EACHs, for all services and
procedures paid under the OPPS,
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excluding separately payable drugs and
biologicals, devices paid under the passthrough payment policy, and items paid
at charges reduced to costs. 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 reports, and
provider information.
Comment: A number of commenters
generally supported the proposal to
continue the rural SCH (including
EACHs) adjustment for CY 2010 OPPS.
Several commenters also asked that
CMS extend for CY 2010 the TOPs
payment policies that were in effect for
CY 2009. The commenters
recommended that CMS evaluate the
differences in cost between urban and
rural hospitals over an extended 3-year
period using updated claims, cost
reports, and provider information. They
further suggested that, during the 3-year
period in which CMS would be
gathering data, CMS pay SCHs and rural
hospitals with less than 100 beds that
are not SCHs the greater of the TOPs
payment in effect for CY 2009 or the
OPPS payment for the applicable
calendar year plus the 7.1 percent rural
adjustment, whichever is greater. The
commenters claimed that CMS’ reversal
of the TOPs allowance after only 1 year
of reimplementation for certain rural
hospitals was unreasonable and could
irreparably harm those rural hospitals
absent a safety net mechanism in place.
Response: We agree that it is
appropriate to continue the 7.1 percent
adjustment for rural SCHs (including
EACHs) as we proposed for CY 2010.
However, we are not extending the CY
2009 TOPs payment policies for rural
hospitals with 100 beds or less and for
SCHs (including EACHs) with 100 or
fewer beds for CY 2010. Section
1833(t)(7)(D)(i)(II) of the Act provides
that, in the case of a hospital located in
a rural area with 100 beds or fewer and
that is not a sole community hospital,
for covered OPD services furnished on
or after January 1, 2006 and before
January 1, 2010, for which the PPS
amount is less than the pre-BBA
amount, the amount of payment should
be increased by the applicable
percentage of the amount of such
difference. Section 1833(t)(7)(D)(i)(III) of
the Act also extends 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, under the specific
circumstances outlined in the statute.
Therefore, sections 1833(t)(D)(i)(II) and
(III) of the Act specifically expire TOPs
payment to these categories of hospitals
for services furnished on and after
January 1, 2010. Accordingly, in CY
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2010, neither rural SCHs nor rural
hospitals with less than 100 beds will
receive payment at whichever is greater,
the TOPs payment in place for CY 2009
or payment for CY 2010, which includes
the rural adjustment for rural SCHs,
because sections 1833(t)(7)(D)(i)(II) and
(III) of the Act expire TOPS payments as
explained above. As we indicate above,
we intend to reassess the 7.1 percent
rural adjustment in the near future by
examining differences between urban
and rural hospitals’ costs using updated
claims, cost reports, and provider
information.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to apply the 7.1
percent payment adjustment to rural
SCHs for most services paid under the
CY 2010 OPPS, excluding drugs,
biologicals, and devices paid under the
pass-through payment policy, and items
paid at charges adjusted to cost. We also
are making a technical correction to the
heading of § 419.70(d)(5) to correctly
identify the policy described in the
regulation text of § 419.70(d)(5). The
paragraph heading indicates that the
adjustment applies to small SCHs,
rather than to rural SCHs.
F. Hospital Outpatient Outlier Payments
1. Background
Currently, the OPPS pays outlier
payments on a service-by-service basis.
For CY 2009, 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 $1,800 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 the cost of a service 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. Before CY
2009, this outlier payment had
historically been considered a final
payment by longstanding OPPS policy.
We implemented a reconciliation
process similar to the IPPS outlier
reconciliation process for cost reports
with cost reporting periods beginning
on or after January 1, 2009 (73 FR 68594
through 68599).
It has been our policy for the past
several years to report the actual amount
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of outlier payments as a percent of total
spending in the claims being used to
model the proposed OPPS. We
previously estimated that CY 2008
outlier payments were approximately
0.73 percent of the total CY 2008 OPPS
payments (73 FR 68592). Our current
estimate of total outlier payments as a
percent of total CY 2008 OPPS payment,
using CY 2008 claims processed through
June 30, 2009, and the revised OPPS
expenditure estimate for the 2009
Trustees Report, is approximately 1.2
percent of the total aggregated OPPS
payments. Therefore, for CY 2008, we
estimate that we paid approximately 0.2
percent more than the CY 2008 outlier
target of 1.0 percent of total aggregated
OPPS payments.
As explained in the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68594), we set our projected target
for aggregate outlier payments at 1.0
percent of the aggregate total payments
under the OPPS for CY 2009. The
outlier thresholds were set so that
estimated CY 2009 aggregate outlier
payments would equal 1.0 percent of
the total aggregated payments under the
OPPS. Using our final rule CY 2008
claims data and CY 2009 payment rates,
we currently estimate that the aggregate
outlier payments for CY 2009 would be
approximately 1.03 percent of the total
CY 2009 OPPS payments. The
difference between 1.0 percent and 1.03
percent is reflected in the regulatory
impact analysis in section XXI.B. of this
final rule with comment period. We
note that we provide estimated CY 2010
outlier payments for hospitals and
CMHCs with claims included in the
claims data that we used to model
impacts in the Hospital-Specific
Impacts—Provider-Specific Data file on
the CMS Web site at: https://
www.cms.hhs.gov/
HospitalOutpatientPPS/.
2. Outlier Calculation
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35296), we proposed to
continue our policy of estimating outlier
payments to be 1.0 percent of the
estimated aggregate total payments
under the OPPS in CY 2010. We
proposed that a portion of that 1.0
percent, specifically 0.02 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 as a proportion of total
estimated outlier payments. As
discussed in section X.C. of this final
rule with comment period, for CMHCs,
we proposed that if a CMHC’s cost for
partial hospitalization services, paid
under either APC 0172 (Level I Partial
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Hospitalization (3 services)) or APC
0173 (Level II Partial Hospitalization (4
or more services)), exceeds 3.40 times
the payment for APC 0173, the outlier
payment would be calculated as 50
percent of the amount by which the cost
exceeds 3.40 times the APC 0173
payment rate. For further discussion of
CMHC outlier payments, we refer
readers to section X.C. of this final rule
with comment period.
To ensure that the estimated CY 2010
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
rate plus a $2,225 fixed-dollar
threshold. This proposed threshold
reflected the methodology discussed
below in this section, as well as the
proposed APC recalibration for CY
2010.
We calculated the fixed-dollar
threshold for the CY 2010 OPPS/ASC
proposed rule using largely the same
methodology as we did in CY 2009 (73
FR 41462). For purposes of estimating
outlier payments for the CY 2010 OPPS/
ASC proposed rule, we used the
hospital-specific overall ancillary CCRs
available in the April 2009 update to the
Outpatient Provider-Specific File
(OPSF). The OPSF contains providerspecific data, such as the most current
CCR, which are 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 2010 OPPS/
ASC proposed rule, we used CY 2008
claims to model the CY 2010 OPPS. In
order to estimate the CY 2010 hospital
outlier payments for the CY 2010 OPPS/
ASC proposed rule, we inflated the
charges on the CY 2008 claims using the
same inflation factor of 1.1511 that we
used to estimate the IPPS fixed-dollar
outlier threshold for the FY 2010 IPPS/
LTCH PPS proposed rule (74 FR 24245).
For 1 year, the inflation factor we used
was 1.0729. The methodology for
determining this charge inflation factor
was discussed in the FY 2010 IPPS/
LTCH PPS proposed rule (74 FR 24245).
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.
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As noted in the CY 2007 OPPS/ASC
final rule with comment period (71 FR
68011), we are concerned that we could
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
2010 IPPS outlier calculation to the
CCRs used to simulate the CY 2010
OPPS outlier payments that determine
the fixed-dollar threshold. Specifically,
for CY 2010, we proposed to apply an
adjustment of 0.9840 to the CCRs that
were in the April 2009 OPSF to trend
them forward from CY 2009 to CY 2010.
The methodology for calculating this
adjustment is discussed in the FY 2010
IPPS/LTCH PPS proposed rule (74 FR
24245 through 24247) and the FY 2010
IPPS/LTCH PPS final rule (74 FR 44007
through 44011).
Therefore, to model hospital outlier
payments for the CY 2010 OPPS/ASC
proposed rule, we applied the overall
CCRs from the April 2009 OPSF file
after adjustment (using the proposed
CCR inflation adjustment factor of
0.9840 to approximate CY 2010 CCRs) to
charges on CY 2008 claims that were
adjusted (using the proposed charge
inflation factor of 1.1511 to approximate
CY 2010 charges). We simulated
aggregated CY 2010 hospital outlier
payments using these costs for several
different fixed-dollar thresholds,
holding the 1.75 multiple threshold
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 2010 OPPS
payments. We estimated that a proposed
fixed-dollar threshold of $2,225,
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 proposed
fixed-dollar $2,225 threshold are met.
For CMHCs, if a CMHC’s cost for partial
hospitalization services, paid under
either APC 0172 or APC 0173, exceeds
3.40 times the payment for APC 0173,
the outlier payment would be calculated
as 50 percent of the amount by which
the cost exceeds 3.40 times the APC
0173 payment rate.
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60427
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 furnished
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 to
continue our policy that we
implemented in CY 2009 that the
hospitals’ costs would be compared to
the reduced payments for purposes of
outlier eligibility and payment
calculation. 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 proposal to increase the
outlier fixed-dollar threshold to
maintain a target outlier spending
percentage of 1.0 percent. One
commenter requested that CMS not
overestimate the fixed-dollar outlier
threshold by decreasing the CY 2010
proposed threshold proportionally to
only account for the amount Medicare
paid in excess of the 1 percent target
outlier percentage in CY 2009. A few
commenters suggested that the target
outlier spending percentage be raised.
One commenter recommended that the
target outlier spending percentage be
raised to maintain the $1,800 fixeddollar threshold that is in effect for CY
2009. Another commenter requested
that CMS increase the amount of outlier
payment from 50 percent to 80 percent
of the difference between the OPPS
payment and the estimated provider
cost for the service to make OPPS
outlier policy more consistent with IPPS
outlier policy. One commenter
expressed concern that changes in
outlier payments disproportionately
affected the safety net hospitals. One
commenter supported the proposal to
use the same assumptions regarding
charge inflation and CCR inflation as
under the IPPS.
Response: We appreciate the
commenters’ support regarding the
development of the OPPS outlier policy.
We are not raising the threshold to
recover the 0.03 percent of OPPS
payment that we estimate was paid in
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addition to the target outlier percent of
1 percent for CY 2009 because we do
not adjust the fixed-dollar threshold in
future years for either paying too much
or too little in outlier payments in past
years. We are not increasing the percent
of total OPPS payment that we attribute
to outlier payments, either for general
purposes or to maintain the $1,800
threshold for CY 2010, because we
continue to believe that it is appropriate
to maintain the target outlier percentage
of 1 percent of total payment under the
OPPS and to have a fixed-dollar
threshold so that OPPS outlier payments
are made only where the hospital would
experience a significant loss for
supplying a particular service.
Similarly, we are not increasing the
outlier payment percentage from 50
percent to 80 percent of the difference
between the amount by which the cost
of furnishing the service exceeds 1.75
times the APC payment rate because we
do not believe that hospitals carry the
same level of risk when they furnish
outpatient hospital services as when
they furnish inpatient hospital services.
OPPS outlier payments are intended to
protect hospitals from excessive losses
when providing an extraordinarily
costly service, and we believe that the
potential for loss when furnishing OPPS
services is limited. Payment bundles
under the OPPS are small relative to
those under the IPPS, and the OPPS
pays separately for many services. The
OPPS would pay hospitals for many
individual services provided to a very
costly patient reducing their financial
risk. Patients for whom a hospital may
incur extraordinary costs for providing
individual OPPS services would usually
require hospital admission. As
described above, outlier payments are
designed to protect hospitals from
financial risk in providing services to
costly patients, and are not designed to
affect any specific hospital classes, such
as safety net hospitals. With regard to
the application of charge inflation
factors, we agree that the charge
inflation factors that apply to inpatient
hospitals services are equally applicable
to services provided under the OPPS.
Therefore, as specified below, we are
applying the charge inflation factors that
were used to calculate the outlier fixeddollar threshold for the IPPS in the
calculation of the fixed-dollar threshold
for the CY 2010 OPPS.
Comment: Several commenters asked
that CMS eliminate outlier payments for
CMHCs and use the funds allocated to
outlier payments for CMHCs to increase
payments for services provided by
CMHCs.
Response: Outlier payments to
CMHCs are discussed in section X.C. of
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this final rule with public comment. We
respond to this comment as part of that
discussion.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal for the
outlier calculation, without
modification, as outlined below.
3. Final Outlier Calculation
For CY 2010, we are applying the
overall CCRs from the July 2009 OPSF
file with a CCR adjustment factor of
0.988 to approximate CY 2010 CCRs to
charges on the final CY 2008 claims that
were adjusted to approximate CY 2010
charges (using the final 2-year charge
inflation factor of 1.1418). We simulated
aggregated CY 2010 hospital outlier
payments using these costs for several
different fixed-dollar thresholds,
holding the 1.75 multiple threshold
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 2010 OPPS
payments. We estimate that a fixeddollar threshold of $2,175, combined
with the multiple threshold of 1.75
times the APC payment rate, will
allocate 1.0 percent of aggregated total
OPPS payments to outlier payments.
In summary, for CY 2010, 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 final fixed-dollar
$2,175 threshold are met. For CMHCs, if
a CMHC’s cost for PHP services, paid
under either APC 0172 or APC 0173,
exceeds 3.40 times the payment for APC
0173, the outlier payment is calculated
as 50 percent of the amount by which
the cost exceeds 3.40 times the APC
0173 payment rate. We estimate that
this threshold will allocate 0.03 percent
of outlier payments to CMHCs for PHP
outlier payments.
4. Outlier Reconciliation
In the CY 2009 OPPS/ASC final rule
with comment period (73 CFR 68599),
we adopted as final policy a process to
reconcile hospital or CMHC outlier
payments at cost report settlement for
services furnished during cost reporting
periods beginning in CY 2009. OPPS
outlier reconciliation ensures accurate
outlier payments for those facilities
whose CCRs fluctuate significantly
relative to the CCRs of other facilities,
and who receive a significant amount of
outlier payments. OPPS outlier
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reconciliation thresholds are provided
in the Medicare Claims Processing
Manual (Pub. 100–4), Chapter 4, Section
10.7.2.1, reevaluated annually, and
modified if necessary. When the cost
report is settled, reconciliation of outlier
payments will be based on the hospitalspecific overall ancillary CCR,
calculated as 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 outlier payments ensures
that the outlier payments made are
appropriate and that final outlier
payments reflect the most accurate cost
data. In the CY 2009 OPPS/ASC final
rule with comment period (73 FR
68599), we also finalized a proposal to
adjust the amount of final outlier
payments determined during
reconciliation for the time value of
money. The OPPS outlier reconciliation
process will require recalculating outlier
payments for individual claims in order
to accurately determine the net effect of
a change in a hospital’s or CMHC’s
overall CCR on the facility’s total outlier
payments. For cost reporting periods
beginning in CY 2009, Medicare
contractors will begin to identify cost
reports that require outlier
reconciliation as a component of cost
report settlement. At this time, CMS
continues to develop a method for
reexamining claims to calculate the
change in total outlier payments in
order to reconcile outlier payments for
these cost reports.
As under the IPPS, we do not adjust
the fixed-dollar threshold or amount of
total OPPS payment set aside for outlier
payments for reconciliation activity.
The predictability of the fixed-dollar
threshold is an important component of
a prospective payment system. We do
not adjust the prospectively set outlier
threshold for the amount of outlier
payment reconciled at cost report
settlement because such action would
be contrary to the prospective nature of
the system. Our outlier threshold
calculation assumes that overall
ancillary CCRs accurately estimate
hospital costs based on the information
available to us at the time we set the
prospective fixed-dollar outlier
threshold. For these reasons, we are not
incorporating any assumptions about
the effects of reconciliation into our
calculation of the OPPS fixed-dollar
outlier threshold.
Comment: A number of commenters
asked that CMS report the amount of
outlier reconciliation activity, including
aggregate amounts recovered by
provider type and region. They
suggested that, if the reconciled
amounts are significant, these amounts
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should be factored into the annual
fixed-dollar outlier threshold. Several
commenters supported the current
reconciliation thresholds identified in
the CMS manual (Medicare Claims
Processing Manual (Pub. 100–04),
Chapter 4, Section 10.7.2.1). One
commenter asked that CMS apply the
outlier reconciliation thresholds
established in manual instructions to
the claims used for estimating outlier
payment and the fixed-dollar threshold
to achieve the most accurate estimates
possible.
Response: We revised Worksheet E,
Part B, of the Medicare hospital cost
report form CMS 2552–10 to collect
OPPS outlier reconciliation information
for cost reports beginning on or after
January 1, 2009. This information will
be available to the public through the
Hospital Cost Report Information
System (HCRIS). We do not expect to
take outlier reconciliation amounts into
account in our projections of future
outlier payments. We believe that the
reconciliation CCR and outlier payment
thresholds implemented in the final rule
(73 CFR 68599) are generous and that
most hospitals will not be subject to
outlier reconciliation upon cost report
settlement. Further, it is difficult to
predict the specific hospitals that will
have CCRs and outlier payments
reconciled in any given year. We also
note that reconciliation occurs because
hospitals’ actual CCRs for the cost
reporting period are different than the
interim CCRs used to calculate outlier
payment when a bill is processed. Our
fixed-dollar 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. We do not believe that
estimating the fixed-dollar threshold to
estimate the amount of payment that
may be recovered as a result of outlier
reconciliation in any given year would
necessarily result in a more accurate
estimate of outlier payments or a more
accurate calculation of the fixed-dollar
threshold for outlier payment for the
prospective payment year. For these
reasons, we will not make any
assumptions about the amount of
anticipated reconciliation of outlier
payments on the outlier threshold
calculation.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without 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 2010, and we
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are including an adjustment for the time
value of money.
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 42 CFR
part 419, subparts C and D. 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 final
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
2010 scaled weight for the APC by the
final CY 2010 conversion factor.
We note that section 1833(t)(17) of the
Act, which applies to hospitals as
defined under section 1886(d)(1)(B) of
the Act, requires that hospitals that fail
to submit data required to be submitted
on quality measures selected by the
Secretary, in the form and manner and
at a time specified by the Secretary,
receive 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 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 payments
that would 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,’’ ‘‘U,’’ ‘‘V,’’ or ‘‘X’’ (as
defined in Addendum D1 to this final
rule with comment period), in a
circumstance in which the multiple
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60429
procedure discount does not apply, the
procedure is not bilateral, and
conditionally packaged services (status
indicator of ‘‘Q1’’ and ‘‘Q2’’) qualify for
separate payment. We note that blood
and blood products with status
indicator ‘‘R’’ are not subject to wage
adjustment but are subject to reduced
payments when a hospital fails to meet
the HOP QDRP requirements, as
outlined in the steps and examples
below.
Individual providers interested in
calculating the payment amount that
they would 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 0.98
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 2010 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 a specific service.
X is the labor-related portion of the
national unadjusted payment rate.
X = .60 * (national unadjusted payment
rate)
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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 geographic statistical areas
(which are based upon OMB standards)
to which hospitals are assigned for FY
2010 under the IPPS, reclassifications
through the MGCRB, section
1886(d)(8)(B) ‘‘Lugar’’ hospitals,
reclassifications under section
1886(d)(8)(E) of the Act, as defined in
§ 412.103 of the regulations and
hospitals designated as urban under
section 601(g) of Public Law 98–21. We
note that the reclassifications of
hospitals under section 508 of Public
Law 108–173, as extended by section
124 of Public Law 110–275, expired on
September 30, 2009, and will not be
applicable under the IPPS for FY 2010.
Therefore, these reclassifications will
not apply to the CY 2010 OPPS. For
further discussion of the changes to the
FY 2010 IPPS wage indices, as applied
to the CY 2010 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 FY 2010 IPPS
final payment rates published in the
Federal Register on August 27, 2009 (74
FR 43827).
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 2010 IPPS and published as
Table 4J in the FY 2010 IPPS final rule
(74 FR 44118 through 44125), as
corrected in the Federal Register on
October 2, 2009 (74 FR 51506) This step
is to be followed only if the hospital is
not reclassified or redesignated under
section 1886(d)(8) or section 1886(d)(10)
of the Act.
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.
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.
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Xa is the 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 is the 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, set forth
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 would 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 use a
provider that is located in Wayne, New
Jersey that is assigned to CBSA 35644.
This provider bills one service that is
assigned to APC 0019 (Level I Excision/
Biopsy). The CY 2010 full national
unadjusted payment rate for APC 0019
is $294.06. The reduced national
unadjusted payment rate for a hospital
that fails to meet the HOP QDRP
requirements is $288.17. This reduced
rate is calculated by multiplying the
reporting ratio of 0.98 by the full
unadjusted payment rate for APC 0019.
The FY 2010 wage index for a
provider located in CBSA 35644 in New
Jersey is 1.3005. The labor-related
portion of the full national unadjusted
payment is $229.45 (.60 * $294.06 *
1.3005). The labor-related portion of the
reduced national unadjusted payment is
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$224.85 (.60 * $288.17 * 1.3005). The
nonlabor-related portion of the full
national unadjusted payment is $117.62
(.40 * $294.06). The nonlabor-related
portion of the reduced national
unadjusted payment is $115.26 (.40 *
$288.17). The sum of the labor-related
and nonlabor-related portions of the full
national adjusted payment is $347.07
($229.45 + $117.62). The sum of the
reduced national adjusted payment is
$340.11 ($224.85 + $115.26).
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 2010.
Therefore, we are finalizing our
proposed CY 2010 methodology,
without modification.
H. Beneficiary Copayments
1. Background
Section 1833(t)(3)(B) of the Act
requires the Secretary to set rules for
determining the unadjusted 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
2010, 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
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35298), for CY 2010, we
proposed to determine copayment
amounts for new and revised APCs
using the same methodology that we
implemented beginning in CY 2004.
(We refer readers to the November 7,
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2003 OPPS final rule with comment
period (68 FR 63458)). In addition, we
proposed to use the same standard
rounding principles that we have
historically used 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) in which
we discuss our rationale for applying
these rounding principles.) The national
unadjusted copayment amounts for
services payable under the OPPS that
will be effective January 1, 2010, 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, as we proposed, we
are providing that, for CY 2010, the
Medicare beneficiary’s minimum
unadjusted copayment and national
unadjusted copayment for a service to
which a reduced national unadjusted
payment rate applies will 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.
Comment: One commenter
recommended that CMS continue its
educational outreach and keep Medicare
beneficiaries informed about the
benefits of supplemental/secondary
insurance in reducing their out-ofpocket costs for orthopedic procedures.
Response: We appreciate the
commenter’s support for our
educational efforts on the availability of
supplemental/secondary insurance and
refer beneficiaries seeking information
about their Medicare benefits and
supplemental/secondary insurance
coverage to the Web site at: https://
www.medicare.gov.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, for determining
APC copayment amounts.
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, $64.51 is 22
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percent of the full national unadjusted
payment rate of $294.06. For APCs with
only a minimum unadjusted copayment
in Addendum A and B of this final rule
with comment period, identify a
beneficiary payment percentage of 20
percent.
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 is the 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
indicated in Steps 2 through 4 under
section II.G. of this final rule with
comment period. Calculate the rural
adjustment for eligible providers as
indicated in Step 6 under 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 0.98.
The unadjusted copayments for
services payable under the OPPS that
will be effective January 1, 2010, 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 CPT and
Level II HCPCS Codes
CPT and Level II HCPCS codes are
used to report procedures, services,
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60431
items, and supplies under the hospital
OPPS. Specifically, CMS recognizes the
following codes on OPPS claims: (1)
Category I CPT codes, which describe
medical services and procedures; (2)
Category III CPT codes, which describe
new and emerging technologies,
services, and procedures; and (3) Level
II HCPCS codes, which are used
primarily to identify products, supplies,
temporary procedures, and services not
described by CPT codes. CPT codes are
established by the AMA and the Level
II HCPCS codes are established by the
CMS HCPCS Workgroup. These codes
are updated and changed throughout the
year. CPT and HCPCS code changes that
affect the OPPS are published both
through the annual rulemaking cycle
and through the OPPS quarterly update
Change Requests (CRs). CMS releases
new Level II HCPCS codes to the public
or recognizes the release of new CPT
codes by the AMA and makes these
codes effective (that is, the codes can be
reported on Medicare claims) outside of
the formal rulemaking process via OPPS
quarterly update CRs. This quarterly
process offers hospitals access to codes
that may more accurately describe items
or services furnished and/or provides
payment or more accurate payment for
these items or services in a timelier
manner than if CMS waited for the
annual rulemaking process. We solicit
comments on these new codes and
finalize our proposals related to these
codes through our annual rulemaking
process.
We note that we sought public
comments in the CY 2009 OPPS/ASC
final rule with comment period on the
new CPT and Level II HCPCS codes that
were effective January 1, 2009. We also
sought public comments in the CY 2009
OPPS/ASC final rule with comment
period on the new Level II HCPCS codes
effective October 1, 2008. These new
codes with an effective date of October
1, 2008 or January 1, 2009 were flagged
with comment indicator ‘‘NI’’ (New
code, interim APC assignment;
comments will be accepted on the
interim APC assignment for the new
code) in Addendum B to the CY 2009
OPPS/ASC final rule with comment
period to indicate that we were
assigning them an interim payment
status and an APC and payment rate, if
applicable, which were subject to public
comment following publication of the
CY 2009 OPPS/ASC final rule with
comment period. Summaries of public
comments on the codes flagged with
comment indicator ‘‘NI’’ in the CY 2009
OPPS/ASC final rule with comment
period and our responses are included
in the sections of this final rule with
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comment period that are relevant to the
services described by those codes.
In Table 13 of the CY 2010 OPPS/ASC
proposed rule (74 FR 35299), which is
reproduced as Table 18 in this final rule
with comment period, we summarized
our process for updating codes through
our OPPS quarterly update CRs, seeking
public comment, and finalizing their
treatment under the OPPS.
TABLE 18—COMMENT TIMEFRAME FOR NEW OR REVISED HCPCS CODES
Type of code
Effective date
Comments sought
When finalized
April 1, 2009 ......................
Level II HCPCS Codes .....
April 1, 2009 ......................
CY 2010 OPPS/ASC proposed rule.
July 1, 2009 .......................
Level II HCPCS Codes .....
July 1, 2009 ......................
CY 2010 OPPS/ASC proposed rule.
Category I (certain vaccine
codes) and Category III
CPT Codes.
Level II HCPCS Codes .....
July 1, 2009 ......................
CY 2010 OPPS/ASC proposed rule.
October 1, 2009 ................
October 1, 2009 ................
January 1, 2010 ................
Level II HCPCS Codes .....
January 1, 2010 ................
Category I and Category
III CPT Codes.
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OPPS quarterly update CR
January 1, 2010 ................
CY 2010 OPPS/ASC final
rule with comment period.
CY 2010 OPPS/ASC final
rule with Comment Period.
CY 2010 OPPS/ASC final
rule with comment period.
CY 2010 OPPS/ASC final
rule with comment period.
CY 2010 OPPS/ASC final
rule with comment period.
CY 2010 OPPS/ASC final
rule with comment period.
CY 2011 OPPS/ASC final
rule with comment period.
CY 2011 OPPS/ASC final
rule with comment period.
CY 2011 OPPS/ASC final
rule with comment period.
1. Treatment of New Level II HCPCS
Codes and Category I CPT Vaccine
Codes and Category III CPT Codes
In the April 1 and July 1 CRs for CY
2009, we made effective a total of 13
new Level II HCPCS codes that were not
addressed in the CY 2009 OPPS/ASC
final rule with comment period that
updated the OPPS and we allowed
separate payment for 12 of these new
codes. Through the April 1, 2009 CR, we
also changed the OPPS status indicator
for one existing Level II HCPCS code
from the interim status indicator
designated in the CY 2009 OPPS/ASC
final rule with comment period to a
status indicator that allowed separate
pass-through payment for this code. In
addition to the changes for Level II
HCPCS codes, we made effective 5 new
Category I vaccine and Category III CPT
codes that were not addressed in the CY
2009 OPPS/ASC final rule with
comment period that updated the OPPS
and we allowed separate payment for 3
of these new codes.
Through the April 2009 OPPS
quarterly update CR (Transmittal 1702,
Change Request 6416, dated March 13,
2009), we allowed separate payment for
a total of 2 additional Level II HCPCS
codes, specifically existing HCPCS code
C9247 (Iobenguane, I–123, diagnostic,
per study dose, up to 10 millicuries) and
new HCPCS code C9249 (Injection,
certolizumab pegol, 1 mg). HCPCS code
C9249, which received separate
payment as a result of its pass-through
status under the OPPS, was made
effective on April 1, 2009. HCPCS code
C9247 was released January 1, 2009
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through the January 2009 OPPS
quarterly update CR (Transmittal 1657,
Change Request 6320, dated December
31, 2008). From January 1, 2009 through
March 31, 2009, HCPCS code C9247 was
packaged under the OPPS and assigned
status indicator ‘‘N’’ (Items and Services
Packaged into APC Rates). We note that
between January 1, 2009 through March
31, 2009, HCPCS code C9247 was
recognized as a nonpass-through
diagnostic radiopharmaceutical.
Because nonpass-through diagnostic
radiopharmaceuticals are packaged
under the OPPS, there was no separate
APC payment for HCPCS code C9247
from January 1, 2009 through March 31,
2009. However, effective April 1, 2009,
HCPCS code C9247 was allowed
separate pass-through payment and its
status indicator was revised from ‘‘N’’ to
‘‘G’’ (Pass-Through Drugs and
Biologicals).
In the CY 2010 OPPS/ASC proposed
rule, we solicited public comments on
the status indicators and APC
assignments of HCPCS codes C9247 and
C9249, which were listed in Table 14 of
that proposed rule (74 FR 35301) and
now appear in Table 19 of this final rule
with comment period.
We did not receive any public
comments on the proposed APC
assignments and status indicators for
HCPCS codes C9247 and C9249.
However, for CY 2010, the HCPCS
Workgroup replaced both HCPCS Ccodes with permanent HCPCS codes.
Specifically, C9247 was replaced with
A9582 (Iodine I–123 iobenguane,
diagnostic, per study dose, up to 15
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millicuries) and C9249 was replaced
with J0718 (Injection, certolizumab
pegol, 1 mg). Consistent with our
general policy of using permanent
HCPCS codes if appropriate rather than
HCPCS C-codes for the reporting of
drugs under the OPPS in order to
streamline coding, we are showing the
replacement HCPCS codes in Table 19
that will replace the HCPCS C-codes
effective January 1, 2010. Both HCPCS
C-codes will be deleted December 31,
2009. Because HCPCS code J0718
describes the same drug and the same
dosage currently designated by HCPCS
code C9249 and this drug will continue
on pass-through status in CY 2010, we
are assigning HCPCS code J0718 the
same status indicator and APC as its
predecessor C-code, as shown in Table
19. Although the dosage descriptor of
HCPCS code A9582 indicates ‘‘per study
dose, up to 15 millicuries’’ and the
descriptor of its predecessor C-code
designates ‘‘per study dose, up to 10
millicuries,’’ because we believe that the
reporting of one unit for a study dose
would be the same in almost all cases
under either HCPCS code, we are
assigning HCPCS code A9582 to the
same APC as its predecessor C-code, as
shown in Table 19. The recommended
dose of I–123 iobenguane is 10
millicuries for adult patients, so we
expect that hospitals would report 1
unit of new HCPCS code A9582 for the
typical dose in CY 2010, just as they
would have reported one unit of HCPCS
code C9247 previously for the typical
dose. We also note this diagnostic
radiopharmaceutical will continue on
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pass-through status in CY 2010;
therefore, its CY 2010 status indicator
remains as ‘‘G.’’ Because we did not
receive any public comments on the
new Level II HCPCS codes that were
implemented in April 2009, we are
adopting as final, without modification,
our proposal to assign the Level II
HCPCS codes listed in Table 19 to the
60433
APCs and status indicators as proposed
for CY 2010.
Table 19 below shows the final APC
and status indicator assignments for
both HCPCS codes A9582 and J0718.
TABLE 19—LEVEL II HCPCS CODES WITH A CHANGE IN OPPS STATUS INDICATOR OR NEWLY IMPLEMENTED IN APRIL
2009
CY 2009
HCPCS code
CY 2010 long descriptor
Final
CY 2010 status indicator
Final
CY 2010 APC
A9582 ...........
J0718 ...........
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CY 2010
HCPCS code
C9247 ..........
C9249 ..........
Iodine I–123 iobenguane, diagnostic, per study dose, up to 15 millicuries ........
Injection, certolizumab pegol, 1 mg .....................................................................
G ..................
G ..................
9247
9249
Through the July 2009 OPPS quarterly
update CR (Transmittal 107, Change
Request 6492, dated May 22, 2009),
which included HCPCS codes that were
made effective July 1, 2009, we allowed
separate payment for a total of 11 new
Level II HCPCS codes for pass-through
drugs and biologicals and nonpassthrough drugs and nonimplantable
biologicals. Specifically, we provided
separate payment for HCPCS codes
C9250 (Human plasma fibrin sealant,
vapor-heated, solvent-detergent (Artiss),
2ml); C9251 (Injection, C1 esterase
inhibitor (human), 10 units); C9252
(Injection, plerixafor, 1 mg); C9253
(Injection, temozolomide, 1 mg); C9360
(Dermal substitute, native, nondenatured collagen, neonatal bovine
origin (SurgiMend Collagen Matrix), per
0.5 square centimeters); C9361 (Collagen
matrix nerve wrap (NeuroMend
Collagen Nerve Wrap), per 0.5
centimeter length); C9362 (Porous
purified collagen matrix bone void filler
(Integra Mozaik Osteoconductive
Scaffold Strip), per 0.5 cc); C9363 (Skin
substitute, Integra Meshed Bilayer
Wound Matrix, per square centimeter);
C9364 (Porcine implant, Permacol, per
square centimeter); Q2023 (Injection,
factor viii (antihemophilic factor,
recombinant) (Xyntha), per i.u.); and
Q4116 (Skin substitute, Alloderm, per
square centimeter).
Although HCPCS code Q4115 (Skin
substitute, Alloskin, per square
centimeter) was made effective July 1,
2009, because ASP pricing information
was not available at the time the code
was made effective, the HCPCS code
was not paid separately and it was
assigned status indicator ‘‘M’’ (Items
and Services Not Billable to the Fiscal
Intermediary/MAC) in the CY 2010
OPPS/ASC proposed rule (74 FR 35300
through 35301). For the October 2009
OPPS quarterly update, the status
indicator for HCPCS code Q4115 was
revised from ‘‘M’’ to K’’ (NonpassThrough Drugs and Biologicals)
effective October 1, 2009 because
pricing information was available, and
this product was paid separately as a
new biological HCPCS code based on
the ASP methodology, consistent with
the final CY 2009 policy and the final
CY 2010 policy for payment of new drug
and biological HCPCS codes without
pass-through status. The change in
status indicator assignment was
announced through the October 2009
OPPS quarterly update CR (Transmittal
1803, Change Request 6626, dated
August 28, 2009).
In the CY 2010 OPPS/ASC proposed
rule, we solicited public comments on
the status indicators, APC assignments,
and payment rates of these codes, which
were listed in Table 15 of that proposed
rule (74 FR 35301) and now appear in
Table 20 of this final rule with comment
period. Because of the timing of the
proposed rule, the codes implemented
in the July 2009 OPPS update were not
included in Addendum B of that
proposed rule, while those codes based
upon the April 2009 OPPS update were
included in Addendum B. In the CY
2009 OPPS/ASC proposed rule, we
proposed to assign the new HCPCS
codes for CY 2010 to the designated
APCs listed in Table 15 for each HCPCS
code and incorporate them into our final
rule with comment period for CY 2010,
which is consistent with our annual
APC updating policy.
We did not receive any public
comments on the proposed APC
assignments, payment rates, and status
indicators designated for the codes
listed in Table 15 of the proposed rule.
However, for CY 2010, the HCPCS
Workgroup created permanent HCPCS Jcodes for 4 of the 11 separately payable
drug codes. Consistent with our general
policy of using permanent HCPCS codes
if appropriate rather than HCPCS Ccodes for the reporting of drugs under
the OPPS in order to streamline coding,
we are showing the HCPCS J-codes in
Table 20 of this final rule with comment
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period that will replace the HCPCS Ccodes effective January 1, 2010. HCPCS
code C9251 is replaced with J0598
(Injection, C1 esterase inhibitor
(human), 10 units); C9252 with J2562
(Injection, plerixafor, 1 mg); C9253 is
replaced with J9328 (Injection,
temozolomide, 1 mg); and Q2023 is
replaced with J7185 (Injection, factor
viii (antihemophilic factor,
recombinant) (Xyntha), per i.u.). The
HCPCS J-codes describe the same drugs
and the same dosages as the HCPCS Ccodes that will be deleted December 31,
2009. We note that HCPCS C-codes 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 three of
the four new HCPCS J-codes describe
the same drugs and the same dosages
that are currently designated by HCPCS
codes C9251, C9252, and C9253 and all
three of these drugs will continue on
pass-through status in CY 2010, we are
assigning the HCPCS J-codes to the same
APCs and status indicators as their
predecessor HCPCS C-codes, as shown
in Table 20. That is, HCPCS code J0598
is assigned to the same APC and status
indicator as HCPCS code C9251 (APC
9251); HCPCS code J2562 is assigned to
APC 9252; and HCPCS J9328 is assigned
to APC 9253. Also, we note that,
effective January 1, 2010, HCPCS code
Q2023 will be replaced with HCPCS
code J7185, which has the same
descriptor and is assigned to the same
APC and status indicator as HCPCS
code Q2023.
Because we did not receive any public
comments on the new Level II HCPCS
codes that were implemented in July
2009, we are adopting as final, without
modification, our proposal to assign the
Level II HCPCS codes listed in Table 20
to the APCs and status indicators as
proposed for CY 2010.
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TABLE 20—NEW LEVEL II HCPCS CODES IMPLEMENTED IN JULY 2009
CY 2010
HCPCS code
CY 2009
HCPCS code
CY 2010 Long descriptor
C9250 ...................................
C9250 ..................................
J0598 ....................................
J2562 ....................................
J9328 ....................................
C9360 ...................................
C9251
C9252
C9253
C9360
C9361 ...................................
C9361 ..................................
C9362 ...................................
C9362 ..................................
C9363 ...................................
C9363 ..................................
C9364 ...................................
J7185 ....................................
C9364 ..................................
Q2023 ..................................
Q4115 ...................................
Q4116 ...................................
Q4115 ..................................
Q4116 ..................................
Final
CY 2010
status indicator
Human plasma fibrin sealant, vapor-heated, solvent-detergent (Artiss), 2ml.
Injection, C1 esterase inhibitor (human), 10 units ............
Injection, plerixafor, 1 mg .................................................
Injection, temozolomide, 1 mg ..........................................
Dermal substitute, native, non-denatured collagen, neonatal bovine origin (SurgiMend Collagen Matrix), per
0.5 square centimeters.
Collagen matrix nerve wrap (NeuroMend Collagen Nerve
Wrap), per 0.5 centimeter length.
Porous purified collagen matrix bone void filler (Integra
Mozaik Osteoconductive Scaffold Strip), per 0.5 cc.
Skin substitute, Integra Meshed Bilayer Wound Matrix,
per square centimeter.
Porcine implant, Permacol, per square centimeter ..........
Injection, factor viii (antihemophilic factor, recombinant)
(Xyntha), per i.u..
Skin substitute, Alloskin, per square centimeter ..............
Skin substitute, Alloderm, per square centimeter .............
..................................
..................................
..................................
..................................
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35300), we proposed to
continue our established policy of
recognizing Category I CPT vaccine
codes for which FDA approval is
imminent and Category III CPT codes
that the AMA releases in January of
each year for implementation in July
through the OPPS quarterly update
process. Under the OPPS, Category I
vaccine codes and Category III CPT
codes that are released on the AMA Web
site in January are made effective in July
of the same year through the July OPPS
quarterly update CR, consistent with the
AMA’s implementation date for the
codes. Through the July 2009 OPPS
quarterly update CR, we allowed
separate payment for 3 of the 5 new
Category I vaccine and Category III CPT
Codes effective July 1, 2009.
Specifically, as displayed in Table 16 of
the CY 2010 OPPS/ASC proposed rule
(74 FR 35301) and reproduced in this
final rule with comment period as Table
21, we allowed payment for CPT codes
0199T (Physiologic recording of tremor
using accelerometer(s) and gyroscope(s),
(including frequency and amplitude)
including interpretation and report);
0200T (Percutaneous sacral
augmentation (sacroplasty), unilateral
injection(s), including the use of a
balloon or mechanical device (if
utilized), one or more needles); and
0201T (Percutaneous sacral
augmentation (sacroplasty), bilateral
injections, including the use of a
balloon or mechanical device (if
utilized), two or more needles). We note
that CPT code 0202T (Posterior vertebral
joint(s) arthroplasty (e.g., facet joint[s]
replacement) including facetectomy,
laminectomy, foraminotomy and
vertebral column fixation, with or
without injection of bone cement,
including fluoroscopy, single level,
lumbar spine) was assigned status
indicator ‘‘C’’ (Inpatient Procedures)
because we believe that this procedure
may only be safely performed on
Medicare beneficiaries in the hospital
inpatient setting. In addition, CPT code
90670 (Pneumococcal conjugate
vaccine, 13 valent, for intramuscular
use), a Category I CPT vaccine code, was
assigned status indicator ‘‘E’’ (Items,
Codes, and Services not paid by
Medicare when submitted on outpatient
claims (any outpatient bill type))
because the drug has not yet been
approved by the FDA for marketing.
Because the July 2009 OPPS quarterly
update CR was issued close to the
Final
CY 2010
APC
G
9250
G
G
G
G
9251
9252
9253
9360
G
9361
G
9362
G
9363
G
K
9364
1268
K
K
1287
1270
publication of the CY 2010 OPPS/ASC
proposed rule, the Category I vaccine
and Category III CPT codes
implemented through the July 2009
OPPS quarterly update CR were not be
included in Addendum B to the
proposed rule, but these codes were
listed in Table 16 of the proposed rule.
Additionally, we proposed to
incorporate them into Addendum B to
this CY 2010 OPPS/ASC final rule with
comment period, which is consistent
with our annual OPPS update policy.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35301), we solicited public
comments on the proposed status
indicators, APC assignments, and
payment rates for the new Category I
and III CPT codes. We did not receive
any public comments on our proposals
for CPT codes 0199T, 0200T, 0201T,
0202T, and 90670. Therefore, we are
finalizing our CY 2010 proposals for
these codes, without modification. The
final CY 2010 status indicators and APC
assignments for CPT codes 0199T,
0200T, 0201T, 0202T, and 90670 are
listed in Table 21 below, as well as in
Addendum B to this final rule with
comment period.
dcolon on DSK2BSOYB1PROD with RULES2
TABLE 21—CATEGORY I VACCINE AND CATEGORY III CPT CODES IMPLEMENTED IN JULY 2009
Final
CY 2010
status indicator
CY 2010 HCPCS code
CY 2010 long descriptor
0199T ..........................
Physiologic recording of tremor using accelerometer(s) and gyroscope(s), (including frequency and amplitude) including interpretation and report.
Percutaneous sacral augmentation (sacroplasty), unilateral injection(s), including the use of
a balloon or mechanical device (if utilized), one or more needles.
0200T ..........................
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CY 2010
APC
S
0215
T
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TABLE 21—CATEGORY I VACCINE AND CATEGORY III CPT CODES IMPLEMENTED IN JULY 2009—Continued
Final
CY 2010
status indicator
CY 2010 HCPCS code
CY 2010 long descriptor
0201T ..........................
Percutaneous sacral augmentation (sacroplasty), bilateral injections, including the use of a
balloon or mechanical device (if utilized), two or more needles.
Posterior vertebral joint(s) arthroplasty (e.g., facet joint[s] replacement) including
facetectomy, laminectomy, foraminotomy and vertebral column fixation, with or without
injection of bone cement, including fluoroscopy, single level, lumbar spine.
Pneumococcal conjugate vaccine, 13 valent, for intramuscular use .......................................
0202T ..........................
90670 ..........................
dcolon on DSK2BSOYB1PROD with RULES2
2. Process for New Level II HCPCS
Codes and Category I and Category III
CPT Codes for Which We Are Soliciting
Public Comments on the CY 2010
OPPS/ASC Final Rule With Comment
Period
As has been our practice in the past,
we incorporate those new Category I
and III CPT codes and new Level II
HCPCS codes that are effective January
1 in the final rule with comment period
updating the OPPS for the following
calendar year. These codes are released
to the public via the CMS HCPCS (for
Level II HCPCS codes) and AMA Web
sites (for CPT codes), and also through
the January OPPS quarterly update CRs.
In the past, we also have released new
Level II HCPCS codes that are effective
October 1 through the October OPPS
quarterly update CRs and incorporated
these new codes in the final rule with
comment period updating the OPPS for
the following calendar year. All of these
codes are flagged with comment
indicator ‘‘NI’’ in Addendum B to the
OPPS/ASC final rule with comment
period to indicate that we are assigning
them an interim payment status which
is subject to public comment.
Specifically, the status indicator and the
APC assignment, and payment rate, if
applicable, for all such codes flagged
with comment indicator ‘‘NI’’ are open
to public comment in this final rule
with comment period, and we respond
to these comments in the final rule with
comment period for the next calendar
year’s OPPS/ASC update. In the CY
2010 OPPS/ASC proposed rule (74 FR
35302), we proposed to continue this
process for CY 2010. Specifically, for CY
2010, we proposed to include in
Addendum B to the CY 2010 OPPS/ASC
final rule with comment period the new
Category I and III CPT codes effective
January 1, 2010 (including those
Category I vaccine and Category III CPT
codes that were released by the AMA in
July 2009) that would be incorporated in
the January 2010 OPPS quarterly update
CR and the new Level II HCPCS codes,
effective October 1, 2009 or January 1,
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14:52 Nov 19, 2009
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2010, that would be released by CMS in
its October 2009 and January 2010 OPPS
quarterly update CRs. Excluding those
Category I vaccine and Category III CPT
codes that were released by the AMA in
July 2009 which were subject to
comment in the CY 2010 OPPS/ASC
proposed rule as described above, these
codes would be flagged with comment
indicator ‘‘NI’’ in Addendum B to this
CY 2010 OPPS/ASC final rule with
comment period to indicate that we
have assigned them an interim OPPS
payment status. We proposed that their
status indicators and their APC
assignments and payment rates, if
applicable, would be open to public
comment in the CY 2010 OPPS/ASC
final rule with comment period and
would be finalized in the CY 2011
OPPS/ASC final rule with comment
period.
Comment: One commenter requested
that CMS solicit public comments on
APC assignments for the newly
implemented CPT codes that go into
effect January 1 and, when necessary,
revise their APC assignments and
implement the changes in the next
quarterly OPPS update to promote
payment accuracy.
Response: For new HCPCS codes with
an interim final APC and/or status
indicator designation in a final rule, we
are only able to finalize their
assignments in another OPPS final rule
in order to allow for the necessary
public notice and comment period and
to allow for CMS to respond to such
comments. Therefore, we only assign
HCPCS codes permanently for the year
through the annual regulatory process.
Because we are not able to revise APC
and/or status indicator assignments for
the newly implemented HCPCS codes in
CY 2010 that are assigned an interim
final status in this CY 2010 OPPS/ASC
final rule with comment period outside
of the rulemaking process, the next
available opportunity to update an APC
or status indicator for these codes is in
the CY 2011 OPPS update. These
HCPCS codes retain their interim final
APC and status indicator assignments
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Final
CY 2010
APC
T
0050
C
Not
applicable.
E
Not
applicable.
for all of CY 2010. Therefore, only in the
CY 2011 OPPS/ASC final rule with
comment period will we be able to
finalize the APC and/or status indicator
assignments of the new CY 2010 HCPCS
codes and respond to all public
comments received on their interim
designations.
After consideration of the public
comment we received, we are finalizing
our proposal, without modification, to
provide interim final status indicators
and APC assignments and payment
rates, if applicable, for all CPT codes
newly implemented in January 2010
and all HCPCS codes newly
implemented in October 2009 or
January 2010 in Addendum B to this
final rule with comment period. The
interim final OPPS treatment of these
codes is open to public comment in the
CY 2010 OPPS/ASC final rule with
comment period and will be finalized in
the CY 2011 OPPS/ASC final rule with
comment period.
B. OPPS Changes—Variations Within
APCs
1. Background
Section 1833(t)(2)(A) of the Act
requires the Secretary to develop a
classification system for covered
outpatient department services. Section
1833(t)(2)(B) of the Act provides that the
Secretary may establish groups of
covered outpatient department services
within this classification system, so that
services classified within each group are
comparable clinically and with respect
to the use of resources (and so that an
implantable item is classified to the
group that includes the service to which
the item relates). 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
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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/
surgical supplies; (6) pharmaceuticals
(other than those for which separate
payment may be allowed under the
provisions discussed in section V.3. 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 (72 FR 66650), 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
our CY 2010 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, mental health services, and
multiple imaging services. 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
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,
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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 not less
often than annually and revise the
groups, relative payment weights, and
the wage and other adjustments under
the OPPS to take into account changes
in medical practice, changes in
technology, 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 to consult
with an outside panel of experts to
review (and advise the Secretary
concerning) the clinical integrity of the
APC groups and the relative payment
weights (the APC Panel
recommendations for specific services
for the CY 2010 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 (or mean
cost, if so elected) for an item or service
within the same group (referred to as the
‘‘2 times rule’’). We use the median cost
of the item or service in implementing
this provision. In performing this
analysis, we examine data from the
significant services assigned to an APC,
specifically those HCPCS codes with a
single claim frequency of greater than
1,000 or a frequency of greater than 99
and a percentage of all single claims that
is equal to or greater than 2 percent.
Because, as a matter of policy, HCPCS
codes that are unlisted procedures, not
otherwise classified, or not otherwise
specified codes are assigned to the
lowest level APC that is appropriate to
the clinical nature of the service (69 FR
65724 through 65725), we do not
consider the costs of these services in
assessing APCs for 2 times violations.
Section 1833(t)(2) of the Act authorizes
the Secretary to make exceptions to the
2 times rule in unusual cases, such as
low-volume items and services (but the
Secretary may not make such an
exception in the case of a drug or
biological that has been designated as an
orphan drug under section 526 of the
Federal Food, Drug, and Cosmetic Act).
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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. In the CY 2010 OPPS/
ASC proposed rule (74 FR 35303), 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
2010.
During the APC Panel’s February 2009
meeting, we presented median cost and
utilization data for services furnished
during the period of January 1, 2008
through September 30, 2008, because
we had concerns or the public had
raised concerns regarding their APC
assignments, status indicator
assignments, or payment rates. 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
2010 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. We
also proposed to rename existing APCs
or create new clinical APCs to
complement proposed HCPCS code
reassignments. In many cases, the
proposed HCPCS code reassignments
and associated APC reconfigurations for
CY 2010 included in the proposed rule
were related to changes in median costs
of services that were observed in the CY
2008 claims data newly available for CY
2010 ratesetting. In addition, we
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 2010.
Addendum B to the CY 2010 OPPS/
ASC proposed rule identified, with
comment indicator ‘‘CH,’’ those HCPCS
codes for which we proposed a change
to the APC assignment or status
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dcolon on DSK2BSOYB1PROD with RULES2
indicator that were initially assigned in
the April 2009 Addendum B update
(Transmittal 1702, Change Request
6416, dated March 13, 2009).
Comment: One commenter generally
supported CMS’ adherence to the 2
times rule to ensure appropriate
payment for OPPS services and to
provide incentives for patients to be
treated in the most suitable clinical
setting. In particular, the commenter
supported the proposed reassignments
of the following CPT codes: CPT code
20103 (Exploration of penetrating
wound (separate procedure); extremity)
from APC 0136 (Level IV Skin Repair)
to APC 0007 (Level II Incision &
Drainage); and CPT code 29888
(Arthroscopically aided anterior
cruciate ligament repair/augmentation
or reconstruction) and CPT code 29889
(Arthroscopically aided posterior
cruciate ligament repair/augmentation
or reconstruction) from APC 0042 (Level
II Arthroscopy) to APC 0052 (Level IV
Musculoskeletal Procedures Except
Hand and Foot).
Response: We appreciate the
commenter’s support for the 2 times
rule in general and for the proposed
APC reassignments of CPT codes 20103,
29888, and 29889 in particular. We
agree with the commenter that the 2
times rule is an important mechanism
for ensuring appropriate payment for
OPPS services. Based on the CY 2008
claims and cost report data available for
this final rule with comment period, we
also agree with the commenter that we
should adopt the proposed
reassignments of CPT codes 20103,
29888, and 29889 in order to improve
clinical and resource homogeneity.
Therefore, after consideration of the
public comment we received, we are
finalizing, without modification, our CY
2010 proposals to reassign CPT code
20103 to APC 0007, with a final CY
2010 APC median cost of approximately
$843 and CPT codes 29888 and 29889
to APC 0052, with a final CY 2010 APC
median cost of approximately $5,921.
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. We stated in
the CY 2010 OPPS/ASC proposed rule
(74 FR 35303) that we took into account
the APC changes that we proposed for
CY 2010 based on the APC Panel
recommendations, the other proposed
changes to status indicators and APC
assignments as identified in Addendum
B to the proposed rule, and the use of
CY 2008 claims data available for the
proposed rule to calculate the median
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costs of procedures classified in the
APCs. We then reviewed all of the APCs
to determine which APCs would not
satisfy the 2 times rule and to determine
which APCs should be proposed as
exceptions to the 2 times rule for CY
2010. 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); and
• 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 17 of the CY 2010 OPPS/ASC
proposed rule (74 FR 35303) listed 14
APCs that we proposed to exempt from
the 2 times rule for CY 2010 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
2008 claims data used to determine the
APC payment rates that we proposed for
CY 2010. The median costs for hospital
outpatient services for these and all
other APCs that were used in the
development of the CY 2010 OPPS/ASC
proposed rule and this final rule with
comment period can be found on the
CMS Web site at: https://
www.cms.hhs.gov/
HospitalOutpatientPPS/
01_overview.asp.
For the CY 2010 OPPS/ASC proposed
rule, we based the listed exceptions to
the 2 times rule on claims data for dates
of service between January 1, 2008, and
December 31, 2008, that were processed
before January 1, 2009. For this final
rule with comment period, we used
claims data for dates of service between
January 1, 2008, and December 31, 2008,
that were processed on or before June
30, 2008, and updated CCRs, if
available. Thus, after responding to all
of the public comments on the CY 2010
OPPS/ASC proposed rule and making
changes to APC assignments based on
those comments, we analyzed the CY
2008 claims data used for this final rule
with comment period to identify the
APCs with 2 times violations. Based on
the final CY 2008 claims data, we found
that there are 15 APCs with 2 times rule
violations, a cumulative increase of 1
APC from the proposed rule. We
applied the criteria as described earlier
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60437
to identify the APCs that are exceptions
to the 2 times rule for CY 2010, and
identified 4 additional APCs that meet
the criteria for exception to the 2 times
rule for this final rule with comment
period: APC 0057 (Bunion Procedures);
APC 0060 (Manipulation Therapy); APC
0341 (Skin Tests); and APC 0409 (Red
Blood Cell Tests). These APC exceptions
are listed in Table 22 below. We also
determined that there are 3 APCs that
no longer violate the 2 times rule: APC
0237 (Level II Posterior Segment Eye
Procedures); APC 0325 (Group
Psychotherapy); and APC 0436 (Level I
Drug Administration). 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 Services 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
criteria-based median costs, such as
device-dependent APCs, with 2 times
violations.
Comment: One commenter requested
that CMS not exempt any imaging and
radiation therapy APCs from the 2 times
rule. According to the commenter,
violations of the 2 times rule should
demonstrate to CMS that a particular
APC is incorrectly constructed. The
commenter recommended that, rather
than exempting these APCs from the 2
times rule, CMS review the
configurations of the APCs and make
any necessary revisions.
Response: We do not agree with the
commenter that we should not exempt
any imaging and radiation therapy APCs
from the 2 times rule. As stated earlier
in this section, we may make exceptions
to the 2 times limit on the variation of
costs within each APC group in unusual
cases such as low-volume items and
services. In the CY 2010 OPPS/ASC
proposed rule (74 FR 35303), we
proposed to exempt one imaging APC
and one radiation therapy APC from the
2 times rule, specifically APC 0128
(Echocardiogram with Contrast) and
APC 0664 (Level I Proton Beam
Radiation Therapy), respectively. As
discussed in greater detail in section
II.A.2.d.(4) of this final rule with
comment period, we believe that the
median costs of the echocardiography
procedures assigned to APC 0128 do not
warrant assignment of any of those
procedures to a new clinical APC. APC
0664 includes CPT code 77520 (Proton
treatment delivery; simple, without
compensation), with a median cost of
approximately $396 (based on 243
single claims of 251 total claims), and
CPT code 77522 (Proton treatment
delivery; simple, with compensation),
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with a median cost of approximately
$934 (based on 11,012 single claims of
12,252 total claims). We continue to
believe that the resources and clinical
characteristics of the low-volume
procedure described by CPT code 77520
are sufficiently similar to the procedure
described by CPT code 77522 to warrant
continued assignment of both CPT
codes to APC 0664. Therefore, we are
finalizing our proposal to exempt APC
0128 and APC 0664 from the 2 times
rule for CY 2010. Consistent with our
standard policy, we will continue to
review, on an annual basis, the APC
assignments for all OPPS services to
ensure appropriate placement.
We also received a number of specific
public comments regarding some of the
procedures assigned to APCs that we
proposed to exempt from the 2 times
rule for CY 2010. Discussions of those
public comments are included
elsewhere in this final rule with
comment period in the specific sections
related to the types of procedures that
were the subjects of the comments.
After consideration of the public
comments we received and our review
of the CY 2008 costs from claims
available for this final rule with
comment period, we are exempting 15
APCs from the 2 times rule for CY 2010,
as described previously in this section.
Our final list of 15 APCs exempted from
the 2 times rule is displayed in Table 22
below.
TABLE 22—FINAL APC EXCEPTIONS TO THE 2 TIMES RULE FOR CY 2010
Final
CY 2010 APC
Final CY 2010 APC Title
0057
0060
0080
0105
............................................................................................................................................
............................................................................................................................................
............................................................................................................................................
............................................................................................................................................
0128
0141
0142
0245
0303
0341
0381
0409
0432
0604
0664
............................................................................................................................................
............................................................................................................................................
............................................................................................................................................
............................................................................................................................................
............................................................................................................................................
............................................................................................................................................
............................................................................................................................................
............................................................................................................................................
............................................................................................................................................
............................................................................................................................................
............................................................................................................................................
C. New Technology APCs
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1. Background
In the November 30, 2001 final rule
(66 FR 59903), we finalized changes to
the time period a service was eligible for
payment under a New Technology APC.
Beginning in CY 2002, we retain
services within New Technology APC
groups until we gather sufficient claims
data to enable us to assign the service
to a clinically appropriate APC. This
policy allows us to move a service from
a New Technology APC in less than 2
years if sufficient data are available. It
also allows us to retain a service in a
New Technology APC for more than 2
years if sufficient data upon which to
base a decision for reassignment have
not been collected.
We note that the cost bands for New
Technology APCs range from $0 to $50
in increments of $10, from $50 to $100
in increments of $50, from $100 through
$2,000 in increments of $100, and from
$2,000 through $10,000 in increments of
$500. These cost bands identify the
APCs to which new technology
procedures and services with estimated
service costs that fall within those cost
bands are assigned under the OPPS.
Payment for each APC is made at the
mid-point of the APC’s assigned cost
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Bunion Procedures.
Manipulation Therapy.
Diagnostic Cardiac Catheterization.
Repair/Revision/Removal of Pacemakers, AICDs,
or Vascular Devices.
Echocardiogram with Contrast.
Level I Upper GI Procedures.
Small Intestine Endoscopy.
Level I Cataract Procedures without IOL Insert.
Treatment Device Construction.
Skin Tests.
Single Allergy Tests.
Red Blood Cell Tests.
Health and Behavior Services.
Level 1 Hospital Clinic Visits.
Level I Proton Beam Radiation Therapy.
band. For example, payment for New
Technology APC 1507 (New
Technology—Level VII ($500–$600)) is
made at $550. Currently, there are 82
New Technology APCs, ranging from
the lowest cost band assigned to APC
1491 (New Technology—Level IA ($0–
$10)) through the highest cost band
assigned to APC 1574 (New
Technology—Level XXXVII ($9,500–
$10,000). In CY 2004 (68 FR 63416), we
last restructured the New Technology
APCs to make the cost intervals more
consistent across payment levels and
refined the cost bands for these APCs to
retain two parallel sets of New
Technology APCs, one set with a status
indicator of ‘‘S’’ (Significant Procedures,
Not Discounted when Multiple. Paid
under OPPS; separate APC payment)
and the other set with a status indicator
of ‘‘T’’ (Significant Procedure, Multiple
Reduction Applies. Paid under OPPS;
separate APC payment). These current
New Technology APC configurations
allow us to price new technology
services more appropriately and
consistently.
2. Movement of Procedures From New
Technology APCs to Clinical APCs
As we explained in the November 30,
2001 final rule (66 FR 59902), we
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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 2010 OPPS/ASC proposed rule
(74 FR 35304), for CY 2010, we
proposed to 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. 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
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hospital claims data upon which to base
a decision for reassignment have not
been collected.
Table 18 of the proposed rule (74 FR
35304) listed the HCPCS code and its
associated status indicator that we
proposed to reassign from a New
Technology APC to a clinically
appropriate APC for CY 2010. Based on
the CY 2008 OPPS claims data available
for the proposed rule, we believe we
had sufficient claims data to propose
reassignment of CPT code 0182T to a
clinically appropriate APC. Specifically,
we proposed to reassign this electronic
brachytherapy service from APC 1519
(New Technology—Level IXX ($1,700–
$1,800)) to APC 0313 (Brachytherapy),
where other brachytherapy services also
reside. Based on hospital claims data for
CPT code 0182T, its hospital resource
costs are similar to those of other
services assigned to APC 0313.
The proposed CY 2010 APC
reassignment of CPT code 0182T was
discussed with the APC Panel at its
August 2009 meeting. One public
presenter indicated that CPT code
0182T describes both single-fraction and
multiple-fraction electronic
brachytherapy, and that most of the
claims on which CMS based its CY 2010
proposal were from hospitals reporting
multi-fraction electronic brachytherapy.
The presenter believed that the hospital
resources required for these two types of
brachytherapy were significantly
different from one another. The
presenter also stated that, unlike the
conventional brachytherapy procedures
that are assigned to APC 0313 and for
which the associated brachytherapy
sources are all paid separately under the
OPPS, payment for the brachytherapy
source associated with CPT code 0182T
is packaged into the procedure payment.
The APC Panel noted that the problem
of distinguishing single-fraction from
multiple-fraction electronic
brachytherapy is a coding issue that
would not be resolved by additional
claims data because the two types of
procedures are reported with the same
CPT code. After discussion of the
median cost of CPT code 0182T
observed in claims data and the
potential contribution of the
brachytherapy source cost to the overall
procedure cost, the APC Panel made no
recommendation on the CY 2010 APC
assignment for CPT code 0182T.
Comment: Several commenters
disagreed with the CMS proposal to
reassign CPT code 0182T to APC 0313
for CY 2010. Commenters responding
regarding both single-fraction and
multiple-fraction electronic
brachytherapy procedures reported with
CPT code 0182T asserted that the
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proposed payment of approximately
$747 does not cover the full costs of
providing these services. They indicated
that the current payment rate of $1,750
that is associated with APC 1519, where
CPT code 0182T is assigned, includes
the cost of the electronic brachytherapy
source, whereas the payment rate for
APC 0313 does not. Several commenters
noted that the claims data used in
determining the reassignment for CPT
code 0182T are very limited and
pointed out that the claims data for this
service came from only a few hospitals
that were early adopters of the multiplesource electronic brachytherapy
technology. They argued that data from
these hospitals represented precommercial clinical site data and that,
therefore, these hospitals had received
equipment and sources at reduced cost.
One commenter suggested that CMS
should develop coding that would
distinguish between single-fraction and
multiple-fraction electronic
brachytherapy procedures in order to
pay appropriately for each type of
service because the current single
payment for both technologies provides
a financial incentive for the use of
multiple-fraction electronic
brachytherapy. Most commenters urged
CMS to continue to assign CPT code
0182T to APC 1519 for at least another
year to enable CMS to gather sufficient
claims data from more hospitals in order
to appropriately reassign CPT code
0182T to a clinical APC based on the
clinical and resource costs of the
procedure.
Response: CPT code 0182T was
initially assigned to New Technology
APC 1519 with a payment rate of $1,750
when the code was implemented in July
2007, and it has been assigned to that
same APC through CY 2009. For CY
2010, we proposed to reassign CPT code
0182T from New Technology APC 1519
to APC 0313, which had a proposed
payment rate of approximately $747 and
a proposed median cost of
approximately $753 (and now has a
final rule median cost of $770). Analysis
of hospital claims data from CY 2007
and CY 2008 revealed that the
procedure described by CPT code 0182T
is not commonly performed on
Medicare patients. For CY 2008, claims
data show 223 total claims with a
median cost of about $506 for this
procedure. For CY 2007, claims data (6
months due to implementation of the
code in July 2007) show only 21 total
claims with a median cost of about
$495. Therefore, we believe that the
hospital resources required for CPT
code 0182T are consistent with the costs
of other services assigned to APC 0313
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60439
and payment for CPT code 0182T would
be appropriately made through that
clinical APC.
We are not creating a new Level II
HCPCS code for single-fraction
electronic brachytherapy at this time
because we believe that the two forms
of electronic brachytherapy, whether
provided in a single-fraction or
multiple-fraction regimen, depending
on the technology, are both described by
CPT code 0182T, which is appropriately
assigned to a single APC. We note that
the payment is per-fraction according to
the code descriptor for CPT code 0182T,
and that would include a single-fraction
treatment as well. While we recognize
that CPT code 0182T describes both
single- and multiple-fraction electronic
brachytherapy, we commonly pay for
different technologies under the OPPS
that are reported in a single CPT code
and we expect the hospital claims data
to reflect the resources required for all
of the different technologies reported
under the one code. To the extent that
one technology is predominantly used
by hospitals, then the costs of that
technology will have a greater effect on
the procedure’s median cost, but we do
not believe payment through such
groupings inappropriately encourages
the use of certain technologies, such as
the provision of multiple-fraction
electronic brachytherapy in the case of
CPT code 0182T. Our standard OPPS
ratesetting methodology provides a
single payment based on historical
hospital costs that reflect utilization
patterns of the various technologies,
consistent with prospective payment for
groups of similar services in order to
encourage hospital efficiencies. The
hospital cost information for services
always reflects the discounts available
to hospitals in the claims year, such as
the commenters indicate was the case
for multiple-fraction electronic
brachytherapy in CY 2008, that may not
be available in the payment year for
those services, and those discounts may
vary from year to year for different
HOPD services. Nevertheless, we rely on
the relativity of median costs as
reflected in claims data to be
appropriate. Payment based on a
measure of central tendency is a
principle of any prospective payment
system like the OPPS. 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. In the case of CPT code
0182T, we believe that its assignment to
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APC 0313 for CY 2010 is fully
consistent with our standard ratesetting
methodology that provides appropriate
incentives for efficiency.
As of January 2010, CPT code 0182T
will have been assigned to New
Technology APC 1519 for 21⁄2 years.
While we have relatively few claims
data from CY 2007 and CY 2008 for
electronic brachytherapy, a commenter
on a prior rule has indicated that this
service may only be used to treat a small
number of patients (72 FR 66691). To
the extent that more hospitals furnish
electronic brachytherapy in future years
and that hospital costs from
commercialization of the technology
change, we expect to see those costs
reflected in our claims data for those
future years, which we will annually
review for electronic brachytherapy, just
as we do for all OPPS services.
Moreover, while we acknowledge that,
in the case of conventional
brachytherapy procedures where
distinct radioactive sources are
implanted, the statute requires separate
payment of the associated radioactive
brachytherapy source so that APC 0313
only pays for the application of those
sources, we have no reason to believe
that reported hospital costs for CPT
code 0182T do not include the cost of
the source. As we stated in the CY 2007
OPPS/ASC final rule with comment
period (71 FR 68113), we do not
consider specific devices, beams of
radiation, or equipment that do not
constitute separate sources that utilize
radioactive isotopes to deliver radiation
to be brachytherapy sources for separate
payment, as such items do not meet the
statutory requirements provided in
section 1833(t)(2)(H) of the Act.
Electronic brachytherapy, described by
CPT code 0182T, utilizes such devices,
beams of radiation, or equipment to
generate the radiation for the treatment,
rather than distinct radioactive sources.
Therefore, in CY 2008, hospitals would
have included the costs of the devices
or equipment that are necessary to
generate the radiation in their charges
for the electronic brachytherapy
procedures, in contrast to the
conventional brachytherapy procedures
also assigned to APC 0313 where the
sources would have been separately
reported and paid. Therefore, just as in
the case of other OPPS services, our
ratesetting methodology relies upon
hospitals’ consideration of all costs
associated with furnishing services,
including the costs of those items and
services for which payment is packaged,
in setting hospital charges for separately
payable procedures such as electronic
brachytherapy. Although the hospital
median costs for other HCPCS codes
assigned to APC 0313 do not include the
cost of radioactive brachytherapy
sources that are separately paid, we
believe the hospital cost of CPT code
0182T includes the cost of the devices
or equipment used to generate the
radiation for the treatment. This
difference in packaging source payment
between conventional and electronic
brachytherapy procedures alone does
not lead us to conclude that these
procedures do not share sufficient cost
and clinical similarity to be assigned to
the same clinical APC. The overall
hospital costs for conventional and
electronic brachytherapy procedures,
including the associated packaged costs,
that are paid through the procedure
codes for electronic and conventional
brachytherapy are comparable and the
procedures are clinically similar so we
believe that their assignment to the
same APC is appropriate, regardless of
the differences in their packaged costs.
Therefore, we continue to believe that
APC 0313 is an appropriate APC for
assignment of CPT code 0182T based on
our consideration of the clinical
characteristics of electronic
brachytherapy and hospital costs from
claims data. Maintaining CPT code
0182T in APC 0313 for another year
would pay at a rate that is three times
the cost of this service as reflected in the
hospital outpatient claims data, and we
do not believe continued payment at
$1,750 is appropriate. To the extent that
hospitals’ costs change over time if the
procedure is more broadly furnished,
consistent with our current policy to
annually assess the appropriateness of
the APC assignments for all services
under the hospital OPPS, we will
continue to monitor our claims data for
CPT code 0182T in the future.
After consideration of the public
comments we received, we are
finalizing our proposal, without
modification, to assign CPT code 0182T
to APC 0313, which has a final CY 2010
APC median cost of approximately
$770. Table 23 below lists the HCPCS
code and its associated status indicator
for CY 2010.
TABLE 23.—CY 2010 REASSIGNMENT OF A NEW TECHNOLOGY PROCEDURE TO A CLINICAL APC
CY 2010 HCPCS code
Short descriptor
CY 2009
SI
0182T .......................................
Hdr elect brachytherapy ............................................................
S
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D. OPPS APC-Specific Policies
In this section, we discuss HCPCS
codes and their proposed status
indicators and APC reassignments for
which we provided explicit discussion
in section III.D. of the CY 2010 OPPS/
ASC proposed rule or for which we
received public comments on their
proposed CY 2010 OPPS treatment.
Certain HCPCS codes are discussed in
other sections of this final rule with
comment period, as appropriate to the
items or services they describe. The
final CY 2010 OPPS/ASC treatment of
all other HCPCS not explicitly discussed
in this final rule with comment period
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is displayed in Addendum B to this
final rule with comment period.
1. Cardiovascular Services
a. Cardiovascular Telemetry (APC 0209)
For CY 2010, we proposed to continue
to assign CPT code 93229 (Wearable
mobile cardiovascular telemetry with
electrocardiographic recording,
concurrent computerized real time data
analysis and greater than 24 hours of
accessible ECG data storage (retrievable
with query) with ECG-triggered and
patient-selected events transmitted to a
remote attended surveillance center for
up to 30 days; technical support for
connection and patient instructions for
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CY 2009
APC
1519
Final
CY 2010
SI
S
Final
CY 2010
APC
0313
use, attended surveillance, analysis and
physician prescribed transmission of
daily and emergent data reports) to APC
0209 (Level II Extended EEG, Sleep, and
Cardiovascular Studies), with a
proposed payment rate of approximately
$774. Because CPT code 93229 was a
new code for CY 2009, in the CY 2009
OPPS/ASC final rule with comment
period, we finalized an interim final
APC assignment for this code of APC
0209, with a payment rate of
approximately $754.
Comment: Some commenters
recommended that CMS assign status
indicator ‘‘A’’ (Services furnished to a
hospital outpatient that are paid under
a fee schedule or payment system other
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than OPPS) to CPT code 93229 in order
to make this service nonpayable under
the OPPS for CY 2010. The commenters
argued that there are currently no
hospitals that can provide the type of
constant monitoring the service
described by CPT code 93229 requires.
For this reason, according to the
commenters, any claims submitted for
CPT code 93229 by hospitals are
incorrectly coded. The commenters
stated that, if CMS chose not to adopt
their recommendation and instead
chose to continue recognizing CPT code
93229 as payable under the OPPS, CMS
should reconsider the proposed
assignment of the service to APC 0209.
According to the commenters, the
service described by CPT code 93229 is
not similar clinically or in terms of
resource utilization to the other
procedures assigned to APC 0209, in
particular, the polysomnography
procedures described by CPT codes
95810 (Polysomnography; sleep staging
with 4 or more additional parameters of
sleep, attended by a technologist) and
95811 (Polysomnography; sleep staging
with 4 or more additional parameters of
sleep, with initiation of continuous
positive airway pressure therapy or
bilevel ventilation, attended by a
technologist), which are the most
commonly reported procedures in APC
0209 with the highest number of single
claims contributing to the APC’s median
cost. The commenters urged CMS to
assign CPT code 93229 to New
Technology APC 1513 (New
Technology—Level XIII ($1,100–
$1,200)) with a payment rate of $1,150,
or New Technology APC 1514 (New
Technology—Level XIV ($1,200–
$1,300)) with a payment rate of $1,250.
The commenters argued that, if any
hospitals were to provide the remote
cardiac monitoring service described by
CPT code 93229, the proposed payment
rate for APC 0209 would be less than
hospitals’ costs for providing this
service.
Response: We do not agree with the
commenters that we should assign
status indicator ‘‘A’’ to CPT code 93229
in order to make the service nonpayable
under the OPPS for CY 2010. For each
new calendar year, we typically
recognize for OPPS payment purposes
new HCPCS codes describing services
that could be covered by Medicare when
provided to hospital outpatients,
regardless of whether those services are
actually being provided by hospitals at
the time the OPPS/ASC final rule with
comment period for the upcoming year
is issued. We believe that CPT code
93229 describes a diagnostic study that
could be provided to Medicare
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beneficiaries in the hospital outpatient
setting and, therefore, could be covered
by Medicare. We also do not agree that
the service described by CPT code
93229 is not similar clinically and in
terms of resource utilization to the other
procedures assigned to APC 0209 for CY
2010. For example, similar to the remote
cardiac monitoring service described by
CPT code 93229, the polysomnography
procedures described by CPT codes
95810 and 95811 involve continuous
and simultaneous monitoring and
recording of various physiological and
pathophysiological parameters, with
attendance by a technologist.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to assign CPT
code 93229 to APC 0209, with a final
CY 2010 APC median cost of
approximately $764.
b. Implantable Loop Recorder
Monitoring (APC 0689)
For CY 2010, we proposed to reassign
CPT code 93299 (Interrogation device
evaluation(s), (remote) up to 30 days;
implantable cardiovascular monitor
system or implantable loop recorder
system, remote data acquisition(s),
receipt of transmissions and technician
review, technical support and
distribution of results) to APC 0689
(Level II Electronic Analysis of Devices),
with a proposed payment rate of
approximately $40. In CY 2009, this
CPT code was assigned to APC 0209
(Level II Extended EEG, Sleep, and
Cardiovascular Studies), with a payment
rate of approximately $754.
Comment: One commenter supported
the proposed reassignment of CPT code
93299 to APC 0689 for CY 2010.
According to the commenter, the
procedure described by CPT code 93299
is similar clinically and in terms of
resource utilization to other procedures
assigned to APC 0689.
Response: We appreciate the
commenter’s support of our proposal to
reassign CPT code 93299 to APC 0689
for CY 2010. We agree that the
procedure described by CPT code 93299
is similar clinically and in terms of
resource utilization to other procedures
assigned to APC 0689.
After consideration of the public
comment we received, we are finalizing
our CY 2010 proposal, without
modification, to reassign CPT code
93299 to APC 0689, which has a final
CY 2010 APC median cost of
approximately $38.
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c. Transluminal Balloon Angioplasty
(APC 0279)
For CY 2010, we proposed to reassign
CPT code 75978 (Transluminal balloon
angioplasty, venous (eg, subclavian
stenosis), radiological supervision and
interpretation) from APC 0083
(Coronary or Non-Coronary Angioplasty
and Percutaneous Valvuloplasty) to APC
0279 (Level II Angiography and
Venography), with a proposed payment
rate of approximately $2,000.
Comment: Some commenters
disagreed with the proposed APC
reassignment of CPT code 75978. The
commenters noted that CPT code 75978
is a therapeutic interventional
procedure that is not similar to the other
diagnostic procedures assigned to APC
0279. The commenters requested that
CMS continue to assign CPT code 75978
to APC 0083 where they believe the
service is most appropriately placed
based on considerations of clinical
coherence and resource costs.
Response: The proposed CY 2010
median cost for APC 0083 of
approximately $3,380 is significantly
higher than the proposed CY 2010
median cost of CPT code 75978 of
approximately $2,597. Given the
difference in median costs, we do not
believe that we should continue to
assign this procedure to APC 0083. After
further analysis and review by CMS
medical advisors, we believe that CPT
code 75978 would be most
appropriately assigned to APC 0093
(Vascular Reconstruction/Fistula Repair
without Device) for CY 2010 because it
is a therapeutic procedure performed on
veins, similar to other therapeutic blood
vessel procedures that are currently
assigned to APC 0093. Further, the CY
2010 final median cost of CPT code
75978 of approximately $2,597 is very
similar to the CY 2010 final median cost
of APC 0093 of approximately $2,378.
After consideration of the public
comments we received, we are
modifying our proposed CY 2010
reassignment of CPT code 75978 from
APC 0083 to APC 0279. In this final rule
with comment period, for CY 2010, we
are reassigning CPT code 75978 from
APC 0083 to APC 0093, which has a
final CY 2010 APC median cost of
approximately $2,378.
2. Gastrointestinal Services
a. Change of Gastrostomy Tube (APC
0676)
For CY 2010, we proposed to reassign
CPT code 43760 (Change of gastrostomy
tube, percutaneous, without imaging or
endoscopic guidance) from APC 0121
(Level I Tube or Catheter Changes or
Repositioning) to APC 0676
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(Thrombolysis and Other Device
Revisions), with a proposed CY 2010
payment rate of approximately $160.
Comment: Some commenters
disagreed with the proposed APC
reassignment and requested that CMS
continue to assign CPT code 43760 to
APC 0121 because they believe the
gastrostomy tube change procedure
shares significant clinical and resource
characteristics with other procedures
assigned to APC 0121.
Response: Prior to CY 2008, OPPS
payment for CPT code 43760 captured
both the procedure and the imaging or
endoscopic guidance, if used, that was
associated with percutaneously
changing a gastrostomy tube because its
descriptor read, ‘‘Change of gastrostomy
tube,’’ and the OPPS packages payment
for all guidance into payment for the
associated procedures. However,
effective January 1, 2008, the CPT
Editorial Panel revised the code
descriptor by adding the words
‘‘without imaging or endoscopic
guidance’’ to further clarify that the
code should be reported for tube change
procedures that do not require imaging
or endoscopic guidance. The CPT
Editorial Panel further determined that
gastrostomy tube placement requiring
fluoroscopic or endoscopic guidance
should be reported with either CPT code
49450 (Replacement of gastrostomy or
cecostomy (or other colonic) tube,
percutaneous, under fluoroscopic
guidance including contrast injection(s),
image documentation and report) or
CPT code 43246 (Upper gastrointestinal
endoscopy including esophagus,
stomach, and either the duodenum and/
or jejunum as appropriate; with directed
placement of percutaneous gastrostomy
tube). Based on the median cost from
CY 2008 claims data that reflects the
new service reported under CPT code
43760, we believe a reassignment of the
CPT code for CY 2010 is necessary.
We disagree with the commenters that
CPT code 43760 would be appropriately
assigned to APC 0121, which has a
median cost of approximately $426 for
CY 2010. We note that the median cost
for CPT code 43760 from CY 2007,
when the code represented services
provided with and without guidance,
was higher at approximately $216,
compared with the CY 2008 median cost
of the revised procedure code. Claims
data from CY 2008 reveal that we have
21,178 single claims (out of 38,246 total
claims) for CPT code 43760, with a
lower median cost of approximately
$160. The median cost for CPT code
43760 closely aligns with the median
cost of approximately $160 for APC
0676. We note that the procedure for
gastrostomy tube placement using
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fluoroscopic guidance, specifically CPT
code 49450, is assigned to APC 0121,
and the procedure for gastrostomy tube
placement using endoscopic guidance,
specifically CPT code 43246, is assigned
to APC 0141 (Level I Upper GI
Procedures). We believe that both of
these other procedures are appropriately
assigned to APCs 0121 and 0141,
respectively, based on considerations of
clinical and resource homogeneity. As
expected, their CPT code-specific
median costs that include the cost of
fluoroscopy or endoscopic guidance are
significantly higher than the median
cost of CPT code 43760, which is
provided without guidance.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to reassign CPT
code 43760 from APC 0121 to APC
0676, which has a final CY 2010 APC
median cost of approximately $160.
b. Laparoscopic Liver Cryoablation
(APC 0131)
For CY 2010, we proposed to continue
to assign CPT code 47371 (Laparoscopy,
surgical, ablation of one or more liver
tumor(s); cryosurgical) to APC 0131
(Level II Laparoscopy), with a proposed
payment rate of approximately $3,181.
Comment: One commenter requested
that CMS reassign CPT code 47371 from
APC 0131 to APC 0174 (Level IV
Laparoscopy), which had a proposed
payment rate of approximately $7,766,
to better reflect the actual costs of the
procedure. The commenter stated that
CPT code 47371 is neither similar in
resource costs nor clinical
characteristics to the other procedures
assigned to APC 0131, and that the four
single claims for procedure available for
ratesetting are not reflective of the costs
of the procedure. In addition, the
commenter indicated that most of the
procedures assigned to APC 0131
describe abdominal biopsy or repair
procedures, in contrast to CPT code
47371, which describes cryosurgical
ablation of a liver tumor. The
commenter noted that there are other
similar laparoscopic liver tumor
ablation procedures already assigned to
APC 0174.
Response: We agree with the
commenter’s argument that CPT code
47371 would be more appropriately
assigned to APC 0174, where other
laparoscopic liver and renal ablation
procedures are assigned. Although we
have few CY 2008 claims for CPT code
47371, our claims data show a higher
median cost of approximately $4,229 for
CPT code 47371 based on four single
claims out of seven total claims,
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compared to the APC median cost of
approximately $3,128 for APC 0131.
We also note that since CPT code
47371 was made effective in CY 2002,
the procedure for the code is rarely
performed on Medicare beneficiaries in
the HOPD based on analysis of our
hospital outpatient claims data. Based
upon OPPS claims submitted from CY
2002 through CY 2008, the median cost
for this code has varied widely, perhaps
due to the small volume of claims
annually. Specifically, the historical
median cost for CPT code 47371 has
ranged from $1,850 based on two single
claims to $6,839 based on one single
claim. Although this procedure is not
commonly performed on Medicare
beneficiaries in the HOPD, because we
believe CPT code 47371 is similar in
clinical characteristics and resource
costs to the other procedures currently
assigned to APC 0174, we agree with the
commenter’s recommendation.
After consideration of the public
comment we received, we are modifying
our CY 2010 proposal and assigning
CPT code 47371 to APC 0174, which
has a final CY 2010 APC median cost of
approximately $7,342.
c. Cholangioscopy (APC 0151)
The CPT Editorial Panel created a
new add-on code for cholangioscopy,
CPT code 43273 (Endoscopic
cannulation of papilla with direct
visualization of common bile duct(s)
and/or pancreatic ducts (List separately
in addition to code(s) for primary
procedure), effective January 1, 2009.
We assigned CPT code 43273 to APC
0151 (Endoscopic Retrograde CholangioPancreatography (ERCP)) on an interim
final basis in the CY 2009 OPPS/ASC
final rule with comment period (73 FR
69030), and the CPT code was flagged
with comment indicator ‘‘NI’’ to
indicate that its OPPS treatment was
open to comment on that final rule with
comment period. For CY 2010, we
proposed to continue the assignment of
CPT code 43273 to APC 0151, with a
proposed payment rate of approximately
$1,527.
At the August 2009 APC Panel
meeting, the APC Panel heard a public
presentation recommending that CPT
code 43273 be reassigned to APC 0152
(Level I Percutaneous Abdominal and
Biliary Procedures). However, the APC
Panel recommended that CPT code
43273 continue to be assigned to APC
0151.
Comment: One commenter on the CY
2009 OPPS/ASC final rule with
comment period and again on the CY
2010 OPPS/ASC proposed rule
recommended that CPT code 43273 be
reassigned to APC 0152 and that CMS
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rename APCs 0151 and 0152 to
accommodate the reassignment. The
commenter provided cost information
for CPT code 43273 in a New
Technology APC application previously
filed with CMS, estimating that the cost
of the cholangioscopy procedure is
approximately $2,958. Because the
procedure is always performed with an
ERCP procedure, the commenter
estimated that the combined cost of
ERCP and cholangioscopy is
approximately $4,484 by adding the CY
2008 median cost of APC 0151 to the
estimated cost of the cholangioscopy
procedure. The commenter pointed out
that, because all ERCP CPT codes,
which are assigned to APC 0151, have
a status indicator of ‘‘T’’ (Significant
Procedure, Multiple Reduction
Applies), under CMS’ proposal, CPT
code 43273 would be paid at 50 percent
of the CY 2010 proposed payment rate
for APC 0151, or $757, a rate that is
approximately $2,200 less than the
reported cost of $2,958 for the
cholangioscopy procedure alone. The
commenter further estimated the cost of
disposable devices alone for
cholangioscopy in combination with
ERCP to be approximately $2,064. The
commenter argued that the proposed CY
2010 payment hospitals would receive
for the two procedures of approximately
$2,271 would barely cover the device
costs of $2,064, and not the additional
procedure costs. The commenter
maintained that if CMS reassigned CPT
code 43273 to APC 0152, payment for
the combination of the two procedures
would be approximately $2,821,
partially closing the gap between OPPS
payment and the commenter’s estimated
combined cost of the two procedures of
$4,484.
The commenter explained that
cholangioscopy is a complex, resourceintensive procedure requiring additional
physician training, which adds 45
minutes to the ERCP procedure, for a
total of approximately 112 minutes for
the two procedures. The commenter
also asserted that the clinical intensity
of cholangioscopy is closer to the nondraining percutaneous procedures
assigned to APC 0152 than to the ERCP
procedures assigned to APC 0151.
Further, the commenter explained that
the primary clinical difference between
non-draining percutaneous procedures
and CPT code 43273 is the method of
access to the biliary and pancreatic area,
noting that a small incision is required
for the percutaneous procedures and the
use of an additional endoscope for
cholangioscopy.
The commenter also recommended
that APC 0151 be renamed ‘‘Level I
Hepatobiliary Procedures’’ and APC
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0152 be renamed ‘‘Level II Hepatobiliary
Procedures,’’ and that lower complexity
hepatobiliary procedures be assigned to
APC 0151 and higher complexity
hepatobiliary procedures, including
percutaneous procedures and
cholangioscopy, be assigned to APC
0152. The commenter believed that
renaming and reconfiguring APCs 0151
and 0152 would improve the clinical
homogeneity of the APCs and
appropriately account for differences in
the resource costs of biliary procedures.
The commenter argued that CMS has
previously renamed existing APCs,
created multilevel APCs for specific
clinical areas, and configured APCs to
incorporate surgical procedures that
include a variety of access types.
Response: Because CPT code 43273
was new for CY 2009, we do not yet
have cost information for the procedure
based upon hospital claims for CY 2010
ratesetting. According to our established
policy, a New Technology APC
applicant’s cost estimate is only one
source of information we consider in
determining the cost of a new service for
purposes of its initial APC assignment
under the OPPS (66 FR 59900; 73 FR
68614). We generally assign new CPT
codes to an APC based on input from a
variety of sources, including, but not
limited to, review of the resource costs
and clinical similarity of the service to
existing procedures; input from CMS
medical advisors; information from
interested specialty societies; and
review of all other information available
to us. We note that, while CPT code
43273 is new for CY 2009,
cholangioscopy in association with
ERCP procedures has been performed,
using a variety of technologies, for many
years. We expect that its costs have
already been incorporated into the
OPPS, either packaged into payment for
the associated ERCP procedures or
under an unlisted CPT procedure code.
We continue to believe that APC 0151
is an appropriate APC assignment for
CPT code 43273 for CY 2010, based on
consideration of the procedure’s clinical
and resource characteristics. CPT code
43273, which is an add-on code to ERCP
procedures, clinically resembles the
ERCP procedures that also are assigned
to APC 0151 because they all use an
endoscope to examine various
components of the hepatobiliary system.
While cholangioscopy extends ERCP
procedures to visualize the common bile
duct(s) and/or pancreatic duct(s)
through use of an additional endoscope,
many of the other ERCP procedures
assigned to APC 0151 also have
additional procedures associated with
them that require the use of other
devices or equipment as well. We do not
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60443
agree with the commenter that
percutaneous biliary procedures that
require incisions and, in some cases
drainage tubes, are more clinically
similar to cholangioscopy than ERCP
procedures that also examine the
hepatobiliary system with an
endoscope.
Furthermore, we understand that
there are a variety of technologies that
can be used to perform cholangioscopy
with variable resource costs. Therefore,
we do not believe that the commenter’s
estimate based on one type of new
cholangioscopy technology is
necessarily an appropriate
representation of the cost of the
procedure described by CPT code 43273
to hospitals. We believe that the cost of
cholangioscopy is similar to the cost of
ERCP procedures that require similar
procedure time and devices, and that
CPT code 43273 is appropriately
assigned to APC 0151 along with these
ERCP procedures. Moreover, we believe
that applying the multiple procedure
discount to payment for cholangioscopy
as a result of its status indicator ‘‘T’’ and
its routine performance with ERCP
procedures that also are assigned status
indicator ‘‘T’’ is appropriate because
cholangioscopy is performed directly
after ERCP and much of the preparatory
procedure work is performed during the
ERCP.
Finally, because we are not
reassigning CPT code 43273 to APC
0152, no renaming of APCs 0151 and
0152 is warranted because we are
maintaining the endoscopic and
percutaneous biliary procedures in
separate APCs.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to maintain the
assignment of CPT code 43273 to APC
0151, which has a final CY 2010 APC
median cost of approximately $1,510.
d. Laparoscopic Hernia Repair (APC
0131)
For CY 2010, we proposed to reassign
the following six laparoscopic hernia
repair CPT codes that were new for CY
2009 from APC 0130 (Level I
Laparoscopy), with a proposed payment
rate of approximately $2,538, to APC
0131 (Level II Laparoscopy), with a
proposed payment rate of approximately
$3,181: CPT code 49652 (Laparoscopy,
surgical, repair, ventral, umbilical,
spigelian or epigastric hernia (includes
mesh insertion, when performed);
reducible); CPT code 49653
(Laparoscopy, surgical, repair, ventral,
umbilical, spigelian or epigastric hernia
(includes mesh insertion, when
performed); incarcerated or
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strangulated); CPT code 49654
(Laparoscopy, surgical, repair,
incisional hernia (includes mesh
insertion, when performed); reducible);
CPT code 49655 (Laparoscopy, surgical,
repair, incisional hernia (includes mesh
insertion, when performed);
incarcerated or strangulated); CPT code
49656 (Laparoscopy, surgical, repair,
recurrent incisional hernia (includes
mesh insertion, when performed);
reducible); and CPT code 49657
(Laparoscopy, surgical, repair, recurrent
incisional hernia (includes mesh
insertion, when performed);
incarcerated or strangulated).
Comment: One commenter indicated
that the resource costs associated with
the six laparoscopic hernia repair CPT
codes are significantly greater than the
proposed payment rate of approximately
$3,181 for APC 0131 and suggested that
the procedures in APC 0132 (Level III
Laparoscopy) are more similar to the six
laparoscopic hernia repair codes
because they have similar resource
costs. The commenter requested that
CMS review the clinical characteristics
and resource costs associated with the
six CPT codes and consider reassigning
these codes to APC 0132, which had a
CY 2010 proposed payment rate of
approximately $4,903. In addition, the
commenter provided an analysis of CY
2008 claims data for cases reported
under the unlisted CPT code that would
previously have been reported for these
procedures (CPT code 49659 (Unlisted
laparoscopy procedure, hernioplasty,
herniorrhaphy, herniotomy)), combined
with the ICD–9 diagnoses codes specific
to hernia of the abdominal cavity.
Because these codes were new for CY
2009, they were assigned comment
indicator ‘‘NI’’ in the CY 2009 OPPS/
ASC final rule with comment period to
indicate that they were subject to
comment. For the CY 2009 OPPS/ASC
final rule with comment period, the
same commenter submitted a similar
comment and data analysis of CY 2007
OPPS claims. The commenter found
3,456 claims that met the same case
criteria in the analysis, with a median
cost of approximately $4,261. The
commenter believed that this cost from
historical hospital claims data
represented the hospital cost of
procedures that would be reported with
one of the laparoscopic hernia repair
CPT codes in CY 2010.
Response: We have no hospital claims
data for CPT codes 49652 through 49657
because these CPT codes were new for
CY 2009. However, we agree with the
commenter that procedures described
by these CPT codes were likely
commonly furnished in the HOPD in CY
2008 and reported under CPT code
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49659. Taking into consideration the
commenter’s analyses of CY 2007 and
CY 2008 claims and performing a
detailed clinical review, we agree with
the commenter that the resource costs
for the six laparoscopic hernia repair
CPT codes, specifically CPT codes
49652 through 49657, more closely align
with other services assigned to APC
0132. In addition, from a clinical
perspective, we also believe that APC
0132 is an appropriate APC assignment
for these codes because APC 0132 most
accurately recognizes the complexity of
the laparoscopic hernia repair codes.
After consideration of the public
comments we received, we are
modifying our CY 2010 proposals and
reassigning CPT codes 49652, 49653,
49654, 49655, 49656, and 49657 from
APC 0130 to APC 0132, which has a
final CY 2010 APC median cost of
approximately $4,873.
3. Genitourinary Services
a. Percutaneous Renal Cryoablation
(APC 0423)
For CY 2010, 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), with a proposed payment
rate of approximately $3,329. 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, for 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, effective January 1, 2007.
Comment: One commenter expressed
concern that the proposed payment rate
of approximately $3,329 for CPT code
50593 is inadequate because the
payment does not accurately account for
the costs incurred by hospitals in
performing this procedure. The
commenter argued that the low
proposed payment rate for CPT code
50593 is attributable to claims data that
do not accurately capture the full costs
of CPT code 50593 because almost half
of the single claims do not contain the
HCPCS code and associated charge for
the required device, specifically HCPCS
code C2618 (Probe, cryoablation). The
commenter requested that CMS
designate CPT code 50593 as a devicedependent procedure, which would
require hospitals to submit claims with
the appropriate device HCPCS code,
assign the procedure to its own APC,
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and set the payment rate for that APC
based on claims for CPT code 50593
reported with HCPCS code C2618. The
commenter’s analysis concluded that
the median cost on which payment for
CPT code 50593 would be based if these
recommendations were adopted would
be approximately $5,469, resulting in
more accurate payment for the
procedure and continued Medicare
beneficiary access to percutaneous renal
cryoablation in the HOPD.
Response: We believe that CPT code
50593 is appropriately assigned to APC
0423 based on clinical and resource
considerations when compared to other
procedures also proposed for
assignment to APC 0423 for CY 2010. As
we stated in the CY 2007 OPPS final
rule with comment period (71 FR 68049
through 68050), the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66709), and the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68611), we initially revised the APC
assignment for the percutaneous renal
cryoablation procedure from APC 0163
to APC 0423 in CY 2007 based on the
APC Panel’s recommendation to
reassign the procedure to APC 0423.
The median costs of the four HCPCS
codes assigned to APC 0423 for CY 2010
range from approximately $3,159 to
$4,670, well within the 2 times rule for
the OPPS payment groups. Even if we
were to calculate the median cost for
CPT code 50593 using only claims that
also contain HCPCS code C2618,
estimated by the commenter to be
approximately $5,469 using proposed
rule data, the grouping of these
procedures in the same APC would not
violate the 2 times rule. Further, we
note that all four of these procedures are
relatively low volume, with fewer than
1,100 total claims each for CY 2008 and
fewer than 700 single claims each for
ratesetting. We believe that grouping
these clinically similar, low volume
procedures for the percutaneous
ablation of renal, liver, or pulmonary
tumors in the same payment group
helps to promote payment stability for
these low volume services.
We also do not agree that CPT code
50593 should be designated as a devicedependent procedure and assigned to its
own separate APC. We have only 226
single claims (out of 513 total claims)
for CPT code 50593 from CY 2008 and,
as such, the procedure has the second
lowest frequency of the four procedures
assigned to APC 0423. We believe this
relatively low volume procedure should
be assigned to a payment group with
similar services, as we have proposed,
in order to promote payment stability
and encourage hospital efficiency. In
addition, we do not identify individual
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HCPCS codes as device-dependent
HCPCS codes under the OPPS. Rather,
we first consider the clinical and
resource characteristics of a procedure
and determine the most appropriate
APC assignment. When we determine
that we should assign a procedure to an
APC that is device-dependent, based on
whether that APC has been historically
identified under the OPPS as having
very high device costs, we then consider
the implementation of device edits, as
appropriate. We note that the
identification of device-dependent APCs
was particularly important in the early
years of the OPPS when separate passthrough payment for many implantable
devices expired. At that time, a variety
of methodologies to package the costs of
those devices into procedural APCs was
utilized over several years to ensure
appropriate incorporation of the device
costs into the procedure payments. At
this point in time, hospitals have
significantly more experience reporting
HCPCS codes for packaged and
separately payable items and services
under the OPPS and the payment
groups are more mature. We believe our
standard ratesetting methodology
typically results in appropriate payment
rates for new procedures that utilize
devices, as well as those that do not use
high cost devices. In recent years, we
have not encountered circumstances
whereby we have had to establish new
device-dependent APCs because we
were not able to accommodate the
clinical and resource characteristics of a
procedure by assigning it to an existing
APC (whether device-dependent or nondevice-dependent), and the procedure
described by CPT code 50593 is no
exception.
While all of the procedures assigned
to APC 0423 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 all of the CPT codes
assigned to APC 0423. Under the OPPS,
there are many other procedures that
require the use of implantable devices
that, because they are assigned to OPPS
APCs that are not device-dependent, do
not have procedure-to-device edits
applied, even if those claims processing
edits would be feasible. We believe that
our payments for procedures that utilize
high cost devices are appropriate for
those services, even when those services
are grouped with other procedures that
either do not require the use of
implantable devices or that utilize
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devices that are not described by
specific Level II HCPCS codes.
When reporting CPT code 50593, we
expect hospitals to also report the
device HCPCS code C2618, which is
associated with this procedure. We also
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 the public
comment we received, we are finalizing
our CY 2010 proposal, without
modification, to continue to assign CPT
code 50593 to APC 0423, which has a
final CY 2010 APC median cost of
approximately $3,430.
b. Hemodialysis (APC 0170)
Currently, APC 0170 (Dialysis)
contains two HCPCS codes: CPT code
90935 (Hemodialysis procedure with
single physician evaluation) and HCPCS
code G0257 (Unscheduled or emergency
dialysis treatment for an ESRD patient
in an HOPD that is not certified as an
ESRD facility). Hospital outpatient and
emergency departments sometimes must
furnish hemodialysis to patients who do
not have ESRD and, in these cases, they
would report CPT code 90935 for the
service. Under the Medicare ESRD
benefit, to be covered by Medicare,
routine dialysis required by a Medicare
ESRD beneficiary must be furnished in
a certified ESRD facility. Most HOPDs
and emergency departments are not
certified by Medicare to furnish routine
dialysis to Medicare ESRD patients and,
therefore, are not paid under the ESRD
benefit. However, there are a limited
number of specific cases in which
Medicare pays under the OPPS for an
ESRD patient to receive unscheduled
dialysis in an outpatient department of
a hospital that does not have an ESRDcertified facility. These provisions were
established in the CY 2003 OPPS final
rule with comment period (67 FR 66803
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60445
through 66805). Specifically, Medicare
pays hospitals under the OPPS for
dialysis for ESRD patients under the
following limited circumstances as
specified in the Medicare Claims
Processing Manual, Pub. 100–04,
Chapter 4, Section 200.2:
• Dialysis is performed following or
in connection with a dialysis-related
procedure such as a vascular access
procedure or a blood transfusion;
• Dialysis is performed following
treatment for an unrelated medical
emergency; or
• Emergency dialysis is performed for
ESRD patients who would otherwise
have to be admitted as inpatients in
order for the hospital to receive
payment.
When these criteria are met, the
hospital reports HCPCS code G0257,
which we proposed to assign to APC
0170 for CY 2010, with a proposed
payment of approximately $442.
Comment: One commenter, who
recognized that Medicare pays under
the OPPS for hemodialysis for ESRD
patients under very specific, limited
circumstances, asked whether hospitals
are permitted to bill and be paid under
the OPPS for routine hemodialysis for
ESRD patients who are unable to
arrange for routine hemodialysis at a
Medicare-certified ESRD facility.
Response: As the commenter noted,
Medicare pays under OPPS for dialysis
for a beneficiary with ESRD only under
the exceptional circumstances specified
in the Medicare Claims Processing
Manual, Pub. 100–04, Chapter 4,
Section 200.2 that are listed above.
Routine treatments in hospitals that do
not have an ESRD facility are not
payable under the OPPS. A hospital that
would like to provide routine
hemodialysis to ESRD patients should
contact the State survey and
certification agency to pursue ESRD
certification of an outpatient dialysis
unit.
After consideration of the public
comment we received, we continue to
believe that our policy governing the
payment of dialysis services in HOPDs
and emergency departments is
appropriate. We are not making any
change to this policy for CY 2010. The
final CY 2010 median cost of APC 0170
for hemodialysis is approximately $456.
c. Radiofrequency Remodeling of
Bladder Neck (APC 0165)
For CY 2010, we proposed to continue
to assign Category III CPT code 0193T
(Transurethral, radiofrequency microremodeling of the female bladder neck
and proximal urethra for stress urinary
incontinence) to APC 0165 (Level IV
Urinary and Anal Procedures) with a
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proposed payment rate of approximately
$1,353. This CPT code was new for CY
2009 and was assigned to APC 0165 on
an interim final basis in the CY 2009
OPPS/ASC final rule with comment
period.
At the August 2009 APC Panel
meeting, a presenter requested that the
APC Panel recommend that CMS
reassign CPT code 0193T to either APC
0202 (Level VII Female Reproductive
Procedures) or APC 0168 (Level II
Urethral Procedures) for CY 2010 based
on resource intensity and therapeutic
benefit. The presenter claimed that the
device cost associated with CPT code
0193T is comparable to the single-use
devices that are used with certain
procedures assigned to APC 0202,
specifically those procedures described
by CPT codes 58356 (Endometrial
cryoablation with ultrasonic guidance,
including endometrial curettage, when
performed); 58565 (Hysteroscopy,
surgical; with bilateral fallopian tube
cannulation to induce occlusion by
placement of permanent implants); and
57288 (Sling operation for stress
incontinence (e.g., fascia or synthetic)).
The presenter indicated that, unlike
procedures assigned to APC 0202 that
require costly medical devices, the costs
of single-use medical devices for
procedures assigned to APC 0165 are
very minimal. After a discussion, the
APC Panel recommended that CMS
maintain the APC assignment of CPT
code 0193T to APC 0165, as proposed,
for CY 2010.
Comment: Some commenters
disagreed with CMS’ proposal to
continue to assign CPT code 0193T to
APC 0165. The commenters believed
that the proposed payment for the
procedure would not pay appropriately
for the costs incurred by hospitals to
perform the procedure, especially
because the procedure utilizes a costly,
single-use, disposable medical device.
The commenters argued that APC 0202,
which had a proposed CY 2010
proposed payment rate of approximately
$2,991, contains procedures that are
very similar to CPT code 0193T.
Specifically, the commenters indicated
that CPT code 0193T is similar in
clinical characteristics and resource
costs to CPT codes 58356, 58565, and
57288. The commenters added that the
probe used in the procedure reported
with CPT code 0193T costs $1,095 and,
overall, the total procedure cost that
includes the cost of the probe is
approximately $2,473, which is
comparable to the proposed CY 2010
payment rate for APC 0202.
Another commenter was concerned
that, at the August 2009 APC Panel
meeting, the APC Panel members may
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have been confused about the surgical
nature of CPT code 0193T. Specifically,
the commenter believed that the APC
Panel concluded that all of the
procedures assigned to APC 0202 are
surgical in nature, whereas the
procedure described by CPT code 0193T
is not, which resulted in the APC
Panel’s recommendation to continue to
assign this code to APC 0165. The
commenter clarified that CPT code
0193T is similar to surgical CPT codes
58565 and 58356, which are both
assigned to APC 0202 based on their
resource use and clinical characteristics.
The commenter further noted that,
although CPT code 0193T may be
performed in the physician’s office, in
the Medicare population, this procedure
is more likely to be performed in the
hospital outpatient setting because of
medical conditions and comorbidities
experienced by Medicare patients.
Response: As a new Category III CPT
code for CY 2009, we do not yet have
hospital claims data for the procedure.
Category III CPT codes are temporary
codes that describe emerging
technology, procedures, and services,
and they are created by the AMA to
allow for data collection for new
services or procedures. Under the OPPS,
we generally assign a payment rate to a
new Category III CPT code based on
input from a variety of sources,
including but not limited to, review of
resource costs and clinical homogeneity
of the service to existing procedures,
information from specialty societies,
input from CMS medical advisors, and
other information available to us. Based
on our review of the clinical
characteristics of CPT code 0193T, as
well as the other procedures assigned to
APC 0165 and APC 0202 that was
recommended by the commenters, and
the APC Panel discussion and
recommendation regarding the
procedure, we continue to believe that
APC 0165 is the most appropriate APC
assignment for CPT code 0193T for CY
2010. We understand that CPT code
0193T is a minimally invasive
procedure for female stress urinary
incontinence that requires a relative
brief time in the procedure room. We do
not agree with the commenters that the
procedures assigned to APC 0202 that
involve fallopian tube cannulation,
endometrial ablation, or implantation of
a sling for stress urinary incontinence
are sufficiently similar to the procedure
described by CPT code 0193T based on
procedure duration, device utilization,
use of guidance, or other characteristics
to warrant reassignment of CPT code
0193T to APC 0202 based on
considerations of clinical homogeneity.
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Rather, we believe that assignment to
APC 0165 will appropriately account for
the device and procedure costs of CPT
code 0193T.
After consideration of the public
comments we received and the APC
Panel recommendation from the August
2009 meeting, we are finalizing our CY
2010 proposal, without modification, to
continue to assign CPT code 0193T to
APC 0165, which has a final CY 2010
APC median cost of approximately
$1,337.
d. Change of Bladder Tube (APC 0121)
For CY 2010, we proposed to reassign
CPT code 51710 (Change of cystostomy
tube; complicated) from APC 0427
(Level II Tube or Catheter Changes or
Repositioning) to APC 0121 (Level I
Tube or Catheter Changes or
Repositioning), with a proposed CY
2010 payment rate of approximately
$428.
Comment: One commenter supported
the proposed APC reassignment of CPT
code 51710 from APC 0427 to APC
0121.
Response: We appreciate the
commenter’s support. Hospital
outpatient claims data revealed that we
have approximately 267 single claims
(out of 431 total claims) for CPT code
51710, with a final CY 2010 median cost
of approximately $446. The final CY
2010 median cost for CPT code 51710
closely aligns with the final CY 2010
median cost of approximately $426 for
APC 0121. We believe that CPT code
51710 is appropriately reassigned to
APC 0121 based on clinical and
resource considerations.
After consideration of the public
comment we received, we are finalizing
our CY 2010 proposal, without
modification, to reassign CPT code
51710 from APC 0427 to APC 0121,
which has a final CY 2010 APC median
cost of approximately $426.
4. Nervous System Services
a. Pain-Related Procedures (APCs 0203,
0204, 0206, 0207, 0221, 0224, and 0388)
We proposed to set the CY 2010
payment rates for APCs 0203 (Level IV
Nerve Injections), 0204 (Level I Nerve
Injections), 0206 (Level II Nerve
Injections), 0207 (Level III Nerve
Injections), 0221 (Level II Nerve
Procedures), 0224 (Implantation of
Catheter/Reservoir/Shunt) and 0388
(Discography) based on the median
costs determined under the OPPS
standard ratesetting. Among the CPT
codes included in these APCs are: 62350
(Implantation, revision, or repositioning
of tunneled intrathecal or epidural
catheter for long-term medication
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administration via an external pump or
implantable reservoir/infusion pump;
with laminectomy); 62355 (Removal of
previously implanted intrathecal or
epidural catheter); 62365 (Removal of
subcutaneous reservoir or pump,
previously implanted for intrathecal or
epidural infusion); 64472 (Injection,
anesthetic agent and/or steroid,
paravertebral facet joint or facet joint
nerve; cervical or thoracic, each
additional level (list separately in
addition to code for primary
procedure)); 64476 (Injection, anesthetic
agent and/or steroid, paravertebral facet
joint or facet joint nerve; lumbar or
sacral, each additional level (list
separately in addition to code for
primary procedure)); 64480 (Injection,
anesthetic agent and/or steroid,
transforminal epidural; cervical or
thoracic, each additional level (list
separately in addition to code for
primary procedure)); 64623,
(Destruction by neurolytic agent,
paravertebral facet joint nerve; lumbar
or sacral, each additional level, (list
separately in addition to code for
primary procedure)); 64627 (Destruction
by neurolytic agent, paravertebral facet
joint nerve; cervical or thoracic, each
additional level, (list separately in
addition to code for primary
procedure)); 72285 (Discography,
cervical or thoracic, radiological
supervision and interpretation); and
72295 (Discography, lumbar,
radiological supervision and
interpretation).
Comment: One commenter objected to
the proposed CY 2010 payment rates for
CPT codes 64472, 64476, 64480, 64623,
and 64627, which the commenter
believed have declined 28 percent to 48
percent since CY 2007. The commenter
also objected to the proposed CY 2010
increase in payments for CPT codes
72285 and 72295 on the basis that their
proposed payment rates are
unreasonable because they are not
procedures. The commenter added that
CPT codes 62290 (Injection procedure
for discography, each level, lumbar) and
62291 (Injection procedure for
discography, each level, cervical or
thoracic) are the related procedures,
which are paid at an unreasonably low
rate.
Response: OPPS payment rates
fluctuate based on a variety of factors,
including, but not limited to, changes in
the mix of hospitals billing the services,
differential changes in hospital charges
and costs for the services, and changes
in the volumes of services reported.
Therefore, the median costs on which
the OPPS payment rates are based vary
from one year to another. We note that
the median costs of all of the APCs to
which CPT codes 64472, 64476, 64480,
64623, and 64627 are assigned increased
between CY 2009 and CY 2010. For CPT
codes 64472 and 64480, the median cost
of APC 0206 to which they are assigned
increased from approximately $236 in
CY 2009 to approximately $249 in CY
2010. In the case of CPT codes 64476
and 64627, the median cost of APC 0204
to which they are assigned increased
from approximately $161 in CY 2009 to
approximately $171 in CY 2010. Lastly,
for CPT code 64623, the median cost of
APC 0207 to which the code is assigned
increased from approximately $463 in
CY 2009 to approximately $481 in CY
2010.
CPT codes 72285 and 72295, both of
which are assigned to APC 0388, are
‘‘T’’ packaged codes and, as such, are
paid separately only if there is no
separately paid surgical procedure with
a status indicator of ‘‘T’’ on the same
claim. When there is a separate payment
made for these codes, the payment is
not only payment for the code itself but
also includes payment for all services
reported on the claim that are always
packaged (that is, those with a status
indicator of ‘‘N’’). The median cost of
APC 0388 to which CPT codes 72285
and 72295 are assigned for payment
when separate payment can be made
increased from approximately $1,470 in
CY 2009 to approximately $1,727 in CY
2010, reflecting the cost of all
conditionally and unconditionally
packaged services on the claim.
Payment for CPT codes 62290 and
62291 is always packaged into payment
for the independent, separately paid
procedures with which these codes are
reported because we believe that these
codes are ancillary and supportive to
other major separately paid procedures
60447
and that they are furnished only as an
ancillary and dependent part of an
independent separately paid procedure.
Comment: One commenter disagreed
with the proposed CY 2010 payment
rates for CPT codes 62355, 62350, 62363
(we note that this code did not exist in
CY 2008 and does not exist in CY 2009;
the commenter did not provide a
description of the procedure that would
enable us to identify the code and
respond to the comment), and 62365.
The commenter believed that access to
these services is very limited as a result
of payment reductions for these
procedures.
Response: The final median costs for
the APCs to which CPT codes 62350
and 62365 are assigned for CY 2010
increased from CY 2009 to CY 2010,
while the final median cost for APC
0203 to which CPT code 62355 is
assigned declined over that same time
period. Specifically, CPT code 62350 is
assigned to APC 0224, which has a CY
2009 median cost of approximately
$2,715 and a final CY 2010 median cost
of approximately $2,740. Similarly, CPT
code 62365 is assigned to APC 0221,
which has a CY 2009 median cost of
approximately $2,322 and a final CY
2010 median cost of approximately
$2,490. In contrast, CPT code 62355 is
assigned to APC 0203, which has a CY
2009 median cost of approximately $928
that declined to approximately $885 in
CY 2010. The increased median costs of
APCs 0221 and 0224 do not create
barriers to care for these procedures.
Moreover, we do not believe that the
modest reduction in median cost for
APC 0203 would cause hospitals to
cease to furnish the service.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposals,
without modification, to pay for CPT
codes 62350, 62355, 62365, 64472,
64476, 64480, 64623, 64627, 72285, and
72295 through APCs 0203, 0204, 0206,
0207, 0221, 0224, and 0388. The final
CY 2010 median costs of the relevant
APCs are displayed in Table 24 below.
For comparative purposes, we also are
showing in the table the median costs
on which the CY 2009 OPPS payments
are based.
dcolon on DSK2BSOYB1PROD with RULES2
TABLE 24—MEDIAN COSTS FOR SELECTED APCS FOR PAIN-RELATED PROCEDURES MENTIONED BY COMMENTERS
APC
0203
0204
0206
0207
.........................................
.........................................
.........................................
.........................................
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14:52 Nov 19, 2009
CY 2009
approximate
median cost
APC title
Level
Level
Level
Level
Proposed
CY 2010
approximate
median cost
Final
CY 2010
approximate
median cost
$929
161
236
463
$1,066
181
254
504
$885
171
249
481
IV Nerve Injections ............................................................
I Nerve Injections ..............................................................
IV Nerve Injections ............................................................
III Nerve Injections ............................................................
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TABLE 24—MEDIAN COSTS FOR SELECTED APCS FOR PAIN-RELATED PROCEDURES MENTIONED BY COMMENTERS—
Continued
CY 2009
approximate
median cost
APC title
0221 .........................................
0224 .........................................
0388 .........................................
dcolon on DSK2BSOYB1PROD with RULES2
APC
Proposed
CY 2010
approximate
median cost
Final
CY 2010
approximate
median cost
2,322
2,715
1,470
2,521
2,769
1,769
2,490
2,740
1,727
Level II Nerve Procedures ..........................................................
Implantation of Catheter/Reservoir/Shunt ...................................
Discography ................................................................................
b. Magnetoencephalography (APCs 0065
and 0067)
Three CPT codes describe
magnetoencephalography services:
95965 (Magnetoencephalography
(MEG), recording and analysis; for
spontaneous brain magnetic activity
(e.g. epileptic cerebral cortex
localization)); 95966
(Magnetoencephalography (MEG),
recording and analysis; for spontaneous
brain magnetic activity (e.g. epileptic
cerebral cortex localization) for evoked
magnetic fields, single modality (e.g.
sensory, motor, language or visual
cortex localization)); and 95967
(Magnetoencephalography (MEG),
recording and analysis; for spontaneous
brain magnetic activity (e.g. epileptic
cerebral cortex localization), for evoked
magnetic fields, each additional
modality (e.g. sensory, motor language,
or visual cortex localization (List
separately in addition to code for
primary procedure)). These CPT codes
were originally assigned to New
Technology APCs but, beginning in CY
2006 and for every year thereafter, these
codes have been assigned to clinical
APCs on the basis of the clinical and
resource characteristics of the services.
For CY 2010, we proposed to continue
to assign CPT code 95965 to APC 0067
(Level III Stereotactic Radiosurgery,
MRgFUS and MEG) with a proposed
payment rate of approximately $3,507,
and we proposed to continue to assign
CPT codes 95966 and 96967 to APC
0065 (Level II Stereotactic Radiosurgery,
MRgFUS and MEG), with a proposed
payment rate of approximately $894.
Comment: Several commenters
requested that CMS restore the payment
rates for CPT codes 95965, 95966, and
95967 to the levels at which they were
paid under New Technology APCs in
CY 2005 of $5,250, $1,450, and $950,
respectively. They believed the payment
rates for CYs 2006, 2007, 2008, and 2009
and the proposed rate for CY 2010 were
based on median cost calculations that
understated the full costs of the
services. The commenters asked CMS to
create a cost center on the Medicare cost
report that would be used solely to
house hospitals’ costs of MEG and
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14:52 Nov 19, 2009
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indicated that the NUBC had approved
a request for a dedicated revenue code
for the reporting of charges for MEG.
The commenters argued that if CMS
would create a cost center for the costs
of MEG from which a specific CCR
could be developed for application to
MEG charges, the resulting median cost
would be a more accurate reflection of
the cost of MEG and would, therefore,
result in more appropriate payment.
One commenter submitted eight claims
for MEG, stating that its Medicare
contractor had approved use of a
subscript for a specific cost center on
the cost report to house the costs of
MEG. The commenter asked if these
claims were used in ratesetting,
provided the CCR the commenter
calculated using the costs and charges
for MEG that would be reported on the
cost report line that contained only
MEG costs, and asked if CMS calculated
the costs of these claims using the
specific CCR for MEG services.
Response: We assign new services to
New Technology APCs only until we
believe that we have sufficient historical
hospital claims data reflecting hospital
costs to reassign them to appropriate
clinical APCs. We initially assigned
MEG services to New Technology APCs
based on the information available to us
at the time about the expected hospital
costs. For CY 2006, we believed that we
had sufficient claims data to enable us
to make informed decisions regarding
the proper clinical APCs for assignment
of MEG services. We note that the
volumes of claims for MEG services
have remained stable since we moved
them to clinical APCs in CY 2006. We
have no reason to believe that the costs
that we have derived from our standard
cost estimation process for the CY 2010
OPPS fail to appropriately reflect the
relative costs of MEG services in
relation to the costs of other services
paid under the OPPS, nor do we have
reason to believe that payment at the
rates under which these services were
paid under the New Technology APCs
in CY 2005 are justified.
With regard to whether individual
claims that were submitted by one
commenter were used to set the median
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costs on which the CY 2010 MEG
payment rates are based, we note that
the claims we use to set the payment
rates under the OPPS are available for
purchase and a provider that wishes to
see if particular claims were used can
attain the claims file and perform any
analysis they choose. We are not able to
create provider-specific revenue codeto-cost center crosswalks that would use
unique cost report subscripts that
hospitals choose to create for particular
services. In the case of a hospital
reporting MEG costs on a subscripted
line 54.01, the costs would be included
as costs in cost center 5400 (the cost
center to which 54.01 is a subscripted
line), the standard cost center for
electroencephalography. In accordance
with our standard revenue code-to-cost
center crosswalk, we would apply the
CCR for this cost center to the charges
reported under revenue code 0740 (EEG
(Electroencephalogram); General
Classification)) if there is no CCR
available for nonstandard cost center
3280 (EKG and EEG).
We recognize that the NUBC created
a new revenue code for MEG on August
11, 2009, to be effective for services
reported on or after April 1, 2010, if a
hospital chooses to use it. We anticipate
that we will propose to use claims for
services furnished in CY 2010 to
calculate OPPS payment rates for CY
2012. Therefore, for the CY 2012 OPPS,
we expect that we will propose to
determine the primary, secondary and
tertiary (if any) CCRs to be applied to
the new revenue code as part of our
standard ratesetting process for the CY
2012 OPPS. With regard to requests for
a dedicated cost center for MEG
services, the revised draft hospital cost
report Form CMS–2552–10 went on
public display through the Federal
Register (74 FR 31738), with a comment
period that ended on August 31, 2009.
We will consider whether creation of
such a cost center is appropriate in our
review of all public comments on the
proposed revisions to the cost report.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposals,
without modification, to continue to
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assign CPT code 95965 to APC 0067,
with a final CY 2010 median cost of
approximately $3,539, and to continue
to assign CPT codes 95966 and 96967 to
APC 0065, with a final CY 2010 median
cost of approximately $954.
5. Ocular Services
dcolon on DSK2BSOYB1PROD with RULES2
a. Insertion of Anterior Segment
Aqueous Drainage Device (APC 0234)
The CPT Editorial Panel created
Category III CPT code 0191T (Insertion
of anterior segment aqueous drainage
device, without extraocular reservoir;
internal approach), effective on July 1,
2008. We assigned CPT code 0191T to
APC 0234 (Level III Anterior Segment
Eye Procedures), effective July 1, 2008,
and maintained this APC assignment for
CY 2009. For CY 2010, we proposed to
continue the assignment of CPT code
0191T to APC 0234, with a proposed
payment rate of approximately $1,639.
Comment: One commenter asserted
that the assignment of CPT code 0191T
to APC 0234 for CY 2010 would not
provide sufficient payment to hospitals
and ASCs to cover the cost of the
procedure and, therefore, is
inappropriate. The commenter indicated
that the manufacturer of the device
system inserted in the procedure
reported by CPT code 0191T currently
has an Investigational Device Exemption
(IDE) from the FDA and has filed a
premarket approval (PMA) application
with the FDA with the expectation that
the device will be available for use in
the United States as early as the first
quarter of CY 2010. The commenter
noted that the CY 2010 proposed
median cost of CPT code 0191T of
approximately $2,380, based on only
three single claims, was much higher
than the CY 2010 proposed median cost
of APC 0234 of approximately $1,639
and the CY 2010 proposed ASC
payment of approximately $962. The
commenter explained that the relatively
low number of Medicare hospital
outpatient claims for CPT code 0191T
resulted from the limited use of the
procedure in IDE studies and its
predominant performance in ASCs in
association with cataract surgery. The
commenter also noted that none of the
other procedures assigned to APC 0234
involve the placement of an implantable
device, while CPT code 0191T requires
the insertion of a device that costs about
$2,500.
Response: CPT code 0191T is a new
CPT code with very few Medicare
claims from CY 2008, possibly because
this procedure has been limited to IDE
studies, as noted by the commenter.
Furthermore, because this CPT code was
effective on July 1, 2008, CY 2008
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claims reflect only 6 months of hospital
data, rather than a full year. We note
that there are a number of other surgical
eye procedures to treat glaucoma that
are also assigned to APC 0234 for CY
2010. Moreover, the final CY 2010
median cost of CPT code 0191T based
on a small number of CY 2008 claims
is approximately $1,962, close to the
final CY 2010 median cost of APC 0234
of approximately $1,630. Therefore,
based on considerations of clinical and
resource homogeneity, we continue to
believe that APC 0234 is the most
appropriate APC assignment for CPT
code 0191T for CY 2010.
After consideration of the public
comment we received, we are finalizing
our CY 2010 proposal, without
modification, to continue to assign CPT
code 0191T to APC 0234, with a final
CY 2010 APC median cost of
approximately $1,630.
b. Backbench Preparation of Corneal
Allograft
For CY 2010, we proposed to continue
to assign CPT code 65757 (Backbench
preparation of corneal endothelial
allograft prior to transplantation) status
indicator ‘‘N’’ (Items and Services
Packaged into APC Rates). In the CY
2009 OPPS/ASC final rule with
comment period (73 FR 69076), we
assigned CPT code 65757 status
indicator ‘‘N’’ and flagged the code with
comment indicator ‘‘NI’’ to indicate
that, as a new CPT code for CY 2009, its
interim final CY 2009 OPPS treatment
was subject to comment on that final
rule with comment period.
Comment: One commenter requested
that CMS pay separately for CPT code
65757 under the OPPS through an APC.
According to the commenter, this
service represents the preparation
process for corneal transplants. The
commenter argued that because this
service is time-consuming and requires
specialized skills and equipment, CPT
code 65757 should not be packaged
under the OPPS but, instead, should be
paid separately.
Response: We packaged CPT code
65757 because we consider it to be an
intraoperative service that is ancillary
and supportive to another service that is
paid separately under the OPPS,
specifically the corneal transplant. Our
general packaging policies for certain
categories of services are discussed in
section II.A.4. of this final rule with
comment period. Although OPPS
payment for CPT code 65757 is
packaged, we will consider its costs in
setting the payment rates for the
associated surgical procedures under
the OPPS, according to the standard
OPPS cost estimation methodology that
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60449
is discussed in section II.A.2. of this
final rule with comment period.
After consideration of the public
comment we received, we are finalizing
our CY 2010 proposal, without
modification, to continue to assign CPT
code 65757 status indicator ‘‘N.’’
6. Orthopedic and Musculoskeletal
Services
a. Arthroscopic Procedures (APCs 0041
and 0042)
For CY 2010, we proposed to continue
the assignment of various arthroscopy
procedures to APCs 0041 (Level I
Arthroscopy) and APC 0042 (Level II
Arthroscopy), with proposed payment
rates of approximately $2,014 and
$3,279, respectively.
Comment: One commenter expressed
concern about the variety of procedures
assigned to APC 0041, whose HCPCS
code-specific median costs ranged from
$50 to $22,000, and to APC 0042, whose
HCPCS code-specific median costs
ranged from $143 to $20,000. In
particular, the commenter indicated that
the current designation of only two
APCs for the more than 60 distinct
arthroscopic procedures assigned to
these APCs does not appropriately
reflect the unique clinical and resource
characteristics associated with
arthroscopic procedures that are
provided to Medicare beneficiaries. The
commenter urged CMS to create several
new APCs to ensure clinical
homogeneity and similar resource
utilization for the arthroscopy
procedures assigned to them and
provided recommended APC
configurations.
To pay appropriately for arthroscopic
procedures under the OPPS, the
commenter recommended that CMS
restructure the arthroscopy procedures
into 11 new APCs based on the
following three clinical categories: (1)
Diagnostic arthroscopies; (2) lower
extremity versus upper extremity
arthroscopies; and (3) arthroscopies
with implants. The commenter further
recommended specific payment rates
associated with each of the 11
recommended APCs, ranging from
$1,400 to $5,400. According to the
commenter, the recommended clinical
distinctions parallel the distinctions
CMS has created for other classes of
procedures, including other orthopedic
procedures, and would more accurately
reflect the clinical characteristics and
resource utilization of the services
provided.
Alternatively, the commenter
provided, in the event a reconfiguration
of APCs 0041 and 0042 is not possible
at this time, two more limited
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suggestions: Finalize the proposal to
reassign CPT codes 29888
(Arthroscopically aided anterior
cruciate ligament repair/augmentation
or reconstruction) and 29889
(Arthroscopically aided posterior
cruciate ligament repair/augmentation
or reconstruction) from APC 0042 to
APC 0052 (Level IV Musculoskeletal
Procedures Except Hand and Foot) and
reassign CPT code 29892
(Arthroscopically aided repair of large
osteochondritis dissecans lesion, talar
dome fracture, or tibial plafond fracture,
with or without internal fixation
(includes arthroscopy)) from APC 0042
to APC 0052.
Response: We believe the existing
clinical APCs 0041 and 0042
sufficiently account for the different
clinical and resource characteristics of
the procedures assigned to them. 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.
For APC 0041, based on significant
services with a total claim frequency of
greater than 1,000 or a frequency of
greater than 99 and percentage of single
claims equal to or greater than 2
percent, CY 2008 hospital outpatient
claims data showed that the median cost
of the lowest cost service is
approximately $1,463 and the median
cost of the highest cost service is
approximately $2,086. Likewise, for
APC 0042, claims data showed that the
median cost of the lowest cost
significant procedure is approximately
$2,730 and the median cost of the
highest cost significant procedure is
approximately $4,592. Based on the CY
2008 claims data, there is no 2 times
violation in either APC 0041 or APC
0042. Therefore, we see no reason for a
reconfiguration into many more APCs in
light of our interest in promoting
hospital efficiency, as discussed earlier.
With respect to the reassignment of
CPT code 29892 from APC 0042 to APC
0052 as recommended by the
commenter, we agree that this
reassignment would be appropriate for
CY 2010. While we have very few
claims for this procedure upon which to
accurately estimate its cost, we
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reviewed the clinical characteristics
associated with CPT code 29892 and
agree that, based on the complexity of
this procedure, it would be more
appropriately assigned to APC 0052
based on its clinical characteristics and
expected resource utilization.
Furthermore, we appreciate the
commenter’s support for our proposed
reassignment of CPT codes 29888 and
29889 from APC 0042 to APC 0052 for
CY 2010.
After consideration of the public
comment we received, we are finalizing
our CY 2010 proposals to reassign CPT
codes 29888 and 29889 from APC 0042
to APC 0052, with a final CY 2010 APC
median cost of approximately $5,921. In
addition, we are also finalizing the
reassignment of CPT code 29892 from
APC 0042 to APC 0052 for CY 2010. We
are making no other changes to the
proposed configurations of APC 0041
and 0042 for CY 2010. The final CY
2010 APC median cost for APC 0041 is
approximately $1,998 and
approximately $3,261 for APC 0042.
b. Knee Arthroscopy (APCs 0041 and
0042)
For CY 2010, we proposed to continue
to assign CPT codes 29882
(Arthroscopy, knee, surgical; with
meniscus repair (medial or lateral)) and
29883 (Arthroscopy, knee, surgical; with
meniscus repair (medial and lateral)) to
APC 0041 (Level I Arthroscopy), with a
proposed payment rate of approximately
$2,014. In addition, we proposed to
continue to assign CPT code 29867
(Arthroscopy, knee, surgical;
osteochondral allograft (eg,
mosaicplasty)) to APC 0042 (Level II
Arthroscopy), with a proposed payment
rate of approximately $3,279.
Comment: One commenter
recommended that CMS reassign CPT
code 29882 and 29883 from APC 0041
to APC 0042 because of their similarity
to procedures assigned to APC 0042.
The commenter also requested that CMS
reassign CPT code 29867 from APC
0042 to APC 0052 (Level IV
Musculoskeletal Procedures Except
Hand and Foot), with a proposed
payment rate of approximately $5,889.
The commenter believed that CPT code
29867 is clinically comparable to the
other procedures assigned to APC 0052.
Response: We reviewed the clinical
and resource characteristics of CPT
codes 29882 and 29883 and continue to
believe these CPT codes are
appropriately assigned to APC 0041 for
CY 2010. Analysis of CY 2008 claims
data showed that the median cost for
CPT code 29882, based on 165 single
claims (out of 334 total claims), is
approximately $2,224 and for CPT code
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29883, based on 116 claims (out of 182
total claims), is approximately $2,075.
These median costs are consistent with
the final CY 2010 median cost of APC
0041, which is approximately $1,998.
Furthermore, these procedures are
clinically similar to the majority of other
knee arthroscopy procedures that are
also assigned to APC 0041.
In addition, we do not agree with the
commenter’s assertion that CPT code
29867 is similar to the other procedures
in APC 0052. Our claims data show that
CPT code 29867 has a median cost of
approximately $3,652, which is
significantly lower than the median cost
of approximately $5,921 for APC 0052,
but close to the median cost of
approximately $3,261 for APC 0042,
where we proposed to assign the code
for CY 2010. Furthermore, the knee
arthroscopy procedure described by
CPT code 29867 is not clinically similar
to other procedures assigned to APC
0052, which are generally not performed
arthoscopically.
After consideration of the public
comment we received, we are finalizing
our CY 2010 proposals, without
modification, to continue to assign CPT
codes 29882 and 29883 to APC 0041,
which has a final CY 2010 APC median
cost of approximately $1,998, and to
continue to assign CPT code 29867 to
APC 0042, which has a final CY 2010
APC median cost of approximately
$3,261.
c. Shoulder Arthroscopy (APC 0042)
For CY 2010, we proposed to continue
to assign CPT codes 29806
(Arthroscopy, shoulder, surgical;
capsulorrhaphy) and 29807
(Arthroscopy, shoulder, surgical; repair
of slap lesion) to APC 0042 (Level II
Arthroscopy), with a proposed payment
rate of approximately $3,279.
Comment: One commenter
recommended that CMS reassign CPT
codes 29806 and 29807 to APC 0052
(Level IV Musculoskeletal Procedures
Except Hand and Foot), which had a
proposed payment rate of approximately
$5,889. The commenter believed that
these procedures are clinically similar
to the other procedures in APC 0052.
Response: We continue to believe that
CPT codes 29806 and 29807 are
appropriately assigned to APC 0042
based on clinical and resource
considerations. We note that most other
shoulder arthroscopy procedures that
are similar to CPT codes 29806 and
29807 are assigned to APC 0042, while
most procedures assigned to APC 0052
are bone procedures that are not
performed arthroscopically. Analysis of
our claims data revealed that the
median cost of CPT code 29806, based
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on 161 single claims (out of 759 total
claims), is approximately $4,003, which
is significantly lower than the median
cost of approximately $5,921 for APC
0052. Likewise, our claims data showed
that the median cost of CPT code 29807,
based on 199 single claims (out of 3,802
total claims), is approximately $4,202,
which is also significantly lower than
the median cost for APC 0052. The CPT
code-specific median costs of these two
procedure codes fall within the range of
median costs (approximately $2,730 to
$4,592) of significant procedures that
are also assigned to APC 0042 for CY
2010. Therefore, we believe that CPT
codes 29806 and 29807 are most similar
clinically and with respect to resource
costs to other procedures assigned to
APC 0042.
After consideration of the public
comment we received, we are finalizing
our CY 2010 proposal, without
modification, to continue to assign CPT
codes 29806 and 29807 to APC 0042,
which has a final CY 2010 APC median
cost of approximately $3,261.
d. Fasciotomy Procedures (APC 0049)
For CY 2010, we proposed to continue
to assign the following seven CPT codes
for fasciotomy procedures to APC 0049
(Level I Musculoskeletal Procedures
Except Hand and Foot): CPT code 25020
(Decompression fasciotomy, forearm
and/or wrist, flexor or extensor
compartment; without debridement of
nonviable muscle and/or nerve); CPT
code 27496 (Decompression fasciotomy,
thigh and/or knee, one compartment
(flexor or extensor or adductor)); CPT
code 27498 (Decompression fasciotomy,
thigh and/or knee, multiple
compartments); CPT code 27499
(Decompression fasciotomy, thigh and/
or knee, multiple compartments; with
debridement of nonviable muscle and/
or nerve); CPT code 27892
(Decompression fasciotomy, leg;
anterior and/or lateral compartments
only, with debridement of nonviable
muscle and/or nerve); CPT code 27893
(’Decompression fasciotomy, leg;
posterior compartment(s) only, with
debridement of nonviable muscle and/
or nerve); and CPT code 27894
(Decompression fasciotomy, leg;
anterior and/or lateral, and posterior
compartment(s), with debridement of
nonviable muscle and/or nerve). The CY
2010 proposed payment rate for APC
0049 was approximately $1,490.
Comment: One commenter
recommended that CMS reassign CPT
codes 25020, 27496, 27498, 27599,
27892, 27893, and 27894 from APC
0049 to APC 0050 (Level II
Musculoskeletal Procedures Except
Hand and Foot) based on their clinical
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and resource similarity to the other
fasciotomy procedures proposed for
assignment to APC 0050. Although the
commenter recommended assignment of
CPT code 27599 (Unlisted procedure,
femur or knee) among its list of codes
for assignment to APC 0050, we believe
that the commenter may have intended
to reference CPT code 27499 instead.
CPT code 27499 describes a
decompression fasciotomy on the thigh
and/or knee and was proposed for
assignment to APC 0049. CPT code
27599 was proposed for assignment to
APC 0129 (Level I Closed Treatment
Fracture Finger/Toe/Trunk) and does
not describe a fasciotomy procedure.
Response: We reviewed the clinical
characteristics associated with each of
the seven fasciotomy procedures, and
based on our analysis, we agree with the
commenter’s recommendation. We note
that, while we have no or very limited
hospital claims data for these services
that reflect hospital costs, a number of
other similar fasciotomy procedures are
already assigned to APC 0050. Based on
further analysis, we believe that CPT
codes 25020, 27496, 27498, 27499,
27892, 27893, and 27894 are sufficiently
similar to those other fasciotomy
procedures to warrant reassignment to
APC 0050.
After consideration of the public
comment we received, for CY 2010, we
are reassigning CPT codes 25020, 27496,
27498, 27499, 27892, 27893, and 27894
from APC 0049 to APC 0050, which has
a final CY 2010 APC median cost of
approximately $2,122.
e. Fibula Repair (APC 0062)
For CY 2010, we proposed to continue
to assign CPT code 27726 (Repair of
fibula nonunion and/or malunion with
internal fixation) to APC 0062 (Level I
Treatment Fracture/Dislocation), with a
proposed payment rate of approximately
$1,735.
Comment: One commenter
recommended that CMS reassign CPT
code 27726 from APC 0062 to APC 0063
(Level II Treatment Fracture/
Dislocation) because the procedure is
comparable in clinical and resource
characteristics to CPT code 27760
(Closed treatment of medial malleolus
fracture; without manipulation), which
was proposed for assignment to APC
0063, with a proposed payment rate of
approximately $3,023. In particular, the
commenter argued that repair of a
fibular nonunion is similar clinically
and with respect to resource costs to
repair of a tibial nonunion and,
therefore, the two procedures should be
assigned to the same clinical APC.
Although the commenter compared CPT
code 27726 to CPT code 27760, we
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60451
believe that the commenter may have
intended to reference CPT code 27720
(Repair of nonunion or malunion, tibia;
without graft, (eg, compression
technique)), which describes a repair of
a tibial nonunion and was proposed for
assignment to APC 0063, instead of CPT
code 27760. CPT code 27760 describes
a closed treatment of an ankle fracture
and was proposed for assignment to
APC 0129 (Level I closed Treatment
Fracture Finger/Toe/Trunk).
Response: We reviewed the clinical
characteristics and resource use
associated with CPT code 27726, and
based on our analysis, we agree with the
commenter’s recommendation. For CY
2010, our claims data showed a median
cost of approximately $3,486 for CPT
code 27726, based on 59 single claims
(of 121 total claims), which is
significantly higher than the median
cost of approximately $1,726 for APC
0062. Further, our claims data showed
that the median cost of CPT code 27726
is similar to that of APC 0063, which
has an APC median cost of
approximately $3,037. In addition, CPT
code 27726 clinically resembles CPT
code 27720, which is also assigned to
APC 0063.
After consideration of the public
comment we received, for CY 2010, we
are modifying our CY 2010 proposal and
reassigning CPT code 27726 to APC
0063 for CY 2010, which has a final CY
2010 APC median cost of approximately
$3,037.
f. Forearm Orthopedic Procedures
(APCs 0050, 0051, and 0052)
For CY 2010, we proposed to assign
the 14 forearm fracture procedures
listed in Table 25 below to APC 0050
(Level II Musculoskeletal Procedures
Except Hand and Foot), APC 0051,
(Level III Musculoskeletal Procedures
Except Hand and Foot), or APC 0052
(Level IV Musculoskeletal Procedures
Except Hand and Foot). The CY 2010
proposed payment rate for APCs 0050
was approximately $2,135; for APC
0051, approximately $3,156; and for
APC 0052, approximately $5,889.
Comment: One commenter
recommended that CMS reassign six
forearm fracture procedures to APC
0051. In particular, the commenter
stated that CPT codes 25350, 25355,
25360, 25370, 25390, and 25400
describe forearm surgical procedures
involving only one bone and the
hospital resource costs for the
procedures are similar to those of
procedures assigned to APC 0051. In
addition, the commenter suggested that
CMS reassign both CPT codes 24400
and 24410 to APC 0051 because these
procedures are similar in clinical
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characteristics and resource costs to
other procedures in APC 0051. Further,
the commenter recommended that CPT
codes 25365, 25375, 25393, 25405,
25415, and 25420 be reassigned to APC
0052 based on considerations of clinical
and resource homogeneity.
Response: We reviewed the clinical
characteristics and resource costs
associated with each surgical procedure
discussed by the commenter. Based on
our analysis of hospital claims data and
clinical review, we agree with the
commenter’s recommendation that CPT
codes 24400, 24410, 25350, 25355,
25360, 25370, 25390, and 25400 should
be assigned to APC 0051. We have very
few hospital outpatient claims for these
procedures upon which to estimate their
hospital costs. We note that these
procedures are all performed on only
one forearm bone, either the radius or
the ulna, and we believe they share
significant clinical and resource
characteristics with other procedures
assigned to APC 0051. Therefore, we are
reassigning CPT codes 24400, 24410,
25350, 25360, and 25390 to APC 0051
for CY 2010. As we proposed, we are
continuing to assign CPT codes 25355,
25370, and 25400 to APC 0051 for CY
2010.
With regard to the procedures that
were recommended for reassignment to
APC 0052, we agree with the
commenter’s argument that CPT codes
25405, 25415, and 25420 have similar
resource costs to other procedures
already assigned to APC 0052. These
procedures were assigned to APC 0052
for CY 2009 and, as we proposed, for CY
2010, we are continuing their
assignment to APC 0052.
However, we do not agree with the
commenter’s recommendation to
reassign CPT codes 25365, 25375, and
25393 to APC 0052. We have very few
claims for these procedures from CY
2008, but we believe their clinical and
resource characteristics are sufficiently
similar to other procedures assigned to
APC 0051 that they should all be
assigned to APC 0051 for CY 2010.
While we proposed to assign CPT codes
25375 and 25393 to APC 0051 for CY
2010, we proposed to assign CPT code
25365 to APC 0050. In this final rule
with comment period, we are modifying
the assignment of CPT code 25365 to
APC 0051, where it will reside along
with CPT codes 25375 and 25393.
After consideration of the public
comment we received, we are finalizing
our CY 2010 proposals, without
modification, to continue to assign CPT
codes 25355, 25370, 25375, and 25393,
and 25400 to APC 0051, which has a
final CY 2010 APC median cost of
approximately $3,111, and CPT codes
25405, 25415, and 25420 to APC 0052,
which has a final CY 2010 APC median
cost of approximately $5,921. We are
modifying our CY 2010 proposals and
assigning CPT codes 24400, 24410,
25350, 25360, 25365, and 25390 to APC
0051, which has a final CY 2010 APC
median cost of approximately $3,111.
Table 25 below lists the final APC
assignments for the 14 forearm fracture
procedures discussed in this section.
TABLE 25—CY 2010 APC ASSIGNMENT FOR CERTAIN FOREARM FRACTURE PROCEDURES
Proposed
CY 2010
APC
CY 2010 HCPCS code
CY 2010 Long descriptor
24400 ....................................................
24410 ....................................................
Osteotomy, humerus, with or without internal fixation .........................................
Multiple osteotomies with realignment on intramedullary rod, humeral shaft
(sofield type procedure).
Osteotomy, radius; distal third .............................................................................
Osteotomy, radius; middle or proximal third ........................................................
Osteotomy; ulna ...................................................................................................
Osteotomy; radius and ulna .................................................................................
Multiple osteotomies, with realignment on intramedullary rod (sofield type procedure); radius or ulna.
Multiple osteotomies, with realignment on intramedullary rod (sofield type procedure); radius and ulna.
Osteoplasty, radius or ulna; shortening ...............................................................
Osteoplasty, radius and ulna; lengthening with autograft ...................................
Repair of nonunion or malunion, radius or ulna; without graft (eg, compression
technique.
Repair of nonunion or malunion, radius or ulna; with autograft (includes obtaining graft).
Repair of nonunion or malunion, radius and ulna; without graft (eg, compression technique).
Repair of nonunion or malunion, radius and ulna; with autograft (includes obtaining graft).
25350
25355
25360
25365
25370
....................................................
....................................................
....................................................
....................................................
....................................................
25375 ....................................................
25390 ....................................................
25393 ....................................................
25400 ....................................................
25405 ....................................................
25415 ....................................................
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25420 ....................................................
g. Low Energy Extracorporeal Shock
Wave Therapy (Low Energy ESWT)
For CY 2010, we proposed to continue
to assign CPT code 0019T
(Extracorporeal shock wave involving
musculoskeletal system, not otherwise
specified, low energy) status indicator
‘‘A’’ (Services furnished to a hospital
outpatient that are paid under a fee
schedule or payment system other than
OPPS).
Comment: One commenter urged
CMS to assign CPT code 0019T status
indicator ‘‘T’’ (Significant Procedure:
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Multiple Reduction Applies), and to
place the CPT code in an APC that pays
appropriately. The commenter indicated
that high energy ESWT, specifically CPT
code 0101T (Extracorporeal shock wave
involving musculoskeletal system, not
otherwise specified, high energy), is
assigned to APC 0050 (Level II
Musculoskeletal Procedures Except
Hand and Foot), with a proposed CY
2010 payment rate of approximately
$2,135. The commenter argued that both
the low energy and high energy ESWT
treat similar conditions and both use
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Final CY
2010
APC
0050
0050
0051
0051
0052
0051
0050
0050
0051
0051
0051
0051
0051
0051
0051
0051
0050
0051
0051
0051
0051
0051
0052
0052
0052
0052
0052
0052
Class III medical devices that are subject
to the most stringent FDA approval
process that restricts the sale of the
device to by or on the order of a
physician. Because of this similarity, the
commenter urged CMS to be consistent
in its payment policy and recommended
that both CPT codes 0101T and 0019T
be assigned the same status indicator to
specify their separate payment under
the OPPS.
Response: We do not agree that low
energy ESWT is similar to high energy
ESWT. High energy ESWT requires the
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use of anesthesia during the procedure
and usually involves only one treatment
session. Alternatively, low energy
ESWT does not require anesthesia and
usually is furnished over several
sessions. Because of the complexity of
high energy ESWT, we believe that it is
appropriate to pay for CPT code 0101T
as a hospital outpatient service under
the OPPS through APC 0050. However,
CPT code 0019T is assigned status
indicator ‘‘A’’ because it is designated as
a ‘‘sometimes therapy’’ service to
indicate that it is a therapy service when
furnished by a therapist. When
performed in the HOPD, we believe CPT
code 0019T would be furnished as a
therapy service paid under the MPFS
and, therefore, the service is
appropriately assigned status indicator
‘‘A’’ for hospital outpatient payment
purposes. Regulation of the device by
the FDA as a Class III medical device for
sale by or on the order of a physician
and the need for special training to use
the technology for its approved use are
not inconsistent with our considering
CPT code 0019T to be a ‘‘sometimes
therapy’’ service, that is, a therapy
service when furnished by a therapist.
After consideration of the public
comment we received, we are finalizing
our CY 2010 proposal, without
modification, to continue to assign CPT
code 0019T to status indicator ‘‘A’’ for
CY 2010.
h. Insertion of Posterior Spinous Process
Distraction Device (APC 0052)
For CY 2009 (73 FR 68620), we
reassigned 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). For CY 2007 and CY
2008, the device implanted in
procedures described by CPT codes
0171T and 0172T, HCPCS code C1821
(Interspinous process distraction device
(implantable)), was assigned passthrough payment status and, therefore,
was paid separately at charges adjusted
to cost. The period of pass-through
payment for HCPCS code C1821 expired
after December 31, 2008. According to
our established methodology, the costs
of devices no longer eligible for passthrough payments are packaged into the
costs of the procedures with which the
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devices are reported in the claims data
used to set the payment rates for those
procedures. Therefore, the costs of the
implanted device identified by HCPCS
code C1821 are packaged into the costs
of CPT codes 0171T and 0172T
beginning in CY 2009.
At the February 2009 meeting, the
APC Panel heard a public presentation
that recommended reassignment of CPT
codes 0171T and 0172T from APC 0052
to APC 0425 (Level II Arthroplasty or
Implantation with Prosthesis). The
presenter believed that APC resource
homogeneity would be improved if CPT
codes 0171T and 0172T were reassigned
to APC 0425. The presenter asserted,
based on its analysis of CY 2007 claims
data, that the median cost of CPT code
0171T was significantly higher than the
median cost of APC 0052, while only
slightly lower than the median cost of
APC 0425. The presenter indicated that,
while the median cost of APC 0052 was
significantly higher than the median
cost of device HCPCS code C1821,
device costs are only one element of the
overall procedure cost and other
associated procedure costs are more
than $3,200. Regarding clinical
homogeneity, the presenter stated that
kyphoplasty is the only spine procedure
currently assigned to APC 0052 other
than CPT codes 0171T and 0172T. The
presenter also claimed that 36 percent of
claims for CPT code 0171T are reported
without HCPCS code C1821, which
identified a device that is always
implanted in procedures reported with
CPT codes 0171T and 0172T. The
presenter requested reassignment of
CPT codes 0171T and 0172T to APC
0425 because this APC is a devicedependent APC, and CPT codes 0171T
and 0172T would then be subject to
procedure-to-device claims processing
edits.
The APC Panel recommended that
CMS continue the assignment of CPT
codes 0171T and 0172T to APC 0052 for
CY 2010, institute procedure-to-device
claims processing edits for HCPCS code
C1821, and then reevaluate the APC
assignments of CPT codes 0171T and
0172T in one year.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35305), we stated that under
our existing policy, we generally do not
identify any individual HCPCS codes as
device-dependent codes under the
OPPS. 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. We noted in the CY 2009
OPPS/ASC final rule with comment
period regarding APC 0052 (73 FR
68621) that we typically do not
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60453
implement procedure-to-device edits for
an APC 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 device-dependent 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 examined the CY 2008 claims data
available for the CY 2010 proposed rule
to determine the frequency of billing
CPT code 0171T (which is the main
procedure code reported with HCPCS
code C1821) with and without device
HCPCS code C1821. CPT code 0172T is
an add-on code to CPT code 0171T. We
recognize that our single claims for CPT
code 0172T may not be correctly coded
claims and, therefore, our cost
estimation for CPT code 0172T may not
be accurate. Our analysis showed that
the CY 2010 proposed rule median cost
for CPT code 0171T was approximately
$7,717 based on over 800 single claims.
The CY 2010 proposed rule claims data
for CPT code 0171T revealed a median
cost of approximately $7,916 based on
over 500 single claims with HCPCS code
C1821, and a median cost of
approximately $7,387 based on
approximately 300 single claims
without HCPCS code C1821. Therefore,
we concluded that the median cost of
claims for CPT code 0171T reported
with HCPCS code C1821 is similar to
the median cost of claims for the
procedure reported without HCPCS
code C1821. We stated in the CY 2010
OPPS/ASC proposed rule (74 FR 35305)
that we have no reason to believe that
those hospitals not reporting the device
HCPCS code had failed to consider the
cost of the device in charging for the
procedure. Furthermore, claims for CPT
code 0171T reported with HCPCS code
C1821 accounted for about two-thirds of
the single claims available for
ratesetting. For the CY 2010 OPPS/ASC
proposed rule, we concluded that the
overall median cost of CPT code 0171T
fell within an appropriate range of
HCPCS code-specific median costs for
those services proposed for CY 2010
assignment to APC 0052, which had a
proposed APC median cost of
approximately $5,939 and no 2 times
violation. Moreover, in the CY 2010
OPPS/ASC proposed rule (74 FR 35305),
we indicated that we do not believe that
procedure-to-device claims processing
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edits are necessary to ensure accurate
cost estimation for CPT code 0171T.
The CY 2010 OPPS/ASC proposed
rule line-item median cost for HCPCS
code C1821 was approximately $4,625,
while the CY 2010 OPPS/ASC proposed
rule median cost of APC 0052 was
approximately $1,300 more than this
device cost. We stated in the proposed
rule (74 FR 35305) that previous
estimates of procedure time presented to
us at the time of the device pass-through
application for the interspinous process
distraction device described by HCPCS
code C1821 were approximately 30 to
60 minutes of procedure time for the
service currently described by CPT code
0171T. This is reasonably comparable to
the typical procedure time for
kyphoplasty 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 (eg,
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 (eg,
kyphoplasty); lumbar), which are also
assigned to APC 0052.
Because we reasoned that APC 0052
pays appropriately for the procedure
cost of CPT codes 0171T and 0172T, we
proposed to maintain the assignment of
CPT codes 0171T and 0172T to APC
0052 for CY 2010 and not to implement
device edits for these procedures. We
proposed to accept one part of the APC
Panel’s recommendation regarding the
continued assignment of CPT codes
0171T and 0172T to APC 0052, but we
proposed to not accept the APC Panel’s
further recommendation to institute
procedure-to-device edits for these
services for CY 2010. As we do for all
OPPS services, we stated that we would
reevaluate the APC assignments of CPT
codes 0171T and 0172T when
additional claims data become available
for CY 2011 ratesetting, in accordance
with the final part of the APC Panel’s
recommendation for these procedures
(74 FR 35305).
Comment: Some commenters
recommended that CMS reassign CPT
codes 0171T and 0172T from APC 0052
to APC 0425 for CY 2010, arguing that
the resource costs associated with these
procedures are more similar to the
resource costs of procedures assigned to
APC 0425 than to procedures assigned
to APC 0052. One commenter noted, for
example, that the median cost for CPT
code 0171T is approximately 30 percent
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higher than the median cost for APC
0052, but only two percent lower than
the median cost for APC 0425. In
response to CMS’ observation in the CY
2010 OPPS/ASC proposed rule that the
proposed median cost of APC 0052 was
approximately $1,300 more than the
line-item median cost for HCPCS code
C1821 of approximately $4,625, the
commenter pointed out that device costs
are but one element of the overall
procedure costs. The commenter
presented data to demonstrate that the
service costs associated with CPT code
0171T are greater than this $1,300
difference. The commenter agreed that
the 30 to 60 minute procedure time
associated with CPT code 0171T that
CMS noted in the proposed rule is
reasonable, but argued that intraservice
time should not be used as a sole basis
for judging resource homogeneity
because there is not a direct correlation
between intraservice time and hospital
costs.
The commenters also disagreed with
CMS’ assertion that the procedures
described by CPT codes 0171T and
0172T are more similar clinically to
procedures assigned to APC 0052 than
to procedures assigned to APC 0425.
One commenter argued that
kyphoplasty is the only spine procedure
assigned to APC 0052, and that, like all
of the other procedures assigned to APC
0052, it does not involve the
implantation of a device. The
commenter acknowledged that, while
CMS’ statement of clinical similarity for
APC 0052 is true to some extent, the
procedure described by CPT code 0171T
is more similar to procedures assigned
to APC 0425 because it is orthopedic in
nature and requires the use of a device
that is classified as a prosthesis by the
FDA.
Moreover, the commenter claimed
that there are relevant precedents for
reassignment of CPT codes 0171T and
0172T to APC 0425, such as CMS’
proposed reassignment of CPT code
27446 (Arthroplasty, knee, condyle and
plateau; medial OR lateral
compartment) to APC 0425 for CY 2010.
The commenter also argued that
reassigning CPT 0171T and 0172T to
device-dependent APC 0425, to which
procedure-to-device edits apply, would
help ensure that only correctly coded
claims are used in ratesetting.
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. We do not agree with the
commenters that the resource costs of
providing the procedures described by
CPT codes 0171T and 0172T are
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substantially different from the resource
costs of providing other procedures
assigned to APC 0052 and that they
should not be assigned to APC 0052,
which has a final CY 2010 APC median
cost of approximately $5,921. Based on
the CY 2008 claims data reviewed for
this final rule with comment period, the
final median costs of CPT codes 0171T
and 0172T are approximately $7,522
(based on 939 single claims) and
approximately $14,617 (based on 6
single claims), respectively. As we have
noted previously (73 FR 68620), we
recognize that our single claims for CPT
code 0172T may not be correctly coded
and, therefore, our cost estimation for
CPT code 0172T may not be accurate.
CPT code 0171T has the highest median
cost of the significant procedures
(defined as those procedures with a
frequency of greater than 1,000 single
claims or a 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 $5,072. Therefore, the
configuration of APC 0052 does not
violate the 2 times rule. We continue to
believe that, based on resource
considerations, assignment to APC 0052
would provide appropriate payment for
CPT codes 0171T and 0172T. We agree
with the commenters that we should
consider factors such as line-item
median costs for devices and
intraservice times as two data elements
among several when we evaluate the
clinical and resource homogeneity of
APCs. In this case, we continue to
believe that, as described in the
proposed rule, both the line-item
median cost for HCPCS code C1821 and
the intraservice time for the procedure
described by CPT code 0171T support
our assessment that this procedure is
similar in terms of resource utilization
to other procedures assigned to APC
0052, consistent with the fact there is no
2 times violation within this APC.
We continue to believe the posterior
spinous process distraction device
procedures described by CPT codes
0171T and 0172T are clinically similar
to other procedures, such as the
kyphoplasty procedures, that are
assigned to APC 0052. We disagree with
the commenter that the kyphoplasty
procedures described by CPT codes
22523 and 22524 do not involve the
implantation of a device. Our definition
of an implantable device includes
surgically inserted or implanted devices
that may not remain with the patient
following the procedure, and thus may
include expensive devices used in
kyphoplasty such as expanders and
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other single-use disposal devices used
to create a cavity in the vertebral body.
We note the code descriptor of
kyphoplasty CPT code 22523 states,
‘‘using mechanical device.’’ Based on a
kyphoplasty New Technology APC
application we received in CY 2004, the
prices for these implantable devices are
approximately $3,000. Moreover, the
kyphoplasty procedures are clinical
substitutes for vertebroplasty
procedures, such as the procedure
described by CPT code 22520
(Percutaneous vertebroplasty, one
vertebral body, unilateral or bilateral
injection; thoracic) and are assigned to
APC 0050 (Level II Musculoskeletal
Procedures Except Hand and Foot). CPT
code 22520 has a CY 2010 final rule
median cost of approximately $2,181,
which is nearly $3,800 less than the
final rule median cost of approximately
$5,976 calculated for the kyphoplasty
procedure described by CPT code
22523. This differential appears to be
largely attributable to implantable
device costs in kyphoplasty procedures.
Therefore, we continue to believe that
kyphoplasty and posterior spinous
process distraction device procedures
are clinically similar in that they are
spinal procedures involving implantable
devices. We note that there are no
procedures involving the spine assigned
to APC 0425.
We do not agree with the commenter
that our reassignment of the knee
arthroplasty procedure described by
CPT code 27446 to APC 0425 serves as
a precedent for the reassignment of CPT
codes 0171T and 0172T to APC 0425.
As discussed in section II.A.2.d.(1) of
this final rule with comment period, we
reassigned CPT code 27446 from APC
0681 (Knee Arthroplasty) to APC 0425
for CY 2010 in order to consolidate APC
0425 with APC 0681, in which CPT
code 27446 was the only code. As noted
in section II.A.2.d.(1) of this final rule
with comment period, over the past
several years, the median cost for CPT
code 27446 has fluctuated due to a low
volume of services being performed by
a small number of providers in the
HOPD, and to a single provider
performing the majority of services. We
believe that by reassigning CPT code
27446 to APC 0425 and deleting APC
0681, we can maintain greater stability
from year to year in the payment rate for
CPT code 27446. Therefore, we do not
believe this is a similar situation to that
of CPT codes 0171T and 0172T, as the
commenter argued. Furthermore, we do
not believe that implantation of an
interspinous process distraction device,
a minimally invasive procedure, is
clinically comparable to a knee
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replacement procedure that is
performed on the majority of Medicare
beneficiaries on a hospital inpatient
basis. We also do not agree that we
should reassign CPT codes 0171T and
0172T to APC 0425 in order to
implement device edits for these
procedures. As we described in the
proposed rule (74 FR 35305), based
upon analysis of CY 2010 proposed rule
claims data for CPT code 0171T, we
have no reason to believe that the
minority of hospitals that do not bill
HCPCS code C1821 along with CPT
code 0171T are not already considering
the costs of the interspinous process
distraction device in charging for the
procedure.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposals,
without modification, to continue to
assign CPT codes 0171T and 0172T to
APC 0052, which has a final CY 2010
APC median cost of approximately
$5,921.
7. Radiation Therapy Services
a. Proton Beam Therapy (APCs 0664 and
0667)
For CY 2010, we proposed to continue
to assign CPT codes 77520 (Proton
treatment delivery; simple, without
compensation) and 77522 (Proton
treatment delivery; simple, with
compensation) to APC 0664 (Level I
Proton Beam Radiation Therapy), which
had a proposed payment rate of
approximately $713. We also proposed
to continue to assign CPT codes 77523
(Proton treatment delivery;
intermediate) and 77525 (Proton
treatment delivery; complex) to APC
0667 (Level II Proton Beam Radiation
Therapy), which had a proposed
payment rate of approximately $933.
Comment: Several commenters
supported the proposed payment
increases for the proton beam treatment
CPT codes. The commenters cited a
payment increase of 1.43 percent for
CPT codes 77520 and 77522, and a
payment increase of 11.02 percent for
CPT codes 77523 and 77525.
Response: We appreciate the
commenters’ support for our proposals.
The CY 2010 OPPS payment rates for
CPT codes 77520, 77522, 77523, and
77525 are based on the APC median
costs calculated from CY 2008 hospital
claims data and the most current cost
reports, according to the standard OPPS
ratesetting methodology. We are
confident that the observed costs in the
claims data are representative of the
costs of the proton beam therapy
services provided in CY 2008 because
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60455
almost all of the claims are single claims
that can be used for ratesetting.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposals,
without modification, to assign CPT
codes 77520 and 77522 to APC 0664,
with a final CY 2010 APC median cost
of approximately $934, and CPT codes
77523 and 77525 to APC 0667, with a
final CY 2010 APC median cost of
approximately $1,221.
b. Stereotactic Radiosurgery (SRS)
Treatment Delivery Services (APCs
0065, 0066, 0067, and 0127)
For CY 2010, we proposed to continue
to assign CPT code 77371 (Radiation
treatment delivery, stereotactic
radiosurgery (SRS), complete course of
treatment of cranial lesion(s) consisting
of 1 session; multi-source Cobalt 60
based) to APC 0127 (Level IV
Stereotactic Radiosurgery, MRgFUS, and
MEG), with a proposed payment rate of
approximately $7,714.
We also proposed to continue to
recognize for separate payment in CY
2010 four existing HCPCS G-codes that
describe linear accelerator-based SRS
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 $3,507; 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 $894; 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 $3,507; 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 $2,505.
Further, we proposed to continue to
assign CPT codes 77372 (Radiation
treatment delivery, stereotactic
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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’’ (Codes
that are not recognized by OPPS when
submitted on an outpatient hospital Part
B bill type (12x and 13x)) under the
OPPS, to indicate that these CPT codes
are not payable under the OPPS.
Comment: Several commenters
expressed concern about their belief that
payment for HCPCS code G0173 and
CPT code 77371 is based on the
utilization of specific SRS equipment.
The commenters stated that no clinical
data exist to support the need for
differential payment for linear
accelerator-based and Cobalt-60 SRS
procedures. The commenters further
explained that current medical literature
cites no difference in clinical
effectiveness for the systems associated
with linear accelerator-based and
Cobalt-60 SRS procedures. One
commenter provided an extensive
bibliography of relevant peer-reviewed
articles supporting this finding. The
commenters recommended that CMS
assign HCPCS code G0173 and CPT
code 77371 to the same APC so that
payment for both services would be the
same. Specifically, the commenters
suggested capping the payment rate for
CPT code 77371 at the payment rate for
HCPCS code G0173. One commenter
added that, based on an internal
analysis of CY 2007 claims data using
the CY 2009 OPPS payment rates for
CPT code 77371 and HCPCS code
G0173, paying both procedures at the
payment rate for HCPCS code G0173
would lead to Medicare savings of at
least $272 million over 10 years and
about $104 million over 5 years. The
commenters encouraged CMS to
consider this payment methodology
and, thereby, pay for services
appropriately regardless of the specific
equipment used to deliver SRS
treatment, especially as Medicare moves
towards a value-based purchasing
system.
Response: Analysis of our claims data
shows that the median costs for linear
accelerator-based and Cobalt-60 SRS
procedures vary significantly. Since the
creation of CPT code 77371, which was
made effective January 1, 2007, our
claims data has shown a median cost of
more than approximately $7,000 for this
procedure. Based on data available for
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CY 2010 ratesetting, our claims data
showed a median cost of approximately
$7,277 for CPT code 77371 that is
derived from 483 single claims (of 4,142
total claims), which is significantly
higher than the median cost of
approximately $2,877 for HCPCS code
G0173 that is based on 459 single claims
(of 1,471 total claims). Likewise, for
claims submitted for CY 2007, the data
year used for CY 2009 ratesetting, our
claims data showed a median cost of
approximately $7,470 based on 518
single claims (of 4,208 total claims) for
CPT code 77371, which is much higher
than the median cost of approximately
$3,523 for HCPCS code G0173, based on
528 single claims (of 1,616 total claims).
The OPPS is a prospective payment
system, where APC payment rates are
based on the relative costs of services as
reported to us by hospitals according to
the most recent claims and cost report
data as described in section II.A. of this
final rule with comment period. The 2
times rule specifies that the median cost
of the highest cost item or service
within a payment group may be no more
than 2 times greater than the median
cost of the lowest cost item or service
within the same group. Based on
application of the 2 times rule, we
cannot assign HCPCS code G0173 and
CPT code 77371 to the same APC. In
addition, because hospitals continue to
report very different costs for these
services, we believe it is appropriate to
maintain the assignment of these two
codes to different payment groups for
CY 2010. As a matter of payment policy,
the OPPS does not set payment rates for
services based on considerations of
clinical effectiveness. Furthermore, in
accordance with the statute, we budget
neutralize payments under the OPPS
each year in the annual update so that
projected changes in spending for
certain services are redistributed to
payment for other services.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposals,
without modification, to continue to
assign CPT code 77371 to APC 0127,
which has a final CY 2010 APC median
cost of approximately $7,277, and to
continue to assign HCPCS code G0173
to APC 0067, which has a final CY 2010
APC median cost of approximately
$3,539.
Comment: One commenter requested
that CMS finalize the proposed APC and
status indicator assignments for HCPCS
codes G0173, G0251, G0339, G0340,
77372, and 77373 for CY 2010. The
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commenter also recommended that CMS
revise code descriptors of HCPCS code
G0173, G0251, G0339, and G0340 for
SRS, to distinguish between non-gantry
and gantry-based SRS systems. Based on
internal analysis, the commenter stated
that, within the past year, there has been
an increase in the OPPS volume of
incorrectly coded claims. The
commenter suggested specific code
descriptor changes for the four revised
HCPCS G-codes, as well as specific
language changes to the SRS billing
instructions in Chapter 4 of the
Medicare Claims Processing Manual.
Response: These HCPCS G-codes for
SRS have been in effect for several years
and, based on questions brought to our
attention by hospitals, we have no
reason to believe that hospitals are
confused about the reporting of these
codes. Further, we see resource
differences reflected in the median costs
of the four HCPCS G-codes that are
reasonably consistent with our
expectations for different median costs
for the services based on the current
code descriptors. We believe it would be
confusing to hospitals if we were to
revise the code descriptors for HCPCS
codes G0173, G0251, G0339, and G0340.
Moreover, such a change could lead to
instability in our median costs and
inaccurate payments for some services.
Therefore, we believe that modifying the
G-code descriptors is not necessary for
us to continue to provide appropriate
payment for the services they describe.
We also do not believe changes to our
current billing instructions for SRS
services in the Medicare Claims
Processing Manual are necessary.
After consideration of the public
comment we received, we are finalizing
our CY 2010 proposals, without
modification, to maintain the existing
code descriptors for HCPCS codes
G0173, G0251, G0339, and G0340 for
linear accelerator-based SRS. In
addition, we are finalizing our
proposals, without modification, to
continue to assign CPT codes 77372 and
77373 to status indicator ‘‘B’’ under the
OPPS, and to continue to assign the four
linear accelerator-based SRS HCPCS
codes to the same APCs for CY 2010 as
CY 2009, specifically APCs 0065, 0066,
and 0067, with final CY 2010 APC
median costs of approximately $954,
$2,465, and $3,539, respectively. Table
26 displays the final APC median costs
for the SRS treatment delivery HCPCS
codes and CPT code 77371.
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TABLE 26—FINAL CY 2010 APC ASSIGNMENTS FOR ALL SRS TREATMENT DELIVERY SERVICES
CY 2010 Short descriptor
Final CY
2010 SI
Linear acc stereo radsur com ............................................................
Linear acc based stero radio .............................................................
Robot lin-radsurg com, first ................................................................
Robt lin-radsurg fractx 2–5 ................................................................
SRS, multisource ...............................................................................
G0173
G0251
G0339
G0340
77371
...........................................
...........................................
...........................................
...........................................
............................................
Final CY
2010
APC
Final CY
2010 approximate APC
median cost
0067
0065
0067
0066
0127
$3,539
954
3,539
2,465
7,277
S
S
S
S
S
CY 2010 HCPCS code
c. Clinical Brachytherapy (APCs 0312
and 0651)
For CY 2010, we did not propose any
change to the HCPCS codes for
assignment to APC 0312 (Radioelement
Applications) or APC 0651 (Complex
Interstitial Radiation Source
Application). The proposed CY 2010
payment rates for these APCs were
approximately $298 and $808,
respectively.
Comment: Several commenters
objected to the proposed reduction in
the payment rate for brachytherapy
services assigned to APC 0312 from
approximately $421 in CY 2009 to
approximately $298 in CY 2010, and the
proposed reduction in the payment rate
for APC 0651 from approximately $847
in CY 2009 to approximately $808 in CY
with changes to the bypass list,
trimming of unpaid lines, or other
general problems with CMS’ cost
estimation methodology. They believed
that, regardless of the source of the
problem, CMS must establish
appropriate and stable payment rates for
these services to allow Medicare
beneficiaries consistent access to
brachytherapy procedures.
Response: The median cost for APC
0312 for CY 2010, calculated using final
rule data, is approximately $300. Our
review of final rule claims data
indicates that the reduction in median
cost for APC 0312 from CY 2009 to CY
2010 appears to be caused by changes in
the median costs for the HCPCS codes
assigned to the APC that drive the
median cost for the APC.
2010. The commenters believed these
reductions in payment rates are the
result of reduced numbers of single
claims for the services assigned to the
APCs, caused by the trimming of lines
for which no payment was made on the
claim. They objected to the use of only
2 percent of total claims or a 30 percent
reduction in single claims for CPT code
77778 (Interstitial radiation source
application; complex) that is assigned to
APC 0651, and to the use of only 9
percent of total claims for CPT code
77776 (Interstitial radiation source
application; simple) and 19 percent of
total claims for CPT code 77777
(Interstitial radiation source application;
intermediate) that are both assigned to
APC 0312. The commenters speculated
that the problem could be associated
TABLE 27—MEDIAN COST AND FREQUENCY DATA FOR SERVICES ASSIGNED TO APC 0312* IN CY 2009 AND CY 2010
HCPCS code in APC
0312
77776 ........................
77762 ........................
77763 ........................
77777 ........................
77761 ........................
Totals .................
CY 2009
approximate
median
cost
Short descriptor
CY 2009
frequency
of single
claims
CY 2009
percentages of
single
claims
CY 2009
total
claims
CY 2010
approximate
median
cost
CY 2010
single
claims
CY 2010
percentages of
single
claims
CY 2010
total
claims
$119
23
6
149
$522
9
4
104
180
70
18
161
345
25
11
69
507
131
34
352
345
112
48
250
608
7
2
51
300
11
5
54
681
158
41
247
85
78
33
124
................
389
41
960
................
235
39
601
Apply interstit radiat
simpl.
Apply intrcav radiat
interm.
Apply intrcav radiat
compl.
Apply interstit radiat
inter.
Apply intrcav radiat
simple.
...................................
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* Data exclude claims for CPT code 77799, which were not used in setting the APC median cost.
Specifically, in CY 2009, CPT codes
77761 and 77763 dominated APC 0312
and the APC median cost was
approximately $420. For CY 2010, CPT
codes 77761 and 77763 continue to
dominate APC 0312 but their HCPCSspecific median costs declined. Hence,
the median cost for APC 0312 decreased
to approximately $300. We do not
believe that the exclusion of the lines
for which no payment was made was
the controlling factor in the decline of
the APC median cost. We excluded 97
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lines (including one unlisted line that is
not relevant) from the claims containing
CPT codes assigned to APC 0312 before
we split the claims into single claims.
Therefore, it is not possible to know
how many of the line-items we trimmed
were on claims that might have become
single claims that could be used for
ratesetting purposes. The total
frequency of HCPCS codes reported on
claims used for CY 2010 ratesetting
declined to 601 from 960 (before the
line-item trim). Therefore, a reduction
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in the number of single claims that are
available for calculation of the median
cost for the APC is to be expected
because the universe of claims assigned
to APC 0312 declined by more than one
third. However, we note that the single
claims used in the APC median
calculation, as a percent of the total
frequency, was 41 percent in CY 2009
and declined only minimally to 39
percent in CY 2010, notwithstanding the
decrease in total frequency from CY
2009 to CY 2010 and the trim of 96
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relevant lines of the 601 total claims for
the codes used to set the APC median
cost for APC 0312. We agree that the
decline in the median costs for CPT
codes 77761 and 77763 is notable.
However, we know that, for CY 2007
(the year of the claims used for the CY
2009 OPPS), there were no CPT codes
for the insertion of the needles and
catheters used to apply brachytherapy
sources interstitially to body areas other
than the prostate. We believe it is
possible that the costs of the needles
and catheters may have been
incorporated into the CY 2009 payment
for some of the CPT codes assigned to
APC 0312.
For CY 2008, the AMA’s CPT
Editorial Panel created CPT code 20555
(Placement of needles or catheters into
muscle and/or soft tissue for subsequent
interstitial radioelement application (at
the time of or subsequent to the
procedure)), and payment has been
made for that CPT code through APC
0050 (Level II Musculoskeletal
Procedures Except Hand and Foot) in
CY 2008 and CY 2009. In the updated
claims data used for this CY 2010 final
rule with comment period, for services
furnished in CY 2008, CPT code 20555
has a total frequency of 67 and a single
claim frequency of 25. CPT code 20555
is assigned to APC 0050, which has a
final CY 2010 median cost of
approximately $2,122. Because the
needles and catheters must be placed
before services reported by certain CPT
codes assigned to APC 0312 can be
performed, the hospital would receive
not only the payment for APC 0312, but
would also be paid for the placement of
the needles and catheters or other
devices, whether reported under CPT
code 20555 or another code for
placement of needles and catheters or
other brachytherapy source delivery
devices. Therefore, although the
payment rate for APC 0312 has declined
between CY 2009 and CY 2010,
hospitals will commonly receive a
separate payment for the placement of
the needles and catheters or other
devices that, when added to the
payment for the application of the
sources, will provide a robust payment
for the service in its entirety.
The final CY 2010 median cost of APC
0651 is approximately $885, compared
to the median cost of approximately
$847 for CY 2009. We note that most
claims that report CPT code 77778 are
for low dose rate prostate brachytherapy
that is paid through APC 8001 (LDR
Prostate Brachytherapy Composite)
rather than through APC 0651.
Therefore, the total claim frequency for
APC 0651 of 9,649 includes both the
7,742 claims that meet the criteria for
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payment through APC 8001 and the
1,907 claims that meet the criteria for
payment through APC 0651. For this
final rule with comment period, we
were able to use approximately 11
percent of the claims (206 of 1,907 total
claims) that meet the criteria for
payment through APC 0651 in the
calculation of the median cost for APC
0651. Not only does the CY 2010
median cost for APC 0651 increase over
the CY 2009 median cost, but when the
separate payment for the placement of
brachytherapy insertion devices is
made, the full payment for the
comprehensive service is substantial.
For example, if CPT code 20555 was
reported for placement of needles and
catheters, the hospital would be paid for
both one unit of APC 0651 (based on a
CY 2010 median cost of approximately
$885) and one unit of APC 0050 (based
on a CY 2010 median cost of
approximately $2,122).
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposals,
without modification, to calculate the
median costs for APCs 0312 and 0651
according to the standard OPPS
ratesetting methodology, applying the
final bypass list and line-item trim as
discussed in sections II.A.1. and II.A.2.
of this final rule with comment period.
The final CY 2010 median costs of APCs
0312 and 0651 are approximately $300
and $885, respectively. We believe that
when hospitals fully report the services
required for brachytherapy treatment,
the combined OPPS payment for
insertion of the source application
devices and application of the sources
themselves provides appropriate
payment for the comprehensive service.
8. Other Services
a. Low Frequency, Non-Contact, NonThermal Ultrasound (APC 0013)
The CPT Editorial Panel created CPT
code 0183T (Low frequency, noncontact, non-thermal ultrasound,
including topical application(s), when
performed, wound assessment, and
instruction(s) for ongoing care, per day),
effective January 1, 2008. Under the
OPPS, we assigned CPT code 0183T to
APC 0015 (Level III Debridement &
Destruction) for CY 2008 and CY 2009.
For CY 2009, APC 0015 has a payment
rate of approximately $100. Based upon
our review of the first year of hospital
claims data for CPT 0183T, for CY 2010
we proposed to reassign CPT code
0183T to APC 0013 (Level II
Debridement & Destruction), with a
proposed payment rate of approximately
$59.
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Comment: Several commenters
recommended that CMS continue to
assign CPT code 0183T to APC 0015.
The commenters asserted that the
proposed payment for APC 0013 would
not cover hospitals’ costs for performing
the procedure. One commenter stated
that the single-use kit for the service
costs $55. Another commenter reported
that the majority of hospitals with the
highest utilization of CPT code 0183T
either failed to report or underreported
the packaged supply costs associated
with CPT code 0183T. The commenter
analyzed CMS’ claims data according to
hospitals’ reporting of ‘‘packaged’’
supplies with CPT code 0183T and
found that 52 percent of all single
claims were from 5 hospitals, and that
4 of these 5 hospitals, representing 39
percent of single claims for CPT code
0183T used in ratesetting, reported $0 or
an insignificant (less than $5) packaged
supply cost. Moreover, the commenter
stated that the analysis indicated that,
overall, only one-third of the single
claims for CPT code 0183T included
any packaged costs, although costly
supplies are required for hospitals to
furnish the service. In addition, the
commenter reported that it surveyed
hospitals that provided the service and
learned that those hospitals reported a
median procedure cost of approximately
$153.
One commenter offered several
reasons why hospitals might not report
packaged supply costs with CPT code
0183T, including the fact that CPT code
0183T was a new CPT code in CY 2008,
the year of claims data for the CY 2010
OPPS rates; hospitals’ historical failure
to consider supply costs in setting their
procedure charges; the fact that
relatively low cost supplies are often
overlooked when hospitals charge for
services; and the lack of a specific Level
II HCPCS code to report a charge for the
applicator kit. The commenter estimated
that 32,000 procedures were furnished
to Medicare beneficiaries in the HOPD
in CY 2008, yet there were far fewer CY
2008 OPPS claims for the service. The
commenter cited several examples of
contractors providing instructions to
report other CPT codes, such as CPT
code 97602 (Removal of devitalized
tissue from wound(s), non-selective
debridement, without anesthesia (eg
wet-to-moist dressings, enzymatic,
abrasion), including topical
application(s), wound assessment, and
instruction(s) for ongoing care, per
session), when providing the low
frequency, non-contact, non-thermal
ultrasound procedure. Another
commenter argued that APC 0015 is the
most clinically appropriate APC for CPT
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code 0183T, and stated that if the
service were reassigned to APC 0013 as
proposed, it would be the only wound
healing procedure and the only
procedure requiring a single use
disposable supply in APC 0013.
Response: We proposed to reassign
CPT code 0183T to APC 0013 for CY
2010 based on clinical and resource
considerations. The final CY 2010
median cost of CPT code 0183T is
approximately $77, based on 9,335
single claims. The final CY 2010 median
cost of APC 0013 is approximately $59,
and the final CY 2010 final cost of APC
0015 is approximately $103. The final
CY 2010 HCPCS code-specific median
costs of other significant services
assigned to APC 0013 range from
approximately $46 to $82; therefore, the
$77 final median cost of CPT code
0183T for CY 2010 is well within that
range. While CY 2008 is the first year
we have cost information from hospitals
for the service, the large number of
single claims provides a robust estimate
of the service’s cost based on claims
from those hospitals that furnished the
service in CY 2008. While the
commenters were concerned that many
claims did not include separate charges
for the associated supplies, we have
found that it is common for hospitals to
consider the cost of necessary supplies
when setting the procedure charge,
rather than reporting a separate lineitem charge for the associated supplies.
Many supplies where payment is always
packaged into procedure payments do
not have specific Level II HCPCS codes
under which to report the associated
charges. Hospitals incorporate the
charge for such supplies in the
procedure charge or provide a charge on
a separate line under an appropriate
revenue code without a HCPCS code,
and we package the costs from these
uncoded line-items into payment for the
associated procedure. Therefore, we
have no reason to believe that our
estimated cost for CPT code 0183T from
CY 2008 claims data does not include
the cost of the necessary supplies. The
final CY 2010 median cost of CPT code
0183T is closer to the final CY 2010
median cost of APC 0013 than APC
0015. In fact, if we were to continue to
assign CPT code 0183T to APC 0015 for
CY 2010, APC 0015 would violate the 2
times rule. That is, if we maintained
CPT code 0183T in APC 0015 for CY
2010 as requested by the commenters, it
would be the significant procedure with
the lowest median cost assigned to APC
0015. In turn, the median cost of
approximately $158 for the highest cost
significant procedure, CPT code 11000
(Debridement of extensive eczematous
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or infected skin; up to 1 of body
surface), would be more than 2 times
the median cost of CPT code 0183T,
resulting in a 2 times violation in APC
0015. We note that the APC Panel heard
several public presentations that
addressed the proposed CY 2010 APC
assignment of CPT code 0183T at the
August 2009 meeting but made no
recommendation regarding the CY 2010
assignment of the code. In particular,
the APC Panel did not make a
recommendation to us to maintain an
APC configuration that would violate
the 2 times rule and require that we
except APC 0015 from the 2 times rule
for CY 2010.
We also believe that APC 0013 is an
appropriate APC assignment for CPT
code 0183T based on clinical
considerations. Other wound care
services with similar median costs are
assigned to APC 0013 for CY 2010,
specifically CPT codes 97602 and 97605
(Negative pressure wound therapy (eg,
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 50
square centimeters).
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to reassign CPT
0183T from APC 0015 to APC 0013,
with a final CY 2010 APC median cost
of approximately $59.
b. Skin Repair (APCs 0134 and 0135)
For CY 2010, we proposed to continue
to assign the CPT skin repair codes for
the application of Apligraf, Oasis, and
Dermagraft skin substitutes to the same
procedural APCs for CY 2010 as their
CY 2009 assignments. Specifically, we
proposed to continue to assign the
Apligraf application CPT codes 15340
(Tissue cultured allogeneic skin
substitute; first 25 sq cm or less) and
15341 (Tissue cultured allogeneic skin
substitute; each additional 25 sq cm, or
part thereof) to APC 0134 (Level II Skin
Repair), with a proposed payment rate
of approximately $214. Likewise, we
proposed to continue to assign the
Dermagraft application CPT codes
15365 (Tissue cultured allogeneic
dermal substitute, face, scalp, eyelids,
mouth, neck, ears, orbits, genitalia,
hands, feet, and/or multiple digits; first
100 sq cm or less, or 1% of body area
of infants and children) and 15366
(Tissue cultured allogeneic dermal
substitute, face, scalp, eyelids, mouth,
neck, ears, orbits, genitalia, hands, feet,
and/or multiple digits; each additional
100 sq cm, or each additional 1% of
body area of infants and children, or
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60459
part thereof) to APC 0134. We proposed
to continue to assign the Oasis
application CPT codes 15430 (Acellular
xenograft implant; first 100 sq cm or
less, or 1% of body area of infants and
children) and 15431 (Acellular
xenograft implant; each additional 100
sq cm, or each additional 1% of body
area of infants and children, or part
thereof) to APC 0135 (Level III Skin
Repair), with a proposed payment rate
of approximately $297.
At the August 2009 meeting of the
APC Panel, one public presenter
requested that the APC Panel
recommend that CMS reassign CPT
codes 15340 and 15341 from APC 0134
to APC 0135. The presenter stated that
the CY 2010 proposal to continue to
assign both codes to APC 0134 would
create a financial incentive favoring
Dermagraft application. Specifically, the
presenter explained that CPT
instructions allow the separate reporting
of the CPT codes for site preparation
when Dermagraft is applied, while the
CPT instructions for Apligraf
application codes specify that site
preparation cannot be separately
reported. The presenter believed that
this reporting difference and the
resulting expected differences in the
associated application procedure costs
could be addressed by assigning the
Apligraf application CPT codes to a
higher paying APC than the Dermagraft
application codes, instead of the same
APC as CMS proposed for CY 2010.
After discussion, the APC Panel
requested that CMS provide data at the
next APC Panel meeting on the
frequency of primary and add-on CPT
codes billed for Apligraf, Oasis, and
Dermagraft application in order to
assess the apparent variability in billing
for the application of these products. In
addition, the APC Panel requested
median cost data for site preparation
and debridement that may be separately
reported in preparation for application
of Dermagraft.
Comment: Several commenters
supported the CY 2010 proposal to
continue the CY 2009 APC assignments
for the Apligraf, Dermagraft, and Oasis
application CPT codes. One commenter
argued that reassignment of the Apligraf
application codes from APC 0134 to
APC 0135 would create a financial
incentive for hospitals to choose
Apligraf instead of other products.
Another commenter stated that the
current APC assignments for all three
sets of skin repair codes are appropriate
based on an assessment of clinical
homogeneity and resource costs.
Another commenter requested that
CMS reassign the Apligraf application
CPT codes 15340 and 15341 from APC
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0134 to APC 0135 because of their
similarity, from clinical and resource
perspectives, to the Oasis application
CPT codes 15430 and 15431 that are
currently assigned to APC 0135. The
commenter noted that none of these
procedures allow separate reporting and
payment of site preparation when
performed. The commenter expressed
concern that the variable APC
assignments for similar procedures
would create an unlevel playing field
that would lead to financial incentives
for hospitals to use one product rather
than the other, as opposed to the most
clinically appropriate product. Further,
the commenter indicated that site
preparation and debridement
procedures are not paid separately when
associated with Apligraf application, yet
these site preparation services are paid
separately when reported with
Dermagraft application procedures that
are assigned to the same APC as
Apligraf application procedures. The
commenter also requested that CMS not
reassign the Oasis application CPT
codes 15430 and 15431 from APC 0135
to APC 0134 because such a
reassignment would inappropriately
group skin repair procedures that
incorporate site preparation with those
that allow separate reporting and
payment of that preparation.
Response: The current Apligraf, Oasis,
and Dermagraft application CPT codes
were made effective January 1, 2006. In
the CY 2006 OPPS final rule with
comment period (70 FR 68762), we
assigned the Apligraf application CPT
codes 15340 and 15341 and the
Dermagraft application CPT codes
15365 and 15366 to the Level I Skin
Repair APC (then designated as APC
0024 with a payment rate of
approximately $92). We assigned the
Oasis application CPT codes 15430 and
15431 to the Level II Skin Repair APC
(then designated as APC 0025 with a
payment rate of approximately $315)
based on consideration of clinical and
resource homogeneity.
For CY 2007 (71 FR 68054 through
68056), we assigned the three sets of
skin repair CPT codes to the Level II
Skin Repair APC (then designated as
APC 0025) in response to comments
received from the public regarding their
clinical and expected resource
similarity. However, for CY 2008,
because of a 2 times violation in two of
the four skin repair APCs that resulted
from hospital claims data that were first
available for these codes, we
reconfigured the APC assignments for
the Apligraf, Dermagraft, and Oasis
application procedures. This
reconfiguration resulted in our again
differentiating the APC assignments for
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the Oasis application CPT codes from
the APC assignments for the Apligraf
and Dermagraft application procedures,
similar to the initial CY 2006 APC
configuration. We also renumbered the
Skin Repair APCs. We note that, for CY
2008, we made no change to the APC
assignments for the Apligraf and
Dermagraft application CPT codes,
maintaining them in APC 0134, but we
reassigned the Oasis application codes
to APC 0135.
We retained these configurations for
CY 2009 and, for CY 2010, we proposed
to continue to assign these procedures
to their CY 2009 APCs. We also
proposed to pay separately for the
Apligraf, Dermagraft, and Oasis
products themselves in CY 2010.
Analysis of our claims data for the
application procedures revealed that the
hospital resource costs associated with
the Apligraf and Oasis application
procedures are different. The median
cost of the Apligraf application CPT
code 15340 is approximately $234,
based on 13,551 single claims (of 17,534
total claims), and approximately $186
for CPT code 15341, based on 1,789
single claims (of 4,424 total claims). For
the Oasis application CPT code 15430,
the median cost is approximately $276
based on 12,807 single claims (of 14,723
total claims), and approximately $261
for CPT code 15431 based on 150 single
claims (of 293 total claims). These CPT
code-specific median costs are
consistent with the APC 0134 and APC
0135 median costs of approximately
$210 and $296, respectively, where the
different two sets of procedure codes are
assigned.
The OPPS is a payment system that is
based on the relativity of costs of
procedures as reported to us by
hospitals. Hospital costs, based on
significant numbers of single claims,
have been and continue to be
consistently higher for the Oasis
application procedures than for Apligraf
or Dermagraft application procedures,
despite the differences in CPT reporting
instructions for Apligraf and Oasis
application procedures in comparison
with Dermagraft application procedures.
We also note that the coverage areas for
the Apligraf application codes are based
on 25 square centimeter increments,
whereas the Oasis and Dermagraft
application codes are based on 100
square centimeter increments. While we
are not sure of the contribution
application of different products to
different size wounds may have on
hospital costs, we have no reason to
believe that our high volume and
consistent hospital claims data for these
services do not accurately represent the
costs of the procedures that have been
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reported in accordance with their
specific code descriptors since CY 2006.
Further, we do not agree that different
APC assignments for similar skin repair
procedures would create an unlevel
playing field that would lead to
financial incentives for hospitals to use
one product rather than the other, as
opposed to the most clinically
appropriate product. Payments under
the OPPS are based on the relative costs
of services as reported to us by hospitals
in claims and cost report data. In part,
we assign services to APCs based on
considerations of resource homogeneity,
and hospital resources are reflected in
the costs reported to us by hospitals.
The skin repair CPT codes differ
significantly from one another in terms
of the other services that are bundled
into them (such as site preparation) and
in the coverage areas they describe. The
specific Apligraf, Dermagraft, and Oasis
application procedures have different
median costs based on CY 2008 hospital
claims that have led us to continue to
assign them to different APCs for CY
2010, and we do not believe that
appropriate payment for hospitals’ costs
for procedures provides incentives for
hospitals to use one product instead of
another. Instead, accurate payment
based on the relative costs of services is
an important principle of the OPPS,
specifically intended to minimize any
financial incentives for use of one
product rather than the other in the case
of similar procedures. We agree with the
commenter that the choice of a patient’s
treatment should be based on clinical
considerations, not financial incentives
due to OPPS payment rates. We believe
our final CY 2010 APC assignments for
the Apligraf, Dermagraft, and Oasis
application CPT codes are fully
consistent with our interest in hospitals
providing the most clinically
appropriate treatments in an efficient
manner.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposals,
without modification, to continue to
assign the Apligraf and Dermagraft
application CPT codes to APC 0134,
which has a final CY 2010 APC median
cost of approximately $210, and to
continue to assign the Oasis application
CPY codes to APC 0135, which has a
final CY 2010 APC median cost of
approximately $296. We note that when
hospitals are performing these
procedures, they also would report the
Level II HCPCS codes that describe the
biological products that are used with
the Apligraf, Dermagraft, and Oasis
application CPT codes, which are paid
separately in CY 2010. Further, we are
accepting the August 2009
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recommendation of the APC Panel and
will provide information at the winter
2010 APC Panel meeting on the
frequency of primary and add-on CPT
codes billed for Apligraf, Oasis, and
Dermagraft application procedures, in
addition to providing median cost data
for site preparation and debridement
that may be separately reported in
preparation for application of
Dermagraft.
c. Group Psychotherapy (APC 0325)
For CY 2010, we proposed to continue
to assign CPT codes 90849 (Multiplefamily group psychotherapy), 90853
(Group psychotherapy (other than of a
multiple-family group)), and 90857
(Interactive group psychotherapy) to
APC 0325 (Group Psychotherapy), with
a proposed payment rate of
approximately $61, calculated according
to the standard OPPS ratesetting
methodology. In CY 2009, these three
CPT codes also were the only codes
assigned to APC 0325, with a payment
rate of approximately $65.
Comment: Several commenters
expressed concern that the CY 2010
proposed payment rate for APC 0325 of
approximately $61 is 21 percent less
than the CY 2006 payment rate for this
APC, and 24 percent less than the CY
2004 payment rate for this APC. The
commenters stated that the proposed
payment rate would be insufficient to
cover hospitals’ costs for providing
group mental health services and, as a
result, would threaten beneficiary
access to these services. Some
commenters recommended that CMS
increase the final CY 2010 payment rate
for APC 0325 by approximately 17
percent, which the commenters
calculated is the average increase from
CY 2006 to CY 2010 for the other
psychotherapy APCs, specifically APC
0322 (Brief Individual Psychotherapy),
APC 0323 (Extended Individual
Psychotherapy), and APC 0324 (Family
Psychotherapy).
Response: As we have stated in the
past regarding APC 0325 (72 FR 66739
and 73 FR 68627), we cannot speculate
as to why the median cost of group
psychotherapy services has decreased
significantly since CY 2004. We again
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 1.6
million claims submitted by hospitals to
report group psychotherapy services.
We set the payment rates for APC 0325
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
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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.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to calculate the
payment rate for APC 0325 by applying
our standard OPPS ratesetting
methodology that relies on all single
claims for all procedures assigned to the
APC. The final CY 2010 APC median
cost of APC 0325 is approximately $59.
d. Portable X-Ray Services
Consistent with applicable
requirements, hospitals may bill and be
paid under the OPPS for diagnostic xray tests performed in locations other
than HOPDs, such as a skilled nursing
facility (SNF), if the patient is receiving
the x-ray as a covered outpatient
department service and not in the
course of a Medicare-covered SNF stay.
The charge for the x-ray (but not the
transportation and set-up charges) is
billed on a hospital outpatient claim.
Medicare does not pay under the OPPS
for transportation or set-up when the xray equipment is transported to another
location where the x-ray is taken.
Comment: One commenter objected to
the assignment of status indicator ‘‘B’’
(Codes that are not recognized by OPPS
when submitted on an outpatient
hospital Part B bill type (12X or 13X))
to HCPCS codes R0070 (Transportation
of portable x-ray equipment and
personnel to home or nursing home, per
trip to facility or location, one patient
seen); R0075 (Transportation of portable
x-ray equipment and personnel to home
or nursing home, per trip to facility or
location, more than one patient seen);
and Q0092 (Set up portable x-ray
equipment) under the OPPS when a
hospital transports and sets up a
portable x-ray machine in a SNF or
other nonhospital site of service to
furnish an x-ray to a patient who is not
in the course of a SNF stay that is
covered by Medicare. The commenter
indicated that to be paid for the
transportation and set-up of the portable
x-ray, the hospital must enroll as a
supplier and bill the Medicare carrier or
MAC on a HCFA 1500 claim for the
transportation and set-up services,
although the hospital may bill the fiscal
intermediary or MAC on a UB–04 claim
for the x-ray service itself. The
commenter requested that CMS revise
its billing instructions so that the
transportation and set-up charges for
portable x-ray services could be
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reported on the same claim as the
hospital’s charge for the x-ray.
Response: In the case in which a
patient receiving the portable x-ray
service is not in a Medicare-covered
SNF stay but a hospital furnishes the
portable x-ray service in the SNF as a
covered outpatient department service
consistent with all applicable
requirements, the HCPCS code and
charge for the x-ray service (but not
transportation and set-up charges) are
billed to the fiscal intermediary or MAC.
Payment is made under the OPPS for
the x-ray service under such
circumstances. The transportation and
set-up of the portable x-ray are also
covered services which are currently
reported on the HCFA 1500 claim and
are carrier-priced. We assign status
indicator ‘‘B’’ to HCPCS codes R0070,
R0075, and Q0092 because these
services (transportation and set-up of
the portable x-ray) are not paid under
the OPPS and are rejected by the I/OCE
if they are billed in an outpatient
hospital bill type. We will explore
whether it is feasible to revise the
billing instructions to enable hospitals
to bill for these transportation and setup services on the same claim on which
they report the charge for the x-ray
service to which the transportation and
set-up charges are ancillary. If we
determine that it would be feasible and
desirable to propose this change, we
would propose to change the status
indicators of these codes accordingly.
After consideration of the public
comment we received, we are finalizing
our CY 2010 proposals, without
modification, to continue to assign the
status indicator of ‘‘B’’ to HCPCS codes
R0070, R0075, and Q0092. We will
explore the feasibility of alternatives for
billing and payment of these services
that could reduce the hospital
administrative burden associated with
billing for the services.
e. Home Sleep Study Tests (APC 0213)
For CY 2010, we proposed to continue
to assign Level II HCPCS codes G0398
(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), 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) to APC 0213
(Level I Extended EEG, Sleep, and
Cardiovascular Studies), with a
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proposed payment rate of approximately
$160.
Comment: One commenter urged
CMS to pay appropriately for Level II
HCPCS codes G0398, G0399, and G0400
to adequately cover the cost of devices
used in performing these procedures.
Specifically, the commenter stated that
the acquisition costs for the devices
used with these procedures are
significant and vary between $4,400 and
$16,500. The commenter argued that it
was unreasonable for CMS to assign all
three HCPCS G-codes to the same APC
because the devices used for the
procedures vary significantly in their
costs and, therefore, payment at the
same rate for all three services would
violate the 2 times rule. The commenter
urged CMS to review the proposed
payment rates for HCPCS G-codes
G0398, G0399, and G0400.
Response: As we explained in the CY
2009 OPPS/ASC final rule with
comment period (73 FR 68602), we
created these three HCPCS G-codes 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. We further explained that
we decided to assign these HCPCS Gcodes to an APC under the OPPS
because we believe these diagnostic
services may be provided by HOPDs to
Medicare beneficiaries.
HCPCS codes G0398, G0399, and
G0400 were made effective in March
2008. Analysis of our claims data from
CY 2008 reveals that these services are
not commonly performed in the hospital
outpatient setting for Medicare
beneficiaries. Our claims data show no
single claims and only three total claims
for HCPCS code G0398. The median
cost of HCPCS code G0399 is
approximately $236 based on 12 single
claims (of 13 total claims), and the
median cost of HCPCS code G0400 is
approximately $80 based on 11 single
claims (of 12 total claims). We believe
it would be difficult to draw any
conclusions about the resource
differences among these three services
based upon such limited claims data
from a single year.
With regard to the commenter’s
concern about a violation of the 2 times
rule, there is no 2 times violation in
APC 0213 because none of the sleep
study HCPCS G-codes are significant
procedures in the APC. Generally, we
review, on an annual basis, 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
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or service within an APC group is more
than 2 times greater than the median
cost of the lowest cost item or service
within that same group, thereby
assessing for 2 times rule violations. We
make exceptions to the 2 times rule in
unusual cases, such as low-volume
items and services, and we only
consider significant procedures for
purposes of the 2 times assessment. We
define significant procedures as those
with a single claim frequency of greater
than 1,000 or those with a frequency of
greater than 99 and that constitute at
least 2 percent of single claims in the
APC. For APC 0213, our CY 2008
hospital outpatient claims used for CY
2010 ratesetting show that the median
cost of the lowest cost significant
service is approximately $150 compared
to approximately $241 for the highest
cost service. Based on our claims data,
there is no 2 times violation in APC
0213.
After consideration of the public
comment we received, we are finalizing
our CY 2010 proposal, without
modification, to continue to assign
HCPCS codes G0398, G0399, and G0400
to APC 0213, which has a final CY 2010
APC median cost of approximately
$161.
IV. OPPS Payment for Devices
A. Pass-Through Payments for Devices
1. Expiration of Transitional PassThrough Payments for Certain Devices
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 pass-through payment eligibility
period begins with the first date on
which transitional pass-through
payments may be made 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 pass-through status
expiration dates for the category codes
on the date on which a category is in
effect. The date on which a category is
in effect is the first date on which passthrough payment may be made for any
medical device that is described by such
category. We propose and finalize the
dates for expiration of pass-through
status for device categories as part of the
OPPS annual update.
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).
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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.
There currently are no device
categories eligible for pass-through
payment, and there are no categories for
which we proposed expiration of passthrough status. If we create new device
categories for pass-through payment
status during the remainder of CY 2009
or during CY 2010, we will propose
future expiration dates in accordance
with the statutory requirement that they
be eligible for pass-through payments
for at least 2, but not more than 3, years
from the date on which pass-through
payment for any medical device
described by the category may first be
made.
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 device 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 device APC
offset amounts for eligible pass-through
device categories through the
transmittals that implement the
quarterly OPPS updates.
We currently have published a list of
all procedural APCs with the CY 2009
portions (both percentages and dollar
amounts) of the APC payment amounts
that we determine are associated with
the cost of devices, on the CMS Web site
at: https://www.cms.hhs.gov/
HospitalOutpatientPPS/01_
overview.asp. The dollar amounts are
used as the device APC offset amounts.
In addition, in accordance with our
established practice, the device APC
offset amounts in a related APC are used
in order to evaluate whether the cost of
a device in an application for a new
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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. Final Policy
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35306), for CY 2010, we
proposed to continue our established
policies for calculating and setting the
device 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-by-case 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 proposed to deduct the
device APC offset amount from the passthrough payment for the device
category. As stated earlier, these device
APC offset amounts also would 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
(§ 419.66(d)).
In section V.A.4. of the CY 2010
OPPS/ASC proposed rule (74 FR 35311
through 35314), we proposed to specify
that, beginning in CY 2010, the passthrough evaluation process and passthrough payment methodology for
implantable biologicals, that are
surgically inserted or implanted
(through a surgical incision or a natural
orifice) and that are newly approved for
pass-through status beginning on or
after January 1, 2010, would be the
device pass-through process and
payment methodology only. As a result
of that proposal, we then proposed that,
beginning in CY 2010, we would
include implantable biologicals in our
calculation of the device APC offset
amounts. As of CY 2009, the costs of
implantable biologicals not eligible for
pass-through payment are packaged into
the costs of the procedures in which
they are implanted because nonpassthrough implantable biologicals are not
separately paid. We proposed to
calculate and set any device APC offset
amount for a new device pass-through
category that includes a newly eligible
implantable biological beginning in CY
2010 using the same methodology we
have historically used to calculate and
set device APC offset amounts for
device categories eligible for passthrough payment (72 FR 66751 through
66752), with one modification. Because
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implantable biologicals would be
considered devices rather than drugs for
purposes of pass-through evaluation and
payment under this proposal for CY
2010, the device APC offset amounts
would include the costs of implantable
biologicals for the first time. We also
proposed to utilize these revised device
APC offset amounts to evaluate whether
the cost of an implantable biological 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. Further, we
proposed to no longer use the ‘‘policypackaged’’ drug APC offset amounts for
evaluating the cost significance of
implantable biological pass-through
applications under review and for
setting the APC offset amounts that
would apply to pass-through payment
for those implantable biologicals,
effective for new pass-through status
determinations beginning in CY 2010. In
addition, we proposed to update, on the
CMS Web site at https://
www.cms.hhs.gov/
HospitalOutpatientPPS, the list of all
procedural APCs with the final CY 2010
portions of the APC payment amounts
that we determine are associated with
the cost of devices so that this
information is available for use by the
public in developing potential CY 2010
device pass-through payment
applications and by CMS in reviewing
those applications.
Comment: One commenter noted that
a significant consequence of paying for
new implantable biologicals under the
device pass-through payment
methodology would be that the payment
for the implantable biological would be
reduced by the estimated cost of any
predecessor devices included in the
APC payment rate. The commenter
believed that it is reasonable for CMS to
reduce the payment for the pass-through
implantable biological when the
biological is used in lieu of a
predecessor device whose cost is
already incorporated into payment for
the associated procedure. However, the
commenter also stated that if the
hospital implanted the predecessor
device during the procedure in addition
to the pass-through implantable
biological, a reduction in the passthrough payment for the implantable
biological by the predecessor device
cost should not be taken.
Response: Concerning the
commenter’s request that we not take a
reduction (that is, device APC offset)
when both a predecessor device and an
implantable biological that is on passthrough status are used in a procedure
in the case of medical necessity, we note
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60463
that our standard policy when
establishing a new device category for
pass-through payment is to determine
whether device costs associated with
the new category are already packaged
into the relevant existing clinical APC.
If device costs packaged into the
existing clinical APC are associated
with the new pass-through device
category and these predecessor devices
would generally not be used when a
device described by the new device
category was implanted, we identify the
device APC offset that would be
deducted from the pass-through
payment amount each time the new
category is reported with the related
clinical APC. We make determinations
about the applicability of a device APC
offset based on our overall clinical
understanding of the device category
and its associated procedures, rather
than on a claim-by-claim basis for each
different scenario. In the rare case where
an implantable biological that is
described by a device category with
pass-through status was used in
addition to a predecessor device in the
performance of a procedure for which
we had determined that a device APC
offset was applicable, we would still
apply the device APC offset to the passthrough payment for the implantable
biological. With respect to a prospective
payment system such as the OPPS, in
some individual cases, payment exceeds
the average cost; in other cases, payment
is less than the average cost of an
individual case. 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. We would not expect the
scenario of implanting both a new
implantable biological and the
predecessor device described by the
commenter to be common. If such a
clinical scenario were common, we
would determine that no device APC
offset would apply to the new device
category because the implantable
biological was typically used in
addition to the predecessor device in
performing the associated procedure.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to reduce device
pass-through payments based on device
costs already included in the associated
procedural APCs, when we determine
that device costs associated with the
new category are already packaged into
the existing APC structure.
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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 not contain the
‘‘FB’’ modifier signifying that the device
was furnished without cost or with a
full credit. As discussed in section
II.A.2.d.(1) of the CY 2010 OPPS/ASC
proposed rule (74 FR 35267) and this
final rule with comment period, we are
further refining our standard ratesetting
methodology for device-dependent
APCs for CY 2010 by also excluding
claims with the ‘‘FC’’ modifier
signifying that the device was furnished
with partial 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
instructed 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 instructed 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
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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. We reduce the OPPS payment
for the implantation procedure 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 the ‘‘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 policies
(72 FR 66743 through 66749).
2. APCs and Devices Subject to the
Adjustment Policy
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35307), we proposed for CY
2010 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 stated in the CY 2010
OPPS/ASC proposed rule (74 FR 35307)
that we continue to believe 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
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 reflects
the reduced costs in these cases.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35307), we also proposed to
continue using the three criteria
established in the CY 2007 OPPS/ASC
final rule with comment period for
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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 procedure (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 stated in
the CY 2010 OPPS/ASC proposed rule
(74 FR 35307) that we continue to
believe these criteria are appropriate
because free devices and device 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 2010 OPPS/
ASC proposed rule (74 FR 35307), we
examined the offset amounts calculated
from the CY 2010 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 2009 continue to meet the criteria
for CY 2010, and to determine whether
other APCs to which the policy does not
apply in CY 2009 would meet the
criteria for CY 2010. Based on the CY
2008 claims data available for the CY
2010 proposed rule, we did not propose
any changes to the APCs and devices to
which this policy applies. Table 19 of
the CY 2010 OPPS/ASC proposed rule
(74 FR 35307 through 35308) listed the
proposed APCs to which the payment
adjustment policy for no cost/full credit
and partial credit devices would apply
in CY 2010 and displayed the proposed
payment adjustment percentages for
both no cost/full credit and partial
credit circumstances. Table 20 of the CY
2010 OPPS/ASC proposed rule (74 FR
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35308) listed the proposed devices to
which this policy would apply in CY
2010. We stated in the CY 2010 OPPS/
ASC proposed rule (74 FR 35307) 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 2010,
consistent with the three selection
criteria discussed earlier in this section
and based on the final CY 2008 claims
data available for this CY 2010 OPPS/
ASC final rule with comment period.
We did not receive any public
comments on our CY 2010 proposal 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. We also did not
receive any public comments on our CY
2010 proposal 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). Therefore, we are
finalizing our CY 2010 proposals,
without modification, to continue the
established no cost/full credit and
partial credit device adjustment policy.
For CY 2010, 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 29, below, is
present on the claim and the procedure
code maps to an APC listed in Table 28
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 29 is present on the
claim and the procedure code maps to
an APC listed in Table 28. Beneficiary
copayment is based on the reduced
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.
60465
We are adding device HCPCS code
L8680 (Implantable neurostimulator
electrode, each) to the list of devices in
Table 29 because we are changing the
status indicator for this code from ‘‘B’’
(Codes that are not recognized by OPPS
when submitted on an outpatient
hospital Part B bill type (12x and13x))
to ‘‘N’’ (Items and Services Packaged
into APC Rates) for CY 2010, as
reflected in Addendum B to this final
rule with comment period. We are
recognizing HCPCS code L8680 for
payment purposes under the OPPS
because it appropriately describes
neurostimulator electrodes, and we
typically try to recognize all valid
HCPCS codes that hospitals may use to
report items and services provided to
hospital outpatients that are packaged or
otherwise payable under the OPPS. This
change in status indicator for HCPCS
code L8680 for CY 2010 does not
require hospitals to change their current
billing practices in any way, but it does
provide them with the flexibility to use
this code if they choose to do so.
TABLE 28—APCS TO WHICH THE NO COST/FULL CREDIT AND PARTIAL CREDIT DEVICE ADJUSTMENT POLICY WILL APPLY
Final
CY 2010
device offset percentage for
no cost/
full credit
case
Final CY 2010 APC
CY 2010 APC title
0039 ....................................................
0040 ....................................................
0061 ....................................................
Level I Implantation of Neurostimulator Generator ........................................
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 .................
Implantation of Neurostimulator Electrodes, Cranial Nerve ...........................
Implantation of Drug Infusion Device .............................................................
Level VII ENT Procedures ..............................................................................
Level II Implantation of Neurostimulator Generator .......................................
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 .............................................
0089
0090
0106
0107
0108
0225
0227
0259
0315
0385
0386
0418
0425
0648
0654
0655
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
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0680 ....................................................
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20NOR2
Final
CY 2010
device offset percentage for partial credit
case
85
58
64
43
29
32
72
74
44
89
88
73
83
85
88
59
71
81
58
48
75
75
36
37
22
44
44
37
41
42
44
30
35
41
29
24
37
37
73
36
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Federal Register / Vol. 74, No. 223 / Friday, November 20, 2009 / Rules and Regulations
TABLE 29—DEVICES TO WHICH THE
NO COST/FULL CREDIT AND PARTIAL
CREDIT DEVICE ADJUSTMENT POLICY WILL APPLY
CY 2010 device HCPCS
code
C1721
C1722
C1728
C1764
C1767
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
L8680
L8685
............
.............
.............
.............
.............
L8686 .............
L8687 .............
L8688 .............
L8690 .............
CY 2010 short descriptor
AICD, dual chamber.
AICD, single chamber.
Cath, brachytx seed adm.
Event recorder, cardiac.
Generator, neurostim, imp.
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 neurostim elctr each.
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
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A. OPPS Transitional Pass-Through
Payment for Additional Costs of Drugs,
Biologicals, and Radiopharmaceuticals
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 enacted by the Medicare, Medicaid,
and SCHIP Balanced Budget Refinement
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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.
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 for a
drug or biological described in section
1833(t)(6)(C)(i)(II) of the Act can be
made for at least 2 years but not more
than 3 years after the product’s first
payment as a hospital outpatient service
under Part B. The pass-through payment
eligibility period is discussed in detail
in section V.A.5. of this final rule with
comment period. CY 2010 pass-through
drugs and biologicals and their
designated APCs are assigned status
indicator ‘‘G’’ 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
to the average price for the drug or
biological for all competitive acquisition
areas and the 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 establishes the use of the average
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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
this final rule with comment period, the
term ‘‘ASP methodology’’ and ‘‘ASPbased’’ are inclusive of all data sources
and methodologies described therein.
Additional information on the ASP
methodology can be found on the CMS
Web site at: https://www.cms.hhs.gov/
McrPartBDrugAvgSalesPrice.
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 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 included approximately 190
of the most common Part B drugs
provided in the physician’s office
setting. As we noted in the CY 2009
OPPS/ASC final rule with comment
period (73 FR 68633), the Part B drug
CAP program was suspended beginning
in CY 2009 (Medicare Learning Network
(MLN) Matters Special Edition 0833,
available via the Web site: https://
www.medicare.gov). Therefore, there is
no effective Part B drug CAP rate for
pass-through drugs and biologicals as of
January 1, 2009. As we indicated in the
CY 2010 OPPS/ASC proposed rule (74
FR 35309), if the program is reinstituted
during CY 2010 and Part B drug CAP
rates become available, we would again
use the Part B drug CAP rate for passthrough drugs and biologicals if they are
a part of the Part B drug CAP program.
Otherwise, we would continue to use
the rate that would be paid in the
physician’s office setting for drugs and
biologicals with pass-through status. We
note that the CY 2010 MPFS proposed
rule (74 FR 33623 through 33633)
included proposed changes to the
operation of the Part B drug CAP
program, including a proposed change
in the frequency of CAP drug pricing
updates. A discussion of the final CAP
policies is available in the CY 2010
MPFS final rule with comment period.
For CYs 2005, 2006, and 2007, we
estimated the OPPS pass-through
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payment amount for drugs and
biologicals to be zero based on our
interpretation that the ‘‘otherwise
applicable Medicare OPD fee schedule’’
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 CYs 2008 and
2009, we estimated the OPPS passthrough payment amount for drugs and
biologicals to be $6.6 million and $23.3
million, respectively. Our final OPPS
pass-through payment estimate for
drugs and biologicals in CY 2010 is
$35.5 million, which is discussed in
section VI.B. of this final rule with
comment period.
The pass-through application and
review process for drugs and biologicals
is explained on the CMS Web site at:
https://www.cms.hhs.gov/
HospitalOutpatientPPS/
04_passthrough_payment.asp.
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2. Drugs and Biologicals With Expiring
Pass-Through Status in CY 2009
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35309), we proposed that
the pass-through status of 6 drugs and
biologicals would expire on December
31, 2009, as listed in Table 21 of the
proposed rule (74 FR 35309 through
35310). These items were approved for
pass-through status on or before January
1, 2008 and, therefore, all of these drugs
and biologicals will have received OPPS
pass-through payment for at least 2
years and no more than 3 years by
December 31, 2009.
Two of the products with proposed
expiring pass-through status for CY
2010 are biologicals that are solely
surgically implanted according to their
Food and Drug Administration
approved indications. As discussed in
the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68634), we
package payment for those implantable
biologicals that have expiring passthrough status into payment for the
associated surgical procedure. In the CY
2010 OPPS/ASC proposed rule, we
proposed to package payment for two
products described by HCPCS codes
C9354 (Acellular pericardial tissue
matrix of non-human origin (Veritas),
per square centimeter) and C9355
(Collagen nerve cuff (NeuroMatrix), per
0.5 centimeter length).
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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
nonbiological device pass-through
payment ends, we package the costs of
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 final rule with
comment period (73 FR 68634), 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 nonbiological
devices whose costs are already
accounted for in the associated
procedural APC payments for surgical
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60467
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 nonbiological device cost
included in the surgical procedure’s
payment and separate biological
payment. We indicated in the CY 2009
OPPS/ASC final rule with comment
period (73 FR 68634) that we saw no
basis for treating implantable biological
and nonbiological devices without passthrough 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.
With the exception of those groups of
drugs and biologicals that are always
packaged when they do not have passthrough status, specifically diagnostic
radiopharmaceuticals, contrast agents,
and implantable biologicals, our
standard methodology of 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 is $65 for CY 2010), as
discussed further in section V.B.2. of
this final rule with comment period. If
the drug’s or biological’s estimated per
day cost is less than or equal to the
applicable OPPS drug packaging
threshold, we would 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 of the drug or
biological is greater than the OPPS drug
packaging threshold, we would provide
separate payment at the applicable
relative ASP-based payment amount
(which is at ASP+4 percent for CY 2010,
as discussed further in section V.B.3. of
this final rule with comment period).
Section V.B.2.d. of this final rule with
comment period discusses the
packaging of all nonpass-through
contrast agents, diagnostic
radiopharmaceuticals, and implantable
biologicals.
We did not receive any public
comments on our proposal to expire
certain drugs and biologicals from passthrough status, effective December 31,
2009. Therefore, we are finalizing our
proposal, without modification, to
expire the pass-through status of the six
drugs and biologicals listed in Table 30
below, effective December 31, 2009.
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Federal Register / Vol. 74, No. 223 / Friday, November 20, 2009 / Rules and Regulations
TABLE 30—DRUGS AND BIOLOGICALS FOR WHICH PASS-THROUGH STATUS EXPIRES DECEMBER 31, 2009
Final CY
2010
APC
CY 2010 HCPCS code
CY 2010 long descriptor
Final CY
2010 SI
C9354 ....................................
C9354 ..................................
N/A
C9355 ..................................
N
N/A
J1300
J3488
J9261
J9330
J1300
J3488
J9261
J9330
Acellular pericardial tissue matrix of non-human origin
(Veritas), per square centimeter.
Collagen nerve cuff (NeuroMatrix), per 0.5 centimeter
length.
Injection, eculizumab, 10 mg .............................................
Injection, zoledronic acid (Reclast), 1 mg .........................
Injection, nelarabine, 50 mg ..............................................
Injection, temsirolimus, 1 mg .............................................
N
C9355 ....................................
dcolon on DSK2BSOYB1PROD with RULES2
CY 2009 HCPCS code
K
K
K
K
9236
0951
0825
1168
....................................
....................................
....................................
....................................
...................................
...................................
...................................
...................................
3. Drugs, Biologicals, and
Radiopharmaceuticals With New or
Continuing Pass-Through Status in CY
2010
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35310), we proposed to
continue pass-through status in CY 2010
for 31 drugs and biologicals. These
items, which were approved for passthrough status between April 1, 2008
and July 1, 2009, were listed in Table 22
of the proposed rule (74 FR 35310
through 35311). None of these products
will have received OPPS pass-through
payment for at least 2 years and no more
than 3 years by December 31, 2009. The
APCs and HCPCS codes for these drugs
and biologicals 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 the
year established under such section as
calculated and adjusted by the
Secretary) and the portion of the
otherwise applicable OPD fee schedule
that the Secretary determines is
associated with the drug or biological.
Payment for drugs and biologicals with
pass-through status under the OPPS is
currently made at the physician’s office
payment rate of ASP+6 percent. We
believe it is consistent with the statute
to continue to provide payment for
drugs and biologicals with pass-through
status at a rate of ASP+6 percent in CY
2010, the amount that drugs and
biologicals receive under section
1842(o) of the Act. Thus, for CY 2010,
we proposed to pay for pass-through
drugs and biologicals at ASP+6 percent,
equivalent to the rate these drugs and
biologicals would receive in the
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physician’s office setting in CY 2010.
The difference between ASP+4 percent
that we proposed to pay for nonpassthrough separately payable drugs under
the CY 2010 OPPS and ASP+6 percent,
therefore, would be the CY 2010 passthrough payment amount for these
drugs and biologicals. In the case of
pass-through contrast agents, diagnostic
radiopharmaceuticals, and implantable
biologicals, their pass-through payment
amount would be equal to ASP+6
percent because, if not on pass-through
status, payment for these products
would be packaged into the associated
procedures.
As discussed in more detail in section
V.B.2.d. of this final rule with comment
period, over the last 2 years, we
implemented a policy whereby payment
for all nonpass-through diagnostic
radiopharmaceuticals, contrast agents,
and implantable biologicals is packaged
into payment for the associated
procedure, and we proposed to continue
the packaging of these items, regardless
of their per day cost, in CY 2010. As
stated earlier, pass-through payment is
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 the
year established under such section as
calculated and adjusted by the
Secretary) and the portion of the
otherwise applicable OPD fee schedule
that the Secretary determines is
associated with the drug or biological.
Because payment for a drug that is
either a diagnostic radiopharmaceutical
or a contrast agent (identified as a
‘‘policy-packaged’’ drug, first described
in the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68639)) or
for an implantable biological (which we
proposed to consider to be a device for
all payment purposes beginning in CY
2010 as discussed in sections V.A.4. and
V.B.2.d. of the CY 2010 OPPS/ASC
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proposed rule (74 FR 35311 through
35314 and 74 FR 35323 through 35324)
and this final rule with comment
period) would otherwise be packaged if
the product did not have pass-through
status, we believe the otherwise
applicable OPPS payment amount
would be equal to the ‘‘policypackaged’’ drug or device APC offset
amount for the associated clinical APC
in which the drug or biological is
utilized. The calculation of the ‘‘policypackaged’’ drug and device APC offset
amounts are described in more detail in
sections V.A.6.b. and IV.A.2. of this
final rule with comment period,
respectively. It follows that the
copayment for the nonpass-through
payment portion (the otherwise
applicable fee schedule amount that we
would also offset from payment for the
drug or biological if a payment offset
applies) of the total OPPS payment for
those drugs and biologicals would,
therefore, be accounted for in the
copayment for the associated clinical
APC in which the drug or biological is
used. According to section 1833(t)(8)(E)
of the Act, the amount of copayment
associated with pass-through items is
equal to the amount of copayment that
would be applicable if the pass-through
adjustment was not applied. Therefore,
beginning in CY 2010, we proposed to
set the associated copayment amount for
pass-through diagnostic
radiopharmaceuticals, contrast agents,
and implantable biologicals that would
otherwise be packaged if the item did
not have pass-through status to zero.
The separate OPPS payment to a
hospital for the pass-through diagnostic
radiopharmaceutical, contrast agent, or
implantable biological, after taking into
account any applicable payment offset
for the item due to the device or
‘‘policy-packaged’’ APC offset policy, is
the item’s pass-through payment, which
is not subject to a copayment according
to the statute. Therefore, we did not
publish a copayment amount for these
items in Addendum A and B to the
proposed rule.
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We also proposed to update passthrough payment rates on a quarterly
basis on the CMS Web site during CY
2010 if later quarter ASP submissions
(or more recent WAC or AWP
information, as applicable) indicate that
adjustments to the payment rates for
these pass-through drugs or biologicals
are necessary. If the Part B drug CAP is
reinstated during CY 2010, and a drug
or biological that has been granted passthrough status for CY 2010 becomes
covered under the Part B drug CAP, we
proposed to provide pass-through
payment at the Part B drug CAP rate and
to make the appropriate adjustments to
the payment rates for these drugs and
biologicals on a quarterly basis as
appropriate.
As is our standard methodology, we
annually review new permanent HCPCS
codes and delete temporary HCPCS Ccodes if an alternate permanent HCPCS
code is available for purposes of OPPS
billing and payment. For our CY 2010
review, we have determined that HCPCS
code J2796 (Injection, romiplostim, 10
micrograms) describes the product
reported under HCPCS code C9245
(Injection, romiplostim, 10 mcg); HCPCS
code A9581 (Injection, gadoxetate
disodium, 1 ml) describes the product
reported under HCPCS code C9246
(Injection, gadoxetate disodium, per ml);
HCPCS code A9582 (Iodine I-123
iobenguane, diagnostic, per study dose,
up to 15 millicuries) describes the
product reported under HCPCS code
C9247 (Iobenguane, I-123, diagnostic,
per study dose, up to 10 millicuries);
HCPCS code J0718 (Injection,
certolizumab pegol, 1 mg) describes the
product reported under HCPCS code
C9249 (Injection, certolizumab pegol, 1
mg); HCPCS code J0598 (Injection, C1
esterase inhibitor (human), 10 units)
describes the product reported under
HCPCS code C9251 (Injection, C1
esterase inhibitor (human), 10 units);
HCPCS code J2562 (Injection, plerixafor,
1 mg) describes the product reported
under HCPCS code C9252 (Injection,
plerixafor, 1 mg); and HCPCS code
J9328 (Injection, temozolomide, 1 mg)
describes the product reported under
HCPCS code C9253 (Injection,
temozolomide, 1 mg). These new CY
2010 HCPCS codes are included in
Table 31 below.
Comment: Several commenters
supported CMS’ proposal to provide
payment at ASP+6 percent for drugs,
biologicals, contrast agents, and
radiopharmaceuticals that are granted
pass-through status. Further, the
commenters approved of the proposal to
use the ASP methodology that would
provide payment based on WAC if ASP
information is not available, and
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payment at 95 percent of AWP if WAC
information is not available. Some
commenters requested that CMS
provide an additional payment for
radiopharmaceuticals that are granted
pass-through status because
radiopharmaceuticals typically have
higher overhead and pharmacy handling
costs associated with their preparation
than the overhead costs of other drugs
and biologicals.
Response: As discussed above, the
statutorily mandated 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. Therefore, the passthrough payment is determined by
subtracting the otherwise applicable
payment amount under the OPPS
(determined to be ASP+4 percent for CY
2010) from the amount determined
under section 1842(o) (ASP+6 percent).
For CY 2010, consistent with our CY
2009 policy for diagnostic
radiopharmaceuticals, we proposed to
provide payment for both diagnostic
and therapeutic radiopharmaceuticals
with pass-through status based on the
ASP methodology. As stated above, the
ASP methodology, as applied under the
OPPS, uses several sources of data as a
basis for payment, including the ASP,
WAC if ASP is unavailable, and AWP if
ASP and WAC are unavailable. For
purposes of pass-through payment, we
consider radiopharmaceuticals to be
drugs under the OPPS and, therefore, if
a diagnostic or therapeutic
radiopharmaceutical receives passthrough status during CY 2010, we
proposed to follow the standard ASP
methodology to determine its passthrough payment rate under the OPPS.
We have routinely provided a single
payment for drugs, biologicals, and
radiopharmaceuticals under the OPPS
to account for the acquisition and
pharmacy overhead costs, including
compounding costs. We continue to
believe that a single payment is
appropriate for diagnostic
radiopharmaceuticals with pass-through
status in CY 2009, and that the payment
rate of ASP+6 (or payment based on the
ASP methodology) is appropriate to
provide payment for both the
radiopharmaceutical acquisition cost
and any associated nuclear medicine
handling and compounding costs. We
refer readers to section V.B.5.b. of this
final rule with comment period for
further discussion of payment for
radiopharmaceuticals based on ASP
information submitted by
manufacturers.
Comment: Several commenters
expressed concern that a pass-through
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60469
payment period of possibly only 2 years
discourages new product development,
especially for radiopharmaceutical
products. One commenter
recommended providing pass-through
payment for approved
radiopharmaceuticals for a full 3-year
time period to allow hospitals time to
incorporate new products into their
chargemasters and billing practices.
Response: The pass-through statute
specifically allows for pass-through
payment of drugs and biologicals to be
made for at least 2 years, but no more
than 3 years. We believe this period of
payment facilitates dissemination of
these new products into clinical
practice and collection of hospital
claims data reflective of their costs for
future OPPS ratesetting. Our
longstanding practice has been to
provide pass-through payment for a
period of 2 to 3 years, with expiration
of pass-through status proposed and
finalized through the annual rulemaking
process. Each year when proposing to
expire the pass-through status of certain
drugs and biologicals, we examine our
claims data for these products and we
have generally seen no evidence that
hospitals have not fully incorporated
these items into their chargemasters
based on the utilization and costs
observed in our claims data. As
discussed further in section V.A.5. of
this final rule with comment period, we
are making no operational changes to
the drug and biological pass-through
program for CY 2010 and plan to
continue to expire pass-through status
on an annual basis through rulemaking.
Under this existing operational policy,
which was generally supported by the
commenters, because we begin passthrough payment on a quarterly basis
that depends on when applications are
submitted to us for consideration and
we expire pass-through status only on
an annual basis, there is no way to
ensure that all pass-through drugs and
biologicals receive pass-through
payment for a full 3 years, while also
providing pass-through payment for no
more than 3 years as the statute
requires. Therefore, we will continue to
provide drug and biological passthrough payment for at least 2 years, but
no more than 3 years, as required by the
statute. We continue to receive
numerous pass-through applications for
drugs and biologicals for consideration
each quarter, and we have no evidence
that our current pass-through payment
policies discourage new product
development.
There is currently one diagnostic
radiopharmaceutical, HCPCS code
C9247 (Iodine I-123 iobenguane,
diagnostic, per study dose, up to 15
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millicuries), that has been granted passthrough status at the time of this final
rule with comment period. We proposed
to continue pass-through status for this
diagnostic radiopharmaceutical as it
would not have received at least 2 but
not more than 3 years of pass-through
payment by December 31, 2009. This is
consistent with the OPPS provision that
provides for at least 2 but not more than
3 years of pass-through payment for
drugs and biologicals that are approved
for pass-through payments.
We provide an opportunity through
the annual OPPS/ASC rulemaking cycle
for public comment on those drugs and
biologicals that are proposed for
expiration of pass-through payment at
the end of the next calendar year. We
have often received public comments
related to our proposed expiration of
pass-through status for particular drugs
and biologicals, and we expect to
continue to receive public comments
regarding the proposed expiration of
pass-through status for drugs and
biologicals in the future. In this manner,
we would address specific concerns
about the pass-through payment period
for individual drugs and biologicals in
the future, including
radiopharmaceuticals.
Comment: A few commenters
supported the CY 2010 proposal to set
the associated copayment amounts for
pass-through diagnostic
radiopharmaceuticals, contrast agents,
and implantable biologicals that would
otherwise be packaged if the product
did not have pass-through status to zero.
The commenters noted increased
beneficiary savings by setting the
copayment amount to zero.
Response: We appreciate the
commenters’ support. As discussed in
the CY 2010 OPPS/ASC proposed rule
(74 FR 35311), we believe that for drugs
and biologicals that are ‘‘policypackaged,’’ the copayment for the
nonpass-through payment portion of the
total OPPS payment for this subset of
drugs and biologicals is accounted for in
the copayment for the associated
clinical APC in which the drug or
biological is used. According to section
1833(t)(8)(E) of the Act, the amount of
copayment associated with pass-through
items is equal to the amount of
copayment that would be applicable if
the pass-through adjustment was not
applied. Therefore, it is our belief that
the amount should be zero for drugs and
biologicals that are ‘‘policy-packaged,’’
including diagnostic
radiopharmaceuticals.
We did not receive any public
comments on our proposal to update
pass-through payment rates on a
quarterly basis during CY 2010 if later
quarter ASP submissions (or more
recent WAC or AWP information, as
applicable) indicate that adjustments to
the payment rates for these pass-through
drugs and biologicals are necessary.
After consideration of the public
comments we received, we are
finalizing our CY 2010 pass-through
payment proposals, without
modification. Specifically, we will
provide pass-through payment in CY
2010 for those drugs, biologicals and
radiopharmaceuticals listed in Table 31
below. Pass-through payment for drugs,
biologicals, and radiopharmaceuticals
granted pass-through status will be
made at the payment rate indicated in
section 1842(o) of the Act, that is,
ASP+6 percent. If ASP data are not
available, pass-through payment will be
based on the OPPS ASP methodology—
that is, payment at WAC+6 percent if
ASP data are not available and payment
at 95 percent of the pass-through
radiopharmaceutical’s most recent AWP
if WAC information is not available. We
will update pass-through payment rates
on a quarterly basis during CY 2010 if
later ASP submissions (or more recent
WAC or AWP information, as
applicable) indicate that adjustments to
the payment rates for pass-through
drugs and biologicals are necessary. We
will set the associated copayment
amount for pass-through diagnostic
radiopharmaceuticals, contrast agents,
and implantable biologicals that would
otherwise be packaged if the item did
not have pass-through status to zero.
Finally, if a drug or biological that has
been granted pass-through status for CY
2010 becomes covered under the Part B
drug CAP if the program is reinstituted,
we will provide payment for Part B
drugs that are granted pass-through
status and are covered under the Part B
drug CAP at the Part B drug CAP rate.
The drugs and biologicals that are
continuing pass-through status for CY
2010 or that have been granted passthrough status as of January 2010 are
displayed in Table 31 below.
TABLE 31—DRUGS AND BIOLOGICALS WITH PASS-THROUGH STATUS IN CY 2010
CY 2009
HCPCS code
CY 2010
HCPCS code
CY 2010
long descriptor
Final
CY 2010
SI
C9245 ....................................
C9246 ....................................
C9247 ....................................
J2796 ...................................
A9581 ..................................
A9582 ..................................
G
G
G
9245
9246
9247
C9248 ....................................
C9249 ....................................
C9250 ....................................
A9583 ..................................
C9248 ..................................
J0718 ...................................
C9250 ..................................
Injection, romiplostim, 10 micrograms ...............................
Injection, gadoxetate disodium, 1 ml .................................
Iodine I–123 iobenguane, diagnostic, per study dose, up
to 15 millicuries.
Injection, gadofosveset trisodium, 1 ml .............................
Injection, clevidipien butyrate, 1 mg ..................................
Injection, certolizumab pegol, 1 mg ...................................
Human plasma fibrin sealant, vapor-heated, solvent-detergent (Artiss), 2ml.
Injection, C1 esterase inhibitor (human), 10 units .............
Injection, plerixafor, 1 mg ..................................................
Injection, temozolomide, 1 mg ...........................................
Injection, paliperidone palmitate, 1 mg ..............................
Injection, dexamethasone intravitreal implant, 0.1 mg ......
Tendon, porous matrix of cross-linked collagen and
glycosaminoglycan matrix (TenoGlide Tendon Protector Sheet), per square centimeter.
Dermal substitute, native, non-denatured collagen, fetal
bovine origin (SurgiMend Collagen Matrix), per 0.5
square centimeters.
Porous purified collagen matrix bone void filler (Integra
Mozaik Osteoconductive Scaffold Putty, Integra OS
Osteoconductive Scaffold Putty), per 0.5 cc.
G
G
G
G
1299
9248
9249
9250
G
G
G
G
G
G
9251
9252
9253
1300
9256
9356
G
9358
G
9359
C9356 ....................................
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C9251 ....................................
C9252 ....................................
C9253 ....................................
J0598 ...................................
J2562 ...................................
J9328 ...................................
C9255 ..................................
C9256 ..................................
C9356 ..................................
C9358 ....................................
C9358 ..................................
C9359 ....................................
C9359 ..................................
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60471
TABLE 31—DRUGS AND BIOLOGICALS WITH PASS-THROUGH STATUS IN CY 2010—Continued
CY 2009
HCPCS code
CY 2010
HCPCS code
CY 2010
long descriptor
Final
CY 2010
SI
C9360 ....................................
C9360 ..................................
G
9360
C9361 ....................................
C9361 ..................................
G
9361
C9362 ....................................
C9362 ..................................
G
9362
C9363 ....................................
C9363 ..................................
G
9363
C9364
J0641
J1267
J1453
J1459
....................................
....................................
....................................
....................................
....................................
C9364 ..................................
J0641 ...................................
J1267 ...................................
J1453 ...................................
J1459 ...................................
G
G
G
G
G
9364
1236
9241
9242
1214
J1571 ....................................
J1571 ...................................
G
0946
J1573 ....................................
J1573 ...................................
Dermal substitute, native, non-denatured collagen, neonatal bovine origin (SurgiMend Collagen Matrix), per
0.5 square centimeters.
Collagen matrix nerve wrap (NeuroMend Collagen Nerve
Wrap), per 0.5 centimeter length.
Porous purified collagen matrix bone void filler (Integra
Mozaik Osteoconductive Scaffold Strip), per 0.5 cc.
Skin substitute, Integra Meshed Bilayer Wound Matrix,
per square centimeter.
Porcine implant, Permacol, per square centimeter ...........
Injection, levoleucovorin calcium, 0.5 mg ..........................
Injection, doripenem, 10 mg ..............................................
Injection, fosaprepitant, 1 mg ............................................
Injection, immune globulin (privigen), intravenous, nonlyophilized (e.g. liquid), 500 mg.
Injection, hepatitis b immune globulin (hepagam b),
intramuscular, 0.5 ml.
Injection, hepatitis B immune globulin (Hepagam B), intravenous, 0.5ml.
Injection, human fibrinogen concentrate, 100 mg .............
Injection, levetiracetam, 10 mg ..........................................
Injection, regadenoson, 0.1 mg .........................................
Topotecan, oral, 0.25 mg ...................................................
Injection, bendamustine hcl, 1 mg .....................................
Injection, degarelix, 1 mg ...................................................
Injection, ixabepilone, 1 mg ...............................................
Histrelin implant (vantas), 50 mg .......................................
Histrelin implant (supprelin la), 50 mg ...............................
Injection, ferumoxytol, for treatment of iron deficiency
anemia, 1 mg (non-esrd use).
Dermal substitute, granulated cross-linked collagen and
glycosaminoglycan matrix (Flowable Wound Matrix), 1
cc.
G
1138
G
G
G
G
G
G
G
G
G
G
1290
9238
9244
1238
9243
1296
9240
1711
1142
1297
G
1251
J1953
J2785
J8705
J9033
....................................
....................................
....................................
....................................
J9207 ....................................
J9225 ....................................
J9226 ....................................
Q4114 ...................................
J1680 ...................................
J1953 ...................................
J2785 ...................................
J8705 ...................................
J9033 ...................................
J9155 ...................................
J9207 ...................................
J9225 ...................................
J9226 ...................................
Q0138 ..................................
Q4114 ..................................
4. Pass-Through Payment for
Implantable Biologicals
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a. Background
Section 1833(t)(6)(A)(iv) of the Act
authorizes transitional pass-through
payments for new medical devices,
drugs, and biologicals, for those items
where payment was not being made as
a hospital outpatient service under Part
B as of December 31, 1996, and whose
cost is not insignificant in relation to the
OPD fee schedule amount payable for
the service (or group of services)
involved. These pass-through payments
are in addition to the usual APC
payments for services in which the
product is used. Coding and payment
for drugs and biologicals with passthrough status are generally provided on
a product-specific basis for a period of
no less than 2 and no more than 3 years
from the date pass-through payment is
first made as discussed in section V.A.5.
of this final rule with comment period,
while coding and payment for devices
with pass-through status are provided
for categories of devices that may
describe numerous products. The Act
specifies that the duration of
transitional pass-through payments for
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devices must be no less than 2 and no
more than 3 years from the first date on
which payment is made for any medical
device that is described by the category.
Therefore, we utilize separate passthrough application and evaluation
processes and criteria for drugs and
biologicals and device categories
because the statutory provisions are not
the same for all items that may receive
pass-through payment. These processes
and the applicable evaluation criteria
are available on the CMS Web site at:
https://www.cms.hhs.gov/
HospitalOutpatientPPS/
04_passthrough_payment.asp#
TopOfPage. The regulations that govern
pass-through payment for drugs and
biologicals are found in § 419.64 and
those applicable to pass-through device
categories are found in § 419.66.
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 equal to the
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CY 2010
APC
average price for the drug or biological
for all competitive acquisition areas and
the 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.
For the drugs and biologicals that would
have otherwise been paid under the Part
B drug CAP, because the Part B drug
CAP has been suspended beginning
January 1, 2009, pass-through payment
for these drugs and biologicals is
currently made at the physician’s office
payment rate of ASP+6 percent. In the
case of diagnostic radiopharmaceuticals,
where all products without passthrough status are packaged into
payment for nuclear medicine
procedures, the pass-through payment is
reduced by an amount that reflects the
diagnostic radiopharmaceutical portion
of the APC payment amount for the
associated nuclear medicine procedure
(the ‘‘policy-packaged’’ drug APC offset)
that we determine is associated with the
cost of predecessor diagnostic
radiopharmaceuticals. In the CY 2010
OPPS/ASC proposed rule (74 FR 35318),
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we proposed a similar payment offset
policy for contrast agents beginning in
CY 2010, as discussed in section
V.A.6.c. of the proposed rule, and we
are finalizing this policy for CY 2010, as
discussed in section V.A.6.c. of this
final rule with comment period. Passthrough payment for a category of
devices is made at the hospital’s charge
for the device, adjusted to cost by
application of the hospital’s CCR. If
applicable, the device payment is
reduced by an amount that reflects the
portion of the APC payment amount for
the associated surgical procedure that
we determine is associated with the cost
of the device, called the device APC
offset and discussed further in section
IV.A.2. of the proposed rule (74 FR
35306) and this final rule with comment
period.
In the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68633
through 68636), we finalized a policy to
package payment for implantable
biologicals without pass-through status
that are surgically inserted or implanted
(through a surgical incision or a natural
orifice) into payment for the associated
surgical procedure. Prior to our
implementation of this policy for
nonpass-through implantable
biologicals, we adopted in the CY 2003
OPPS final rule with comment period
(67 FR 66763) the current OPPS policy
that packages payment for an
implantable device into the associated
surgical procedures when its passthrough payment period ends because
payment for all implantable devices
without pass-through status under the
OPPS is packaged. We consider
nonpass-through implantable devices to
be integral and supportive items for
which packaged payment is most
appropriate. As we stated in the CY
2009 OPPS/ASC final rule with
comment period (73 FR 68634), we
believe this policy to package payment
for implantable devices that are integral
to the performance of procedures paid
separately through an APC payment
should also apply to payment for
implantable biologicals without passthrough status, when those biologicals
function as implantable devices.
Implantable biologicals may be used in
place of other implantable nonbiological
devices whose costs are already
accounted for in the associated
procedural APC payments for surgical
procedures. We reasoned that if we were
to provide separate payment for
nonpass-through implantable
biologicals, we would potentially be
providing duplicate device payment,
both through the packaged
nonbiological device cost included in
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the surgical procedure’s payment and
the separate biological payment.
In the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68634), we
stated our belief that the three
implantable biologicals with expiring
pass-through status for CY 2009 differ
from other biologicals paid under the
OPPS in that they specifically always
function as surgically implanted
devices. We noted that both implantable
nonbiological devices under the OPPS
and the three biologicals with expiring
pass-through status in CY 2009 are
surgically inserted or implanted
(including through a surgical incision or
a natural orifice). These three
biologicals are approved by the FDA as
devices, and they are solely surgically
implanted according to their FDAapproved indications. Furthermore, in
some cases, these implantable
biologicals can substitute for
implantable nonbiological devices (such
as for synthetic nerve conduits or
synthetic mesh used in tendon repair).
For other nonpass-through biologicals
paid under the OPPS that may
sometimes be used as implantable
devices, we have instructed hospitals,
beginning via Transmittal 1336, Change
Request 5718, dated September 14,
2007, to not separately bill 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. We stated that
hospitals may include the charge for the
biological in their charge for the
procedure, report the charge on an
uncoded revenue center line, or report
the charge under a device HCPCS code,
if one exists, so that the biological costs
may be considered in future ratesetting
for the associated surgical procedures.
Several commenters who responded
to the CY 2009 OPPS/ASC proposed
rule supported CMS’ proposal to
package payment for implantable
biologicals without pass-through status
into payment for the associated surgical
procedure (73 FR 68635). One
commenter also recommended that CMS
treat biologicals that are always
surgically implanted or inserted and
have FDA device approval as devices for
purposes of pass-through payment,
rather than as drugs. The commenter
observed that this would allow all
implantable devices, biological and
otherwise, to be subject to a single passthrough payment policy. The
commenter concluded that this policy
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change would provide consistency in
billing and payment for these products
functioning as implantable devices
during their pass-through payment
period, as well as after the expiration of
pass-through status.
We finalized in the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68635) our proposal to package
payment for any nonpass-through
biological that is surgically inserted or
implanted (through a surgical incision
or a natural orifice) into the payment for
the associated surgical procedure, just
as we package payment for all nonpassthrough, implantable, nonbiological
devices. As a result of this final policy,
the three implantable biologicals with
expiring pass-through status in CY 2009
were packaged and assigned status
indicator ‘‘N’’ as of January 1, 2009. In
addition, any new biologicals without
pass-through status that are surgically
inserted or implanted (through a
surgical incision or a natural orifice) are
also packaged beginning in CY 2009.
Hospitals continue to report the HCPCS
codes that describe biologicals that are
always used as implantable devices on
their claims, and we package the costs
of those biologicals into the associated
procedures, according to the standard
OPPS ratesetting methodology that is
described in section II.A.2. of the CY
2010 OPPS/ASC proposed rule (74 FR
35254 through 35267) and this final rule
with comment period. 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
always, used as implanted biologicals
are appropriately packaged into
payment for the associated implantation
procedures when the products are used
as implantable devices.
b. Policy for CY 2010
Some implantable biologicals are
described by device category codes for
expired pass-through categories,
including HCPCS code C1781 (Mesh
(implantable)), HCPCS code C1762
(Connective tissue, human), and HCPCS
code C1763 (Connective tissue, nonhuman). All implantable devices
described by the latter two categories
are biologicals, while HCPCS code
C1781 describes both implantable
biological and nonbiological devices.
Historically, these category codes
included biological products that we
approved for pass-through payment
under the device pass-through process,
initially when we paid for pass-through
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devices on a brand-specific basis from
CY 2000 through March 31, 2001, and
later through the device categories
described by HCPCS codes C1781,
C1762, and C1763, which were
developed effective April 1, 2001.
We believe that it is most appropriate
for a product to be eligible for a single
period of OPPS pass-through payment,
rather than a period of device passthrough payment and a period of drug
or biological pass-through payment. The
limited timeframe for transitional passthrough payment ensures that new
devices, drugs, and biologicals may
receive special payment consideration
under the OPPS for the first few years
after their initial use, in order to allow
sufficient time for their cost information
to be reflected in hospital claims data
and, therefore, to be available for OPPS
ratesetting. After the pass-through
payment period ends, like other existing
services, we have cost information
regarding these new products provided
to us by hospitals from claims and cost
report data. We then utilize that
information when packaging the costs of
the items (all devices, diagnostic
radiopharmaceuticals, contrast agents,
and implantable biologicals, and other
drugs with an estimated per day cost
equal to or less than the annual drug
packaging threshold) or paying
separately for the products (drugs
except contrast agents and diagnostic
radiopharmaceuticals and also
nonimplantable biologicals with
estimated per day costs above the
annual drug packaging threshold).
Further, although implantable
biologicals with pass-through status
may substitute for nonpass-through
implantable devices whose costs are
packaged into procedural APC
payments, our existing APC offset
policies for the costs of predecessor
items packaged into APC payment for
the associated services do not apply to
pass-through payment for biologicals.
We note that the APC offset amount that
would be most applicable to
implantable biologicals, if we determine
that an offset applies for a given APC,
would be the device APC offset amount,
based on their similarity of function to
the implantable devices whose costs
have been included in establishing the
procedural APC payment, not the
‘‘policy-packaged’’ or ‘‘thresholdpackaged’’ drug APC offset amounts that
one would expect to apply to passthrough drugs and biologicals.
Similarly, when we currently evaluate a
pass-through implantable biological
application for the cost significance of
the product, our methodology utilizes
the ‘‘policy-packaged’’ APC offset
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amount to assess the candidate
implantable biological, not the device
APC offset amount that would be more
reflective of the costs of predecessor
devices related to the candidate
implantable biological, such as those of
device category HCPCS codes C1781,
C1762, and C1763.
Many implantable biologicals, such as
the three biologicals that expired from
pass-through status after CY 2008, have
FDA approval as devices. A number of
other implantable biologicals with FDA
approval as devices also have been
approved for OPPS pass-through
payment over the past several years,
based on their product-specific passthrough applications as biologicals, not
devices. Moreover, outside of the period
of pass-through payment, the costs of
implantable biologicals, like the costs of
implantable devices, are now packaged
into the cost of the procedure in which
they are used. Implantable biologicals
may be used in place of other
implantable nonbiological devices
whose costs are already accounted for in
the associated procedural APC
payments. Payment is made for
nonpass-through implantable
biologicals, like for devices, through the
APC payment for the associated surgical
procedure.
In view of these considerations, in the
CY 2010 OPPS/ASC proposed rule (74
FR 35313), we proposed that the passthrough evaluation process and passthrough payment methodology for
implantable biologicals that are
surgically inserted or implanted
(through a surgical incision or a natural
orifice) and that are newly approved for
pass-through status beginning on or
after January 1, 2010, be the device passthrough process and payment
methodology only. Given the shared
payment methodologies for implantable
biological and nonbiological devices
during their nonpass-through payment
periods, as well as their overlapping and
sometimes identical clinical uses and
their similar regulation by the FDA as
devices, we believe that the most
consistent pass-through payment policy
for these different types of items that are
surgically inserted or implanted and
that may sometimes substitute for one
another is to evaluate all such devices,
both biological and nonbiological, only
under the device pass-through process.
As a result, implantable biologicals
would no longer be eligible to submit
biological pass-through applications and
to receive biological pass-through
payment at ASP+6 percent. While we
understand that implantable biologicals
have characteristics that result in their
meeting the definitions of both devices
and biologicals, we believe that
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implantable biologicals are most similar
to devices because of their required
surgical insertion or implantation and
that it would be appropriate to only
evaluate them as devices because they
share significant clinical similarity with
implantable nonbiological devices. We
refer readers to the CMS Web site
specified previously in this section to
view the device pass-through
application requirements and review
criteria that would apply to the
evaluation of all implantable biologicals
for pass-through status when their passthrough payment would begin on or
after January 1, 2010.
However, those implantable
biologicals that are surgically inserted or
implanted (through a surgical incision
or natural orifice) and that are receiving
pass-through payment as biologicals
prior to January 1, 2010, would continue
to be considered pass-through
biologicals for the duration of their
period of pass-through payment. These
products have already been evaluated
for pass-through status based on their
applications as biologicals and have
been approved for pass-through status
based on the established criteria for
biological pass-through payment. We
believe it would be most appropriate for
them to complete their 2- to 3-year
period of pass-through payment as
biologicals in accordance with the passthrough payment policies that were
applicable at the time their pass-through
status was initially approved.
We note that, in conducting our passthrough review of implantable
biologicals as devices beginning with
CY 2010 pass-through payment, we
would apply the portions of APC
payment amounts associated with
devices (that is, the device APC offset
amounts) to assess the cost significance
of the candidate implantable biologicals,
as we do for other devices. The CY 2009
device APC offset amounts are posted
on the CMS Web site at: https://
www.cms.hhs.gov/
HospitalOutpatientPPS/04_
passthrough_payment.asp. The result of
evaluating all implantable biological
items only for device pass-through
payment is that payment for
implantable biologicals eligible for passthrough payment beginning on or after
January 1, 2010, would be based on
hospital charges adjusted to cost, rather
than the ASP methodology that is
applicable to pass-through drugs and
biologicals. Treating implantable
biologicals as devices for evaluation of
pass-through payment eligibility and
payment would result in their
consistent treatment with respect to
coding and payment during their passthrough and nonpass-through periods of
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payment. This proposed policy would
allow us to appropriately offset the passthrough payment for an implantable
biological using the device APC offset
amounts, which would incorporate the
costs of predecessor devices (both
biological and nonbiological) that are
similar to the implantable biological
item with pass-through status. Finally,
this proposed policy would ensure that
each implantable biological is eligible
for OPPS pass-through payment for only
one 2- to 3-year time period (as a device
only, not as a biological), so that once
OPPS claims data incorporate cost
information for the implantable
biological, the product would not be
again eligible for OPPS pass-through
payment in the future.
Further, because we proposed that the
pass-through evaluation process for CY
2010 pass-through status approvals and
pass-through payment methodology for
implantable biologicals that are
surgically inserted or implanted
(through a surgical incision or a natural
orifice) beginning in CY 2010 be the
device pass-through process and
payment methodology only, we also
proposed to revise our regulations at
§§ 419.64 and 419.66 to conform to this
new policy. Specifically, we proposed
to amend § 419.64 by adding a new
paragraph (a)(4)(iii) and language under
a new paragraph (c)(3) to exclude
implantable biologicals from
consideration for drug and biological
pass-through payment. Furthermore,
under proposed new paragraph (a)(4)(iv)
of § 419.64, we proposed to specify the
continued inclusion of implantable
biologicals for which pass-through
payment as a biological is made on or
before December 31, 2009, as eligible for
biological pass-through payment,
consistent with our proposal to allow
these products to complete their period
of pass-through payment as biologicals.
Moreover, in light of our CY 2010
proposal that implantable biological
applications for pass-through status
beginning on or after January 1, 2010,
would be considered only for device
pass-through evaluation and payment,
we stated in the proposed rule (74 FR
35314) that we believe it would also be
appropriate to clarify the current
example in § 419.66(b)(4)(iii) of the
regulations regarding the exclusion of
materials, for example, biological or
synthetic materials, that may be used to
replace human skin from device passthrough payment eligibility. While, by
definition, implantable biologicals that
are surgically implanted or inserted
would not be biological materials that
replace human skin, we proposed to
more precisely state this in the
regulations. Therefore, we proposed to
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revise § 419.66(b)(4)(iii), which
currently states that a device is not a
material that may be used to replace
human skin and provides an example of
such a material as ‘‘a biological or
synthetic material.’’ We proposed to
revise § 419.66(b)(4)(iii) to specify that
the biological materials be a ‘‘biological
skin replacement material’’ rather than
a ‘‘biological’’ and the synthetic
materials be a ‘‘synthetic skin
replacement material’’ rather than a
‘‘synthetic material’’ because we do not
believe this example should refer to
biologicals or synthetic materials that
are used for purposes other than as a
skin replacement material, given that
the regulatory provision in
§ 419.66(b)(4)(iii) applies only to a
material that may be used to replace
human skin.
Comment: A few commenters
requested that CMS continue to pay for
all pass-through biologicals under the
ASP methodology for drugs and
nonimplantable biologicals, and not pay
for new implantable biologicals eligible
for pass-through payment based on
charges adjusted to cost. One
commenter believed that the ASP
methodology is well understood by
hospitals and Medicare contractors and
asserted that some new implantable
biologicals under development will cost
several thousand dollars per procedure.
Therefore, the commenter stated, many
hospitals will be reluctant to mark up
charges for these new implantable
biologicals, thereby resulting in charge
compression and an underestimate of
the costs of biologicals. Furthermore,
the commenter claimed that continued
payment for pass-through implantable
biologicals based on the ASP
methodology would ensure consistent
payment for new biologicals rather than
variable payment based on hospitals’
charging practices.
Response: Under our CY 2010
proposal to evaluate and pay for
implantable biologicals under the
device pass-through methodology, we
would use the charges adjusted to cost
payment methodology and apply a
reduction to payment (that is, the device
APC offset) for implantable biologicals
eligible for pass-through payment
beginning on or after January 1, 2010.
Regarding the commenters’ request that
we continue the ASP payment
methodology for pass-through
implantable biologicals, we do not agree
that payment under this methodology
would be appropriate. Payment based
on ASP for pass-through implantable
biologicals would not provide the
similar OPPS payment treatment of
biological and nonbiological
implantable devices that is our goal for
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new devices. Given the shared payment
methodologies for implantable
biological and nonbiological devices
during their nonpass-through payment
periods, as well as their overlapping and
sometimes identical clinical uses and
their generally similar regulation by the
FDA as devices, we believe that the
most consistent pass-through payment
policy for these different types of items
that are surgically inserted or implanted
and that may sometimes substitute for
one another is to evaluate and pay for
all such devices, both biological and
nonbiological, only under the device
pass-through process and payment
methodology. As we stated in the CY
2010 OPPS/ASC proposed rule (74 FR
35313), we believe that implantable
biologicals are most similar to devices
because of their required surgical
insertion or implantation and that it
would be appropriate to only evaluate
them as devices because they share
significant clinical similarity with
implantable nonbiological devices. We
note that we will continue pass-through
payment under the ASP methodology
for any implantable biological for which
pass-through payment as a biological
begins on or before December 31, 2009.
Comment: A few commenters
supported the proposal to treat
implantable biologicals and implanted
devices the same regarding the passthrough eligibility criteria and payment
methodology. Some commenters stated
that payment for both implantable
biological and nonbiological devices
should be made on the same basis for
items with both pass-through and
nonpass-through status. One commenter
asserted that the proposed treatment of
implantable biologicals is consistent
with CMS’ policy to package the costs
of implantable devices and would
reinforce previous CMS instructions
regarding the billing of biologicals when
used as implanted devices.
Furthermore, another commenter also
agreed with CMS’ policy that separately
payable HCPCS codes not be reported
when biologicals that are sometimes
implanted are surgically inserted during
a procedure. The commenter urged CMS
to continue educating providers about
when HCPCS codes that describe
biologicals that are sometimes
implanted should be reported, including
publishing a list of procedures with
which the HCPCS codes for implantable
biologicals would not typically be
reported. The commenter encouraged
CMS to publish ‘‘reverse’’ device-toprocedure edits for such procedures.
Response: We appreciate the
commenters’ support for our proposal.
We agree that payment for both
implantable biological and
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nonbiological devices that may be
substitutes for one another should be
made on the same basis for items with
both pass-through and nonpass-through
status, that is, based on charges adjusted
to cost while on pass-through status and
packaged when not on pass-through
status. Concerning the suggestion to
publish a list of procedure codes with
which the HCPCS codes for biologicals
that are implanted would not typically
be reported, we believe that creating and
maintaining such a list would not be
feasible because implantable biologicals
may be used in a wide variety of
surgical procedures. Moreover, creating
and maintaining device-to-procedure
edits for implantable biologicals also
would not be feasible, given the broad
array of surgical procedures in which
such biologicals may be implanted.
Comment: One commenter requested
that CMS delay the CY 2010 proposal to
include implantable biologicals in the
calculation of the device APC offset
amounts. The commenter also
recommended that CMS grandfather all
implantable biological applications
submitted under the drug and biological
pass-through application process prior
to the September 1, 2009 application
filing deadline. The commenter noted
that implantable biological applications
submitted prior to September 1, 2009,
could have received biological passthrough status if CMS had not proposed
and finalized the policy to treat them as
devices for pass-through purposes,
beginning in CY 2010.
The commenter explained that two
implantable biological products that are
competitors to the product
manufactured by the commenter
currently have pass-through status as
biologicals, and their pass-through
status is proposed to continue for CY
2010. The commenter believed that
treating implantable biologicals
differently based on the date of their
pass-through application would result
in a competitive disadvantage for the
product manufactured by the
commenter.
Response: The commenter
recommended delaying the packaging of
implantable biologicals in calculating
the device offset. As a practical matter,
the packaging of nonpass-through
implantable biologicals was proposed
and finalized for CY 2009 (73 FR 68635)
and was implemented beginning in CY
2009. Given our proposal to treat
implantable biologicals as devices for
pass-through purposes beginning in CY
2010 and our longstanding device APC
offset policy for pass-through devices,
we believe it is appropriate to consider
the costs of implantable biologicals that
are packaged in establishing the device
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APC offset amounts under a policy that
considers implantable biologicals to be
devices for pass-through evaluation and
payment purposes. We rely on the
device APC offset amounts to account
for the costs of all predecessor devices
to a new device category when those
predecessor devices are implanted in
procedures assigned to an APC to which
procedures associated with the new
device category would be assigned, and
the predecessor devices may now
include implantable biologicals.
Concerning the commenter’s request
to grandfather all implantable biological
applications submitted under the drug
and biological pass-through application
process prior to the September 1, 2009
application filing deadline, we believe it
is important to adopt a consistent
implantable biological pass-through
policy for a full calendar year to provide
appropriate payment under a single
payment policy for that year and allow
consistent use of our CY 2010 claims
data for ratesetting in the future. The
earliest an application filed for the
September 1 deadline (applications are
received and processed on a continual
basis) could be considered for passthrough status is January 1 of the
following year, in this case, CY 2010, as
we have established and posted on the
CMS Web site for pass-through
applications at: https://
www.cms.hhs.gov/HospitalOutpatient
PPS/04_passthrough_payment.asp#Top
OfPage. We do not believe it would be
appropriate to implement pass-through
evaluation and payment of implantable
biologicals as devices later than the
quarter beginning January 1, 2010. In
order to meet the timeframes required
by our claims processing systems,
applications for drug and biological
pass-through status received by the
September 1, 2009 deadline for January
2010 payment have been evaluated
based on the policy established in this
final rule with comment period to
evaluate implantable biologicals for
device pass-through payment. We also
note that when adopting any significant
policy change under the OPPS with a
specific effective date, we recognize that
similar products or services may be
treated differently because of the timing
of their FDA approval, pass-through
application submission, or other
characteristics. Nevertheless, the
rulemaking process provides significant
opportunity for public notice and
comment prior to such policy changes
in order to ensure that we give full
consideration to all issues and
information related to proposals of new
policy.
Comment: Several commenters
recommended that both implantable
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60475
and nonimplantable biologicals
approved by the FDA under a biologics
license application (BLA) be evaluated
for pass-through payment status under
the drug pass-through evaluation
process, and indicated their belief that
Congress intended biologicals approved
under BLAs to be paid under the
specific OPPS statutory provisions that
apply to specified covered outpatient
drugs (SCODs), including the passthrough provisions. One commenter
agreed that CMS should have similar
payment methodologies for biological,
nonbiological, and composite devices
for fairness and consistency and
recommended that CMS implement the
proposed policy based on FDA approval
status, specifically treating as devices
for pass-through purposes only those
implantable biologicals approved by the
FDA as devices. The commenter
claimed that CMS determined that
several implantable devices that are
currently treated as drugs or biologicals
must be paid based on their productspecific ASP submissions because the
requirement for combining drugs for the
purpose of ASP is that the reference
materials report them as clinical
equivalents. The commenter reasoned
that devices do not have equivalents
identified in reference materials;
therefore, those devices paid as drugs
must always receive separate payment.
The commenter also requested that CMS
clarify when it will treat an implantable
device as a biological for ASP payment.
One commenter suggested that CMS
not use the device pass-through process
for evaluating drugs or biologicals that
are implanted using a device as merely
a delivery vehicle, simply because the
drug is administered through a device.
The commenter recommended that CMS
base its pass-through payment decision
on the identity of the component that
exerts the therapeutic effect of the
combined product, either the biological
component or the delivery vehicle, and
provided as an example the practice of
FDA’s Office of Combination Products
to assess combination products in
development and assign their FDA
regulation based on which component
exerts the therapeutic effect claimed by
the manufacturer. The commenter
believed that there are clinical problems
with using implantation to define
whether a biological should be treated
as a device because, for some drugs,
implantation may always be the
clinically superior route of
administration. Another commenter
claimed that some implantable
biologicals meet the Act’s definition of
a biological under section 1861(t)(1) of
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the Act even though they are approved
by the FDA as devices.
Response: We proposed to evaluate
implantable biologicals that function as
and are substitutes for implantable
devices, regardless of their category of
FDA approval, as devices for OPPS
payment purposes. We do not believe it
is necessary to make our OPPS payment
policies regarding implantable
biologicals dependent on categories of
FDA approval, the intent of which is to
ensure the safety and effectiveness of
medical products.
We do not agree with the commenters
who asserted that Congress intended
biologicals approved under BLAs to be
paid under the specific OPPS statutory
provisions that apply to SCODs,
including the pass-through provisions.
Moreover, Congress did not specify that
we must pay for implantable biologicals
as biologicals rather than devices, if
they also meet our criteria for payment
as a device. We believe that implantable
biologicals meet the definitions of a
device and a biological and that, for
payment purposes, it is appropriate for
us to consider implantable biologicals as
implantable devices in all cases, not as
biologicals. For example, beginning in
CY 2009, we package the costs of
implantable biologicals into the costs of
the procedures in which they are used,
as we do for implantable devices.
Therefore, we do not believe that we
must pay for implantable biologicals
under our OPPS biological payment
methodologies, rather than our device
payment methodologies. Furthermore,
because we consider implantable
biologicals to be devices for payment
purposes, any interpretation that a
biological is unique in the context of the
ASP payment methodology for
biologicals would not apply. Thus, we
disagree with the commenter’s
conclusion that implantable biologicals
treated as devices must receive separate
payment because devices do not have
equivalents in reference materials, a
concept applicable only to the
requirements for combining biologicals
for payment under the ASP
methodology, because we consider these
implantable biologicals to be devices
under the OPPS, to which packaged
payment outside of the pass-through
payment period applies.
It is not our intention to consider
biologicals under the device passthrough evaluation process and
payment methodology when these
products are merely administered
through the implantation of a delivery
system for the biological. Each
implantable biological pass-through
application for a combination product
would be initially evaluated in such a
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case to determine if the biological or
device is the key therapeutic or
diagnostic component, after which we
would then determine whether to
evaluate the item under the device or
drug and biological pass-through
process. If the key component of the
candidate pass-through product is the
biological and that biological is only
implanted because it is administered
through an implanted delivery system
for the biological (that is, the biological
itself is not functioning as an
implantable device), we would evaluate
the product under the drug and
biological pass-through process.
Conversely, if the key component of the
candidate pass-through product is the
biological and that biological is
functioning as an implantable device or
the key component of the product is the
implantable delivery system for the
biological, we would evaluate the
product under the device pass-through
process.
As we stated in the CY 2010 OPPS/
ASC proposed rule (74 FR 35313) and
this final rule with comment period,
while we understand that implantable
biologicals have characteristics that
result in their meeting the definitions of
both devices and biologicals, we believe
that biologicals are most similar to
devices because of their required
surgical insertion or implantation and
that it would be appropriate to only
evaluate them as devices because they
share significant clinical similarity with
implantable nonbiological devices. We
do not believe that those implantable
biologicals that meet the Act’s definition
of biological under section 1861(t)(1)
necessarily must be evaluated and paid
for under the OPPS drug and biological
pass-through payment methodology,
when they also meet the definition of a
device for purposes of pass-through
evaluation and payment.
Comment: One commenter requested
that CMS clarify certain points
regarding the proposal to evaluate and
pay for implantable biologicals with
pass-through status similarly to passthrough devices. The commenter
requested that CMS designate that the
types of biologicals that would be
affected by the proposal would be
connective tissue replacements that
function as devices. The commenter
also requested that CMS clarify that the
proposed changes would apply to passthrough implantable biologicals and not
to implantable drugs, and that CMS
recognize that it would be inappropriate
to treat implantable drugs as devices for
pass-through purposes in the future.
Response: Our CY 2010 proposal was
not limited to implantable biological
connective tissue replacements, but
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instead it applies to all implantable
biologicals. For example, in the
proposed rule (74 FR 35313), we cited
expired device category HCPCS code
C1781 (Mesh (implantable)) as
describing implantable biologicals as
well as implantable nonbiological
devices, yet mesh need not necessarily
function as a connective tissue
replacement. We did not propose to
treat implantable drugs as devices and,
therefore, would not treat implantable
drugs as devices for pass-through
payment program purposes in CY 2010.
Comment: One commenter suggested
that implantable biologicals should not
be treated as devices, and observed that
stakeholders have not had adequate
time to consider the long-term
implications of the CMS proposal. The
commenter recommended that CMS not
finalize the proposal at this time and
hold a public meeting regarding the
proposal.
Response: We believe that all
stakeholders have had sufficient time to
consider this proposal through the
routine notice and comment rulemaking
process. We received numerous public
comments on our CY 2010 proposal
and, while we are always open to
meeting with stakeholders who would
like to share their views with us, we do
not believe a public meeting on this
issue is needed.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, that the passthrough evaluation process and
payment methodology for implantable
biologicals that are surgically inserted or
implanted (through a surgical incision
or a natural orifice) and that are newly
approved for pass-through status
beginning on or after January 1, 2010, be
the device pass-through process and
payment methodology only. However,
those implantable biologicals that are
surgically inserted or implanted
(through a surgical incision or natural
orifice) and that are receiving passthrough payment as biologicals prior to
January 1, 2010, would continue to be
considered pass-through biologicals for
the duration of their period of passthrough payment. As proposed, in
conducting our pass-through review of
implantable biologicals as devices
beginning with CY 2010 pass-through
payment, we will apply the portions of
APC payment amounts associated with
devices (that is, the device APC offset
amounts) to assess the cost significance
of the candidate implantable biologicals,
as we do for other devices. Furthermore,
we are finalizing our proposal to revise
our regulations at §§ 419.64 and 419.66
to conform to this new policy.
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Specifically, we are finalizing our
proposal to amend § 419.64 by adding a
new paragraph (a)(4)(iii) to exclude
implantable biologicals from
consideration for drug and biological
pass-through payment. However, we
note that, as discussed in section V.A.5.
of this final rule with comment period,
we are not finalizing our proposed
addition of a new paragraph (c)(3) to
§ 419.64 and, therefore, we are not
adopting our related proposed change to
proposed paragraph (c)(3) that would
have excluded implantable biologicals
from consideration for drug and
biological pass-through payment.
Furthermore, we are adopting our
proposed new paragraph (a)(4)(iv) of
§ 419.64, which specifies the continued
inclusion of implantable biologicals for
which pass-through payment as a
biological is made on or before
December 31, 2009, as eligible for
biological pass-through payment.
Finally, we are adopting our proposal
stated above that clarifies the current
example in § 419.66(b)(4)(iii) of the
regulations regarding the exclusion of
materials, for example, biological or
synthetic materials, that may be used to
replace human skin from device passthrough payment eligibility.
5. Definition of Pass-Through Payment
Eligibility Period for New Drugs and
Biologicals
Section 1833(t)(6) of the Act provides
for transitional pass-through payments
for medical devices, drugs, and
biologicals. Section 1833(t)(6)(A) of the
Act generally describes two groups of
services—‘‘current’’ and ‘‘new’’—that
are eligible for pass-through payments,
depending, in part, on when they were
first paid. One of the criteria for ‘‘new’’
drugs and biologicals to receive passthrough payments under section
1833(t)(6)(A)(iv)(I) of the Act is that
payment for the item as an outpatient
hospital service under Part B was not
being made as of December 31, 1996.
For those ‘‘new’’ drugs and biologicals,
section 1833(t)(6)(C)(i)(II) of the Act
specifies that there is a 2- to 3-year
limitation on the pass-through period
that begins on the first date on which
payment is made under Part B for the
drug or biological as an outpatient
hospital service.
Section 419.64 of the regulations
codifies the transitional pass-through
payment provisions for drugs and
biologicals. Section 419.64(a) describes
the drugs and biologicals that are
eligible for pass-through payments,
essentially capturing the distinction
between ‘‘new’’ and ‘‘current’’ services.
Section 419.64(c)(2) provides that the
pass-through payment eligibility period
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for drugs and biologicals that fall into
the ‘‘new’’ category begins on the date
that CMS makes its first pass-through
payment for the drug or biological.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35314), we noted that it had
come to our attention that our passthrough payment eligibility period for
‘‘new’’ drugs and biologicals in
§ 419.64(c)(2) of the regulations might
not most accurately reflect the statutory
requirements of section
1833(t)(6)(C)(i)(II) of the Act. While our
regulations indicate that the passthrough payment eligibility period for
‘‘new’’ drugs and biologicals begins on
the first date on which pass-through
payment is made for the item, section
1833(t)(6)(C)(i)(II) of the Act specifies
that the pass-through period of 2 to 3
years for ‘‘new’’ drugs and biologicals
begins on the first date on which
payment is made under Part B for the
drug or biological as an outpatient
hospital service. In order to better reflect
the statutory requirement for the passthrough period for a ‘‘new’’ drug or
biological, in the CY 2010 OPPS/ASC
proposed rule (74 FR 35314), we
proposed to revise paragraph (c)(2) of
§ 419.64 and add a new paragraph (c)(3)
to § 419.64.
In order to conform the regulations to
the statutory provisions, we proposed to
change the start date of the pass-through
payment eligibility period for a drug or
biological from the first date on which
pass-through payment is made to the
date on which payment is first made for
a drug or biological as an outpatient
hospital service under Part B. Under
this proposal, we needed to identify a
first date of payment for a drug or
biological as an outpatient hospital
service under Part B. (Under our current
policy, we had not established a start
date for the eligibility period distinct
from the beginning of pass-through
payment because our current policy is
to begin the pass-through payment
eligibility period at the same time as we
begin pass-through payment for the drug
or biological.)
Due to the 2-year delay in the
availability of claims data, under our CY
2010 proposal, we would not be able to
identify an exact date of first payment
for a drug or biological as an outpatient
hospital service under Part B in order to
determine the start date of the passthrough payment eligibility period until
years after an application for passthrough payment for a ‘‘new’’ drug or
biological has been submitted. At that
later point in time, the pass-through
payment eligibility period may be close
to expiring, and the result of relying
upon our claims data to evaluate an
item for its eligibility for pass-through
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60477
status could result in a very short period
of pass-through payment for the new
drug or biological. Consequently, in the
proposed rule, we stated our belief that
it would be desirable to identify an
appropriate and timely proxy for the
date of first payment for the drug or
biological as an outpatient hospital
service under Part B. We proposed the
date of first sale for a drug or biological
in the United States following FDA
approval as an appropriate proxy, as
explained below, for the date on which
the pass-through payment eligibility
period would begin. We also noted that,
in light of our CY 2010 proposal to treat
implantable biologicals as medical
devices for purposes of pass-through
eligibility and payment under section
1833(t)(6) of the Act, described in
section V.A.4. of the proposed rule
(74 FR 35311 through 35314), these
proposed revisions to the pass-through
payment eligibility period for a drug or
biological approved for pass-through
payment beginning on or after January
1, 2010, would not apply to implantable
biologicals, but rather only to
nonimplantable biologicals.
We explained that the date of first sale
of the drug or nonimplantable biological
in the United States following FDA
approval was an appropriate proxy for
the first date of payment for the drug or
nonimplantable biological as an
outpatient hospital service under Part B
for several reasons, including our
expectation that Medicare beneficiaries
would be among the first to use these
drugs and nonimplantable biologicals.
In addition, we currently rely on the
date of first sale of a drug or biological
in the United States following FDA
approval under the ASP methodology
and in the existing OPPS pass-through
payment eligibility determination. We
stated that we did not believe that there
is a more accurate and readily available
proxy for the first date of payment for
a drug or biological under Part B as an
outpatient hospital service than the date
of first sale of the drug or
nonimplantable biological in the United
States following FDA approval and that
it was an accepted and available
indicator of initial payment for the
Medicare program.
For these reasons, we proposed that
the date of first sale of a drug or
nonimplantable biological in the United
States following FDA approval would be
the start date of the pass-through
payment eligibility period for drugs or
nonimplantable biologicals approved for
pass-through payment beginning on or
after January 1, 2010. We specified that
our current policy—that the passthrough payment eligibility period of 2
to 3 years begins on the first date that
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pass-through payment is made for the
drug or biological—would apply only to
drugs and biologicals approved for and
receiving pass-through payment on or
before December 31, 2009.
We currently implement new
approvals of pass-through status for
drugs and biologicals on a quarterly
basis, and under our proposal for CY
2010, we stated that we would continue
to implement these new approvals on a
quarterly basis. We describe our
quarterly process for reviewing and
approving applications for drugs and
biologicals to receive pass-through
payment on the CMS Web site at:
https://www.cms.hhs.gov/
HospitalOutpatientPPS/
04_passthrough_payment.asp.
Interested parties may submit a
complete application at any time. We
typically review and make pass-through
status approval decisions about
complete applications for initiation of
pass-through payment within 4 months
of their submission and implement new
pass-through status approvals on a
quarterly basis through the next
available OPPS quarterly update. The
CMS Web site provides a timeline
showing the relationship between the
date of submission of a complete
application and the earliest date of passthrough payment that would result from
approval of pass-through status for the
drug or biological.
Under our current policy, the passthrough payment eligibility period and
period of pass-through payment are the
same. However, the pass-through
payment eligibility period and the
period of pass-through payment would
not have been identical under our
proposed policy. For our proposed
policy, we identified both the passthrough payment eligibility period, as
well as the period during which passthrough payment would be made,
including the respective start and
expiration dates of the pass-through
payment eligibility period and the
period of pass-through payment. We
stated that the period of pass-through
payment would coincide with the time
period during which the drug or
biological is designated as having passthrough status. (We note that being
within the pass-through payment
eligibility period alone does not qualify
a ‘‘new’’ drug or biological for passthrough payment; the drug or biological
must also meet the other requirements
for pass-through payment, including a
CMS determination that the cost of a
drug or biological is not insignificant.)
Under our proposal, the pass-through
payment eligibility period would run for
at least 2 years but no more than 3 years.
We proposed to modify § 419.64
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accordingly by adding new paragraph
(c)(3) to state: ‘‘For a drug or
nonimplantable biological described in
paragraph (a)(4) of this section and
approved for pass-through payment
beginning on or after January 1, 2010—
[the pass-through payment eligibility
period begins on] the date of the first
sale of the drug or nonimplantable
biological in the United States after FDA
approval.’’ Next, we proposed that passthrough payment itself would start on
the first day of the calendar quarter
following the calendar quarter during
which the completed application was
approved. We proposed to reflect this in
regulation text, in proposed new
§ 419.64(c)(3), as follows. ‘‘Pass-through
payment for the drug or nonimplantable
biological begins on the first day of the
hospital outpatient prospective payment
system update following the update
period during which the drug or
nonimplantable biological was
approved for pass-through status.’’ We
noted that this start date for the period
of pass-through payment would be
specified in a letter to the applicant
conveying pass-through status approval
for the new drug or biological and
would be the first day of the calendar
quarter following the calendar quarter
during which a complete pass-through
application is approved by CMS for
pass-through status.
Because the proposed revised
definition of the pass-through payment
eligibility period could have resulted in
the eligibility period beginning well
before application is made for passthrough payment for the drug or
nonimplantable biological and could
have resulted in a shorter period of
pass-through payment for some drugs
and biologicals than would be the case
under our current policy, we also
proposed to expire pass-through status
for ‘‘new’’ drugs and biologicals on a
quarterly basis. This proposal to expire
the pass-through status of drugs and
nonimplantable biologicals on a
quarterly basis was a departure from our
current policy for expiring the passthrough status of drugs and biologicals.
Presently, we expire the pass-through
status of drugs and biologicals at the
end of the calendar year preceding the
year of the applicable annual OPPS
update. Because our current passthrough payment eligibility period
policy effectively aligns the start of
pass-through payment with the
beginning of the 2- to 3-year passthrough payment eligibility period,
expiration of pass-through status on a
calendar year basis affords those drugs
and biologicals at least 2 but not more
than 3 years of pass-through payment.
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In addition to proposing to expire the
pass-through status of ‘‘new’’ drugs and
nonimplantable biologicals described by
proposed new § 419.64(c)(3) on a
quarterly basis, we also proposed to
continue our established policy of
determining whether a drug or
biological would receive separate
payment or packaged payment, after the
expiration of the period of pass-through
payment, on a calendar year basis
through the annual OPPS rulemaking
process as described in section V.B.2. of
the proposed rule (74 FR 35319 through
35321) and this final rule with comment
period. Therefore, after the expiration of
pass-through status of a ‘‘new’’ drug or
biological in a given year’s calendar
quarter, we proposed to continue to
make separate payment through the end
of that calendar year for those drugs and
nonimplantable biologicals that would
be subject to the drug packaging
threshold when they did not have passthrough status at the applicable OPPS
payment rate for separately payable
drugs and biologicals without passthrough status for that year, proposed to
be ASP + 4 percent for CY 2010. (This
proposal would exclude contrast agents
and diagnostic radiopharmaceuticals for
CY 2010, which would always be
packaged when not on pass-through
status.)
Comment: Several commenters
disagreed with CMS’ proposal to change
the pass-through payment eligibility
period policy for new drugs and
nonimplantable biologicals in CY 2010.
Most of the commenters expressed
concerns about separating the passthrough payment eligibility period from
the period of pass-through payment,
noting that delays that may occur
between the date of the first sale of a
drug in the United States and the date
on which payment is first made under
Part B would inevitably and
inappropriately reduce the period of
pass-through payment for new drugs.
The commenters cited several examples,
including a manufacturer’s delay in
submitting a pass-through application
after receiving FDA approval, the length
of CMS’ pass-through review and
approval process, delays in claim
submissions and challenges associated
with hospital billing for new services,
and lags due to the resale process of a
drug from a manufacturer to a
wholesaler before the drug is available
to the beneficiary. In addition, many
commenters argued that non-Medicare
beneficiaries, as opposed to Medicare
beneficiaries, may be the first to receive
a drug or biological, making the date of
a drug’s first sale in the United States
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after FDA approval irrelevant to the
Medicare population.
One commenter acknowledged CMS’
need to align the pass-through payment
eligibility period policy with the
statutory provisions. However, the
commenter disagreed with CMS’
proposal to use the date of the first sale
in the United States following FDA
approval as a proxy for the date on
which payment is made under Part B.
The commenter suggested that,
considering all of the potential delays
between the date of the first sale in the
United States after FDA approval and
the first date of payment under Part B
as an outpatient hospital service, the
date of the first sale in the United States
after FDA approval is not a sufficiently
precise proxy. The commenter
suggested that CMS continue to use the
current pass-through payment policy as
a proxy for the first date on which
payment is made under Part B,
specifically the date that CMS first
makes pass-through payment for a drug
or biological, because it is the most
accurate proxy. The commenter
reasoned that establishing the date that
CMS first makes pass-through payment
for a drug or biological as a proxy for the
first date on which payment is made
under Part B as an outpatient hospital
service is appropriate because the date
of first pass-through payment would
never predate the first payment under
Part B as an outpatient hospital service,
nor would it likely be made later than
the date of first OPPS payment by an
appreciable period of time. The
commenter noted that, in general,
manufacturers have an incentive to
submit pass-through applications as
quickly as possible and will do
whatever they can to minimize any lag
time between the date of first outpatient
hospital payment and the availability of
pass-through payments because passthrough status facilitates the product’s
introduction into the hospital outpatient
setting.
Response: The commenter who urges
us to adopt a different proxy than the
one we proposed for the date of first
payment under part B as an outpatient
hospital service makes some very
persuasive and compelling points. We
have considered the merits and
advantages of adopting the commenter’s
suggested proxy rather than the one we
proposed, and we find that we agree
with the commenter that the most
appropriate policy is one that
establishes the date that CMS makes its
first pass-through payment for a drug or
biological as the proxy for the first date
on which payment is made under Part
B as an outpatient hospital service. We
believe that the date on which pass-
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through payment is first made for a drug
or nonimplantable biological is a more
accurate proxy for the date on which
payment is first made under Part B as
an outpatient hospital service for several
reasons. First, we agree with the
commenter’s points concerning the
significant delays that may occur
between the date of first sale of a drug
or nonimplantable biological in the
United States after FDA approval and
the first date on which outpatient
hospital payment is made under Part B.
Such delays may result from numerous
transactions in the drug distribution
chain, initial use for non-Medicare
patients with later diffusion to treatment
of Medicare patients, delays in claims
submission for new products without
specific HCPCS codes, and established
timeframes for Medicare processing
payment of claims. All of these lags
between the date of first sale and the
date of first payment under Part B as an
outpatient hospital service are
cumulative and potentially significant.
Therefore, adoption of the proposed
proxy could, in some cases, lead to the
start of the pass-through payment
eligibility period substantially earlier
than the start of the period of passthrough payment, thereby resulting in a
reduction in the period of pass-through
payment.
Second, we believe that utilizing the
commenter’s recommended proxy
would eliminate the potential for delays
between the proxy and the actual first
date of payment under Part B as an
outpatient hospital service, since the
date of first pass-through payment
would never predate the first payment
under Part B as an outpatient hospital
service. Although the first date of
payment under Part B as an outpatient
hospital service potentially could
predate the date of first pass-through
payment, it is also true that
manufacturers have a significant
incentive to submit pass-through
applications as quickly as possible to
minimize any lag between the date of
first payment under the OPPS and the
availability of pass-through payment.
Pass-through payment can facilitate the
availability of a product-specific HCPCS
code for reporting its use and additional
pass-through payment for the drug may
allow beneficiaries access to the new
drug in the HOPD. Therefore, in the rare
circumstance that the date of first passthrough payment under the OPPS lags
behind the first payment for the product
under Part B as an outpatient hospital
service, the delay is likely to be
minimal. As a result, adopting this
alternative date as a proxy would be
unlikely to extend the pass-through
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60479
payment eligibility period beyond 2 to
3 years from the date of first payment
under Part B as an outpatient hospital
service as specified in the statute.
In addition, utilizing the date of first
pass-through payment under the OPPS
as a proxy for the date payment is first
made for a product under Part B as an
outpatient hospital service would afford
drugs and nonimplantable biologicals at
least a full 2 years of pass-through
payment, whereas the proposed proxy
might not have allowed for a full 2 years
of pass-through payment in every case.
Finally, using the date of first passthrough payment under the OPPS as the
proxy for the date of first payment
under Part B as an outpatient hospital
service would not present an
administrative burden to CMS or the
public nor would it disrupt or change
CMS’ current operational practices. This
administratively simple proxy would
result in a continuation of the same
smoothly functioning operational
practices that CMS currently utilizes in
determining pass-through payment for
drugs and biologicals. Therefore, we are
finalizing the date on which CMS makes
its first pass-through payment as the
proxy for the first date on which
payment is made under Part B as an
outpatient hospital service.
We note that, in the CY 2010 OPPS/
ASC proposed rule (74 FR 35315
through 35317), we outlined CMS’ passthrough payment policies for approving
and expiring pass-through payment
status for drugs and nonimplantable
biologicals under the OPPS. In adopting
the date on which CMS makes its first
pass-through payment as a proxy for the
first date on which payment is made
under Part B as an outpatient hospital
service and, therefore, as the start date
for pass-through payment eligibility, we
are not changing our current practices
concerning application, approval,
payment, and expiration of pass-through
status for drugs and nonimplantable
biologicals. In this regard, we will
continue to accept applications as is
currently described on the CMS Web
site at: https://www.cms.hhs.gov/
HospitalOutpatientPPS/
04_passthrough_payment.asp. We will
continue to begin pass-through payment
on a quarterly basis through the next
available OPPS quarterly update after
the approval of a product’s pass-through
status. In addition, we will continue to
expire pass-through status for drugs and
nonimplantable biologicals on an
annual basis through notice and
comment rulemaking. Furthermore, our
policy regarding the determination of
packaging status after the pass-through
status ends for a drug or biological, as
discussed in section V.B.2. of this final
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rule with comment period, remains the
same. For those drugs with expiring
pass-through status that are always
packaged when they do not have passthrough status (‘‘policy-packaged’’),
specifically diagnostic
radiopharmaceuticals and contrast
agents for CY 2010, we will package
payment for these drugs once their passthrough status has expired. We discuss
this policy in detail in section V.B.2.d.
of this final rule with comment period.
Comment: One commenter argued
that CMS’ proposed proxy of the date of
the first sale of a drug or biological in
the United States following FDA
approval was contradictory to section
1833(t)(6)(C)(i)(II) of the Act because
that section references section
1833(t)(6)(A)(iv) of the Act, which
defines a ‘‘new’’ drug or biological
eligible for pass-through payment as
being new after December 31, 1996, and
as meeting the cost significance criteria.
The commenter argued that a drug
cannot be considered a pass-through
drug until cost significance has been
determined and that CMS would not
determine cost significance until it
qualifies a drug for pass-through status.
Based on this assessment, the
commenter argued that CMS should
begin the pass-through payment period
on the date CMS begins to treat the
product as a pass-through drug, the first
date of the pass-through payment
period.
Response: We continue to believe that
section 1833(t)(6)(C)(i)(II) of the Act
requires the start date of the passthrough payment eligibility period for a
drug or nonimplantable biological to
begin on the date on which payment is
first made for a drug or biological as an
outpatient hospital service under Part B.
As noted in the previous response,
however, we are convinced by a
commenter to adopt as the proxy for this
date, the date on which CMS makes its
first pass-through payment for the drug
or nonimplantable biological.
Comment: Several commenters
recommended that CMS continue to end
pass-through status for drugs and
nonimplantable biologicals on an
annual basis, instead of ending passthrough status on a quarterly basis as
CMS proposed. In the context of the
specific proposal for the pass-through
payment eligibility period, another
commenter agreed with CMS’ proposal
to end pass-through status on a
quarterly basis. Several other
commenters argued that, because the
proposal creates a delay between the
beginning of the pass-through payment
eligibility period and the period of passthrough payment, drugs and
nonimplantable biologicals that are
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approved for pass-through status should
be given pass-through payment for the
extent of the full 3-year pass-through
eligibility period.
Response: Because we are adopting
the date of first pass-through payment as
the start of the pass-through payment
eligibility period in this final rule with
comment period, we will not change, as
we proposed, the current operation of
our drug and biological pass-through
program. As is our current practice, we
will continue to expire pass-through
status for drugs and biologicals on an
annual basis through notice and
comment rulemaking. For example, if
CMS receives a complete application for
pass-through status for a drug on August
1, 2009, and approves the application
for pass-through status for the January 1,
2010 OPPS quarterly update, the passthrough payment eligibility period
would start on January 1, 2010. The
pass-through payment period would
extend for 2 but not more than 3 years,
as is mandated by the statute, and we
would propose to expire pass-through
status for the drug on December 31,
2011 in the CY 2012 OPPS/ASC
rulemaking process for January 1, 2012.
After consideration of the public
comments we received, we are
modifying our CY 2010 proposal and
adopting the date of first pass-through
payment for the drug or nonimplantable
biological as the proxy for the first date
on which payment for the product is
made under Part B as an outpatient
hospital service. Therefore, the 2- to 3year pass-through payment eligibility
period will start on the date of first passthrough payment and, consistent with
our current policy, the pass-through
payment eligibility period and the
period of pass-through payment
coincide. Finally, we will continue to
expire the pass-through status of drugs
and nonimplantable biologicals
annually through the notice and
comment rulemaking process.
Because our final policy reflects our
current practice for implementing the
pass-through eligibility and payment
periods defined in section
1833(t)(6)(C)(i)(II) of the Act, we are not
making any changes to § 419.64(c)(2),
and we are not adding proposed new
§ 419.64(c)(3) to our regulations.
6. Provisions for Reducing Transitional
Pass-Through Payments for Diagnostic
Radiopharmaceuticals and Contrast
Agents To Offset Costs Packaged Into
APC Groups
a. Background
Prior to CY 2008, diagnostic
radiopharmaceuticals and contrast
agents were paid separately under the
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OPPS if their mean per day costs were
greater than the applicable year’s drug
packaging threshold. In CY 2008 (72 FR
66768), we began a policy of packaging
payment for all nonpass-through
diagnostic radiopharmaceuticals and
contrast agents as ancillary and
supportive items and services into their
associated nuclear medicine procedures.
Therefore, beginning in CY 2008,
nonpass-through diagnostic
radiopharmaceuticals and contrast
agents were not subject to the annual
OPPS drug packaging threshold to
determine their packaged or separately
payable payment status, and instead all
nonpass-through diagnostic
radiopharmaceuticals and contrast
agents were packaged as a matter of
policy. In the CY 2010 OPPS/ASC
proposed rule (74 FR 35323), we
proposed to continue to package
payment for all nonpass-through
diagnostic radiopharmaceuticals and
contrast agents for CY 2010 as discussed
in section V.B.2.d. of the proposed rule
(74 FR 35323 through 35324).
b. Payment Offset Policy for Diagnostic
Radiopharmaceuticals
As previously noted,
radiopharmaceuticals are considered to
be drugs for OPPS pass-through
payment purposes. As described above,
section 1833(t)(6)(D)(i) of the Act
specifies that the transitional passthrough payment amount for passthrough drugs and biologicals is the
difference between the amount paid
under section 1842(o) (or the Part B
drug CAP rate) and the otherwise
applicable OPD fee schedule amount.
There is currently one
radiopharmaceutical with pass-through
status under the OPPS, HCPCS code
C9247 (Iobenguane, I–123, diagnostic,
per study dose, up to 10 millicuries).
HCPCS code C9247 was granted passthrough status beginning April 1, 2009
and will continue on pass-through
status in CY 2010 under permanent
HCPCS code A9582 (Iodine I–123
iobenguane, diagnostic, per study dose,
up to 15 millicuries). We currently
apply the established
radiopharmaceutical payment offset
policy to pass-through payment for this
product. As described earlier in section
V.A.3. of this final rule with comment
period, new pass-through diagnostic
radiopharmaceuticals will be paid at
ASP+6 percent, while those without
ASP information will be paid at WAC+6
percent or, if WAC is not available,
payment will be based on 95 percent of
the product’s most recently published
AWP.
As a payment offset is necessary in
order to provide an appropriate
20NOR2
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transitional pass-through payment, we
deduct from the payment for passthrough radiopharmaceuticals an
amount that reflects the portion of the
APC payment associated with
predecessor radiopharmaceuticals in
order to ensure no duplicate
radiopharmaceutical payment is made.
In CY 2009, we established a policy to
estimate the portion of each APC
payment rate that could reasonably be
attributed to the cost of predecessor
diagnostic radiopharmaceuticals when
considering a new diagnostic
radiopharmaceutical for pass-through
payment (73 FR 68638 through 68641).
Specifically, we utilize the ‘‘policypackaged’’ drug offset fraction for APCs
containing nuclear medicine
procedures, calculated as 1 minus (the
cost from single procedure claims in the
APC after removing the cost for ‘‘policypackaged’’ drugs divided by the cost
from single procedure claims in the
APC). We have previously defined
‘‘policy-packaged’’ drugs and biologicals
as nonpass-through diagnostic
radiopharmaceuticals, contrast agents,
and implantable biologicals (73 FR
68639). In the CY 2010 OPPS/ASC
proposed rule (74 FR 35323), we
proposed for CY 2010 to redefine
‘‘policy-packaged’’ drugs as only
nonpass-through diagnostic
radiopharmaceuticals and contrast
agents, as a result of the CY 2010
proposals discussed in sections V.A.4.
and V.B.2.d. of the proposed rule (74 FR
35311 through 35314 and 74 FR 35323
through 35324) that would treat
nonpass-through implantable
biologicals that are surgically inserted or
implanted (through a surgical incision
or a natural orifice) and implantable
biologicals that are surgically inserted or
implanted (through a surgical incision
or a natural orifice) with newly
approved pass-through status beginning
in CY 2010 or later as devices, rather
than drugs. To determine the actual
APC offset amount for pass-through
diagnostic radiopharmaceuticals that
takes into consideration the otherwise
applicable OPPS payment amount, we
multiply the ‘‘policy-packaged’’ drug
offset fraction by the APC payment
amount for the nuclear medicine
procedure with which the pass-through
diagnostic radiopharmaceutical is used
and, accordingly, reduce the separate
OPPS payment for the pass-through
diagnostic radiopharmaceutical by this
amount.
We will continue to post annually on
the CMS Web site at https://
www.cms.hhs.gov/
HospitalOutpatientPPS, a file that
contains the APC offset amounts that
would be used for that year for purposes
of both evaluating cost significance for
candidate pass-through device
categories and drugs and biologicals,
including diagnostic
radiopharmaceuticals, and establishing
any appropriate APC offset amounts.
Specifically, the file will continue to
provide, for every OPPS clinical APC,
the amounts and percentages of APC
payment associated with packaged
implantable devices, ‘‘policy-packaged’’
drugs, and ‘‘threshold-packaged’’ drugs
and biologicals.
60481
Table 23 of the proposed rule (74 FR
35318) displayed the proposed APCs to
which nuclear medicine procedures
would be assigned in CY 2010 and for
which we expected that an APC offset
could be applicable in the case of new
diagnostic radiopharmaceuticals with
pass-through status.
Comment: A few commenters
supported the continuation of the passthrough diagnostic radiopharmaceutical
offset policy for CY 2010.
Response: We continue to believe that
a diagnostic radiopharmaceutical offset
policy is necessary in order to ensure
that duplicate payment is not made for
diagnostic radiopharmaceuticals with
pass-through status. We believe it is
appropriate to remove the
radiopharmaceutical payment amount
that is already packaged into the
payment for the associated nuclear
medicine procedure when we provide
pass-through payment for a diagnostic
radiopharmaceutical with pass-through
status.
Therefore, after consideration of the
public comments we received, we are
finalizing our CY 2010 proposal,
without modification, to apply the
diagnostic radiopharmaceutical offset
policy to payment for pass-through
diagnostic radiopharmaceuticals, as
described above. Table 32 below
displays the APCs to which nuclear
medicine procedures are assigned in CY
2010 and for which we expect that an
APC offset could be applicable in the
case of diagnostic radiopharmaceuticals
with pass-through status.
TABLE 32—APCS TO WHICH NUCLEAR MEDICINE PROCEDURES ARE ASSIGNED FOR CY 2010
CY 2010 APC
CY 2010 APC title
0307 .......................................................................................................................................................
Myocardial Positron Emission Tomography
(PET) imaging.
Non-Myocardial Positron Emission Tomography (PET) imaging.
Level II Cardiac Imaging.
Level II Pulmonary Imaging.
Level I Non-imaging Nuclear Medicine.
Level I Endocrine Imaging.
Level II Endocrine Imaging.
Level II Non-imaging Nuclear Medicine.
Hematologic Processing & Studies.
Hepatobiliary Imaging.
GI Tract Imaging.
Bone Imaging.
Vascular Imaging.
Level I Cardiac Imaging.
Hematopoietic Imaging.
Level I Pulmonary Imaging.
Level II Nervous System Imaging.
Level I Nervous System Imaging.
Renal and Genitourinary Studies.
Level I Tumor/Infection Imaging.
Level III Tumor/Infection Imaging.
Level II Tumor/Infection Imaging.
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0308 .......................................................................................................................................................
0377
0378
0389
0390
0391
0392
0393
0394
0395
0396
0397
0398
0400
0401
0402
0403
0404
0406
0408
0414
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
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Federal Register / Vol. 74, No. 223 / Friday, November 20, 2009 / Rules and Regulations
c. Payment Offset Policy for Contrast
Agents
As described above, section
1833(t)(6)(D)(i) of the Act specifies that
the transitional pass-through payment
amount for pass-through drugs and
biologicals is the difference between the
amount paid under section 1842(o) (or
the Part B drug CAP rate) and the
otherwise applicable OPD fee schedule
amount. There is currently one contrast
agent with pass-through status under
the OPPS, HCPCS code C9246
(Injection, gadoxetate disodium, per ml).
HCPCS code C9246 was granted passthrough status beginning January 1,
2009, and will continue with passthrough status in CY 2010 under HCPCS
code A9581 (Injection, gadoxetate
disodium, 1 ml). As described earlier in
section V.A.3. of this final rule with
comment period, new pass-through
contrast agents will be paid at ASP+6
percent, while those without ASP
information would be paid at WAC+6
percent or, if WAC is not available,
payment would be based on 95 percent
of the product’s most recently published
AWP.
As discussed in the CY 2010 OPPS/
ASC proposed rule (74 FR 35318), we
believe that a payment offset, similar to
the offset currently in place for passthrough devices and diagnostic
radiopharmaceuticals, is necessary in
order to provide an appropriate
transitional pass-through payment for
contrast agents because all of these
items are packaged when they do not
have pass-through status. In accordance
with our standard offset methodology,
in the CY 2010 OPPS/ASC proposed
rule (74 FR 35318), we proposed to
deduct from the payment for passthrough contrast agents an amount that
reflects the portion of the APC payment
associated with predecessor contrast
agents in order to ensure no duplicate
contrast agent payment is made.
In CY 2009, we established a policy
to estimate the portion of each APC
payment rate that could reasonably be
attributed to the cost of predecessor
diagnostic radiopharmaceuticals when
considering a new diagnostic
radiopharmaceutical for pass-through
payment (73 FR 68638 through 68641).
For CY 2010, we proposed to apply this
same policy to contrast agents.
Specifically, we proposed to utilize the
‘‘policy-packaged’’ drug offset fraction
for clinical APCs calculated as 1 minus
(the cost from single procedure claims
in the APC after removing the cost for
‘‘policy-packaged’’ drugs divided by the
cost from single procedure claims in the
APC). As discussed above, while we
have previously defined the ‘‘policy-
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14:52 Nov 19, 2009
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packaged’’ drugs and biologicals as
nonpass-through diagnostic
radiopharmaceuticals, contrast agents,
and implantable biologicals (73 FR
68639), we proposed for CY 2010 to
redefine ‘‘policy-packaged’’ drugs as
only nonpass-through diagnostic
radiopharmaceuticals and contrast
agents, as a result of the CY 2010
proposal discussed in sections V.A.4.
and V.B.2.d. of the proposed rule (74 FR
35311 through 35314 and 74 FR 35323
through 35324) that would treat all
implantable biologicals as devices,
rather than drugs. To determine the
actual APC offset amount for passthrough contrast agents that takes into
consideration the otherwise applicable
OPPS payment amount, we proposed to
multiply the ‘‘policy-packaged’’ drug
offset fraction by the APC payment
amount for the procedure with which
the pass-through contrast agent is used
and, accordingly, reduce the separate
OPPS payment for the pass-through
contrast agent by this amount.
We proposed to continue to post
annually on the CMS Web site at
https://www.cms.hhs.gov/
HospitalOutpatientPPS, a file that
contains the APC offset amounts that
would be used for that year for purposes
of both evaluating cost significance for
candidate pass-through device
categories and drugs and biologicals,
including contrast agents, and
establishing any appropriate APC offset
amounts. Specifically, the file will
continue to provide, for every OPPS
clinical APC, the amounts and
percentages of APC payment associated
with packaged implantable devices,
‘‘policy-packaged’’ drugs, and
‘‘threshold-packaged’’ drugs and
biologicals.
Comment: One commenter objected to
the proposed offset policy for contrast
agents, stating that an offset for new
contrast agents granted pass-through
status, combined with the packaging
policy for all nonpass-through contrast
agents, would discourage hospitals from
providing contrast agents for financial
reasons. The commenter argued that an
offset policy is not necessary to avoid
duplicate payment for pass-through
contrast agents as the majority of older
contrast agents have costs that are well
below the $65 OPPS drug packaging
threshold and more expensive contrast
agents would be eligible for passthrough status. Finally, the commenter
believed that CMS does not have the
appropriate contrast agent data available
in order to calculate an offset amount
for these products. Another commenter
objected to CMS’ proposed offset
methodology for contrast agents and
urged CMS to specify the APCs that
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would be subject to an offset. Further,
the commenter requested that CMS
implement a contrast offset
methodology that would be more
similar to the offset methodology
currently in place for pass-through
devices and diagnostic
radiopharmaceuticals.
Response: We have consistently
implemented an offset policy for
products receiving pass-through
payment that would otherwise receive
significant packaged payment if not for
their pass-through status. An offset
methodology ensures that we do not pay
twice, first through a packaged payment
included in the associated procedure
payment and second through an
individual separate payment, for the
item with pass-through status. The
potential for duplicate payment is
higher for items such as contrast agents,
diagnostic radiopharmaceuticals, and
devices where the pass-through item
typically substitutes for items that are
otherwise always packaged.
Furthermore, the potential magnitude of
duplicate payment also is higher for
these items because they are always
packaged when they do not have passthrough status.
As discussed above, this offset policy
appropriately provides for pass-through
payment for the new product that
represents the difference between the
physician’s office payment amount and
the otherwise applicable OPD fee
schedule amount, in the case of
packaged contrast agents the ‘‘policypackaged’’ drug APC offset amount, as
specified by the statute. We note that
the proposed contrast agent offset policy
is virtually identical to the offset
methodology currently in place for passthrough devices and diagnostic
radiopharmaceuticals, consistent with
the recommendation by one commenter
that we adopt a similar policy for
contrast agents. We believe that this
methodology would pay appropriately
for the cost of pass-through contrast
agents and that hospitals should have
no payment concerns when determining
which contrast agent would be most
clinically appropriate and efficient for a
particular patient’s study. Therefore, we
do not believe that the application of a
contrast agent offset methodology would
discourage hospitals from using passthrough contrast agents insofar as
providers determine they are necessary
in the care of the patient.
As discussed above, we proposed to
deduct from the payment for passthrough contrast agents an amount that
reflects the portion of the APC payment
associated with predecessor contrast
agents in order to ensure no duplicate
contrast agent payment is made. As
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Federal Register / Vol. 74, No. 223 / Friday, November 20, 2009 / Rules and Regulations
discussed above, we identified the
‘‘policy-packaged’’ drug APC offset
amount as applicable to our offset
policy because we have identified
contrast agents as ‘‘policy- packaged’’
drugs in our claims data. To the extent
that hospitals reported the HCPCS code
for contrast agents when those drugs
were administered during procedures,
the contrast agent costs are included in
our calculation of the ‘‘policypackaged’’ drug APC offset amounts,
and we believe that we have sufficient
information regarding the costs of
predecessor contrast agents to apply the
resulting offset amounts to payment for
pass-through contrast agents. To the
extent hospitals did not report the use
of contrast agents under specific HCPCS
codes in CY 2008, we could not fully
total the cost of contrast for a given
imaging APC and we would
underestimate an accurate ‘‘policypackaged’’ drug APC offset amount.
This unknown but potential bias would
generally result in higher overall passthrough payment for a new contrast
agent so any limitations of our current
data on contrast agents for purposes of
the offset would not inappropriately
reduce pass-through payment for a new
contrast agent.
We disagree with the commenter that
an offset is unnecessary to avoid
duplicate payment for contrast material.
All nonpass-through contrast agents,
regardless of their per day costs, are
packaged into payments for the
associated procedures. Therefore, OPPS
payment for imaging and other
procedures that currently utilize
contrast agents already includes
packaged payment for the necessary
contrast agent. The observation that
most contrast agents have per day costs
below the $65 threshold does not
obviate the need for an offset policy for
contrast agents with pass-through status.
First, while the CY 2010 drug packaging
threshold is low, $65 as the per day
cost, this cost may constitute a sizable
percentage of a procedural APC’s
median cost. Paying the full procedural
APC amount plus the pass-through
contrast agent payment of ASP+6 for an
imaging scan with high volume could
result in significant overpayment of the
new contrast agent. Furthermore, a few
contrast agents have per day costs above
the $65 drug packaging threshold, so
that the amount of contrast agent cost
represented in the ‘‘policy-packaged’’
drug amount of an APC median cost
could be fairly substantial. Finally,
unlike ‘‘threshold-packaged’’ drugs that
are packaged based on the relationship
of their per day cost to the $65 drug
packaging threshold, where the
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14:52 Nov 19, 2009
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packaged drug cost in a procedural APC
may or may not represent predecessor
drug costs and where multiple drugs
may be administered in a single session
paid under one procedural APC,
contrast agents typically substitute for
one another and hospitals rarely
administer multiple contrast agents in
the same session. Pass-through contrast
agents are paid separately and are billed
with procedures that already have costs
of predecessor contrast agents packaged
into the procedural APC payment, so
duplicate contrast agent payment would
result in the absence of an offset
methodology.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35318), we proposed to
utilize the ‘‘policy-packaged’’ drug
offset fraction for procedural APCs
calculated as 1 minus (the cost from
single procedure claims in the APC after
removing the cost for ‘‘policy-packaged’’
drugs divided by the cost from single
procedure claims in the APC). To
determine the actual APC offset amount
for pass-through contrast agents that
takes into consideration the otherwise
applicable OPPS payment amount, we
proposed to multiply the ‘‘policypackaged’’ drug offset fraction by the
APC payment amount for the procedure
with which the pass-through contrast
agent is used and, accordingly, reduce
the separate OPPS payment for the passthrough contrast agent by this amount.
In response to the commenters’
concerns regarding our proposed
methodology and request that we
specify the APCs subject to the contrast
agent offset policy, we reviewed the
methodology and specifically examined
the amount of contrast agent offsets
associated with procedural APCs to
determine which APCs, other than
nuclear medicine APCs that contained
the costs of diagnostic
radiopharmaceuticals, included a
significant ‘‘policy-packaged’’ drug
amount in the APC payment. First, we
excluded all APCs to which nuclear
medicine procedures were assigned for
CY 2010 from the APCs that would be
subject to a contrast agent offset policy,
reasoning that the ‘‘policy-packaged’’
drug costs associated with these APCs
were for diagnostic
radiopharmaceuticals. From a clinical
perspective, there is very little overlap
in the procedures that use contrast
agents or diagnostic
radiopharmaceuticals. Next, we
reviewed the per day costs for all
contrast agents with CY 2008 claims
data and compared their aggregate,
average per day cost to the ‘‘policypackaged’’ drug amounts listed in the
CY 2010 proposed rule APC offset file
that was posted on the CMS Web site in
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60483
association with the CY 2010 OPPS/
ASC proposed rule. When examining
those APCs with ‘‘policy-packaged’’
drug amounts equal to or less than the
25th percentile of per day contrast agent
cost (approximately $22), we found that
the majority of APCs with a ‘‘policypackaged’’ drug offset amount other
than zero but less than $20 (our $22
estimate rounded to the nearest $5
increment) were generally APCs that
were not likely to include procedures
requiring significant use of contrast
agents. We selected the 25th percentile
of per day contrast agent cost to identify
the majority of APCs with significant
contrast agent cost because we believe
that the 25th percentile is an
appropriate threshold for representing
significant contrast agent cost as it
captures the lower bound of significant
variation around the per day contrast
agent cost. The interquartile range, the
25th to 75th percentile, is a typical
descriptive statistic used to describe the
variation in the center of a distribution.
Further, the dollar value of the 25th
percentile, $22 was sufficiently high
that we believed it would be worth
establishing and implementing offset
logic in our claims processing Pricer
module. This allowed us to establish a
meaningful threshold cost for
application of a contrast agent offset
policy that would identify APCs in
which there is significant packaged
contrast agent cost. Unlike the case of
diagnostic radiopharmaceuticals, which
are always administered during a
limited number of nuclear medicine
procedures so we are able to identify all
APCs to which nuclear medicine
procedures are assigned as those for
which the diagnostic
radiopharmaceutical offset policy would
apply, contrast agents are utilized much
more widely among procedures
assigned to many OPPS APCs.
The APCs that we identified as below
the threshold of $20 included APC 0384
(GI Procedures with Stents) and APC
0427 (Level II Tube or Catheter Changes
or Repositioning). As we would not
expect contrast agents to generally be
used in the procedures assigned to these
APCs, we believe that implementing a
threshold that would exclude these
APCs from a contrast agent offset policy
would be appropriate for administrative
simplification of claims processing,
while continuing to ensure no duplicate
payment is made for pass-through
contrast agents. Therefore, we have
identified the APCs that would be
subject to the contrast offset policy in
CY 2010, within the scope of the criteria
discussed above.
After consideration of the public
comments we received, we are
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Federal Register / Vol. 74, No. 223 / Friday, November 20, 2009 / Rules and Regulations
finalizing a pass through contrast agent
offset policy for CY 2010, with
modification to specify the procedural
APCs to which offsets for pass-through
contrast agents would apply. Procedural
APCs for which we expect a contrast
agent offset could be applicable in the
case of a pass-through contrast agent
have been identified as any procedural
APC with a ‘‘policy-packaged’’ drug
amount greater than $20 that is not a
nuclear medicine APC identified in
Table 32 above, and these APCs are
displayed in Table 33. For CY 2010,
when a contrast agent with pass-through
status is billed with any procedural APC
listed in Table 33, a specific offset based
on the procedural APC will be applied
to payment for the contrast agent to
ensure that duplicate payment is not
made for the contrast agent.
TABLE 33—APCS TO WHICH A CONTRAST AGENT OFFSET MAY BE APPLICABLE FOR CY 2010
CY 2010
APC
CY 2010 APC title
0080 ....................................................................................................................................
0082 ....................................................................................................................................
0083 ....................................................................................................................................
Diagnostic Cardiac Catheterization.
Coronary or Non-Coronary Atherectomy.
Coronary
or
Non-Coronary
Angioplasty
and
Percutaneous Valvuloplasty.
Vascular Reconstruction/Fistula Repair without Device.
Transcatheter Placement of Intracoronary Stents.
Echocardiogram with Contrast.
Level I Percutaneous Abdominal and Biliary Procedures.
Transcatheter Placement of Intravascular Shunts.
Diagnostic Urography.
Level II Angiography and Venography.
Level III Angiography and Venography.
Computed Tomography with Contrast.
Magnetic Resonance Imaging and Magnetic Resonance Angiography with Contrast.
Computed Tomography without Contrast followed by
Contrast.
Magnetic Resonance Imaging and Magnetic Resonance Angiography without Contrast followed by
Contrast.
Ancillary Outpatient Services When Patient Expires.
Cardiac Computed Tomographic Imaging.
Discography.
Insertion of Left Ventricular Pacing Elect.
Dosimetric Drug Administration.
Vascular Reconstruction/Fistula Repair with Device.
Transcatheter Placement of Intracoronary Drug-Eluting
Stents.
CT Angiography.
Level I Angiography and Venography.
CT and CTA with Contrast Composite.
MRI and MRA with Contrast Composite.
0093
0104
0128
0152
....................................................................................................................................
....................................................................................................................................
....................................................................................................................................
....................................................................................................................................
0229
0278
0279
0280
0283
0284
....................................................................................................................................
....................................................................................................................................
....................................................................................................................................
....................................................................................................................................
....................................................................................................................................
....................................................................................................................................
0333 ....................................................................................................................................
0337 ....................................................................................................................................
0375
0383
0388
0418
0442
0653
0656
....................................................................................................................................
....................................................................................................................................
....................................................................................................................................
....................................................................................................................................
....................................................................................................................................
....................................................................................................................................
....................................................................................................................................
0662
0668
8006
8008
....................................................................................................................................
....................................................................................................................................
....................................................................................................................................
....................................................................................................................................
B. OPPS Payment for Drugs, Biologicals,
and Radiopharmaceuticals Without
Pass-Through Status
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1. Background
Under the CY 2009 OPPS, we
currently pay for drugs, biologicals, and
radiopharmaceuticals that do not have
pass-through status in one of two ways:
packaged payment into the payment for
the associated service; or separate
payment (individual APCs). We
explained in the April 7, 2000 OPPS
final rule with comment period (65 FR
18450) that we generally package the
cost of drugs and radiopharmaceuticals
into the APC payment rate for the
procedure or treatment with which the
products are usually furnished.
Hospitals do not receive separate
payment for packaged items and
supplies, and hospitals may not bill
beneficiaries separately for any
packaged items and supplies whose
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costs are recognized and paid within the
national OPPS payment rate for the
associated procedure or service.
(Transmittal A–01–133, issued on
November 20, 2001, explains in greater
detail the rules regarding separate
payment for packaged services.)
Packaging costs into a single aggregate
payment for a service, procedure, or
episode-of-care is a fundamental
principle that distinguishes a
prospective payment system from a fee
schedule. In general, packaging the costs
of items and services into the payment
for the primary procedure or service
with which they are associated
encourages hospital efficiencies and
also enables hospitals to manage their
resources with maximum flexibility.
Section 1833(t)(16)(B) of the Act, as
added by section 621(a)(2) of Public
Law 108–173, set the threshold for
establishing separate APCs for drugs
and biologicals at $50 per
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administration for CYs 2005 and 2006.
Therefore, for CYs 2005 and 2006, we
paid separately for drugs, biologicals,
and radiopharmaceuticals whose per
day cost exceeded $50 and packaged the
costs of drugs, biologicals, and
radiopharmaceuticals whose per day
cost was equal to or less than $50 into
the procedures with which they were
billed. For CY 2007, the packaging
threshold for drugs, biologicals, and
radiopharmaceuticals that were not new
and did not have pass-through status
was established at $55. For CYs 2008
and 2009, the packaging threshold for
drugs, biologicals, and
radiopharmaceuticals that were not new
and do not have pass-through status was
established at $60. The methodology
used to establish the $55 threshold for
CY 2007, the $60 threshold for CYs 2008
and 2009, and our approach for CY 2010
are discussed in more detail in section
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V.B.2.b. of this final rule with comment
period.
2. Criteria for Packaging Payment for
Drugs, Biologicals, and
Radiopharmaceuticals
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a. Background
As indicated in section V.B.1. of this
final rule with comment period, in
accordance with section 1833(t)(16)(B)
of the Act, the threshold for establishing
separate APCs for payment of drugs and
biologicals was set to $50 per
administration during CYs 2005 and
2006. In CY 2007, we used the fourth
quarter moving average Producer Price
Index (PPI) levels for prescription
preparations to trend the $50 threshold
forward from the third quarter of CY
2005 (when the Pub. L. 108–173
mandated threshold became effective) to
the third quarter of CY 2007. We then
rounded the resulting dollar amount to
the nearest $5 increment in order to
determine the CY 2007 threshold
amount of $55. Using the same
methodology as that used in CY 2007
(which is discussed in more detail in
the CY 2007 OPPS/ASC final rule with
comment period (71 FR 68085 through
68086)), we set the packaging threshold
for establishing separate APCs for drugs
and biologicals at $60 for CYs 2008 and
2009.
Following the CY 2007 methodology,
for the CY 2010 OPPS/ASC proposed
rule we used updated fourth quarter
moving average PPI levels to trend the
$50 threshold forward from the third
quarter of CY 2005 to the third quarter
of CY 2009 and again rounded the
resulting dollar amount ($65.07) to the
nearest $5 increment, which yielded a
figure of $65. In performing this
calculation, we used the most up-to-date
forecasted, quarterly PPI estimates from
CMS’ Office of the Actuary (OACT). As
actual inflation for past quarters
replaced forecasted amounts, the PPI
estimates for prior quarters have been
revised (compared with those used in
the CY 2007 OPPS/ASC final rule with
comment period) and were incorporated
into our calculation. Based on the
calculations described above, we
proposed a packaging threshold for CY
2010 of $65. (For a more detailed
discussion of the OPPS drug packaging
threshold and the use of the PPI for
prescription drugs, we refer readers to
the CY 2007 OPPS/ASC final rule with
comment period (71 FR 68085 through
68086).)
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b. Cost Threshold for Packaging of
Payment for HCPCS Codes that Describe
Certain Drugs, Nonimplantable
Biologicals, and Therapeutic
Radiopharmaceuticals (‘‘ThresholdPackaged Drugs’’)
To determine their proposed CY 2010
packaging status, for the CY 2010
OPPS/ASC proposed rule we calculated
the per day cost of all drugs on a HCPCS
code-specific basis (with the exception
of those drugs and biologicals with
multiple HCPCS codes that include
different dosages as described in section
V.B.2.c. of the CY 2010 OPPS/ASC
proposed rule (74 FR 35321) and
excluding diagnostic
radiopharmaceuticals, contrast agents,
and implantable biologicals that we
proposed to continue to package in CY
2010 as discussed in section V.B.2.d. of
the CY 2010 OPPS/ASC proposed rule
(74 FR 35323 through 35324) and this
final rule with comment period),
nonimplantable biologicals, and
therapeutic radiopharmaceuticals
(collectively called ‘‘thresholdpackaged’’ drugs) that had a HCPCS
code in CY 2008 and were paid (via
packaged or separate payment) under
the OPPS, using CY 2008 claims data
processed before January 1, 2009. In
order to calculate the per day costs for
drugs, nonimplantable biologicals, and
therapeutic radiopharmaceuticals to
determine their proposed packaging
status in CY 2010, we used the
methodology that was described in
detail in the CY 2006 OPPS proposed
rule (70 FR 42723 through 42724) and
finalized in the CY 2006 OPPS final rule
with comment period (70 FR 68636
through 70 FR 68638).
To calculate the CY 2010 proposed
rule per day costs, we used an estimated
payment rate for each drug and
nonimplantable biological HCPCS code
of ASP+4 percent (which was the
payment rate we proposed for separately
payable drugs and nonimplantable
biologicals in CY 2010, as discussed in
more detail in section V.B.3.b. of the CY
2010 OPPS/ASC proposed rule (74 FR
35324 through 35326)). We used the
manufacturer submitted ASP data from
the fourth quarter of CY 2008 (data that
were used for payment purposes in the
physician’s office setting, effective April
1, 2009) to determine the proposed rule
per day cost.
As is our standard methodology, for
CY 2010, we proposed to use payment
rates based on the ASP data from the
fourth quarter of CY 2008 for budget
neutrality estimates, packaging
determinations, impact analyses, and
completion of Addenda A and B to the
proposed rule because these were the
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60485
most recent data available for use at the
time of development of the proposed
rule. These data were also the basis for
drug payments in the physician’s office
setting, effective April 1, 2009. For
items that did not have an ASP-based
payment rate, such as therapeutic
radiopharmaceuticals, we used their
mean unit cost derived from the CY
2008 hospital claims data to determine
their proposed per day cost. We
packaged items with a per day cost less
than or equal to $65 and identified
items with a per day cost greater than
$65 as separately payable. Consistent
with our past practice, we crosswalked
historical OPPS claims data from the CY
2008 HCPCS codes that were reported to
the CY 2009 HCPCS codes that we
displayed in Addendum B to the
proposed rule for payment in CY 2010.
Comment: Several commenters
supported CMS’ proposal to increase the
packaging threshold to $65 for CY 2010.
However, the majority of commenters
objected to the proposed increase to the
OPPS packaging threshold.
A few commenters recommended that
CMS consider either eliminating the
drug packaging threshold and providing
separate payment for all drugs with
HCPCS codes or freezing the packaging
threshold at $60 for CY 2010. Some
commenters objected to the use of a
packaging threshold under the OPPS
when one is not used for physician’s
office payment and believed that
eliminating the drug packaging
threshold would allow for parity in drug
payment between the HOPD setting and
the physician’s office setting. These
commenters expressed concern that the
packaging threshold may impede
beneficiary access to lower-cost
packaged drugs in the HOPD setting. In
addition, some commenters believed
that eliminating the packaging threshold
and paying separately for all drugs in
the HOPD setting would allow a more
accurate calculation of the separately
payable payment amount for drugs
(otherwise referred to as the ASP+X
percent amount). Other commenters
stated that CMS should not increase the
drug packaging threshold because other
changes in the drug payment ratesetting
methodology were proposed. These
commenters requested that CMS only
change one aspect of the drug payment
methodology at a time to allow for
greater understanding of the impact of
proposed changes to drug payment.
Response: As fully discussed in the
CY 2008 OPPS/ASC final rule with
comment period (72 FR 66757 through
66758) and the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68643), we continue to believe that
unpackaging payment for all drugs,
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biologicals, and radiopharmaceuticals is
inconsistent with the concept of a
prospective payment system and that
such a change could create an
additional reporting burden for
hospitals. The OPPS and the MPFS that
applies to physician’s office services are
fundamentally different payment
systems with essential differences in
their payment policies and structures.
Specifically, the OPPS is a prospective
payment system, based on the concept
of payment for groups of services that
share clinical and resource
characteristics. Payment is made under
the OPPS according to prospectively
established payment rates that are
related to the relative costs of hospital
resources for services. The MPFS is a fee
schedule based on the relative value of
each individual component of a service.
Consistent with the MPFS approach,
separate payment is made for each drug
provided in the physician’s office, but
the OPPS packages payment for certain
drugs into the associated procedure
payments for the APC group. Given the
fundamental differences between the
MPFS payment mechanism and the
OPPS payment mechanism, differences
in the degrees of packaged payment and
separate payment between these two
systems are only to be expected. In
general, we do not believe that our
packaging methodology under the OPPS
results in limited beneficiary access to
drugs because packaging is a
fundamental component of a
prospective payment system that
accounts for the cost of certain items
and services in larger payment bundles,
recognizing that some clinical cases may
be more costly and others less costly but
that, on average, OPPS payment is
appropriate for the services provided.
We note that, in CYs 2005 and 2006,
the statutorily mandated drug packaging
threshold was set at $50, and we
continue to believe that it is appropriate
to continue a modest drug packaging
threshold for the CY 2010 OPPS for the
reasons set forth below. As stated in the
CY 2007 OPPS/ASC final rule with
comment period (71 FR 68086), we
believe that packaging certain items is a
fundamental component of a
prospective payment system, that
packaging these items does not lead to
beneficiary access issues and does not
create a problematic site of service
differential, that the packaging
threshold is reasonable based on the
initial establishment in law of a $50
threshold for the CY 2005 OPPS, that
updating the $50 threshold is consistent
with industry and government practices,
and that the PPI for prescription
preparations is an appropriate
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mechanism to gauge Part B drug
inflation. Therefore, because of our
continued belief that packaging is a
fundamental component of a
prospective payment system that
contributes to important flexibility and
efficiency in the delivery of high quality
hospital outpatient services, we are not
adopting the commenters’
recommendations to pay separately for
all drugs, biologicals, and
radiopharmaceuticals for CY 2010 or to
eliminate or to freeze the packaging
threshold at $60.
Finally, we believe that our continued
application of the methodology initially
adopted in CY 2007 to update the drug
packaging threshold does not inhibit our
ability to propose additional changes to
the nonpass-through drug payment
methodology under the OPPS. We note
that for the past several years, we have
made a number of proposals to revise
our drug payment methodology, while
continuing to implement our
established methodology for annually
updating the drug packaging threshold.
While we have not finalized any of
these previous proposals, we have
consistently applied the methodology
described above to update the drug
packaging threshold while examining a
variety of alternatives for determining
payment for separately payable drugs
without pass-through status.
Comment: One commenter to the CY
2009 OPPS/ASC final rule with
comment period noted that HCPCS code
J3300 (Injection, triamcinolone
acetonide, preservative free, 1 mg)
should not be packaged as established
in the final rule with comment period
because the per day cost of this drug is
over the CY 2009 OPPS drug packaging
threshold of $60 per day.
Response: While the payment for
HCPCS code J3300 was adopted on an
interim final basis as packaged for CY
2009 (status indicator ‘‘N’’), upon
receipt of this public comment we
reviewed our calculation and released a
correction notice changing the status
indicator to ‘‘K’’ for CY 2009 (74 FR
4343). In addition, we discussed this
status indicator change in the April
2009 OPPS quarterly update CR
(Transmittal 1702, CR 6416, dated
March 13, 2009).
Comment: One commenter stated that
HCPCS code J3473 (Injection,
hyaluronidase, recombinant, 1 USP
unit) was incorrectly assigned status
indicator ‘‘N’’ in the CY 2010
OPPS/ASC proposed rule. The
commenter argued that coding errors
resulted in hospital claims data
indicating that per day costs of HCPCS
code J3473 is below the drug packaging
threshold for CY 2010. The commenter
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explained that a variety of HCPCS codes
and various dosage descriptors for
similar products contributed to hospital
coding errors, and that the product
described by HCPCS code J3473 is only
sold in a single use vial of 150 units,
with an ASP that exceeds the CY 2010
packaging threshold. The commenter
noted that this concern had been raised
with the CMS HCPCS Workgroup but a
request for a new HCPCS code
descriptor was denied.
Response: HCPCS code J3473 expired
from pass-through status on December
31, 2008, and was paid separately in CY
2009 because the estimated per day cost,
using updated final rule claims data
from CY 2007, showed that the per day
cost of this drug exceeded the CY 2009
drug packaging threshold. For CY 2010,
we proposed to package HCPCS code
J3473 as the estimated per day cost did
not exceed the proposed CY 2010 drug
packaging threshold. The OPPS relies
on hospital claims data in order to
determine payment rates. For drugs and
biologicals, we rely upon hospital
claims data, in part, to determine the
estimated per day cost we use in our
annual packaging determination. In
addition, the concern about
discrepancies between HCPCS code
descriptors for similar products is under
the purview of the CMS HCPCS
Workgroup, the sole creator and
maintainer of HCPCS codes and their
descriptors. We remind hospitals
through each OPPS quarterly update CR
that when billing for drugs, biologicals,
and radiopharmaceuticals, they should
make certain that the reported units of
service of the reported HCPCS code are
consistent with the quantity of the drug,
biological, or radiopharmaceutical that
was used in the care of the patient.
Therefore, we expect that the data that
we receive on hospital claims accurately
reflect the services that were provided
to the beneficiary.
As is our standard methodology, we
used updated claims data and ASP rates
to make final packaging determinations
for CY 2010. For HCPCS code J3473, our
CY 2008 claims data showed
approximately 2,100 days and 226,800
units from 37 providers. While this drug
was not commonly used in CY 2008, we
have no reason to believe that the
estimated per day cost of HCPCS code
J3473 of approximately $57, based on
our methodology described above as
applied to claims from a modest number
of providers, is not reflective of the per
day cost to hospitals for furnishing the
drug. Therefore, we have determined
that the per day cost of HCPCS code
J3473 does not exceed the $65
packaging threshold for drugs and
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biologicals and payment for HCPCS
code J3473 is packaged in CY 2010.
For purposes of this final rule with
comment period, we again followed the
CY 2007 methodology for CY 2010 and
used updated fourth quarter moving
average PPI levels to trend the $50
threshold forward from the third quarter
of CY 2005 to the third quarter of CY
2010 and again rounded the resulting
dollar amount ($66.55) to the nearest $5
increment, which yielded a figure of
$65. In performing this calculation, we
used the most up-to-date forecasted,
quarterly PPI estimates from CMS’
OACT.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to continue use of
the established methodology for
annually updating the OPPS packaging
threshold for drugs and biologicals by
the PPI for prescription drugs. The final
CY 2010 drug packaging threshold is
$65, calculated according to the
threshold update methodology that we
have applied since CY 2007.
In CY 2005 (69 FR 65779 through
65780), we implemented a policy that
exempted the oral and injectable forms
of 5-HT3 antiemetic products from our
packaging policy, providing separate
payment for these drugs regardless of
their estimated per day costs through
CY 2009. There are currently seven
Level II HCPCS codes for 5-HT3
antiemetics that describe four different
drugs, specifically dolasetron mesylate,
granisetron hydrochloride, ondansetron
hydrochloride, and palonosetron
hydrochloride. Each of these drugs,
except palonosetron hydrochloride, is
available in both injectable and oral
forms, so seven HCPCS codes are
available to describe the four drugs in
all of their forms. As of 2008, both
ondansetron hydrochloride and
granisetron hydrochloride were
available in generic versions. We have
now paid separately for all 5-HT3
antiemetics for 5 years under a policy
that exempts these products from the
drug packaging methodology. While we
continue to believe that use of these
antiemetics is an integral part of an
anticancer treatment regimen and that
OPPS claims data demonstrate their
increasingly common hospital
outpatient utilization, in the CY 2010
OPPS/ASC proposed rule (74 FR 35320),
we indicated that we no longer believe
that a specific exemption to our
standard drug payment methodology is
necessary for CY 2010 to ensure access
to the most appropriate antiemetic
product for Medicare beneficiaries.
We analyzed historical hospital
outpatient claims data for the seven
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5-HT3 antiemetic products that have
been subject to this packaging
exemption, and we found that HCPCS
code J2405 (Injection, ondansetron
hydrochloride, per 1 mg) was the
dominant product used in the hospital
outpatient setting both before and after
the adoption of our 5-HT3 packaging
exemption in CY 2005. Prior to this
packaging exemption, payment for
HCPCS code J2405 was packaged in CY
2004. HCPCS code J2405 was modestly
costly relative to the other 5-HT3
antiemetics in CY 2004, but its per day
cost still fell below the applicable
packaging threshold of $50. Since CY
2005, the injectable form of ondansetron
hydrochloride has experienced a
significant change in its pricing
structure as generic versions of the drug
have become available, including a
steady decline in its estimated per day
cost. Notwithstanding this change in
price, we have observed continued
growth in its OPPS utilization. For CY
2008, HCPCS code J2405 was the least
costly of the seven 5-HT3 antiemetics,
with an estimated per day cost of only
approximately $1 in CY 2008 (based on
July 2008 ASP information), yet we
observed that it constituted 88 percent
of all treatment days of 5-HT3
antiemetics in the CY 2008 OPPS claims
data. Using April 2009 ASP information
for the CY 2010 proposed rule, we
estimated a per day cost of only
approximately $1 for HCPCS code
J2405. For the five modestly priced
5-HT3 antiemetics, we estimated CY
2010 per day costs between
approximately $7 and $50, while we
estimated a per day cost for the most
costly 5-HT3 antiemetic, J2469
(Injection, palonosetron hcl, 25 mcg), of
$174 per day. In light of an anticipated
relatively constant pricing structure for
these drugs in CY 2010, combined with
our experience that prescribing patterns
for these 5-HT3 antiemetics are not very
sensitive to changes in price, we did not
believe that continuing to exempt these
drugs from our standard OPPS drug
packaging methodology was appropriate
for CY 2010. Therefore, for CY 2010,
because we proposed to no longer
exempt the 5-HT3 antiemetic products
from our standard packaging
methodology, we proposed to package
payment for all of the 5-HT3 antiemetics
except palonosetron hydrochloride,
consistent with their estimated per day
costs from CY 2008 claims data.
At the August 2009 meeting of the
APC Panel, the APC Panel
recommended that when CMS changes
the dollar amount of the drug packaging
threshold and determines that some
drugs within a single therapeutic class
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60487
fall on either side of the packaging
threshold, CMS consider packaging all
of the drugs within that class on the
basis of feedback from providers, the
APC Panel, and stakeholders. Our
response to this recommendation is
included in our response to comments
below.
Comment: The majority of
commenters opposed the proposal to no
longer continue to exempt the oral and
injectable forms of 5-HT3 antiemetics
from packaging, thereby packaging all
but one 5-HT3 antiemetic. Many
commenters requested that CMS
continue to exempt all 5-HT3
antiemetics from the packaging
methodology in order to preserve access
to these products. The commenters
expressed concern that hospitals may
choose to only provide the separately
payable antiemetic instead of the
antiemetic that is most beneficial for the
beneficiary. One commenter requested
that CMS not finalize the CY 2010
proposal to apply the packaging
threshold to 5-HT3 antiemetics until
more information is available on the
impact of packaging these products and
to avoid unintended consequences, such
as changes in prescribing practices,
which may result from this policy.
However, several commenters
expressed support for the proposed
payment for 5-HT3 antiemetic products
in the HOPD for CY 2010. These
commenters stated that the majority of
the products would be packaged under
the proposal, and that would lead to
reduced beneficiary copayments. The
commenters offered their support due to
the availability of lower-cost generic
versions of some of the products and
CMS’ data analysis. The commenters
also noted that the single product that
would be paid separately under the
proposal, HCPCS code J2469 (Injection,
palonosetron hcl, 25 mcg), has unique
properties that indicate separate
payment would be appropriate.
Response: We continue to believe that
use of these antiemetics is an integral
part of an anticancer treatment regimen
and that OPPS claims data demonstrate
their increasingly common hospital
outpatient utilization. As discussed
above, our analysis for the CY 2010
OPPS/ASC proposed rule (74 FR 35320
through 35321) found that the most
frequently used 5-HT3 antiemetic
constituted 88 percent of all treatment
days, and had an estimated per day cost
of approximately $1 in CY 2008. The
per day costs of other 5-HT3 antiemetics
with per day costs below the CY 2010
drug packaging threshold of $65 (as
discussed above) ranged from $8 to $51
per day. The single 5-HT3 antiemetic
with a per day cost that exceeded the
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CY 2010 drug packaging threshold is
HCPCS code J2469.
As stated in the proposed rule (74 FR
35320), we no longer believe that a
specific exemption to our standard drug
payment methodology is necessary for
CY 2010 to ensure access to the most
appropriate antiemetic product for
Medicare beneficiaries. We believe that
our analysis, along with the historical
stability in prescribing patterns and the
availability of generic alternatives for
several of these products, allows us to
discontinue our policy of specifically
exempting these products from the
OPPS drug packaging threshold.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to apply the CY
2010 drug packaging threshold to all 5HT3 antiemetics. We expect that
packaging will encourage hospitals to
use the most cost-efficient 5-HT3
antiemetic that is clinically appropriate.
We also anticipate that hospitals will
continue to provide care that is aligned
with the best interests of the patient. We
do not believe that our CY 2010 policy
to apply the drug packaging threshold to
5-HT3 antiemetics will limit
beneficiaries’ ability to receive clinically
appropriate drugs and biologicals. The
final CY 2010 OPPS status indicators for
5-HT3 antiemetics are listed in Table 34
below.
TABLE 34—FINAL CY 2010 STATUS INDICATORS FOR 5-HT3 ANTIEMETICS
CY 2010 HCPCS code
CY 2010 long descriptor
CY 2010
SI
J1260 ................................
J1626 ................................
J2405 ................................
J2469 ................................
Q0166 ...............................
Injection, dolasetron mesylate, 10 mg .........................................................................................................
Injection, granisetron hydrochloride, 100 mcg .............................................................................................
Injection, ondansetron hydrochloride, per 1 mg ...........................................................................................
Injection, palonosetron hcl, 25 mcg .............................................................................................................
Granisetron HCL, 1 mg, oral, FDA approved prescription antiemetic, for use as a complete therapeutic
substitute for an IV antiemetic at the time of chemotherapy treatment, not to exceed a 24-hour dosage regimen
Ondansetron HCL 8 mg, oral, FDA approved prescription antiemetic, for use as a complete therapeutic
substitute for an IV antiemetic at the time of chemotherapy treatment, not to exceed a 48-hour dosage regimen
Dolasetron mesylate, 100 mg, oral, FDA approved prescription antiemetic, for use as a complete therapeutic substitute for an IV antiemetic at the time of chemotherapy treatment, not to exceed a 24-hour
dosage regimen
N
N
N
K
N
Q0179 ...............................
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Q0180 ...............................
Comment: One commenter suggested
that CMS institute a packaging
threshold exemption for antineoplastic
agents and other anticancer therapeutic
agents. The commenter believed that
anticancer agents, as a class, are not
appropriate for packaging because of the
toxicity, side effects, interactions with
other drugs, and level of patient
specificity associated with these
therapies. The commenter requested
that CMS not apply the drug packaging
threshold for anticancer agents and any
product that is typically used in
chemotherapy supportive care regimens.
Instead, the commenter requested that
CMS provide separate payment for all of
these products in CY 2009.
In addition, several commenters
requested that CMS apply the same
principle to other groups of drugs in
order to equalize payment
methodologies across drugs in the same
clinical category. One commenter
suggested that CMS institute a similar
policy for anticoagulant therapies
provided in the HOPD. The commenter
noted that in the group of anticoagulant
therapies, the majority are packaged
while one drug is paid separately. The
commenter was concerned that these
different payment methodologies
provide hospitals an incentive to use the
separately payable drug, although the
commenter noted that treatments are not
interchangeable and that benefits vary
by patient.
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Response: As we discussed in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66757) and the
CY 2009 OPPS/ASC final rule with
comment period (73 FR 68643), as we
continue to explore the possibility of
additional encounter-based or episodebased payment in future years, we may
consider additional options for
packaging drug payment in the future.
For example, a higher drug packaging
threshold could eliminate existing
disparities in payment methodologies
for other drug groups and provide
similar methods of payment across
items in a group. Nevertheless, as
discussed in the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68643), while we may be interested in
alternative threshold methodologies for
future ratesetting purposes, we realize
that there are existing situations where
drugs in a particular category vary in
their payment treatment under the
OPPS, with some drugs packaged and
others separately paid.
We continue to believe the challenges
associated with categorizing drugs to
assess them for differences in their
OPPS payment methodologies are
significant, and we are not convinced
that ensuring the same payment
treatment for all drugs in any particular
drug category is essential at this time.
Therefore, we do not believe that it
would be appropriate at this time to take
any additional steps to ensure that all
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N
N
drugs in a specific category, including
anticoagulants and antineoplastic
agents, are all separately paid (or,
alternatively, all packaged), as requested
by some commenters.
While some commenters requested
that we seek feedback from interested
stakeholders when the packaging
threshold creates a payment
methodology disparity between drugs
within a single therapeutic class, we
note that we provide an opportunity
through the annual OPPS/ASC
rulemaking cycle for public comment on
the proposed packaging status of drugs
and biologicals for the next calendar
year. Further, we regularly accept
meeting requests from interested
providers and stakeholders on a variety
of issues, and we address APC Panel
recommendations in our annual
proposed and final rules. We have often
received public comments related to our
proposed packaging status for particular
drugs and biologicals, and we expect to
continue to receive public comments
regarding the proposed packaging status
for drugs and biologicals in the future.
In this manner, we would address
specific concerns about the proposed
packaging status for individual drugs
and biologicals in the future, including
those within a single therapeutic class
where some drugs may be proposed to
be packaged while others are proposed
to be separately payable. While we have
not defined classes of drugs that may or
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may not be affected by the packaging
threshold, we are accepting the APC
Panel recommendation to continue to
seek feedback on the proposed
packaging status of all drugs under the
OPPS through the annual rulemaking
process. However, implicit in the APC
Panel’s recommendation is that we
consider packaging all drugs within a
therapeutic class and, as described
above, we have not defined classes of
drugs for consideration in the context of
proposed changes to the annual drug
packaging threshold.
In summary, after consideration of the
public comments we received, we are
finalizing our proposed CY 2010
treatment of 5-HT3 antiemetics as
follows. We are finalizing, without
modification, our proposal to apply the
drug packaging methodology to all 5HT3 antiemetics for CY 2010. In
addition, we are not providing any
exceptions to the standard drug
packaging methodology for any class of
drugs, including anticoagulants and
anticancer therapies, for CY 2010.
Finally, we are accepting the APC Panel
recommendation to continue to consider
feedback from providers, the APC Panel,
and stakeholders when finalizing the
packaging status of drugs and
biologicals.
Having specified our standard drug
packaging methodology for all drugs
and biologicals makes no exceptions for
different drugs and biologicals in the
same therapeutic class for CY 2010, we
must adopt final packaging
determinations for CY 2010 for each
drug and biological for this final rule
with comment period. Our policy
during previous cycles of the OPPS has
been to use updated ASP and claims
data to make final determinations of the
packaging status of HCPCS codes for
drugs, nonimplantable biologicals, and
therapeutic radiopharmaceuticals for
the final rule with comment period. We
note that it is also our policy to make
an annual packaging determination for a
HCPCS code only when we develop the
OPPS/ASC final rule for the update
year. Only HCPCS codes that are
identified as separately payable in the
final rule with comment period are
subject to quarterly updates. For our
calculation of per day costs of HCPCS
codes for drugs and nonimplantable
biologicals in the CY 2010 OPPS/ASC
final rule with comment period, we
proposed to use ASP data from the first
quarter of CY 2009, which is the basis
for calculating payment rates for drugs
and biologicals in the physician’s office
setting using the ASP methodology,
effective July 1, 2009, along with
updated hospital claims data from CY
2008. We note that we also used these
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data for budget neutrality estimates and
impact analyses for this CY 2010 OPPS/
ASC final rule with comment period.
Payment rates for HCPCS codes for
separately payable drugs and
nonimplantable biologicals included in
Addenda A and B to this final rule with
comment period are based on ASP data
from the second quarter of CY 2009,
which are the basis for calculating
payment rates for drugs and biologicals
in the physician’s office setting using
the ASP methodology, effective October
1, 2009. These rates would then be
updated in the January 2010 OPPS
update, based on the most recent ASP
data to be used for physician’s office
and OPPS payment as of January 1,
2010. For items that do not currently
have an ASP-based payment rate, we
recalculated their mean unit cost from
all of the CY 2008 claims data and
updated cost report information
available for the CY 2010 final rule with
comment period to determine their final
per day cost.
Consequently, the packaging status of
some HCPCS codes for drugs,
nonimplantable biologicals, and
therapeutic radiopharmaceuticals in this
CY 2010 OPPS/ASC final rule with
comment period using the updated data
may be different from the same drug
HCPCS code’s packaging status
determined based on the data used for
the proposed rule. Under such
circumstances, in the CY 2010 OPPS/
ASC proposed rule (74 FR 35320), we
proposed to continue the established
policies initially adopted for the CY
2005 OPPS (69 FR 65780) in order to
more equitably pay for those drugs
whose median cost fluctuates relative to
the CY 2010 OPPS drug packaging
threshold and the drug’s payment status
(packaged or separately payable) in CY
2009. Specifically, we proposed for CY
2010 to apply the following policies to
these HCPCS codes for drugs,
nonimplantable biologicals, and
therapeutic radiopharmaceuticals whose
relationship to the $65 drug packaging
threshold changes based on the final
updated data:
• HCPCS codes for drugs and
nonimplantable biologicals that were
paid separately in CY 2009 and that
were proposed for separate payment in
CY 2010, and then have per day costs
equal to or less than $65, based on the
updated ASPs and hospital claims data
used for the CY 2010 final rule with
comment period, would continue to
receive separate payment in CY 2010.
• HCPCS codes for drugs and
nonimplantable biologicals that were
packaged in CY 2009 and that were
proposed for separate payment in CY
2010, and then have per day costs equal
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to or less than $65, based on the
updated ASPs and hospital claims data
used for the CY 2010 final rule with
comment period, would remain
packaged in CY 2010.
• HCPCS codes for drugs and
nonimplantable biologicals for which
we proposed packaged payment in CY
2010 but then have per day costs greater
than $65, based on the updated ASPs
and hospital claims data used for the CY
2010 final rule with comment period,
would receive separate payment in CY
2010.
We did not receive any public
comments on our proposal to apply the
established policies initially adopted for
the CY 2005 OPPS (69 FR 65780) in
order to more equitably pay for those
drugs whose median cost fluctuates
relative to the CY 2010 OPPS drug
packaging threshold and the drug’s
payment status (packaged or separately
payable) in CY 2009. Therefore, we are
finalizing our proposal, without
modification, for CY 2010.
We note that HCPCS codes J1652
(Injection, fondaparinux sodium, 0.5
mg), J2430(Injection, pamidronate
disodium, per 30 mg); J7191 (Factor viii
(antihemophilic factor (porcine)), per
i.u.), J9165 (Injection, diethylstilbestrol
diphosphate, 250 mg), and J9209
(Injection, mesna, 200 mg) were all paid
separately in CY 2009 and were
proposed for separate payment in CY
2010 but had final per day costs of less
than the $65 drug packaging threshold,
based on the updated ASPs and the CY
2008 hospital claims data available for
this CY 2010 final rule with comment
period. Therefore, HCPCS codes J1652,
J2430, J7191, J9165 and J9209 will
continue to be paid separately in CY
2010 according to the established
methodology set forth above.
In addition, we proposed to provide
separate payment for HCPCS codes
J2670 (Injection, tolazoline HCL, up to
25 mg) and J3320 (Injection,
spectinomycin dihydrochloride, up to 2
gm) in CY 2010, although their payment
was packaged in CY 2009. Using
updated ASPs and the CY 2008 hospital
claims data available for this final rule
with comment period, HCPCS codes
J2670 and J3320 now have per day costs
less than $65. In accordance with our
established policy for such cases, for CY
2010 we will package payment for
HCPCS codes J2670 and J3320.
Finally, we proposed to package
HCPCS code Q2004 (Irrigation solution
for treatment of bladder calculi, for
example renacidin, per 500 ml) for CY
2010. Using updated ASPs and the CY
2008 hospital claims data available for
this final rule with comment period,
HCPCS code Q2004 now has a per day
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cost greater than $65. In accordance
with our established policy for such
cases, for CY 2010 we will pay for
HCPCS code Q2004 separately.
c. Packaging Determination for HCPCS
Codes That Describe the Same Drug or
Biological But Different Dosages
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66776), we
began recognizing, for OPPS payment
purposes, multiple HCPCS codes
reporting different dosages for the same
covered Part B drugs or biologicals in
order to reduce hospitals’ administrative
burden by permitting them to report all
HCPCS codes for drugs and biologicals.
In general, prior to CY 2008, the OPPS
recognized for payment only the HCPCS
code that described the lowest dosage of
a drug or biological. We extended this
recognition to multiple HCPCS codes for
several other drugs under the CY 2009
OPPS (73 FR 68665). During CYs 2008
and 2009, we applied a policy that
assigned the status indicator of the
previously recognized HCPCS code to
the associated newly recognized code(s),
reflecting the new code(s)’ packaged or
separately payable status. In the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66775), we
explained that once claims data were
available for these previously
unrecognized HCPCS codes, we would
determine the packaging status and
resulting status indicator for each
HCPCS code according to the general,
established HCPCS code-specific
methodology for determining a code’s
packaging status for a given update year.
However, we also stated that we
planned to closely follow our claims
data to ensure that our annual packaging
determinations for the different HCPCS
codes describing the same drug or
biological did not create inappropriate
payment incentives for hospitals to
report certain HCPCS codes instead of
others.
CY 2008 is the first year of claims data
for the HCPCS codes describing
different dosages of the same drug or
biological that were newly recognized in
CY 2008. Applying our standard HCPCS
code-specific packaging determination
methodology as described in the CY
2010 OPPS/ASC proposed rule (74 FR
35321 through 35323), we found that
our CY 2008 claims data would result in
several different packaging
determinations for different codes
describing the same drug or biological.
Furthermore, our claims data included
few units and days for a number of these
newly recognized HCPCS codes,
resulting in our concern that these data
reflected claims from only a small
number of hospitals, even though the
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drug or biological itself may be reported
by many other hospitals under the most
common HCPCS code. We were
concerned about proposing different
packaging determinations for multiple
HCPCS codes for the same drug or
biological driven by different costs
associated with the varying dosages of
the same drug or biological and a small
number of claims for the less common
dosages that are not representative of
the costs of all hospitals billing for the
drug or biological. This is especially
true when the general policy of the
current CMS HCPCS Workgroup is to
establish a single HCPCS code for a drug
or biological, with a dosage that would
allow accurate reporting of a patient
dose for all anticipated clinical uses of
the drug or biological.
Based on these findings from our first
available claims data for the newly
recognized HCPCS codes, in the CY
2010 OPPS/ASC proposed rule (74 FR
35321 through 35323) we explained that
we believe that adopting our standard
HCPCS code-specific packaging
determinations for these codes could
lead to payment incentives for hospitals
to report certain HCPCS codes instead of
others, particularly because we do not
currently require hospitals to report all
drug and biological HCPCS codes under
the OPPS in consideration of our
previous policy that generally
recognized only the lowest dosage
HCPCS code for a drug or biological for
OPPS payment. Therefore, for CY 2010
we proposed to make packaging
determinations on a drug-specific basis,
rather than a HCPCS code-specific basis,
for those HCPCS codes that describe the
same drug or biological but different
dosages. To identify all HCPCS codes
for drugs and biologicals to which this
proposed policy would apply, we first
included the drugs and biologicals with
multiple HCPCS codes that we newly
recognized for payment in CY 2008 and
CY 2009. We then reviewed all of the
remaining drug and biological HCPCS
codes to identify other drugs and
biologicals for which longstanding
OPPS policy recognized for payment
multiple HCPCS codes for different
dosages of the same drug or biological,
so that our CY 2010 proposal would
apply to the packaging determinations
for these drugs and biologicals and their
associated HCPCS codes. All of the drug
and biological HCPCS codes that we
proposed to be subject to this drugspecific packaging determination
methodology were listed in Table 24 of
the proposed rule (74 FR 35321 through
35323).
In order to propose a packaging
determination that is consistent across
all HCPCS codes that describe different
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dosages of the same drug or biological,
we aggregated both our CY 2008 claims
data and our pricing information at
ASP+4 percent across all of the HCPCS
codes that describe each distinct drug or
biological in order to determine the
mean units per day of the drug or
biological in terms of the HCPCS code
with the lowest dosage descriptor. We
then multiplied the weighted average
ASP+4 percent payment amount across
all dosage levels of a specific drug or
biological by the estimated units per day
for all HCPCS codes that describe each
drug or biological from our claims data
to determine the estimated per day cost
of each drug or biological at less than or
equal to $65 (whereupon all HCPCS
codes for the same drug or biological
would be packaged) or greater than $65
(whereupon all HCPCS codes for the
same drug or biological would be
separately payable). The proposed
packaging status of each drug and
biological HCPCS code to which this
methodology would apply was
displayed in Table 24 of the proposed
rule (74 FR 35321 through 35323).
Comment: Several commenters
supported the proposal to make
packaging determinations on a drugspecific basis rather than a HCPCS codespecific basis for drugs with multiple
HCPCS codes describing different
dosages.
Response: We continue to believe that
adopting the standard HCPCS codespecific packaging determinations for
these codes could lead to payment
incentives for hospitals to report certain
HCPCS codes for drugs instead of
others. Making packaging
determinations on a drug-specific basis
eliminates these incentives and allows
hospitals flexibility in choosing to
report all HCPCS codes for different
dosages of the same drug or only the
lowest dosage HCPCS code.
Therefore, after consideration of the
public comments we received, we are
finalizing our CY 2010 proposal,
without modification, to make a single
packaging determination for a drug,
rather than an individual HCPCS code,
when a drug has multiple HCPCS codes
describing different dosages. For CY
2010, we have aggregated both our CY
2008 claims data and our pricing
information at ASP+4 percent across all
of the HCPCS codes that describe each
distinct drug or biological in order to
determine the mean units per day of the
drug or biological in terms of the HCPCS
code with the lowest dosage descriptor.
We then multiplied the weighted
average ASP+4 percent payment amount
across all dosage levels of a specific
drug or biological by the estimated units
per day for all HCPCS codes that
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describe each drug or biological from
our claims data to determine the
estimated per day cost of each drug or
biological at less than or equal to $65
(whereupon all HCPCS codes for the
same drug or biological would be
packaged) or greater than $65
(whereupon all HCPCS codes for the
same drug or biological would be
separately payable). The final CY 2010
packaging status of each drug and
biological HCPCS code to which this
methodology applies is displayed in
Table 35 below.
We note that new HCPCS code Q2024
(Injection, bevacizumab, 0.25 mg) was
implemented effective in October 2009
and represents a different dosage
descriptor for the same drug described
by HCPCS code J9035 (injection,
bevacizumab, 10 mg). Further, HCPCS
code Q2024 has been replaced with
HCPCS code C9257 (Injection,
bevacizumab, 0.25 mg), effective
January 1, 2010. In accordance with our
CY 2010 policy to make a single
packaging determination for a single
drug, we are applying the methodology
described above to bevacizumab and are
assigning the applicable bevacizumab
HCPCS codes the same packaging status
for CY 2010. HCPCS codes C9257 and
J9035 are included in Table 35 below.
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In addition, HCPCS codes J0530
(Injection, penicillin g benzathine and
penicillin g procaine, up to 600,000
units); J0540 (Injection, penicillin g
benzathine and penicillin g procaine, up
to 1,200,000 units); and J0550 (Injection,
penicillin g benzathine and penicillin g
procaine, up to 2,400,000 units), have
been replaced with HCPCS code J0559
(injection, penicillin G benzathine and
penicillin G procaine, 2500 units) for
CY 2010. While we had proposed to
treat HCPCS codes J0530, J0540 and
J0550 as drugs with multiple HCPCS
codes and multiple dosage descriptors
via the methodology finalized above,
this is no longer necessary as there is a
single code for this product in CY 2010.
In order to make a packaging
determination for new HCPCS code
J0559, we used updated hospital claims
data from HCPCS codes J0530, J0540
and J0550 and ASP pricing information
to determine the estimated per day cost
for the drug as described above. Because
the estimated per day cost was less than
our CY 2010 packaging threshold of $65,
we assigned status indicator ‘‘N’’ to
HCPCS code J0559 for CY 2010. We note
that HCPCS codes J0530, J0540, and
J0550 are not displayed in Table 35
below because there is only a single
HCPCS code for the drug in CY 2010.
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Finally, HCPCS codes J7502
(Cyclosporine, oral, 100 mg) and J7515
(Cyclosporine, oral, 25 mg) were
proposed to be packaged in CY 2010
based on the methodology discussed
above for drugs with multiple HCPCS
codes with different dosage descriptors.
As is our standard methodology, we use
updated final rule data and updated
ASP rates for purposes of this final rule
with comment period to calculate per
day estimates for final packaging
determinations. Using this updated data
and the multiple HCPCS code
methodology discussed above, the per
day cost of the drug described by
HCPCS codes J7502 and J7515 would
exceed the packaging threshold for CY
2010. Therefore, in accordance with the
policy that was finalized in section
V.B.2.b. above for HCPCS codes for
drugs and nonimplantable biologicals
for which we proposed packaged
payment in CY 2010 but then have per
day costs greater than $65, based on the
updated ASPs and hospital claims data
available for the CY 2010 final rule with
comment period, HCPCS codes J7502
and J7515 are separately payable in CY
2010.
BILLING CODE 4120–01–P
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BILLING CODE 4120–01–C
d. Packaging of Payment for Diagnostic
Radiopharmaceuticals, Contrast Agents,
and Implantable Biologicals (‘‘PolicyPackaged’’ Drugs and Devices)
Prior to CY 2008, the methodology of
calculating a product’s estimated per
day cost and comparing it to the annual
OPPS drug packaging threshold was
used to determine the packaging status
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of drugs, biologicals, and
radiopharmaceuticals under the OPPS
(except for our CYs 2005 through 2009
exemption for 5-HT3 antiemetics).
However, as established in the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66766 through 66768), we
began packaging payment for all
diagnostic radiopharmaceuticals and
contrast agents into the payment for the
associated procedure, regardless of their
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60495
per day costs. In addition, in CY 2009
we adopted a policy that packaged the
payment for nonpass-through
implantable biologicals into payment for
the associated surgical procedure on the
claim (73 FR 68633 through 68636). We
refer to diagnostic radiopharmaceuticals
and contrast agents collectively as
‘‘policy-packaged’’ drugs and to
implantable biologicals as devices
because we proposed to treat
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implantable biologicals as devices for all
OPPS payment purposes beginning in
CY 2010.
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. Packaging costs into a
single aggregate payment for a service,
encounter, or episode-of-care is a
fundamental principle that
distinguishes a prospective payment
system from a fee schedule. In general,
packaging the costs of items and
services into the payment for the
primary procedure or service with
which they are associated encourages
hospital efficiencies and also enables
hospitals to manage their resources with
maximum flexibility.
Prior to CY 2008, we noted that the
proportion of drugs, biologicals, and
radiopharmaceuticals that were
separately paid under the OPPS had
increased in recent years, a pattern that
we also observed for procedural services
under the OPPS. Our final CY 2008
policy that packaged payment for all
nonpass-through diagnostic
radiopharmaceuticals and contrast
agents, regardless of their per day costs,
contributed significantly to expanding
the size of the OPPS payment bundles
and is consistent with the principles of
a prospective payment system.
We believe that packaging the
payment for diagnostic
radiopharmaceuticals and contrast
agents into the payment for their
associated procedures continues to be
appropriate for CY 2010. As discussed
in more detail in the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68645 through 68649), we presented
several reasons supporting our initial
policy to package payment of diagnostic
radiopharmaceuticals and contrast
agents into their associated procedures
on a claim. Specifically, we stated that
we believed packaging was appropriate
because: (1) The statutory requirement
that we must pay separately for drugs
and biologicals for which the per day
cost exceeds $50 under section
1833(t)(16)(B) of the Act has expired; (2)
we believe that diagnostic
radiopharmaceuticals and contrast
agents function effectively as supplies
that enable the provision of an
independent service; and (3) section
1833(t)(14)(A)(iii) of the Act requires
that payment for specified covered
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outpatient drugs (SCODs) be set
prospectively based on a measure of
average hospital acquisition cost. For
these reasons, we believed that our
proposal to continue to treat diagnostic
radiopharmaceuticals and contrast
agents differently from other SCODs was
appropriate for CY 2010. Therefore, in
the CY 2010 OPPS/ASC proposed rule
(74 FR 35323), we proposed to continue
packaging payment for all contrast
agents and diagnostic
radiopharmaceuticals, collectively
referred to as ‘‘policy-packaged’’ drugs,
regardless of their per day costs, for CY
2010.
For more information on how we
proposed to set CY 2010 payment rates
for nuclear medicine procedures in
which diagnostic radiopharmaceuticals
are used and echocardiography services
provided with and without contrast
agents, we refer readers to sections
II.A.2.d.(5) (74 FR 35276) and (4) (74 FR
35269), respectively, of the proposed
rule and this final rule with comment
period.
In CY 2009 (73 FR 68634), we began
packaging the payment for all nonpassthrough implantable biologicals into
payment for the associated surgical
procedure. Because implantable
biologicals may sometimes substitute for
nonbiological devices, we noted that if
we were to provide separate payment
for implantable biologicals without
pass-through status, we would
potentially be providing duplicate
device payment, both through the
packaged nonbiological device cost
already included in the surgical
procedure’s payment and separate
biological payment. We concluded that
we saw no basis for treating implantable
biological and nonbiological 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. Therefore,
in CY 2009, we adopted a final policy
to package payment for all nonpassthrough implantable biologicals that are
surgically inserted or implanted
(through a surgical incision or a natural
orifice), like our longstanding policy
that packages payment for all
implantable nonbiological devices
without pass-through status.
For CY 2010, we continue to believe
that the policy to package payment for
implantable devices that are integral to
the performance of separately paid
procedures should also apply to
payment for all implantable biologicals
without pass-through status, when those
biologicals function as implantable
devices. Therefore, in the CY 2010
OPPS/ASC proposed rule (74 FR 35323),
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we proposed to continue to package
payment for nonpass-through
implantable biologicals that are
surgically inserted or implanted
(through a surgical incision or a natural
orifice) into the body, referred to as
devices, in CY 2010. In accordance with
this proposal, two of the products with
expiring pass-through status for CY
2010 are biologicals that are solely
surgically implanted according to their
FDA-approved indications. These
products are described by HCPCS codes
C9354 (Acellular pericardial tissue
matrix of non-human origin (Veritas),
per square centimeter) and C9355
(Collagen nerve cuff (NeuroMatrix), per
0.5 centimeter length). Like the three
implantable biologicals with expiring
pass-through status in CY 2009 that
were discussed in the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68633 through 68634), we believe
that the two biologicals specified above
with expiring pass-through status for CY
2010 differ from other biologicals paid
under the OPPS in that they specifically
function as surgically implanted
devices. As a result of the proposed CY
2010 packaged payment methodology
for all nonpass-through implantable
biologicals, we proposed to package
payment for HCPCS codes C9354 and
C9355 and assign them status indicator
‘‘N’’ for CY 2010. In addition, any new
biologicals without pass-through status
that are surgically inserted or implanted
(through a surgical incision or a natural
orifice) would be packaged in CY 2010.
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
always, used as implanted biologicals
are appropriately packaged into
payment for the associated implantation
procedures.
Comment: Several commenters
objected to CMS’ proposal to package
payment for all diagnostic
radiopharmaceuticals and contrast
agents in CY 2010. A number of
commenters stated that diagnostic
radiopharmaceuticals and contrast
agents with per day costs over the
proposed OPPS drug packaging
threshold are defined as SCODs and,
therefore, should be assigned separate
APC payments. In particular, the
commenters questioned CMS’ authority
to classify groups of drugs, such as
diagnostic radiopharmaceuticals and
contrast agents, and implement
packaging and payment policies that do
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not reflect their status as SCODs. Some
commenters stressed that hospitals
consider radiopharmaceuticals to be
drugs, rather than supplies, and that
these products are not interchangeable
for patients receiving specific nuclear
medicine scans. The commenters
recommended that diagnostic
radiopharmaceuticals should be subject
to the same per day cost drug packaging
threshold that applies to other drugs, in
order to determine whether their
payment would be packaged or made
separately.
In addition, the commenters objected
to the proposal to package payment for
diagnostic radiopharmaceuticals and
contrast agents because, as SCODs, the
commenters believed these products
were required by statute to be paid at
average acquisition cost. The
commenters explained that, when
several different diagnostic
radiopharmaceuticals or contrast agents
may be used for a particular procedure,
the costs of those diagnostic
radiopharmaceuticals or contrast agents
are averaged together and added to the
cost for the procedure in order to
determine the payment rate for the
associated procedural APC. Therefore,
the commenters argued that the amount
added to the procedure cost through
packaging, representing the cost of the
diagnostic radiopharmaceutical or
contrast agent, did not reflect the
average acquisition cost of any one
particular item but, rather, reflected the
average cost of whatever items may have
been used with that particular
procedure.
Finally, one commenter requested
clarification on when CMS treats an
implantable device as a biological for
payment purposes.
Response: As discussed in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66766), the CY
2009 OPPS/ASC final rule with
comment period (73 FR 68645) and the
CY 2010 OPPS/ASC proposed rule (74
FR 35323), we continue to believe
diagnostic radiopharmaceuticals and
contrast agents are different from other
drugs and biologicals for several
reasons. We note that the statutorily
required OPPS drug packaging
threshold has expired, and we continue
to believe that diagnostic
radiopharmaceuticals and contrast
agents are always ancillary and
supportive to an independent service,
rather than serving themselves as the
therapeutic modality. We packaged their
payment in CYs 2008 and 2009 as
ancillary and supportive services in
order to provide incentives for greater
efficiency and to provide hospitals with
additional flexibility in managing their
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resources. In order for payment to be
packaged, it is not necessary that all
products be interchangeable in every
case, and we recognize that in some
cases hospitals may utilize higher cost
products and in some cases lower cost
products, taking into consideration the
clinical needs of the patient and
efficiency incentives. While we
recognize this variability from case to
case, on average under a prospective
payment system we expect payment to
pay appropriately for the services
furnished. In the past, we have
classified different groups of drugs for
specific payment purposes, as
evidenced by our CY 2005 through CY
2009 policy regarding 5–HT3 antiemetics and their exemption from the
drug packaging threshold. We note that
we treat diagnostic
radiopharmaceuticals and contrast
agents as ‘‘policy-packaged’’ drugs
because our policy is to package
payment for all of the products in the
category.
In the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68634), we
also began packaging the payment for all
nonpass-through implantable
biologicals into payment for the
associated surgical procedure because
we consider these products to always be
ancillary and supportive to independent
services, just like implantable
nonbiological devices that are always
packaged. Therefore, we currently
package payment for nonpass-through
implantable biologicals, also known as
devices, that are surgically inserted or
implanted (through a surgical incision
or a natural orifice) into the body. As we
stated in the CY 2010 OPPS/ASC
proposed rule (74 FR 35324), we
continue to believe that payment should
be packaged for nonpass-through
implantable biologicals for CY 2010.
Although our final CY 2009 policy
that we are continuing for CY 2010, as
discussed below, packages payment for
all diagnostic radiopharmaceuticals,
contrast agents, and nonpass-through
implantable biologicals into the
payment for their associated procedures,
we are continuing to provide payment
for these items in CY 2010 based on a
proxy for average acquisition cost just as
we did in CY 2009. We continue to
believe that the line-item estimated cost
for a diagnostic radiopharmaceutical,
contrast agent, or nonpass-through
implantable biological in our claims
data is a reasonable approximation of
average acquisition and preparation and
handling costs for diagnostic
radiopharmaceuticals, contrast agents,
and nonpass-through implantable
biologicals, respectively. As we
discussed in the CY 2009 OPPS/ASC
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60497
final rule with comment period (73 FR
68645), we believe that hospitals have
adapted to the CY 2006 coding changes
for radiopharmaceuticals and responded
to our instructions to include charges
for radiopharmaceutical handling in
their charges for the
radiopharmaceutical products. Further,
because the standard OPPS packaging
methodology packages the total
estimated cost of each
radiopharmaceutical, contrast agent, or
nonimplantable biological on each
claim (including the full range of costs
observed on the claims) with the cost of
associated procedures for ratesetting,
this packaging approach is consistent
with considering the average cost for
radiopharmaceuticals, contrast agents,
or nonpass-through implantable
biologicals, rather than the median cost.
In addition, as we noted in the CY 2009
OPPS/ASC final rule with comment
period (73 FR 68646), these drugs,
biologicals, or radiopharmaceuticals for
which we have not established a
separate APC and, therefore, for which
payment would be packaged rather than
separately provided under the OPPS,
could be considered to not be SCODs.
Similarly, drugs and biologicals with
per day costs of less than $65 in CY
2010 that are packaged and for which a
separate APC has not been established
also would not be SCODs. This reading
is consistent with our final payment
policy whereby we package payment for
diagnostic radiopharmaceuticals,
contrast agents, and nonpass-through
implantable biologicals and provide
payment for these products through
payment for their associated procedures.
Comment: Several commenters
disagreed with the proposal to
distinguish between diagnostic and
therapeutic radiopharmaceuticals for
payment purposes under the OPPS. The
commenters noted that CMS’
identification of HCPCS codes A9542
(Indium In-111 ibritumomabituxetan,
diagnostic, per study dose, up to 5
millicuries) and A9544 (Iodine I–131
tositumomab, diagnostic, per study
dose) as diagnostic
radiopharmaceuticals was inappropriate
because these radiopharmaceuticals
function as dosimetric
radiopharmaceuticals, and they both
have higher than average costs
associated with their acquisition and
significant compounding costs in
comparison with other nuclear
medicine imaging agents. A few
commenters explained that these
radiopharmaceutical products are used
as part of a therapeutic regimen and,
therefore, should be considered
therapeutic for OPPS payment purposes.
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Response: As discussed above, and in
the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66641), the CY
2009 OPPS/ASC final rule with
comment period (73 FR 68645) and the
CY 2010 OPPS/ASC proposed rule (74
FR 35323), we classified each
radiopharmaceutical into one of two
groups according to whether its long
descriptor contained the term
‘‘diagnostic’’ or ‘‘therapeutic.’’ HCPCS
codes A9542 and A9544 both contain
the term ‘‘diagnostic’’ in their long code
descriptors. Therefore, according to our
established methodology, we continue
to classify them as diagnostic for the
purposes of CY 2010 OPPS payment.
While we understand that these items
are provided in conjunction with
additional supplies, imaging tests, and
therapeutic radiopharmaceuticals for
patients already diagnosed with cancer,
we continue to believe that the purpose
of administering the products described
by HCPCS codes A9542 and A9544 is
diagnostic in nature. As we first stated
in the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66641), we
continue to believe that HCPCS codes
A9542 and A9544 are diagnostic
radiopharmaceuticals. While they are
not used to diagnose disease, they are
used to determine whether future
therapeutic services would be beneficial
to the patient and to determine how to
proceed with therapy. While a group of
associated services may be considered a
therapeutic regimen by some
commenters, HCPCS codes A9542 and
A9544 are provided in conjunction with
a series of nuclear medicine imaging
scans. Many nuclear medicine studies
using diagnostic radiopharmaceuticals
are provided to patients who already
have an established diagnosis. We
continue to consider HCPCS codes
A9542 and A9544 to be diagnostic
because these items are provided for the
purpose of a diagnostic imaging
procedure and are used to identify the
proper dose of the therapeutic agent to
be provided at a later time.
Comment: Some commenters
recommended using the ASP
methodology to package payment for
nonpass-through diagnostic
radiopharmaceuticals, noting that it
would be inconsistent for CMS to
provide payment for diagnostic
radiopharmaceuticals that have passthrough status based on the ASP
methodology, and then, after the
diagnostic radiopharmaceutical’s passthrough payment status expires, package
the costs included in historical hospital
claims data, rather than using the ASP
methodology to pay for the product. The
commenters believed that the ASP
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methodology would be more reflective
of actual diagnostic
radiopharmaceutical costs and would
not be subject to the billing
inconsistencies that are present in
hospital claims data. Therefore, the
commenters concluded that it would be
illogical to transition from an accurate
methodology to estimate hospital costs
(such as the ASP methodology) to a less
accurate methodology (based on
hospital claims data) once a product is
packaged after its pass-through payment
expires.
Response: While we understand the
commenters’ request for the continued
use of ASP data for purposes of
packaging costs after a diagnostic
radiopharmaceutical’s pass-through
payment period has ended, based on
their belief that ASP data are more
accurate than hospital claims data, we
continue to believe that hospitals have
the ability to identify and set charges for
any new diagnostic radiopharmaceutical
product accurately during its 2 to 3 year
pass-through time period while the
product has the potential to be paid
based on ASP. Packaging hospital costs
based on hospital claims data is how the
costs of all packaged items are factored
into payment rates for associated
procedures under the OPPS. We believe
that the costs reported on claims, as
determined by hospitals, are the most
appropriate representation of the costs
of diagnostic radiopharmaceuticals that
should be packaged into payment for
the associated nuclear medicine
procedures.
We recognize that
radiopharmaceuticals are specialized
products that have unique costs
associated with them. However, we
believe that the costs are reflected in the
charges that hospitals set for them and
in the Medicare cost report where the
full costs and charges associated with
the services are reported. Therefore, the
packaged costs of diagnostic
radiopharmaceuticals are calculated like
any other OPPS costs and packaged into
the cost of the nuclear medicine service
to which they are ancillary and
supportive. This methodology is the
basis for the payment of nuclear
medicine procedures in the same way
that other packaged costs contribute to
the payment rates for the services to
which they are an integral part.
Comment: Some commenters believed
that packaging payment for diagnostic
radiopharmaceuticals and nonpassthrough implantable biologicals would
undermine the clinical and resource
homogeneity in the various procedural
APCs, resulting in 2 times violations.
Response: As we stated in the CY
2009 OPPS/ASC final rule with
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comment period (73 FR 68647), we
agree that packaging the costs of
ancillary and supportive services into
the cost of an independent service can
change the median cost for that service
and could result in 2 times violations.
However, we disagree that we should
refrain from packaging payment for
ancillary and supportive items into the
payment for the service in which they
are used in order to prevent the
occurrence of 2 times violations.
Instead, we believe that we should
reconfigure APCs when necessary to
resolve 2 times violations where they
occur. As we discussed in the CY 2009
OPPS/ASC final rule with comment
period (73 FR 68647), because we have
traditionally paid for a service package
under the OPPS as represented by a
HCPCS code for the major procedure
that is assigned to an APC group for
payment, we assess the applicability of
the 2 times rule to services at the
HCPCS code level, not at a more specific
level based on the individual diagnostic
radiopharmaceuticals or nonpassthrough implantable biologicals that
may be utilized in a service reported
with a single HCPCS code. Furthermore,
if the use of a very expensive diagnostic
radiopharmaceutical in a clinical
scenario causes a specific procedure to
be much more expensive for the
hospital than the APC payment, we
consider such a case to be the natural
consequence of a prospective payment
system that anticipates that some cases
will be more costly and others less
costly than the procedure payment. This
same logic would apply to situations in
which a nonpass-through implantable
biological is implanted in a surgical
procedure and results in an increase in
a procedure’s cost to the hospital for an
individual case. In addition, very high
cost cases could be eligible for outlier
payment. As we note elsewhere in this
final rule with comment period,
decisions about packaging and bundling
payment involve a balance between
ensuring some separate payment for
individual services and establishing
incentives for efficiency through larger
units of payment. In the case of
diagnostic radiopharmaceuticals and
nonpass-through implantable
biologicals, these products are part of
the OPPS payment package for the
procedures in which they are used. We
refer readers to section II.A.d.(5) of this
final rule with comment period for a
discussion of payment for nuclear
medicine procedures.
Comment: One commenter
recommended that CMS provide
separate payment for all diagnostic
radiopharmaceuticals with a median per
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day cost greater than $200. The
commenter believes that this
recommendation is most consistent with
the APC Panel’s recommendation to
CMS at the September 2007 APC
Advisory Panel meeting.
Response: At the September 2007
APC Panel meeting, the APC Panel
recommended that CMS package
radiopharmaceuticals with a median per
day cost of less than $200 but pay
separately for radiopharmaceuticals
with a per day cost of $200 or more. In
the CY 2008 OPPS/ASC final rule with
comment period (72 FR 66638), we did
not accept the APC Panel’s
recommendation, citing an inability to
determine an empirical basis for paying
separately for radiopharmaceuticals
with a per day cost in excess of $200.
Instead, as proposed, for CY 2008 we
finalized the packaging of payment for
all diagnostic radiopharmaceuticals. We
continue to believe that diagnostic
radiopharmaceuticals are ancillary and
supportive to the nuclear medicine
procedures in which they are used and
that their costs should be packaged into
the primary procedures with which they
are associated. We do not believe it
would be appropriate to set a cost
threshold for packaging diagnostic
radiopharmaceuticals because,
regardless of their per day cost, they are
always supportive of an independent
procedure that is the basis for
administration of the diagnostic
radiopharmaceutical.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposals,
without modification, to continue to
package payment for all nonpassthrough diagnostic
radiopharmaceuticals, contrast agents,
and implantable biologicals that are
surgically inserted or implanted into the
body, regardless of their per day costs.
Given the inherent function of contrast
agents and diagnostic
radiopharmaceuticals as ancillary and
supportive to the performance of an
independent procedure and the similar
functions of implantable biological and
nonbiological devices, we continue to
view the packaging of payment for
contrast agents, diagnostic
radiopharmaceuticals, and implantable
biologicals as a logical expansion of
packaging payment for drugs and
biologicals. In addition, as we initially
established in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66768), we are finalizing our proposal to
continue to identify diagnostic
radiopharmaceuticals specifically as
those Level II HCPCS codes that include
the term ‘‘diagnostic’’ along with a
radiopharmaceutical in their long code
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descriptors, and therapeutic
radiopharmaceuticals as those Level II
HCPCS codes that include the terms
‘‘therapeutic’’ along with a
radiopharmaceutical in their long code
descriptors. For more information on
how we set CY 2010 payment rates for
nuclear medicine procedures in which
diagnostic radiopharmaceuticals are
used and echocardiography services
provided with and without contrast
agents, we refer readers to section
II.A.2.d (5) and (4), respectively, of this
final rule with comment period.
3. Payment for Drugs and Biologicals
Without Pass-Through Status That Are
Not Packaged
a. Payment for Specified Covered
Outpatient Drugs (SCODs) and Other
Separately Payable and Packaged Drugs
and Biologicals
Section 1833(t)(14) of the Act defines
certain separately payable
radiopharmaceuticals, drugs, and
biologicals and mandates specific
payments for these items. Under section
1833(t)(14)(B)(i) of the Act, a ‘‘specified
covered outpatient drug’’ is a covered
outpatient drug, as defined in section
1927(k)(2) of the Act, for which a
separate APC has been established and
that either is a radiopharmaceutical
agent or is a drug or biological for which
payment was made on a pass-through
basis on or before December 31, 2002.
Under section 1833(t)(14)(B)(ii) of the
Act, certain drugs and biologicals are
designated as exceptions and are not
included in the definition of ‘‘specified
covered outpatient drugs,’’ known as
SCODs. These exceptions are—
• A drug or biological for which
payment is first made on or after
January 1, 2003, under the transitional
pass-through payment provision in
section 1833(t)(6) of the Act.
• A drug or biological for which a
temporary HCPCS code has not been
assigned.
• During CYs 2004 and 2005, an
orphan drug (as designated by the
Secretary).
Section 1833(t)(14)(A)(iii) of the Act
requires that payment for SCODs in CY
2006 and subsequent years be equal to
the average acquisition cost for the drug
for that year as determined by the
Secretary, subject to any adjustment for
overhead costs and taking into account
the hospital acquisition cost survey data
collected by the Government
Accountability Office (GAO) in CYs
2004 and 2005. If hospital acquisition
cost data are not available, the law
requires that payment be equal to
payment rates established under the
methodology described in section
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60499
1842(o), section 1847A, or section
1847B of the Act, as calculated and
adjusted by the Secretary as necessary.
Section 1833(t)(14)(E) of the Act
provides for an adjustment in OPPS
payment rates for overhead and related
expenses, such as pharmacy services
and handling costs. Section
1833(t)(14)(E)(i) of the Act required
MedPAC to study pharmacy overhead
and to make recommendations to the
Secretary regarding whether, and if so
how, a payment adjustment should be
made to compensate hospitals for them.
Section 1833(t)(14)(E)(ii) of the Act
authorizes the Secretary to adjust the
weights for ambulatory procedure
classifications for SCODs to take into
account the findings of the MedPAC
study.
In the CY 2006 OPPS proposed rule
(70 FR 42728), we discussed the June
2005 report by MedPAC regarding
pharmacy overhead costs in HOPDs and
summarized the findings of that study:
• Handling costs for drugs,
biologicals, and radiopharmaceuticals
administered in the HOPD are not
insignificant;
• Little information is available about
the magnitude of pharmacy overhead
costs;
• Hospitals set charges for drugs,
biologicals, and radiopharmaceuticals at
levels that reflect their respective
handling costs; and
• Hospitals vary considerably in their
likelihood of providing services which
utilize drugs, biologicals, or
radiopharmaceuticals with different
handling costs.
As a result of these findings, MedPAC
developed seven drug categories for
pharmacy and nuclear medicine
handling costs based on the estimated
level of hospital resources used to
prepare the products (70 FR 42729).
Associated with these categories were
two recommendations for accurate
payment of pharmacy overhead under
the OPPS.
1. CMS should establish separate,
budget neutral payments to cover the
costs hospitals incur for handling
separately payable drugs, biologicals,
and radiopharmaceuticals.
2. CMS should define a set of
handling fee APCs that group drugs,
biologicals, and radiopharmaceuticals
based on attributes of the products that
affect handling costs; CMS should
instruct hospitals to submit charges for
these APCs and base payment rates for
the handling fee APCs on submitted
charges reduced to costs.
In response to the MedPAC findings,
in the CY 2006 OPPS proposed rule (70
FR 42729), we discussed our belief that,
because of the varied handling resources
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required to prepare different forms of
drugs, it would be impossible to
exclusively and appropriately assign a
drug to a certain overhead category that
would apply to all hospital outpatient
uses of the drug. Therefore, our CY 2006
OPPS proposal included a proposal to
establish three distinct Level II HCPCS
C-codes and three corresponding APCs
for drug handling categories to
differentiate overhead costs for drugs
and biologicals (70 FR 42730). We also
proposed: (1) To combine several
overhead categories recommended by
MedPAC; (2) to establish three drug
handling categories, as we believed that
larger groups would minimize the
number of drugs that may fit into more
than one category and would lessen any
undesirable payment policy incentives
to utilize particular forms of drugs or
specific preparation methods; (3) to
collect hospital charges for these HCPCS
C-codes for 2 years; and (4) to ultimately
base payment for the corresponding
drug handling APCs on CY 2006 claims
data available for the CY 2008 OPPS.
In the CY 2006 OPPS final rule with
comment period (70 FR 68659 through
68665), we discussed the public
comments we received on our proposal
regarding pharmacy overhead. The
overwhelming majority of commenters
did not support our proposal and urged
us not to finalize this policy, as it would
be administratively burdensome for
hospitals to establish charges for HCPCS
codes for pharmacy overhead and to
report them. Therefore, we did not
finalize this proposal for CY 2006.
Instead, we established payment for
separately payable drugs and biologicals
at ASP+6 percent, which we calculated
by comparing the estimated aggregate
cost of separately payable drugs and
biologicals in our claims data to the
estimated aggregate ASP dollars for
separately payable drugs and
biologicals, using the ASP as a proxy for
average acquisition cost (70 FR 68642).
Hereinafter, we refer to this
methodology as our standard drug
payment methodology. We concluded
that payment for drugs and biologicals
and pharmacy overhead at a combined
ASP+6 percent rate would serve as the
best proxy for the combined acquisition
and overhead costs of each of these
products.
In the CY 2007 OPPS/ASC final rule
with comment period (71 FR 68091), we
finalized our proposed policy to provide
a single payment of ASP+6 percent for
the hospital’s acquisition cost for the
drug or biological and all associated
pharmacy overhead and handling costs.
The ASP+6 percent rate that we
finalized was higher than the equivalent
average ASP-based amount calculated
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from claims of ASP+4 percent according
to our standard drug payment
methodology, but we adopted payment
at ASP+6 percent for stability while we
continued to examine the issue of the
costs of pharmacy overhead in the
HOPD.
In the CY 2008 OPPS/ASC proposed
rule (72 FR 42735), in response to
ongoing discussions with interested
parties, we proposed to continue our
methodology of providing a combined
payment rate for drug and biological
acquisition and pharmacy overhead
costs. We also proposed to instruct
hospitals to remove the pharmacy
overhead charge for both packaged and
separately payable drugs and biologicals
from the charge for the drug or
biological and report the pharmacy
overhead charge on an uncoded revenue
code line on the claim. We believed that
this would provide us with an avenue
for collecting pharmacy handling cost
data specific to drugs in order to
package the overhead costs of these
items into the associated procedures,
most likely drug administration
services. Similar to the public response
to our CY 2006 pharmacy overhead
proposal, the overwhelming majority of
commenters did not support our CY
2008 proposal and urged us to not
finalize this policy (72 FR 66761). At its
September 2007 meeting, the APC Panel
recommended that hospitals not be
required to separately report charges for
pharmacy overhead and handling and
that payment for overhead be included
as part of drug payment. The APC Panel
also recommended that CMS continue
to evaluate alternative methods to
standardize the capture of pharmacy
overhead costs in a manner that is
simple to implement at the
organizational level (72 FR 66761).
Because of concerns expressed by the
APC Panel and public commenters, we
did not finalize the proposal to instruct
hospitals to separately report pharmacy
overhead charges for CY 2008. Instead,
in the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66763), we
finalized a policy of providing payment
for separately payable drugs and
biologicals and their pharmacy
overhead at ASP+5 percent as a
transition from their CY 2007 payment
of ASP+6 percent to payment based on
the equivalent average ASP-based
payment rate calculated from hospital
claims according to our standard drug
payment methodology, which was
ASP+3 percent for the CY 2008 OPPS/
ASC final rule with comment period.
Hospitals continued to include charges
for pharmacy overhead costs in the line-
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item charges for the associated drugs
reported on claims.
For CY 2009, we proposed to pay
separately payable drugs and biologicals
at ASP+4 percent, including both
SCODs and other drugs without CY
2009 OPPS pass-through status, based
on our standard drug payment
methodology, and we also proposed to
split the ‘‘Drugs Charged to Patients’’
cost center into two cost centers: One
for drugs with high pharmacy overhead
costs and one for drugs with low
pharmacy overhead costs (73 FR 41492).
We noted that we expected that CCRs
from the proposed new cost centers
would be available in 2 to 3 years to
refine OPPS drug cost estimates by
accounting for differential hospital
markup practices for drugs with high
and low overhead costs. After
consideration of the public comments
received and the APC Panel
recommendations, we finalized a CY
2009 policy (73 FR 68659) to provide
payment for separately payable
nonpass-through drugs and biologicals
based on costs calculated from hospital
claims at a 1-year transitional rate of
ASP+4 percent, in the context of an
equivalent average ASP-based payment
rate of ASP+2 percent calculated
according to our standard drug payment
methodology from the final rule claims
and cost report data. We did not finalize
our proposal to split the single standard
‘‘Drugs Charged to Patients’’ cost center
into two cost centers largely due to
concerns raised to us by hospitals about
the associated administrative burden.
Instead, we indicated in the CY 2009
OPPS/ASC final rule with comment
period (73 FR 68659) that we would
continue to explore other potential
approaches to improve our drug cost
estimation methodology, thereby
increasing payment accuracy for
separately payable drugs and
biologicals.
In response to the CMS proposals for
the CY 2008 and CY 2009 OPPS, a group
of pharmacy stakeholders (hereinafter
referred to as the pharmacy
stakeholders), including some cancer
hospitals, some pharmaceutical
manufacturers, and some hospital and
professional associations, commented
that CMS should pay an acquisition cost
of ASP+6 percent for separately payable
drugs, should substitute ASP+6 percent
for the packaged cost of all packaged
drugs and biologicals on procedure
claims, and should redistribute the
difference between the aggregate
estimated packaged drug cost in claims
and payment for all drugs, including
packaged drugs at ASP+6 percent, as
separate pharmacy overhead payments
for separately payable drugs. They
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indicated that this approach would
preserve the aggregate drug cost
observed in the claims data, while
significantly increasing payment
accuracy for individual drugs and
procedures using packaged drugs. Their
suggested approach would provide a
separate overhead payment for each
separately payable drug or biological at
one of three different levels, depending
on the pharmacy stakeholders’
assessment of the complexity of
pharmacy handling associated with
each specific drug or biological (73 FR
68651 through 68652). Each separately
payable drug or biological HCPCS code
would be assigned to one of the three
overhead categories, and the separate
pharmacy overhead payment applicable
to the category would be made when
each of the separately payable drugs or
biologicals was paid.
At the February 2009 APC Panel
meeting, the APC Panel recommended
that CMS pay for the acquisition cost of
all separately payable drugs at no less
than ASP+6 percent. The APC Panel
also recommended that CMS package
payment at ASP+6 percent on claims for
all drugs that are not separately payable
and use the difference between these
rates and CMS’ cost derived from
charges to create a pool to provide more
appropriate payment for pharmacy
service costs and that CMS pay for
pharmacy services costs using this pool,
applying a tiered approach to payments
based on some objective criteria related
to the pharmacy resources required for
groups of drugs. The APC Panel further
recommended that, if CMS does not
implement the drug payment
recommendations specified above, CMS
should exclude data from hospitals that
participate in the 340B Federal drug
pricing program from its ratesetting
calculations for drugs and CMS should
pay 340B hospitals in the same manner
as it pays non-340B hospitals. Hospitals
that participate in the 340B program are
generally hospitals that serve a
disproportionate share of low-income
patients and receive disproportionate
share payments under the IPPS. These
facilities may acquire outpatient drugs
and biologicals at prices that are
substantially below ASP because the
340B program requires drug
manufacturers to provide outpatient
drugs to eligible entities at a reduced
price and these reduced price sales are
not included in the ASP submissions of
manufacturers to Medicare. Public
presenters at the February 2009 APC
Panel meeting emphasized that the
purpose of the 340B Federal drug
pricing program is to ensure access to
drugs for low-income patients by
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supplementing the higher cost of
providing care to low-income patients
born by hospitals serving a
disproportionate share of these patients.
The agenda, recommendations, and
report from the February 2009 APC
Panel meeting are posted on the CMS
Web site at: https://www.cms.hhs.gov/
FACA. We respond to these APC Panel
recommendations in our discussion of
the proposed CY 2010 policy that
follows.
b. Payment Policy
Section 1833(t)(14)(A)(iii) of the Act,
as described above, continues to be
applicable to determining payments for
SCODs for CY 2010. This provision
requires that payment for SCODs be
equal to the average acquisition cost for
the drug for that year as determined by
the Secretary, subject to any adjustment
for overhead costs and taking into
account the hospital acquisition cost
survey data collected by the GAO in
CYs 2004 and 2005. If hospital
acquisition cost data are not available,
the law requires that payment be equal
to payment rates established under the
methodology described in section
1842(o), section 1847A, or section
1847B of the Act, as calculated and
adjusted by the Secretary as necessary.
In addition, section 1833(t)(14)(E)(ii) of
the Act authorizes the Secretary to
adjust APC weights to take into account
the 2005 MedPAC report relating to
overhead and related expenses, such as
pharmacy services and handling costs.
Since CY 2006, when we first adopted
our standard methodology of paying for
separately payable drugs and biologicals
based on the equivalent average ASPbased payment rate calculated from
claims and cost report data, we have
applied this methodology to payment
for all separately payable drugs and
biologicals without pass-through status,
both SCODs and other drugs and
biologicals that do not meet the
statutory definition of SCODs. We have
seen no reason to distinguish SCODs
from these other separately payable
drugs and biologicals, and under our
standard drug payment methodology,
we have used ASP data and costs
estimated from charges on hospital
claims data as a proxy for the average
hospital acquisition cost that the statute
requires for payment of SCODs and to
provide payment for the associated
pharmacy overhead cost.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35332), we proposed to
redistribute between one-third and onehalf of the difference between the
aggregate claims cost for coded
packaged drugs and biologicals with an
ASP and ASP dollars for those products,
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60501
which resulted in our proposal to pay
for the acquisition and pharmacy
overhead costs of separately payable
drugs and biologicals that did not have
pass-through payment status at ASP+4
percent. Based on the rationale
described in the CY 2010 OPPS/ASC
proposed rule (74 FR 35326 through
35333), we believed that approximately
$150 million of the estimated $395
million total in pharmacy overhead cost
included in our claims data for coded
packaged drugs and biologicals with an
ASP above the aggregate ASP dollars of
these packaged products should be
attributed to separately payable drugs
and biologicals to provide an
adjustment for the pharmacy overhead
costs of these separately payable
products. As a result, we also proposed
to reduce the cost of these packaged
drugs and biologicals that is included in
the payment for procedural APCs to
offset the $150 million adjustment to
payment for separately payable drugs
and biologicals. In addition, we
proposed that any redistribution of
pharmacy overhead cost that may arise
from CY 2010 final rule data would
occur only from coded packaged drugs
and biologicals with an ASP to
separately payable drugs and
biologicals, thereby maintaining the
estimated total cost of drugs and
biologicals.
Using our CY 2010 proposed rule
data, and applying our longstanding
methodology for calculating the total
cost of separately payable drugs and
biologicals in our claims compared to
the ASP dollars for the same drugs and
biologicals, without applying the
proposed overhead cost redistribution,
we determined that the estimated
aggregate cost of separately payable
drugs and biologicals (status indicators
‘‘K’’ and ‘‘G’’), including acquisition and
pharmacy overhead costs, was
equivalent to ASP–2 percent. Therefore,
under our standard drug payment
methodology, we would pay for
separately payable drugs and biologicals
at ASP–2 percent for CY 2010, their
equivalent average ASP-based payment
rate. We also determined that the
estimated aggregate cost of coded
packaged drugs and biologicals with an
ASP (status indicator ‘‘N’’), including
acquisition and pharmacy overhead
costs, was equivalent to ASP+247
percent. We found that the estimated
aggregate cost for all coded drugs and
biologicals (status indicators ‘‘N,’’ ‘‘K,’’
and ‘‘G), including acquisition and
pharmacy overhead costs, was
equivalent to ASP+13 percent. For a
detailed explanation of our standard
process for these calculations, we refer
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readers to the CY 2006 OPPS proposed
rule (70 FR 42725).
TABLE 36—STANDARD DRUG PAYMENT METHODOLOGY USING CY 2010 OPPS PROPOSED RULE DATA: ASP+X
CALCULATION
Total ASP dollars for drugs
and biologicals
in claims data
(in millions)*
Coded Packaged Drugs and Biologicals with an ASP ....................................
Separately Payable Drugs and Biologicals .....................................................
All Coded Drugs and Biologicals .....................................................................
Total cost of
drugs and
biologicals in
claims data
(in millions)**
$160
2,589
2,749
$555
2,539
3,094
Ratio of cost
to ASP
3.47
0.98
1.13
ASP+X
percent
ASP+247
ASP–2
ASP+13
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*Total April 2009 ASP dollars (ASP multiplied by drug or biological units in CY 2008 claims) for drugs and biologicals with a HCPCS code and
ASP information.
**Total cost in the CY 2008 claims data for drugs and biologicals with a HCPCS code and April 2009 ASP information.
In the proposed rule, we recognized
that there may be concern over whether
the actual full cost (acquisition and
pharmacy overhead) of separately
payable drugs and biologicals could be
2 percent less than ASP for these
products (74 FR 35327), although we
did not have ASP information
specifically for their sales to hospitals.
Similarly, we acknowledged that a full
cost (acquisition and pharmacy
overhead) of ASP+247 percent for coded
packaged drugs and biologicals with an
ASP seemed relatively high. When we
subtracted the total ASP dollars for
packaged drugs and biologicals with a
reported ASP amount in the CY 2008
claims data ($160 million), our proxy for
their acquisition cost, from the total cost
of packaged drugs and biologicals in the
same claims ($555 million), we found
that the difference, which we viewed as
the pharmacy overhead cost currently
attributed to packaged drugs and
biologicals was $395 million. While we
had no way of assessing whether this
current distribution of overhead cost to
coded packaged drugs and biologicals
with an ASP was appropriate, we
acknowledged that the established
method of converting billed charges to
costs had the potential to ‘‘compress’’
the calculated costs to some degree.
Further, we recognized that the
attribution of pharmacy overhead costs
to packaged or separately payable drugs
and biologicals through our standard
drug payment methodology of a
combined payment for acquisition and
pharmacy overhead costs depends, in
part, on the treatment of all drugs and
biologicals each year under our annual
drug packaging threshold. Changes to
the packaging threshold may result in
changes to payment for the overhead
cost of drugs and biologicals that do not
reflect actual changes in hospital
pharmacy overhead cost for those
products. For these reasons, we believed
that some portion, but not all, of the
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$395 million in total overhead cost that
is associated with coded packaged drugs
and biologicals with an ASP based on
our standard drug payment
methodology should, at least for CY
2010, be attributed to separately payable
drugs and biologicals. Although we
believed that for CY 2010 it would be
prudent to redistribute some pharmacy
overhead cost between coded packaged
drugs and biologicals with an ASP at
ASP+247 percent and separately
payable drugs and biologicals at ASP–2
percent that would result from our
standard drug payment methodology,
the amount of overhead cost
redistribution that would be appropriate
between the packaged and separately
payable drugs and biologicals in a
payment system that is fundamentally
based on averages was not fully evident.
Pharmacy overhead cost includes, but is
not limited to, some costs of indirect
overhead that are shared by all hospital
items and services, such as
administrative and general costs, capital
costs, staff benefits, and other facility
costs. With regard to these indirect
overhead costs, the amount of indirect
overhead cost that is attributable to an
inexpensive (typically packaged) drug is
the same in dollar value as the amount
of indirect overhead cost that is
attributable to an extremely costly drug
(typically separately payable). Hence,
the indirect overhead costs that are
common to all drugs and biologicals
have no relationship to the cost of an
individual drug or biological, or to the
complexity of the handling, preparation,
or storage of that individual drug or
biological. Therefore, we believed that
the indirect overhead cost alone for an
inexpensive drug or biological could be
far in excess of the ASP for that
inexpensive product.
Layered on these indirect overhead
costs are the pharmacy overhead direct
costs of staff, supplies, and equipment
that are directly attributable only to the
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storage, handling, preparation, and
distribution of drugs and biologicals and
which do vary, sometimes considerably,
depending upon the drug being
furnished. As we describe above, in its
June 2005 Report to Congress, MedPAC
found that drugs can be categorized into
seven different categories based on the
handling costs (that is, the direct costs)
incurred (70 FR 42729). Similarly, the
pharmacy stakeholders, whose
suggested approach the APC Panel
recommended that we accept for CY
2010, identified three categories of
pharmacy overhead complexity with
variable costs, to which they assigned
individual drugs and biologicals for
purposes of implementing their
recommended redistribution of the
difference between aggregate dollars for
all drugs and biologicals at ASP+6
percent and aggregate cost for all drugs
and biologicals in the claims data as
additional pharmacy overhead
payments.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35328), we acknowledged
that the observed combined payment for
acquisition and pharmacy overhead
costs of ASP–2 percent for separately
payable drugs and biologicals may be
too low and ASP+247 percent for coded
packaged drugs and biologicals with an
ASP in the CY 2010 claims data may be
too high. However, we stated our belief
that the pharmacy stakeholders’
recommendation to set packaged drug
and biologicals dollars to ASP+6
percent was inappropriate given our
understanding that an equal allocation
of indirect overhead costs among
packaged and separately payable drugs
and biologicals would lead to a higher
observed ASP+X percent than ASP+6
percent for packaged drugs and
biologicals. As discussed above, the
indirect overhead costs that are common
to all drugs and biologicals have no
relationship to the cost of an individual
drug or biological, or to the complexity
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of the handling, preparation, or storage
of that individual drug or biological.
Therefore, we stated our belief that the
indirect overhead cost alone for an
inexpensive drug or biological which
would be packaged could be far in
excess of the ASP for that inexpensive
product. In contrast, we would expect
that the indirect overhead cost alone for
an expensive drug or biological which
would be separately paid could be far
less than the ASP for that expensive
product.
Therefore, as discussed in the
proposed rule, we believed that some
middle ground would represent the
most accurate redistribution of
pharmacy overhead cost. We stated that
the assumption that approximately onethird to one-half of the total pharmacy
overhead cost currently associated with
coded packaged drugs and biologicals
with an ASP was a function of both
charge compression and our choice of
60503
recommendation. We stated that if we
attributed $150 million in additional
cost to the payment for the drugs and
biologicals for which we proposed to
pay separately for the CY 2010 OPPS,
we determined a payment rate for
separately payable drugs and biologicals
of ASP+4 percent as displayed in Table
26 of the proposed rule (74 FR 35328)
that is reprinted below as Table 37.
Thus, we proposed a pharmacy
overhead adjustment for separately
payable drugs and biologicals in CY
2010 that would result in their payment
at ASP+4 percent. We proposed to
accomplish this adjustment by
redistributing one-third to one-half of
the pharmacy overhead cost of coded
packaged drugs and biologicals with an
ASP ($150 million), which represented
a reduction in cost of coded packaged
drug and biologicals with an ASP in the
CY 2010 proposed rule claims data of 27
percent.
an annual drug packaging threshold
offered a more appropriate allocation of
drug and biological cost to separately
payable drugs and biologicals. One-third
of the $395 million of pharmacy
overhead cost associated with coded
packaged drugs and biologicals with an
ASP was $132 million, whereas one-half
was $198 million. Within the one-third
to one-half parameters, we proposed
that reallocating $150 million in drug
and biological cost observed in the
claims data from coded packaged drugs
and biologicals with an ASP to
separately payable drugs and biologicals
for CY 2010 would more appropriately
distribute pharmacy overhead cost
among packaged and separately payable
drugs and biologicals than either of the
two other options, that is, paying for
separately payable drugs and biologicals
at ASP–2 percent according to our
standard drug payment methodology or
adopting the pharmacy stakeholders’
TABLE 37—CY 2010 PROPOSED PHARMACY OVERHEAD ADJUSTMENT PAYMENT METHODOLOGY FOR SEPARATELY
PAYABLE AND PACKAGED DRUGS AND BIOLOGICALS
Total ASP dollars for drugs
and biologicals
in claims data
(in millions)*
Coded Packaged Drugs and Biologicals with an ASP ....................................
Separately Payable Drugs and Biologicals .....................................................
All Coded Drugs and Biologicals .....................................................................
Total cost of
drugs and
biologicals in
claims Data
After Adjustment
(in millions)**
$160
2,589
2,749
$405
2,689
3,094
Ratio of cost
to ASP
(column C/column B)
2.53
1.04
1.13
ASP+X
percent
ASP+153
ASP+4
ASP+13
*Total April 2009 ASP dollars (ASP multiplied by drug or biological units in CY 2008 claims) for drugs and biologicals with a HCPCS code and
ASP information.
**Total cost in the CY 2008 claims data for drugs and biologicals with a HCPCS code and April 2009 ASP information.
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Comment: Many commenters agreed
with CMS that it was unlikely that the
full cost (acquisition and pharmacy
overhead) of separately payable drugs
and biologicals could be 2 percent less
than ASP for these products, and that
the full cost (acquisition and pharmacy
overhead) of packaged drugs could be
247 percent of ASP.
Response: We continue to find that
the results of our standard drug
payment methodology are unlikely to
accurately reflect the full cost of
acquisition and pharmacy overhead for
separately payable drugs and biologicals
and packaged drugs and biologicals due
to hospital charging practices and our
use of an annual drug packaging
threshold. Using our CY 2010 final rule
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data, and applying our longstanding
methodology for calculating the total
cost of separately payable drugs and
biologicals in our claims compared to
the ASP dollars for the same drugs and
biologicals and without applying the
proposed overhead cost redistribution,
we determined that the estimated
aggregate cost of separately payable
drugs and biologicals (status indicators
‘‘K’’ and ‘‘G’’), including acquisition and
pharmacy overhead costs, is equivalent
to ASP–3 percent (compared to ASP–2
percent as presented in the proposed
rule). Therefore, under our standard
drug payment methodology, we would
pay for separately payable drugs and
biologicals at ASP–3 percent for CY
2010, their equivalent average ASP-
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based payment rate. We also determined
that the estimated aggregate cost of
coded packaged drugs and biologicals
with an ASP (status indicator ‘‘N’’),
including acquisition and pharmacy
overhead costs, is equivalent to
ASP+259 percent (compared to
ASP+247 percent as presented in the
proposed rule). We found that the
estimated aggregate cost for all coded
drugs and biologicals (status indicators
‘‘N,’’ ‘‘K,’’ and ‘‘G), including
acquisition and pharmacy overhead
costs, is equivalent to ASP+11 percent
(compared to ASP+13 percent as
presented in the proposed rule). These
values are shown in Table 38 below.
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TABLE 38—PROPOSED AND FINAL ASP+X VALUES FOR ALL CODED DRUGS AND BIOLOGICALS WITH AN ASP, CODED
PACKAGED DRUGS AND BIOLOGICALS WITH AN ASP, AND SEPARATELY PAYABLE DRUGS AND BIOLOGICALS
ASP+X for all
coded drugs
and biologicals
with an ASP
ASP+X for
coded packaged drugs
and biologicals
with an ASP
ASP+X for
separately
payable drugs
and biologicals
ASP+13
ASP+11
ASP+247
ASP+258
ASP–2
ASP–3
CY 2010 Proposed Rule* ............................................................................................................
CY 2010 Final Rule** ..................................................................................................................
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*Based on CY 2010 proposed rule claims data and April 2009 ASPs.
**Based on CY 2010 final rule claims data and July 2009 ASPs.
Comment: Some commenters agreed
with CMS’ assertion that packaged
drugs and biologicals typically have an
aggregate absolute pharmacy overhead
cost that exceeds the acquisition cost of
the packaged drugs and biologicals. One
commenter claimed that ASP+6 percent
would be insufficient to accurately
account for the acquisition and
pharmacy overhead costs of packaged
drugs. In addition, a few commenters
recommended that CMS modify the
pharmacy stakeholders’ approach by
packaging the cost of drugs and
biologicals at ASP plus 100 percent,
rather than the stakeholder’s
recommended amount of ASP+6
percent.
Response: We continue to be
concerned with a methodology that
would package the cost of all packaged
drugs and biologicals at ASP+6 percent.
As stated in our proposal, we have no
data specific to the overhead costs of
these drugs and biologicals and,
therefore, we cannot determine with any
certainty an ASP+X value relating
specifically to their costs for acquisition
and pharmacy overhead. While we
appreciate the recommendation of the
commenters to package payment for the
acquisition and pharmacy overhead
costs of inexpensive drugs below the
drug packaging threshold at ASP plus
100 percent, we cannot verify that using
ASP plus 100 percent would result in an
accurate estimate of acquisition and
pharmacy overhead costs of packaged
drugs and biologicals.
Comment: One commenter noted that
a key CMS assumption behind the
standard methodology for calculating
the ASP+X percent payment rate, and
the redistribution methodology by
implication, is that the average overhead
cost for drugs and biologicals ultimately
must appear in the revenue producing
cost center 5600 ‘‘Drugs Charged to
Patients,’’ along with the acquisition
cost of drugs and biologicals. The
commenter acknowledged that CMS’
standard drug payment methodology
relies on appropriate allocation of
pharmacy overhead cost in order to
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derive an accurate payment amount for
separately payable versus packaged
drugs and biologicals. The commenter
specifically cited weak cost reporting
instructions for the ‘‘Drugs Charged to
Patients’’ cost center and cost center
1600 ‘‘Pharmacy’’ and questioned
whether pharmacy overhead cost
adequately and appropriately appears in
the ‘‘Drugs Charged to Patients’’ cost
center. Specifically, the commenter
noted that costs accumulated in the
‘‘Drugs Charged to Patients’’ cost center
remain in that cost center, but asserted
that costs accumulated in the 1600
‘‘Pharmacy’’ cost center would be
allocated across revenue producing cost
centers on the basis of costed
requisitions. The commenter asked a
series of specific questions about how
costs are accumulated in both the
‘‘Pharmacy’’ and ‘‘Drugs Charged to
Patients’’ cost centers, including (1)
what costs hospitals actually report in
the ‘‘Pharmacy’’ cost center versus the
‘‘Drugs Charged to Patients’’ cost center;
(2) which revenue producing cost
centers have costed requisitions that
would receive ‘‘Pharmacy’’ cost center
overhead costs, that is, do hospitals
account for contrast agent costs under
radiology revenue producing cost
centers; (3) how much of ‘‘Pharmacy’’
cost center overhead costs is allocated to
‘‘Drugs Charged to Patients;’’ and (4)
when would hospitals not account for
the cost of a drug in the ‘‘Drugs Charged
to Patients’’ cost center.
Response: We acknowledge that the
CCR for the ‘‘Drugs Charged to Patients’’
cost center reflects the average
acquisition cost for drugs and
biologicals reported in that cost center,
as well as the average pharmacy
overhead cost for those drugs and
biologicals. In addition, use of this CCR
to estimate costs from charges on claims
has the potential to ‘‘compress’’ the
pharmacy overhead costs for expensive
drugs and biologicals, where hospitals
differentially distribute pharmacy
overhead among their charges for drugs
and biologicals by marking up the
charges for expensive drugs and
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biologicals proportionally less than
inexpensive drugs and biologicals. We
have stated that combining this
compression with a packaging threshold
may lead us to underestimate the
pharmacy overhead costs of separately
payable drugs and biologicals and
overestimate the overhead costs of
packaged drugs and biologicals.
At a minimum, the CCR for the cost
center ‘‘Drugs Charged to Patients’’ that
CMS uses to estimate costs from charges
for drugs and biologicals in our claims
data should consist of charges for all
drugs and biologicals separately charged
to patients and the related costs for
those separately chargeable drugs and
biologicals. A hospital would not
include the charge and cost for a drug
or biological in the ‘‘Drugs Charged to
Patients’’ cost center if the hospital did
not separately charge the drug or
biological to a patient. The
identification of costs for the ‘‘Drugs
Charged to Patients’’ cost center can
occur in several ways.
First, we generally believe that the
indirect costs that are common to all
drugs and biologicals, including
administrative and general costs, capital
costs, staff benefits, and other facility
costs, and the more direct costs of
handling, preparation, and storage are
accumulated as total pharmacy
operation costs in cost center 1600
‘‘Pharmacy.’’ Second, hospitals can
choose to treat the acquisition cost of
their drugs and biologicals in several
ways. Frequently, hospitals accumulate
and report the acquisition costs of drugs
and biologicals (costed requisitions)
directly in the most appropriate revenue
producing cost center on Worksheet A
of the cost report. We expect that, the
majority of the time, hospitals accrue
the largest acquisition cost of drugs and
biologicals in the ‘‘Drugs Charged to
Patients’’ cost center, which is specific
to these items. However, hospitals may
also account for the acquisition cost of
unique drugs and biologicals, such as
contrast agents, in other revenue
producing cost centers such as the
radiology cost centers, when the
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contrast agents are not separately
charged to the patient. Assignment of
acquisition cost to a different revenue
producing cost center can only occur if
the drug or biological was not separately
charged to a patient. Although the
commenter suggested that contrast
agents may appear in other cost centers,
our claims data demonstrate a
significant volume of contrast agents
reported under a pharmacy revenue
code. Therefore, we believe that
hospitals largely are charging patients
specifically for contrast agents and
accounting for these costs and charges
in the ‘‘Drugs Charged to Patients’’ cost
center. The hospital would then allocate
the total overhead costs from the
‘‘Pharmacy’’ general services cost center
to all revenue producing cost centers
that have costed requisitions for drugs
and biologicals on Worksheet B–1. In
this circumstance, a large proportion of
the total cost of the ‘‘Pharmacy’’ cost
center would be allocated to the ‘‘Drugs
Charged to Patients’’ cost center,
assuming a concentration of costed
requisitions for drugs and biologicals in
the ‘‘Drugs Charged to Patients’’ cost
center. The total pharmacy cost being
allocated is an aggregation that
commingles the overhead costs of a
variety of drugs and biologicals. The
resulting CCR for the ‘‘Drugs Charged to
Patients’’ cost center should reflect both
the average acquisition cost of drugs and
biologicals, including those that are
expensive and inexpensive, in that cost
center and the average pharmacy
overhead cost apportioned to that cost
center.
Hospitals also may include the
acquisition cost of drugs and biologicals
directly in the ‘‘Pharmacy’’ general
services cost center and reclassify this
cost to revenue producing cost centers,
including ‘‘Drugs Charged to Patients,’’
before allocating the total cost of the
‘‘Pharmacy’’ cost center, which would
have an effect similar to directly
reporting the cost of drugs in the
revenue producing cost centers on
Worksheet A, as discussed above. In this
situation, overhead cost from the
‘‘Pharmacy’’ cost center would be
allocated to each of the revenue
producing cost centers on the basis of
costed requisitions. Some hospitals
include the acquisition cost of drugs
and biologicals directly in the
‘‘Pharmacy’’ cost center but do not
reclassify this cost to the appropriate
revenue producing cost center on
Worksheet A, and instead allocate those
costs on Worksheet B–1 together with
the overhead cost of the pharmacy using
costed requisitions. Regardless of which
method described above that the
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14:52 Nov 19, 2009
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provider uses, the resulting CCR for the
‘‘Drugs Charged to Patients’’ cost center
should reflect the average acquisition
cost for drugs and biologicals in that
cost center and the average pharmacy
overhead apportioned to that cost
center. Our redistribution methodology
acknowledges that relying on a single
CCR has the potential to ‘‘compress’’
overhead costs and that combining this
compression with a packaging threshold
leads us to underestimate the overhead
costs of separately payable drugs and
biologicals and overestimate the
overhead costs of packaged drugs and
biologicals.
As we discussed in our proposal, we
did not propose to redistribute
pharmacy overhead cost from packaged
to separately payable drugs and
biologicals utilizing a methodology that
would provide a separate pharmacy
overhead payment for each separately
payable drug and biological based on its
pharmacy complexity. The OPPS is a
prospective payment system that
provides payment for groups of services
and we believe that it is important, at a
minimum, to maintain the current size
of the OPPS payment bundles, in order
to encourage efficiency in the hospital
outpatient setting. As we stated in the
CY 2008 OPPS/ASC final rule with
comment period (72 FR 66613), we
believe it is important that the OPPS
create incentives for hospitals to
provide only necessary, high quality
care and to provide that care as
efficiently as possible. We have
considered in recent years how we
could increase packaging under the
OPPS in a manner that would create
incentives for efficiency while
providing hospitals with flexibility to
provide care in the most appropriate
way for each Medicare beneficiary.
Hospitals have repeatedly explained
that they consider the acquisition and
pharmacy overhead costs of drugs in
setting their charges for drugs, and we
have continued to provide a single
payment for the acquisition and
pharmacy overhead costs of separately
payable drugs and biologicals under the
OPPS consistent with this hospital
charging practice. While we have
worked to develop, and are now
implementing, a refined payment
methodology for drugs and biologicals
for the CY 2010 OPPS that we believe
will pay more accurately for the
pharmacy overhead cost of packaged
and separately payable drugs and
biologicals, we do not believe it would
be appropriate to unbundle the current
single combined payment for the
acquisition and overhead costs of a
separately payable drug into two
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60505
distinct payments, a drug payment and
a pharmacy overhead payment.
Furthermore, we note that section
1833(t)(14)(E)(ii) of the Act specifically
authorizes the Secretary to adjust the
APC payment weights for SCODs to take
into account the recommendations of
MedPAC on pharmacy overhead costs.
We believe our CY 2010 approach that
will adjust the APC payment for
separately payable drugs and biologicals
to more accurately pay for their
associated pharmacy overhead cost,
rather than provide a separate payment
for a drug’s pharmacy overhead cost
each time the product is separately paid,
is consistent with this statutory
provision. Therefore, as we proposed,
we are continuing to make a single
bundled payment for the acquisition
and pharmacy overhead costs of
separately payable drugs and biologicals
under the CY 2010 OPPS, an approach
we believe both continues to encourage
hospital efficiencies in the provision of
drugs and biologicals to Medicare
beneficiaries in the hospital outpatient
setting and improves payment accuracy
for the acquisition and pharmacy
overhead costs of drugs and biologicals.
To confirm the portion of the $395
million in estimated pharmacy overhead
cost associated with coded packaged
drugs and biologicals with an ASP that
should be attributable to separately
payable drugs and biologicals for the
proposed rule, we used information
from a variety of sources in order to
corroborate the appropriateness of our
policy to redistribute between one-third
and one-half of the difference ($150
million) between the aggregate claims
cost for packaged drugs and biologicals
and ASP dollars for the same drugs and
biologicals to separately payable drugs
and biologicals. In the CY 2010 OPPS/
ASC proposed rule (74 FR 35330
through 35331), we presented two
separate analyses which confirmed that
our proposed redistribution of $150
million in pharmacy overhead cost
associated with the cost of packaged
drugs and biologicals was appropriate.
We began the analytic exercise with
three fundamental assumptions. The
first assumption was that the hospital
acquisition cost of separately payable
drugs and biologicals, on average, is not
less than 100 percent of ASP. We
believed that this assumption was valid
because we have been told that
hospitals pay a range of prices for the
same drug or biological. Some hospitals
may be able to take advantage of volume
and group purchasing to achieve
significant discounts for certain drugs
and biologicals, but other hospitals may
pay more than average for drugs and
biologicals because of their low volume
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usage or a hospital’s remote geographic
location. Further, hospitals often serve
as community care resources so they
must provide drugs and biologicals to
meet the needs of all of the patients who
present to their facilities for care. The
amounts and nature of those drugs and
biologicals may vary significantly and
unpredictably over time, particularly for
smaller hospitals, due to changing
availability of other care settings in their
communities, such as physicians’
offices, or due to emergencies, and this
variability may constrain hospitals’
ability to purchase all necessary
quantities of certain drugs and
biologicals based on best price
contractual agreements negotiated in
advance. Hence, we believed that the
ASP was likely a fair estimate of
hospitals’ average acquisition cost of
drugs and biologicals in general,
excluding direct and indirect overhead
costs.
The second assumption was that
coded packaged drugs and biologicals
with an ASP, as a group, typically have
an aggregate absolute pharmacy
overhead cost (direct and indirect) that
exceeds the acquisition cost of the
packaged drugs and biologicals, as
measured by ASP. We believed that this
assumption was appropriate because
packaged drugs and biologicals carry the
same absolute amount of indirect
overhead cost per drug or biological
administered as separately payable
drugs and biologicals and because many
packaged drugs and biologicals have
extremely low ASPs but some of the
same direct costs (for example,
recordkeeping, storage, safety
precautions, and disposal requirements)
as separately payable drugs and
biologicals. Our proposed rule claims
data showed that the weighted average
ASP for the coded drugs and biologicals
with an ASP that we proposed to
package for CY 2010 was approximately
$7 per day per packaged drug or
biological, and we believed that it was
a reasonable assumption that the full
pharmacy overhead cost for a drug or
biological (direct and indirect) equals or
exceeds that amount.
Our final assumption was that, on
average, the pharmacy overhead cost of
separately payable drugs and
biologicals, as a group, was not greater
than the acquisition cost of the
separately payable drugs and
biologicals. We believed that this
assumption is appropriate because
separately payable drugs and biologicals
carry the same absolute amount of
indirect pharmacy overhead cost per
drug or biological administered as
packaged drugs and biologicals. While
we have been told by MedPAC and the
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pharmacy stakeholders that separately
payable drugs and biologicals generally
have direct pharmacy overhead costs
that are significantly higher than the
direct overhead costs of packaged drugs
and biologicals, we do not believe that
they exceed the acquisition cost of
separately payable drugs and
biologicals. The weighted average ASP
for the drugs and biologicals in our
proposed rule claims data that we
proposed for separate payment for CY
2010 was approximately $954 per day
per separately payable drug or
biological. We believed that the full
pharmacy overhead cost for a separately
payable drug or biological would not, on
average, exceed the weighted average
per day ASP. Hence, we believed these
last two assumptions about the
relationship of ASP to full pharmacy
overhead cost (direct and indirect) for
packaged and separately payable drugs
and biologicals were appropriate for
purposes of these analyses.
Having made these assumptions, for
the proposed rule, we reduced the $395
million in estimated pharmacy overhead
cost that exceeded the ASP dollars for
coded packaged drugs and biologicals
with an ASP (their average acquisition
cost) by $50 million. Fifty million
dollars in additional cost was necessary
to raise the estimated cost calculated for
separately payable drugs and biologicals
from hospital claims data from 98
percent of ASP to 100 percent of ASP,
in order to reach our estimate of the
average hospital acquisition cost of
separately payable drugs and biologicals
of ASP. This left $345 million in
estimated residual pharmacy overhead
cost that continued to be associated
with packaged drugs and biologicals.
We stated our belief that a portion of
this cost was associated with coded
packaged drugs and biologicals with an
ASP in our claims data, both due to
charge compression and our choice of
an annual drug packaging threshold,
and would continue to be less
accurately associated with packaged
drugs and biologicals were we not to
engage in further redistribution of that
portion of this residual pharmacy
overhead cost of packaged drugs and
biologicals.
We then performed two analyses
using information provided by the
MedPAC Report (June 2005 Report to
Congress) and by the pharmacy
stakeholders (February 2009
presentation to the APC Panel and other
meetings with CMS) that we applied to
our proposed rule claims data to
estimate the amount of residual
pharmacy overhead cost associated with
packaged drugs and biologicals that
should more accurately be attributed to
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separately payable drugs and
biologicals. To perform these analyses,
we used proposed rule claims data only
for those drugs and biologicals
described by HCPCS codes that met the
following criteria:
• The proposed CY 2010 OPPS status
indicator for the HCPCS code was ‘‘G’’
for pass-through drugs and biologicals
(excluding pass-through
radiopharmaceuticals), ‘‘K’’ for
separately payable drugs and biologicals
that do not have pass-through status, or
‘‘N’’ for packaged drugs and biologicals,
where the packaged status of these
nonpass-through drugs and biologicals
was determined by an estimate of cost
per day based on ASP+4 percent;
• April 2009 pricing information
based on the ASP methodology (other
than mean cost from claims data) was
available for the HCPCS code, and we
would use the ASP methodology to pay
for the HCPCS code if it had a status
indicator of ‘‘K’’ or ‘‘G’’; and
• CY 2008 OPPS claims data included
claims for the HCPCS code or an
equivalent predecessor code.
We first converted six of the seven
categories that MedPAC recommended
for reporting pharmacy overhead costs
to three CMS categories (low, medium,
and high), as we had proposed for the
CY 2006 OPPS (70 FR 42729 through
42730); the seventh MedPAC category
was not pertinent for this exercise
because it is for the overhead cost
attributable to radiopharmaceuticals.
The CMS categories are defined as: Low
(Orals); medium (Injection/Sterile
Preparation; Single IV Solution/Sterile
Preparation; Compounded
Reconstituted IV Preparations); and high
(Specialty IV or Agents requiring special
handling in order to preserve their
therapeutic value; Cytotoxic Agents in
all formulations requiring personal
protective equipment). We then derived
a relative overhead weight for each of
the three CMS categories by averaging
the overhead weights for the six
pertinent MedPAC categories. These
averages were not weighted. The
derived relative overhead weights for
the CMS categories were as follows:
Low = 1.00 (corresponding to MedPAC
Category 1); medium = 3.61
(corresponding to MedPAC Categories 1,
2, and 3); and high = 11.11
(corresponding to MedPAC categories 5
and 6).
We also calculated a relative overhead
weight for each of the three categories
of pharmacy overhead complexity that
were provided by the pharmacy
stakeholders, using the different fixed
dollar amounts that these stakeholders
recommended that CMS pay for
pharmacy overhead costs if we were to
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make such payments for ‘‘all drugs’’
(packaged and separately payable). The
pharmacy stakeholders’ categories are
defined as: Low (Dispense without
manipulation: e.g., oral drugs, pre-filled
syringes); medium (Injectable drug with
one step manipulation: e.g., simple
injections); and high (Multiple step
injectable products and chemotherapy
that require safety considerations). The
pharmacy stakeholders’ relative
overhead weights were as follows: Low
= 1; medium = 2.67; and high = 5.50.
Using the pharmacy stakeholders’
overhead categories (low, medium, and
high) and incorporating the pharmacy
stakeholders’ assignments of specific
drugs and biologicals to levels of
pharmacy complexity that they
previously provided to CMS, we then
assigned the remaining HCPCS codes for
drugs and biologicals (approximately 50
60507
overhead cost by dividing the total
relative weight for all drugs and
biologicals in this exercise (low,
medium, and high) into the residual
pharmacy overhead cost from packaged
drugs and biologicals of $345 million.
Using the relative weights for each
scenario, we estimated the exact per
unit pharmacy overhead cost
reallocation for each low, medium, and
high pharmacy overhead category. We
then added this payment amount to ASP
for each drug and biological and
reassessed the amount of total claims
cost for separately payable and
packaged drugs and biologicals and
calculated our standard ratio of
aggregate claims cost to aggregate ASP
dollars for separately payable and
packaged drugs and biologicals. The
results of these analyses are reprinted in
Tables 39 and 40 below.
percent of all drug and biological
HCPCS codes with an associated ASP)
based on our understanding of the
characteristics of the categories.
Similarly, we assigned all drug and
biological HCPCS codes to the CMS
categories created from the MedPAC
groups for the derived relative overhead
weights based on the definitions of
those categories. Although the
subsequent analytic processes were
identical, we performed these analyses
separately using the derived CMS
overhead category weights (results are
in Table 39) and using the pharmacy
stakeholders’ overhead category weights
(results are in Table 40).
Specifically, for the proposed rule we
assigned the overhead weights to each
drug and biological in the set of drugs
and biologicals qualifying for this
exercise. We then calculated a per unit
TABLE 39—ESTIMATED REDISTRIBUTION OF PHARMACY OVERHEAD COSTS USING RELATIVE WEIGHTS DERIVED FROM
MEDPAC PHARMACY OVERHEAD CATEGORIES AND CY 2010 OPPS PROPOSED RULE DATA
Total ASP dollars for drugs
and biologicals
in claims data
(in millions)*
Coded Packaged Drugs and Biologicals with an ASP ....................................
Separately Payable Drugs and Biologicals .....................................................
All Coded Drugs and Biologicals .....................................................................
Total cost of
drugs and
biologicals
in claims
data after
adjustment
(in millions)**
$160
2,589
2,749
$390
2,704
3,094
Ratio of cost
to ASP
(column C/
column B)
2.44
1.04
1.13
ASP+X
Percent
ASP+144
ASP+4
ASP+13
* Total April 2009 ASP dollars (ASP multiplied by drug or biological units in CY 2008 claims) for drugs and biologicals with a HCPCS code and
ASP information.
** Total cost in the CY 2008 claims data after adjustment for drugs and biologicals with a HCPCS code and April 2009 ASP information.
TABLE 40—ESTIMATED REDISTRIBUTION OF PHARMACY OVERHEAD COST USING RELATIVE WEIGHTS CALCULATED FROM
PHARMACY STAKEHOLDERS RECOMMENDED PHARMACY OVERHEAD PAYMENT LEVELS AND CY 2010 PROPOSED
RULE DATA
Total ASP dollars for drugs
and biologicals
in claims data
(in millions)*
Coded Packaged Drugs and Biologicals with an ASP ....................................
Separately Payable Drugs and Biologicals .....................................................
All Coded Drugs and Biologicals .....................................................................
Total cost of
drugs and
biologicals
in claims
data after
adjustment
(in millions)**
$160
2,589
2,749
$402
2,692
3,094
Ratio of cost
to ASP
(column C/
column B)
2.51
1.04
1.13
ASP+X
Percent
ASP+151
ASP+4
ASP+13
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* Total April 2009 ASP dollars (ASP multiplied by drug units in CY 2008 claims) for drugs with a HCPCS code and ASP information.
** Total cost in the CY 2008 claims data after adjustment for drugs with a HCPCS code and April 2009 ASP information.
As shown in Tables 39 and 40, the
ratio of adjusted cost in the claims data
for separately payable drugs and
biologicals to ASP increased compared
to the value derived from our standard
methodology and declined for packaged
drugs and biologicals with an associated
ASP compared to the value calculated
according to our standard drug payment
methodology as shown in Table 41.
Specifically, for the proposed rule under
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our standard methodology without
adjustment of the pharmacy overhead
cost currently attributed to packaged
drugs and biologicals with an associated
ASP, we would have made packaged
payment at ASP+247 percent. Using the
CMS overhead weights, this value
declined to ASP+144 percent and using
the pharmacy stakeholders’ overhead
weights, it declined to ASP+151
percent.
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Under our standard drug payment
methodology, without adjustment of the
pharmacy overhead cost currently
attributed to separately payable drugs
and biologicals, we estimated for the
proposed rule that separately payable
drugs and biologicals would be paid at
ASP–2 percent. Assuming a base
average acquisition cost for all drugs
and biologicals of ASP and using the
CMS overhead weights to redistribute
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the residual $345 million in pharmacy
overhead cost associated with coded
packaged drugs and biologicals with an
ASP in the claims data, this value
increased to ASP+4 percent, and using
the pharmacy stakeholders’ overhead
weights to redistribute the residual $345
million in pharmacy overhead cost, this
value also increased to ASP+4 percent.
Based on these analyses, for the
proposed rule, we estimated that we
would redistribute $165 million in
pharmacy overhead cost from coded
packaged drugs and biologicals with an
ASP to separately payable drugs and
biologicals by setting the average
acquisition cost for all drugs and
biologicals to ASP and using the CMS
overhead weights, and we would
redistribute $153 million in pharmacy
overhead cost from coded packaged
drugs and biologicals with an ASP to
separately payable drugs and biologicals
by setting the average acquisition cost
for all drugs and biologicals to ASP and
using the pharmacy stakeholders’
overhead weights. These observed
outcomes were consistent with our CY
2010 proposal to redistribute between
one-third and one-half of the $395
million of pharmacy overhead cost
currently associated with packaged
drugs and biologicals with an ASP to
separately payable drugs and
biologicals. These values were also
consistent with the $150 million we
proposed to redistribute from the cost of
coded packaged drugs and biologicals
with an ASP to separately payable drugs
and biologicals for CY 2010, which
would represent a reduction in the cost
of packaged drugs and biologicals of 27
percent.
After we performed these analyses but
prior to display of the CY 2010 OPPS/
ASC proposed rule, the pharmacy
stakeholders provided us with updated
assignments of CY 2009 drug HCPCS
codes to their recommended levels of
pharmacy complexity. We then assigned
the remaining HCPCS codes for drugs
and biologicals that the pharmacy
stakeholders had not assigned based on
our understanding of the characteristics
of their categories. We recalibrated our
model to incorporate the updated
information. We observed no
substantive changes in our findings,
with the revised overhead category
assignments redistributing $159 million
from packaged to separately payable
drugs and biologicals and resulting in
an ASP+X percentage of ASP+4 percent
for separately payable drugs and
biologicals and ASP+148 percent for
packaged drugs and biologicals with an
ASP.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35331), we indicated that
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these analyses based on our synthesis of
existing data and information from a
variety of sources supported the
appropriateness of a redistribution of
the magnitude we proposed for CY
2010. We believed that our analyses of
the claims data using the CMS relative
overhead weights derived from the 2005
MedPAC pharmacy overhead study and
using the pharmacy overhead category
payments, levels of complexity, and
assignments of drugs provided by the
pharmacy stakeholders (where
available), confirmed that payment for
separately payable drugs and biologicals
at ASP+4 percent would represent a
reasonable aggregate adjustment for the
pharmacy overhead cost of these
separately payable drugs and
biologicals, compared to the payment
that would result from the standard
drug payment methodology. We stated
our belief that payment for separately
payable drugs at ASP+4 percent would
ensure that hospitals are paid
appropriately for the average hospital
acquisition cost and the pharmacy
overhead cost that our analyses show
would be appropriately redistributed
from the estimated cost of overhead
associated with drugs and biologicals
with an ASP that we proposed to
package for CY 2010.
Our proposal for CY 2010 relied upon
the premise of providing a pharmacy
overhead adjustment to payment for
separately payable drugs by
redistributing calculated pharmacy
overhead cost from coded packaged
drugs and biologicals with an ASP to
separately payable drugs and
biologicals. Therefore, regardless of the
payment level that the CY 2010 OPPS/
ASC final rule with comment period
claims and cost report data and July
2009 ASP data ultimately suggested, we
believed that any redistributed amount
of pharmacy overhead cost should be
removed from the estimated cost of
pharmacy overhead associated with
coded packaged drugs and biologicals
with an ASP. We proposed to
redistribute pharmacy overhead cost
within the estimated total amount of
acquisition and overhead cost for all
drugs and biologicals with an ASP that
has been reported to us by hospitals by
making a pharmacy overhead
adjustment to payment for separately
payable drugs and biologicals that is
based upon a partial redistribution of
the pharmacy overhead cost of coded
packaged drugs and biologicals with an
ASP. As described previously in this
section, we proposed that any
redistribution of pharmacy overhead
cost that may arise from CY 2010 final
rule data would occur only from some
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drugs and biologicals to other drugs and
biologicals, thereby maintaining the
estimated total cost of drugs and
biologicals in our claims data (no
redistribution of cost would occur from
other services to drugs and biologicals
or vice versa). While there is some
evidence that relatively more pharmacy
overhead cost should be associated with
separately payable drugs and biologicals
and less pharmacy overhead cost should
be associated with packaged drugs and
biologicals in order to improve payment
accuracy, we concluded that the recent
RTI report on the OPPS’ hospitalspecific CCR methodology (‘‘Refining
Cost to Charge Ratios for Calculating
APC and DRG Relative Payment
Weights,’’ July 2008 final report), the
June 2005 MedPAC study of hospital
outpatient pharmacy overhead costs,
and our claims analyses discussed in
the proposed rule presented no
evidence that the total cost of drugs and
biologicals (including acquisition and
overhead costs) is understated in the
claims data that we use to model the
upcoming prospective payment year in
relation to the costs of other services
paid under the OPPS. Therefore, to
improve the distribution of pharmacy
overhead cost within the total estimated
cost for all drugs and biologicals,
without adversely affecting the relativity
of payment weights for all services paid
under the OPPS, we reasoned that it
would be most appropriate to
redistribute pharmacy overhead cost
only within the total estimated cost of
coded packaged and separately payable
drugs and biologicals. By redistributing
pharmacy overhead cost only within the
total estimated cost of packaged and
separately payable drugs and
biologicals, we would maintain a
constant total cost of drugs and
biologicals under the OPPS as reported
to us by hospitals, without
redistributing cost from other OPPS
services to the cost of drugs and
biologicals under the budget neutral
OPPS.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35332), we indicated that
while we agree conceptually with the
APC Panel that a redistribution of
pharmacy overhead cost in our claims
data from coded packaged drugs and
biologicals with an ASP to separately
payable drugs and biologicals is
appropriate, we did not accept the APC
Panel’s February 2009 recommendation
that CMS pay for the acquisition cost of
all separately payable drugs at no less
than ASP+6 percent because, as we
discussed previously in this section, our
analyses of claims data indicated that
appropriate payment for the acquisition
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and pharmacy overhead costs of
separately payable drugs would be
ASP+4 percent. We also did not accept
the APC Panel’s February 2009
recommendation that CMS package the
cost of packaged drugs at ASP+6
percent, use the difference between this
cost and CMS’ cost derived from charges
to provide more appropriate payment
for pharmacy services costs, and pay for
pharmacy services using this amount by
applying a tiered approach to payments
based on criteria related to the
pharmacy resources required for groups
of drugs. We believed that the
recommendation to package the cost of
packaged drugs at ASP+6 percent would
underpay for the pharmacy overhead
cost of packaged drugs, which we
expected would be higher in relation to
ASP than the pharmacy overhead cost of
separately payable drugs. Further, as
discussed earlier in this section, because
the OPPS is a prospective payment
system that relies on payment for groups
of services to encourage hospital
efficiencies, we did not believe payment
for pharmacy overhead costs that is
separate from the OPPS payment for the
acquisition costs of drugs would be
appropriate.
The APC Panel further recommended
that, if CMS did not adopt a
methodology consistent with their
recommendations summarized above,
CMS should exclude data from hospitals
that participate in the 340B program
from its ratesetting calculations for
drugs and that CMS should pay 340B
hospitals in the same manner as it pays
non-340B hospitals. In the proposed
rule, we did not accept the APC Panel’s
recommendation that CMS propose to
exclude data from hospitals that
participate in the 340B program from its
ratesetting calculations for drugs. For
CY 2010, we note that we proposed a
drug payment methodology that
partially resembled the methodology
recommended by the APC Panel
because the proposal incorporated a
redistribution of pharmacy overhead
cost from coded packaged drugs and
biologicals with an ASP to separately
payable drugs and biologicals. However,
excluding data from hospitals that
participate in the 340B program from
our ASP+X calculation, but paying
those hospitals at that derived payment
amount, would effectively redistribute
payment to drugs and biologicals from
payment for other services under the
OPPS, and we did not believe this
redistribution would be appropriate. In
our CY 2010 proposal, we did accept the
APC Panel’s February 2009
recommendation that CMS propose to
pay 340B hospitals in the same manner
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14:52 Nov 19, 2009
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as non-340B hospitals are paid.
Commenters on the CY 2009 OPPS/ASC
final rule with comment period were
generally opposed to differential
payment for hospitals based on their
340B participation status, and we did
not believe it would be appropriate to
exclude claims from this subset of
hospitals in the context of our CY 2010
proposal to pay all hospitals at the same
rate for separately payable drugs and
biologicals.
Moreover, as discussed above, while
we did not propose to adopt the APC
Panel’s specific recommended
methodology to redistribute pharmacy
overhead cost that would otherwise be
paid through payment for packaged
drugs and biologicals, our proposed CY
2010 pharmacy adjustment
methodology that would result in the
payment of separately payable drugs
and biologicals at ASP+4 percent
incorporated a more limited
redistribution of pharmacy overhead
cost for coded packaged drugs and
biologicals with an ASP (ASP is
necessary to calculate an overhead
amount) that would preserve the
aggregate drug cost in the claims, a
result consistent with the APC Panel’s
recommendations. Therefore, we
believed that it would be appropriate to
propose to pay 340B hospitals at the
same rates that we are proposing to pay
non-340B hospitals, and we proposed to
include the claims and cost report data
for 340B hospitals in the data we had
used for our analyses in order to
calculate the payment rates for drugs
and biologicals and other services for
the CY 2010 OPPS.
In conclusion, we proposed for CY
2010 to redistribute between one-third
and one-half of the difference between
the aggregate claims cost for coded
packaged drugs and biologicals with an
ASP and ASP dollars for those products,
which resulted in proposed payment for
the acquisition and pharmacy overhead
costs of separately payable drugs and
biologicals that do not have passthrough payment status of ASP+4
percent. This payment amount reflected
an APC drug payment adjustment for
pharmacy overhead cost. To accomplish
this payment adjustment, we also
proposed to reduce the cost of coded
packaged drugs and biologicals with an
ASP that was incorporated into the
payment for procedural APCs by the
amount of pharmacy overhead cost that
was redistributed from these packaged
drugs and biologicals to the payment for
separately payable drugs and
biologicals. The proposal was based on
the proposed redistribution of $150
million (through a 27 percent reduction
in the cost of coded packaged drug and
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60509
biologicals with an ASP), between onethird and one-half of the pharmacy
overhead cost (the cost above ASP) of
coded packaged drugs and biologicals
with an ASP in hospital outpatient
claims, to the cost of separately payable
drugs and biologicals, preserving the
aggregate cost of all drugs and
biologicals observed in the most recent
claims and cost report data available for
the proposed rule. We further proposed
that the claims data for 340B hospitals
be included in the calculation of
payment for drugs and biologicals under
the CY 2010 OPPS, and that 340B
hospitals would be paid the same
amounts for separately payable drugs
and biologicals as hospitals that do not
participate in the 340B program.
Finally, we proposed that, in
accordance with our standard drug
payment methodology, the estimated
payments for separately payable drugs
and biologicals would be taken into
account in the calculation of the weight
scaler that would apply to the relative
weights for all procedural services (but
would not apply to separately payable
drugs and biologicals) paid under the
OPPS, as required by section
1833(t)(14)(H) of the Act.
At the August 2009 meeting of the
APC Panel, the APC Panel
recommended that CMS pay for all
separately payable drugs at a rate of
ASP+6 percent. The APC Panel
recommended that CMS redistribute
costs from packaged drugs to separately
payable drugs as outlined in the CY
2010 OPPS/ASC proposed rule. Further,
the APC Panel recommended that CMS
analyze the impact on different classes
of hospitals of payment at ASP+6
percent for separately payable drugs
compared with CY 2009 payment at
ASP+4 percent. In addition, the APC
Panel requested that CMS provide an
impact analysis of payment for
separately payable drugs at ASP+6
percent on payment rates for other
services that use packaged drugs
compared with CY 2009 payment at
ASP+4 percent. Finally, the APC Panel
recommended that CMS and
stakeholders continue to refine their
analysis of payment for drugs,
biologicals, and radiopharmaceuticals to
assess the infrastructure costs associated
with the preparation and handling of
these products. Our responses to these
recommendations are included in our
responses to comments below.
Comment: Several commenters,
including MedPAC, generally agreed
with CMS’ proposal to redistribute
pharmacy overhead cost from packaged
to separately payable drugs and
biologicals. The commenters
appreciated that the proposed
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methodology would not pose an
administrative burden to hospitals.
However, many commenters
disagreed with CMS’ calculation of the
total estimated pharmacy overhead cost
of $395 million in the claims data
associated with packaged drugs that
resulted in the proposed redistribution
of $150 million, which was between
one-half and one-third of this overhead
cost. The commenters stated that CMS’
estimate of $395 million was too low to
represent the aggregate pharmacy
overhead cost of all packaged drugs and
biologicals, resulting in an
underestimate of how much overhead
cost should be redistributed to
separately payable drugs and biologicals
and, therefore, a proposed payment rate
for separately payable drugs and
biologicals that was too low. They
explained that, although CMS allows
flexibility in hospital charging practices
to account for drug and biological cost
on hospital claims, CMS’ proposed rule
calculation did not take hospital
charging practices for packaged drugs
and biologicals into account.
Specifically, in CMS’ estimation of the
cost of packaged drugs and biologicals,
the commenters pointed out that CMS
omitted costs from claims data for drugs
and biologicals that either do not have
a HCPCS code or do not have a reported
ASP, including those costs reported
under a pharmacy revenue code line
without a drug or biological HCPCS
code due to hospital choice or claims
processing requirements. The
commenters argued that these uncoded
packaged drug and biological costs
represent a substantial portion of
aggregate packaged drug and biological
cost under the OPPS.
Some commenters estimated the
additional packaged pharmacy overhead
cost attributable to these uncoded drugs
and biologicals to be nearly $560
million. The commenters asserted that
hospitals mark up the costs of drugs and
biologicals reported on claims under
pharmacy revenue code lines without
HCPCS codes similarly to packaged
drugs and biologicals reported with
HCPCS codes. Several commenters
provided analyses to support their
contention that the costs of uncoded
pharmacy revenue code lines reflect
mostly packaged drug and biological
costs, and that when hospitals do not
report packaged drugs and biologicals
with HCPCS codes, they report uncoded
pharmacy revenue code lines instead for
those drugs and biologicals. The
commenters concluded that a significant
percentage of the uncoded costs
reported under pharmacy revenue code
lines is pharmacy overhead cost
disproportionately attributed to
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packaged drugs and biologicals due to
the tendency of our established
methodology of converting billed
charges to costs to ‘‘compress’’ the
calculated costs to some degree and
recognizing that our choice of an annual
drug packaging threshold contributes to
the magnitude of the ASP+X percent
payment rate resulting from our
standard drug payment methodology.
In order to address these concerns, the
commenters recommended that CMS
redistribute the pharmacy overhead cost
attributed to uncoded cost reported
under pharmacy revenue code lines to
the cost of separately payable drugs and
biologicals. Some commenters argued
that, because they believe the costs on
these uncoded pharmacy revenue code
lines largely are for packaged drugs and
biologicals with HCPCS codes, CMS
could accurately assume the same
proportional amount of ASP and mark
up as for packaged drugs and biologicals
with a HCPCS code and derive a
simulated pharmacy overhead amount.
Therefore, they suggested that one-third
to one-half of residual pharmacy
overhead cost associated with these
uncoded pharmacy revenue code lines,
which they estimate to total
approximately $560 million, should be
redistributed to the cost of separately
payable drugs and biologicals.
In addition, several commenters
expressed concern that hospitals may
not be billing packaged drugs and
biologicals with HCPCS codes
appropriately, resulting in uncoded
costs reported under pharmacy revenue
code lines, and that this contributed to
the low estimate of pharmacy overhead
costs included in the proposed rule. The
commenters stated that a review of the
OPPS claims data found variations in
how hospitals are reporting drugs and
biologicals with HCPCS codes under
pharmacy revenue codes. The
commenters stated that some hospitals
are inappropriately assigning costs for
drugs and biologicals with HCPCS codes
to revenue code 0250 (Pharmacy (also
see 063x, an extension of 025x); General
Classification), rather than revenue code
0636 (Pharmacy—Extension of 025x;
Drugs Requiring Detailed coding (a)).
They speculated about a variety of
reasons why more HCPCS-coding for
packaged drug and biological cost was
not available to CMS for proposed rule
estimate purposes: (1) Hospitals may
have reported their packaged drugs with
revenue code 0250 and the associated
charges and units with no HCPCS codes
because HCPCS codes are not required
to be reported for packaged drugs and
biologicals; (2) the associated HCPCS
code may not have printed on the claim
because of provider billing system
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settings; or (3) Medicare contractors may
have instructed hospitals not to report
HCPCS codes under revenue code 0250.
As a result, the commenters believed
that CMS’ derived pharmacy overhead
cost estimate for packaged drugs and
biologicals based only on the cost of
packaged drugs and biologicals with a
HCPCS code and an ASP in the
proposed rule were inaccurately low. In
order to provide complete drug
information for future years, they
requested that CMS instruct hospitals to
bill for drugs and biologicals with
HCPCS codes under revenue code 0636.
Finally, some commenters expressed
frustration that CMS did not provide
information on the assignment of every
drug and biological HCPCS code with a
status indicator of ‘‘K,’’ ‘‘G,’’ or ‘‘N’’ to
one of three categories of pharmacy
overhead complexity in the analyses
that CMS presented to validate the
proposed redistribution of pharmacy
overhead cost from packaged drugs and
biologicals with an ASP to separately
payable drugs and biologicals. In light of
this omission, the commenters
recommended that CMS redistribute the
larger one-half portion of the one-third
to one-half of the proposed pharmacy
overhead cost to accurately account for
all pharmacy costs represented in the
HOPD.
Response: We proposed to reallocate
approximately $150 million in
pharmacy overhead cost from coded
packaged drugs and biologicals with an
ASP to separately payable drugs and
biologicals, representing a middle
ground between the one-third to onehalf of the total pharmacy overhead cost
associated with this set of packaged
drugs and biologicals. We agree with the
commenters that we did not include
uncoded drug and biological costs
reported under pharmacy revenue code
lines in our proposed rule estimate of
the pharmacy overhead costs of
packaged drugs and biologicals. We also
agree with the commenters that costs on
uncoded pharmacy revenue code lines
represent OPPS drug and biological
cost. The commenters suggested that we
assume the same relationship between
total claim cost and ASP for the
uncoded drug and biological costs in
our claims data as we observe for coded
packaged drugs and biologicals with an
ASP, and then redistribute one-third of
the assumed, associated pharmacy
overhead cost to the cost of separately
payable drugs and biologicals. We were
interested to review the analyses
provided by some commenters that used
statistical techniques to compare the
uncoded drug and biological costs to the
costs of packaged drugs and biologicals
with HCPCS codes but, at this time, we
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cannot be certain that the assumptions
suggested by the commenters would
represent an accurate portion of the
uncoded drug and biological cost
attributable to acquisition cost versus
pharmacy overhead cost. In the
proposed rule, we stated that a premise
of our redistribution model was our
assumption that the associated aggregate
ASP for packaged drugs and biologicals
was a proxy for acquisition cost for this
group of drugs and biologicals (74 FR
35327). Our proposed methodology
identified the difference between this
proxy for acquisition cost and the cost
of the same coded packaged drugs and
biologicals with an ASP in our claims
data as pharmacy overhead cost, and it
was one-third to one-half of that
pharmacy overhead cost ($150 million)
that we specifically proposed to
redistribute from coded packaged drugs
and biologicals with an ASP to the cost
of separately payable drugs and
biologicals.
As shown in Table 41, we determined
that the estimated aggregate cost of
separately payable drugs and
biologicals, including acquisition and
pharmacy overhead costs, is equivalent
to ASP–3 percent for this final rule with
comment period. A redistribution of
$150 million from the pharmacy
overhead cost of coded packaged drugs
and biologicals with an ASP (one-third
of that pharmacy overhead cost from
final rule data) to the cost of separately
payable drugs and biologicals would
result in payment for separately payable
drugs and biologicals at ASP+2 percent
for CY 2010. If we were to assume the
same relationship between total claim
cost and ASP for the uncoded drug and
biological cost in our claims data as we
observe for coded packaged drugs and
biologicals with an ASP as
recommended by some commenters,
and if we were then to redistribute onethird of the assumed, associated
pharmacy overhead cost ($150 million)
of uncoded drug and biological cost to
the cost of separately payable drugs and
biologicals, the result would be payment
for separately payable drugs and
biologicals at ASP+7 percent. The total
cost redistribution to separately payable
drugs and biologicals in this case would
be $300 million, $150 million from the
cost of coded packaged drugs and
biologicals with an ASP and $150
million from the cost of uncoded
packaged drugs and biologicals.
We understand that our proposal for
a redistribution of any drug and
biological cost from packaged to
separately payable drugs and biologicals
already is not our usual OPPS cost
estimation methodology, which uses the
estimated cost from claims and cost
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report data as reported to us by
hospitals for an item or service to
calculate a relative weight for that
service, or in the case of drugs and
biologicals, an ASP+X percent under
our standard drug payment
methodology. We made this
redistribution proposal because we were
concerned that by not redistributing
pharmacy overhead cost from packaged
to separately payable drugs and
biologicals, an underpayment of
separately payable drugs and biologicals
at ASP–2 percent (ASP–3 percent based
on final rule claims data) could result.
We remain concerned that the
redistribution of $150 million from the
pharmacy overhead cost of coded
packaged drugs and biologicals with an
ASP to payment for separately payable
drugs and biologicals, which would
provide payment at ASP+2 percent, also
could result in underpayment of
separately payable drugs and
biologicals. We are also troubled,
however, that payment for separately
payable drug and biologicals at ASP+7
percent resulting from an assumption
that the uncoded drug and biological
cost resembles the coded packaged cost
of drugs and biologicals with an ASP
could result in a potential payment
overestimation. As noted above, we
cannot be certain that we know what
portion of the uncoded drug and
biological cost is acquisition cost versus
pharmacy overhead cost. Therefore, we
are not willing to make even broader
assumptions about the magnitude of
ASP for uncoded drug and biological
cost in claims or layer any other
assumptions on the proposed
methodology that would further
significantly redistribute costs as
reported to us by hospitals within the
framework of the OPPS ratesetting
methodology.
While we are not making sweeping
assumptions that this uncoded packaged
drug and biological cost includes a
pharmacy overhead amount comparable
to that of coded packaged drugs and
biologicals with an ASP, we do
acknowledge that there must be some
pharmacy overhead cost associated with
these uncoded packaged drugs and
biologicals that was not accounted for in
our initial estimate of the pharmacy
overhead cost of packaged drugs and
biologicals because we expect that
hospitals would have attributed some
pharmacy overhead cost to these
products through their mark-up
practices. Therefore, while we further
examine the issue of pharmacy
overhead costs and while hospitals
examine administrative changes that
could result in their submission of more
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60511
accurate data to us as described below,
we believe that the adoption of a
transitional payment rate of ASP+4
percent based on a pharmacy overhead
adjustment methodology for CY 2010
would base OPPS payment upon the
best available proxy for the average
acquisition and pharmacy overhead
costs of separately payable drugs and
biologicals. We note that payment for
separately payable drugs and biologicals
at ASP+4 percent falls within the range
of ASP–3 percent, that would result
from no pharmacy overhead cost
redistribution from packaged to
separately payable drugs and
biologicals, to ASP+7 percent, that
would result from redistribution of
pharmacy overhead cost based on
expansive assumptions about the nature
of uncoded packaged drug and
biological cost. We proposed payment
for separately payable drugs and
biologicals at ASP+4 percent for CY
2010, and our final CY 2010 transitional
payment rate is consistent with this
amount. We are confident that ASP+4
percent will provide appropriate
payment for separately payable drugs
and biologicals in CY 2010, noting that
this payment is consistent with our
payment in CY 2009. We are not aware
of any current access problems for
Medicare beneficiaries to drugs and
biologicals in the HOPD based on our
CY 2009 OPPS payment for separately
payable drugs and biologicals at this
rate.
Specifically, for CY 2010, to
acknowledge the uncoded drug and
biological cost without making
significant further assumptions about
the amount of pharmacy overhead cost
associated with the drugs and
biologicals captured by this cost and to
pay separately payable drugs and
biologicals at ASP+4 percent, we believe
it currently would be appropriate to
reallocate $50 million of the total
uncoded drug and biological cost in
order to represent the pharmacy
overhead cost of uncoded packaged
drugs and biologicals that should be
appropriately associated with the cost of
separately payable drugs and
biologicals. We believe that our
proposal to reallocate $150 million of
cost from coded packaged drugs and
biologicals with an ASP, or one-third of
the pharmacy overhead cost of these
products based upon the claims data
available for this CY 2010 final rule, to
separately payable drugs and biologicals
continues to be appropriate. The
commenters generally supported the
one-third to one-half redistribution
estimate. While some commenters
requested a reallocation of one-half of
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the pharmacy overhead cost of packaged
drugs and biologicals to separately
payable drugs and biologicals, as
already discussed, we do not believe
there is a compelling reason to
reallocate that amount. We note that the
reallocation of $50 million or 8 percent
of the total cost of uncoded packaged
drugs and biologicals assumes that
whatever pharmacy overhead cost is not
accurately associated with uncoded
packaged drugs and biologicals, it
would not be less than 8 percent of total
uncoded drug and biological cost. This
is intentionally a conservative estimate,
as compared with the case of coded
packaged drugs and biologicals with an
ASP and for which we have a specific
pharmacy overhead cost estimate in
relationship to their known ASPs where
the reallocation of $150 million
constitutes 24 percent of the total cost
of the coded packaged drugs and
biologicals with an ASP. As stated
earlier, we are unwilling to make
sweeping assumptions that uncoded
packaged drug and biological cost
includes a pharmacy overhead amount
comparable to that of coded packaged
drugs and biologicals with an ASP. We
are confident that this conservative
drug or biological HCPCS code to one of
three categories of pharmacy overhead
complexity in the analyses that we
presented to validate the proposed
redistribution methodology, we did not
base our proposed redistribution
amount on these analyses. We explicitly
made a proposal to redistribute $150
million in estimated pharmacy overhead
cost associated with coded packaged
drugs and biologicals with an ASP,
between one-third and one-half of the
estimated pharmacy overhead cost.
Although we did not provide the precise
assignment of drugs and biologicals to
the various categories, we did describe
each set of pharmacy overhead
complexity categories in the proposed
rule and our methodology for
redistributing pharmacy overhead cost
under each scenario. In addition, we
posted a clarification to this discussion
for the public replicating our models on
August 6, 2009 during the comment
period.
Table 41 displays the final pharmacy
overhead adjustment methodology for
separately payable and packaged drugs
and biologicals under the CY 2010
OPPS.
estimate of $50 million for
redistribution from the cost of uncoded
packaged drugs and biologicals to
separately payable drugs and
biologicals, as opposed to the $150
million redistribution that could result
from broad assumptions about the ASPs
of these uncoded drugs and biologicals,
is an appropriate amount for CY 2010 in
light of our uncertainty about the
relationship between ASP and
pharmacy overhead cost for the
uncoded drugs and biologicals.
In summary, with a redistribution of
a total of $200 million, $150 million
from the pharmacy overhead cost of
coded packaged drugs and biologicals
with an ASP as we proposed and $50
million from the cost of uncoded
packaged drugs and biologicals for
which we cannot estimate a more
specific pharmacy overhead cost at this
time, to separately payable drugs and
biologicals, the final CY 2010
transitional payment rate for separately
payable drugs and biologicals is ASP+4
percent based on the final pharmacy
overhead adjustment methodology.
In response to commenters’
frustration that we did not provide
information on our assignment of every
TABLE 41—CY 2010 FINAL RULE—PHARMACY OVERHEAD ADJUSTMENT PAYMENT METHODOLOGY FOR SEPARATELY
PAYABLE AND PACKAGED DRUGS AND BIOLOGICALS
Total ASP dollars for drugs
and biologicals
in claims data
(in millions)*
Uncoded Packaged Drugs and Biologicals .....................................................
Coded Packaged Drugs and Biologicals with an ASP ....................................
Separately Payable Drugs and Biologicals with an ASP ................................
All Coded Drugs and Biologicals with an ASP ................................................
Total cost of
drugs and
biologicals in
claims data
after
adjustment
(in millions)**
Unknown
172
2,972
3,144
$606
466
3,039
3,505
Ratio of cost
to ASP
(column C/
column B)
N/A
2.71
1.04
1.11
ASP+X
Percent
N/A
ASP+171
ASP+4
ASP+11
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* Total July 2009 ASP dollars (ASP multiplied by drug or biological units in CY 2008 claims) for drugs and biologicals with a HCPCS code and
ASP information.
** Total cost in the CY 2008 claims data for drugs and biologicals.
We note that hospitals currently have
a variety of ways to bill for drugs and
biologicals that are not separately paid.
They may report the charges for the
HCPCS code separately on a line, and if
the HCPCS code has a status indicator
of ‘‘N,’’ no separate payment is made for
the drug or biological, but the reported
charge information is available to use
for future ratesetting. Provided that
information for the ASP pricing
methodology was available for the drug
or biological HCPCS code, we included
drug or biological cost estimated from
charges for claims described by this
scenario in our estimation of total
pharmacy overhead costs of coded
packaged drugs and biologicals with an
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ASP for CY 2010 because we could
identify these drugs and biologicals,
estimate their cost from charges in CY
2008 claims data, and use their ASP
pricing information. Another option
available to hospitals billing for
packaged drugs and biologicals is to
incorporate the charge for the drug or
biological in the charge for the
procedure. We are unable to identify the
cost estimated from charges as drug or
biological cost because the procedures
are not reported under a pharmacy
revenue code line and, therefore, these
packaged drug and biological costs were
not included in our estimate of the total
pharmacy overhead cost of packaged
drugs and biologicals. The final way for
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hospitals to bill for packaged drugs and
biologicals is to include charges for
these items under a pharmacy revenue
code line, specifically revenue code
0250, without a HCPCS code, and it is
an additional $50 million from this
uncoded cost of packaged drugs and
biologicals that we have redistributed to
the cost of separately payable drugs and
biologicals in our final CY 2010
pharmacy overhead adjustment
payment methodology for drugs and
biologicals.
We have adopted this pharmacy
overhead adjustment payment
methodology for CY 2010 only after 3
distinct attempts over the 4 prior years
to garner more accuracy in both the
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claim drug or biological charge and
Medicare hospital cost report data as
submitted to us by hospitals in an effort
to show consideration for the significant
hospital administrative burden that the
commenters cited in response to each
proposal that, in turn, precluded further
refinement of our data collection efforts.
In light of our commitment to using
hospital data as reported to us by
hospitals to set OPPS payment rates, we
believe that it would be inappropriate to
assume that the costs reported under
uncoded pharmacy revenue code lines
are for the same drugs and biologicals,
with the same ASPs, as the costs of
packaged drugs and biologicals reported
with HCPCS codes. We acknowledge
that the pharmacy overhead cost
associated with drug and biological
costs reported under uncoded pharmacy
revenue code lines were not included in
the proposed rule estimate of total
pharmacy overhead cost of coded
packaged drugs and biologicals with an
ASP. In response to the concerns of
commenters, we have considered only a
small percentage of this uncoded drug
and biological cost to be misallocated
pharmacy overhead cost that is
appropriate for redistribution in our
final CY 2010 methodology. We cannot
be certain that the amount of uncoded
pharmacy overhead cost is as high as
some commenters suggested, that
hospitals mark up these uncoded drugs
and biologicals in the same way as
packaged drugs and biologicals with
HCPCS codes, or that significant volume
for these uncoded drugs and biologicals
might not warrant allocating a greater
percentage of fixed pharmacy overhead
cost to these drugs and biologicals. If
hospitals truly desire significantly
greater OPPS payment accuracy for
separately payable drugs and
biologicals, it is clear that hospitals will
need to assume some burden in
submitting more accurate data to us. In
addition, we will continue to examine
the issue of pharmacy overhead costs as
we work to refine our transitional
payment methodology for separately
payable drugs and biologicals for future
years.
CMS’ longstanding policy is to refrain
from instructing hospitals on charging
practices for services under most
revenue codes. We believe that this
allows hospital flexibility in billing
systems and provides the necessary
autonomy for hospitals to manage the
many variations that are possible when
creating a hospital chargemaster for
multiple payers. While we do not
require hospitals to use revenue code
0636 (Pharmacy-Extension of 025x;
Drugs Requiring Detailed coding (a))
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when billing for drugs and biologicals
that have HCPCS codes, whether they
are separately payable or packaged, we
believe that a practice of billing all
drugs and biologicals with HCPCS codes
under revenue code 0636 would be
consistent with NUBC billing guidelines
and would provide us with the most
complete and detailed information for
ratesetting. We note that we make
packaging determinations for drugs
annually based on cost information
reported under HCPCS codes, so the
OPPS ratesetting is best served when
hospitals report charges for all items
and services that have HCPCS codes
under those HCPCS codes, whether or
not payment for the items and services
is packaged or not. As already
discussed, it is our standard ratesetting
methodology to rely on hospital cost
and charge information as it is reported
to us through the claims data. More
complete data from hospitals on which
drugs were provided for a specific
episode would help improve payment
accuracy for separately payable drugs in
the future, and we encourage hospitals
to change their reporting practices if
they are not already reporting HCPCS
codes for all drugs furnished, if specific
codes are available.
Comment: Several commenters
objected to the proposed redistribution
methodology as it decreased payments
for procedural APCs with high packaged
drug costs included in their payment
rates.
One commenter disagreed with the
proposed redistribution methodology
and its effect on the imaging procedure
APCs. The commenter argued that
because all contrast agents without passthrough status are packaged, regardless
of an individual agent’s relationship to
the annual drug packaging threshold,
imaging procedure APCs should be
exempt from the proposed pharmacy
cost redistribution methodology. If
imaging procedures are not exempted
from the redistribution, the commenter
contended that these procedures would
be disproportionately affected because
the spectrum of contrast costs are
currently represented as packaged costs
within the imaging procedure APCs.
Similarly, another commenter
requested that CMS exempt nuclear
medicine procedures from the
redistribution methodology. Again, the
commenter stated that as all diagnostic
radiopharmaceuticals are packaged,
regardless of their estimated per day
costs, their overhead costs are all
represented in the nuclear medicine
APCs and a redistribution would
disproportionately affect these services.
Response: We agree that packaging all
contrast agents into associated imaging
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60513
procedures results in the inclusion of
payment for both expensive and
relatively inexpensive contrast agents in
the payment for the associated imaging
procedures. While the commenters
contended that this policy thereby
incorporates all contrast agents with
different hospital mark up practices in
a single packaged payment methodology
and, therefore, should not be subject to
the cost redistribution, we believe that
contrast agents are contributing to the
overall charge compression for all drugs
and biologicals that is the specific target
of our redistribution methodology.
When examining CY 2008 claims data
for the final rule, we observed that
hospitals typically billed costs for
contrast agents under a pharmacy
revenue code (025X (Pharmacy), 026X
(IV Therapy), or 063X (Pharmacy—
Extension of 025X)). We believe that in
almost all cases, hospitals capture the
costs and charges for pharmacy revenue
codes in the cost center 5600 ‘‘Drugs
Charged to Patients,’’ and this is the cost
center that we use to estimate costs from
charges for the pharmacy revenue codes
in our claims data each year. We make
the revenue code-to-cost center
crosswalk that we use to match
Medicare hospital cost report
information with claims data
continually available for inspection and
comment on the CMS Web site at:
https://www.cms.hhs.gov/
HospitalOutpatientPPS. The proposed
methodology of redistributing pharmacy
overhead cost from packaged drugs and
biologicals to separately payable drugs
and biologicals was a proposal to
address charge compression observed
within this specific cost center that
captures the vast majority of costs and
charges for drugs and biologicals billed
on hospital outpatient claims.
Therefore, as most hospitals billing
contrast agents with pharmacy revenue
codes are associating the contrast agent
costs with the cost center 5600 ‘‘Drugs
Charged to Patients,’’ we believe it is
appropriate to redistribute cost from
contrast agents to separately payable
drugs and biologicals under our final CY
2010 pharmacy overhead cost
redistribution methodology.
The commenter also suggested that it
would be inappropriate to redistribute
cost from contrast agents because, as
discussed in V.B.2.d. of this final rule
with comment period, it has been OPPS
policy to package payment for all
contrast agents since CY 2008. The
proposed methodology for redistributing
pharmacy overhead cost from packaged
drugs and biologicals to separately
payable drugs and biologicals was not
only a proposal to address charge
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compression, but specifically a proposal
to address charge compression in light
of our adoption of a specific drug
packaging threshold, which is $65 for
CY 2010. The argument that it would,
therefore, be inappropriate to
redistribute cost from contrast agents
could have merit if there was a sizable
amount of aggregate cost for contrast
agents with per day costs greater than
the drug packaging threshold of $65. In
that case, it could be argued that the
compression in cost estimates for
expensive contrast agents (those with
per day costs greater than the $65
packaging threshold) created by
estimating costs for those agents by
applying the CCR for the single cost
center 5600 ‘‘Drugs Charged to Patients’’
to expensive contrast agents’ charges
would be offset by the overestimation of
costs for inexpensive contrast agents
(those with per day costs less than the
$65 packaging threshold) created by
application of the same single CCR to
inexpensive contrast agents’ charges,
assuming that hospitals apply a lower
markup to expensive contrast agents
and a higher markup to inexpensive
contrast agents. If the mix of expensive
and inexpensive contrast agents
resembled the mix of expensive and
inexpensive drugs generally captured in
the cost center 5600 ‘‘Drugs Charged to
Patients,’’ the use of a single CCR would
accurately estimate total cost of contrast
agents in aggregate. Because all contrast
agents not receiving pass-through
payment are packaged, packaging an
accurate aggregate cost estimate for
contrast agents could argue against
redistributing cost from packaged
contrast agents to separately payable
drugs and biologicals. However, in our
CY 2010 final rule claims data, we
observed only 3 percent of total contrast
agent cost associated with those contrast
agents that have per day costs above
$65.
In conclusion, both because contrast
agents are billed under pharmacy
revenue codes and accounted for in the
cost center 5600 ‘‘Drugs Charged to
Patients’’ and because the per day cost
of almost all contrast agents falls under
the CY 2010 packaging threshold of $65,
we believe the estimated cost of contrast
agents contains a disproportionate
amount of pharmacy overhead cost and
that it is appropriate to include them in
our final CY 2010 redistribution
methodology.
While we believe that contrast agents
are commonly billed under pharmacy
revenue codes and that hospitals largely
account for the cost of contrast agents
under the cost center 5600 on their
Medicare hospital cost report, we did
not observe that hospitals apply the
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same practice for diagnostic
radiopharmaceuticals. After reviewing
our claims data, we found that the
majority of diagnostic
radiopharmaceuticals are billed under
revenue code 0343 (Nuclear Medicine;
Diagnostic Radiopharmaceuticals). As
specified in our revenue code-to-cost
center crosswalk, we believe hospitals
largely account for the costs and charges
associated with revenue code 0343 in a
nonstandard cost center for Diagnostic
Nuclear Medicine or the cost center
4100 ‘‘Radiology-Diagnostic.’’ Because
the redistribution of pharmacy overhead
cost from packaged drugs and
biologicals to separately payable drugs
and biologicals is intended to
specifically address charge compression
in the pharmacy cost center, in light of
the above information, we excluded the
costs of both diagnostic and therapeutic
radiopharmaceuticals from our estimate
of total drug and biological cost in the
claims data for the final CY 2010
redistribution methodology. As a result,
the final payment rates for nuclear
medicine procedures that incorporate
the costs of packaged diagnostic
radiopharmaceuticals are not impacted
by the final redistribution methodology.
Comment: Several commenters cited
methodological concerns about the
approach CMS used to calculate the
proposed equivalent average ASP-based
payment amount for separately payable
drugs and biologicals. In addition, the
commenters expressed concern that
CMS’ cost estimation methodology is
very sensitive to changes in the
underlying data and assumptions. Citing
these concerns, some commenters
requested payment at ASP+6 percent for
parity with physician’s office payment
rates for drugs, arguing that hospital
costs for acquisition and associated
pharmacy overhead would be at least as
high, if not significantly greater, than
the physician’s office costs.
Some commenters noted that the
statute requires drug cost surveys for
payment purposes for SCODs under the
OPPS, and that the most recent survey
available is outdated as it was
performed in CY 2004 by the GAO. The
commenters stated that the statute
specifically requires survey data as the
basis for hospital acquisition costs in
order to provide a more appropriate
payment methodology for drugs and
biologicals, instead of costs calculated
from claims data. They concluded that,
by not performing a survey and by not
paying for drugs and biologicals at the
physician’s office rate, CMS is not in
compliance with the statute. The
commenters acknowledged that drug
cost surveys are difficult to perform.
However, they asserted that, in order to
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comply with the requirements of the
statute, either a survey should be
performed or payment should be made
at ASP+6 percent. Other commenters
cited the methodological concerns that
are described below regarding the
proposed proxy for average acquisition
cost based upon claims data, and stated
that until CMS is able to adequately
address these concerns, CMS should
implement payment at ASP+6 percent
pursuant to section 1833(t)(14)(A)(iii)(I).
The commenters’ first methodological
concern is that CMS compared cost
estimates from different points in time
to develop payment rates for drugs and
biologicals. Specifically, several
commenters noted that for the proposed
rule, CMS used ASP data from the
fourth quarter of CY 2008, which is the
basis for calculating payment rates for
drugs and biologicals in the physician’s
office setting using the ASP
methodology effective April 1, 2009,
along with hospital claims data from CY
2008 to determine the relative ASP
amount for CY 2010 under CMS’
proposed drug payment methodology.
The commenters requested that CMS
use an alternative ASP file for the final
rule calculation of ASP+X to better align
ASP data with hospital claims and cost
report data. The commenters stated that
CMS compared hospital claims data
from throughout CY 2008 with costs
estimated from charges that include
pharmacy overhead cost, with ASP data
as a proxy for acquisition cost
representing drug sales in the fourth
quarter of CY 2008, well after the time
hospitals would have purchased most of
their drugs for administration in CY
2008. As an alternative, the commenters
requested that CMS use an earlier ASP
file that is more representative of the
costs to hospitals when they purchase
drugs for the claims year. Specifically,
some commenters requested that CMS
use the July 1, 2008 ASP file that
represents sales from the first quarter of
CY 2008 when comparing CY 2008
hospital claims data to ASP data to
determine an ASP+X amount.
Second, many commenters reiterated
concerns that when CMS applies a
single CCR to adjust charges to costs for
these drugs and biologicals, charge
compression leads to misallocation of
the pharmacy overhead costs associated
with high and low cost drugs and
biologicals during ratesetting. The
commenters noted that hospitals
disproportionately mark up their
charges for low cost drugs and
biologicals to account for pharmacy
overhead costs. They indicated that
while the aggregate charges for
inexpensive and expensive drugs may
include the total pharmacy overhead
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costs of the hospital, the charges for
individual drugs and biologicals do not
represent the specific acquisition and
pharmacy overhead costs of that
particular drug or biological. The
commenters explained that hospitals
apply proportionately smaller markups
to higher cost items and proportionately
larger markups to lower cost items. The
commenters argued that by using only
separately payable drugs in the
calculation of the equivalent average
ASP-based amount, the pharmacy
overhead costs associated with these
separately payable drugs that are
disproportionately included in the
charges for packaged drugs are not
factored into the calculation, resulting
in an artificially low ASP add-on
percentage. Therefore, some
commenters suggested using the costs of
both packaged drugs and separately
payable drugs when calculating the
equivalent average ASP-based payment
amount for separately payable drugs, as
they argued that this would provide a
more accurate ASP-based payment
amount for separately payable drugs. As
an alternative, the commenters
recommended that CMS eliminate the
drug packaging threshold and provide
separate payment for all Part B drugs
under the OPPS at an ASP+X percent
amount calculated from the cost of all
drugs with HCPCS codes.
Finally, several commenters noted
that CMS included, in the calculation of
the costs of separately payable drugs
and biologicals, OPPS claims data from
hospitals that receive Federal discounts
on drug prices under the 340B drug
pricing program. The commenters
pointed out that hospital participation
in the 340B program had grown
substantially over the past few years,
and they believed that the costs from
these hospitals now constituted a
significant proportion of hospital drug
costs on CY 2008 OPPS claims. The
commenters stated that including 340B
hospital claims data when comparing
aggregate hospital costs based on claims
data to ASP rates contributed to an
artificially low equivalent average ASPbased payment rate because ASP data
specifically exclude drugs sales under
the 340B program.
Response: As discussed above, the
provision in section 1833(t)(14)(A)(iii)
of the Act continues to be applicable to
determining payments for SCODs for CY
2010. This provision requires that
payment for SCODs be equal to the
average acquisition cost for the drug for
that year (which, at the option of the
Secretary, may vary by hospital group)
as determined by the Secretary, subject
to any adjustment for overhead costs
and taking into account the hospital
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acquisition cost survey data under
section 1833(t)(14)(D) of the Act, or if
hospital acquisition cost data are not
available, then the average price for the
drug in the year established under
section 1842(o), 1847A, or 1847B of the
Act, as the case may be, as calculated
and adjusted by the Secretary as
necessary for purposes of section
1833(t)(14)of the Act. In the CY 2006
OPPS final rule with comment period
(70 FR 68640), we compared hospital
drug cost data that were available to us
at the time, specifically: (1) data from
the GAO survey; (2) hospital claims data
from CY 2004; and (3) ASP information.
In addition, we discussed our
methodology for comparing these data
that represented different timeframes
from 2004 to 2006. As a result of our
analysis comparing these three sources,
we concluded that, on average, the costs
from hospital claims data representing
SCODs were roughly equivalent to
payment at ASP+6 percent. Therefore,
we finalized a policy that used our
hospital claims data as a proxy for
average hospital acquisition cost and
provided payment for separately
payable drugs that do not have passthrough status at ASP+6 percent for CY
2006 (70 FR 68639 through 68642).
While the commenters are correct that
the statute allows for the use of the
methodology described in section
1842(o), section 1847A or section 1847B
of the Act, as calculated and adjusted by
the Secretary as necessary, this is only
when hospital acquisition cost data are
not available. We believe that we have
established both our hospital claims
data and ASP data as an appropriate
proxy for average hospital acquisition
cost, taking the GAO survey information
into account for the base year (70 FR
68641). Many of the drugs and
biologicals covered under the OPPS are
provided a majority of the time in the
hospitals setting, and the ASP
information we collect would be an
adequate proxy for hospital acquisition
cost. Further, as already discussed, the
commenters have not disputed the
accuracy of the total drug and biological
cost estimated in our claims data, only
the estimated cost of separately payable
drugs and biologicals. While we have
not yet performed hospital drug
acquisition cost surveys similar to the
GAO survey, we note that the statute
only calls for ‘‘periodic’’ surveys.
Therefore, we disagree that we are not
complying with the statute by not
performing a survey and not paying at
the physician’s office rate. We note,
however, that we are considering the
possibility of such a survey at some
point in the future. Therefore, we do not
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60515
believe that it is appropriate at this time
to provide payment at anything other
than average acquisition cost, with a
redistribution for pharmacy overhead,
based on the drug and biological costs
observed in hospital claims data and
pricing information observed in ASP
data. We disagree with the commenters
who believe that our redistribution
methodology is not an appropriate
proxy for average hospital acquisition
cost, with an adjustment for pharmacy
overhead cost. We have no basis for
providing payment for separately
payable drugs at the physician’s office
rate in the face of an appropriate proxy
for average hospital acquisition cost, as
described in detail below.
In response to the commenters who
claimed that hospital costs for drug
acquisition and associated pharmacy
overhead would be at least as high, if
not significantly greater, than the
physician’s office costs, we have no
information that would confirm this
statement. ASP information is only
available for all sales of drugs and
biologicals, so we cannot compare
hospital and physician’s office
acquisition costs for individual drugs
and biologicals or in aggregate. While
our final CY 2010 pharmacy overhead
adjustment methodology for payment of
separately payable drugs and biologicals
relies on the assumption that ASP is a
fair estimate of hospitals’ average
acquisition cost of drugs and biologicals
in general, we expect that drug
acquisition costs could vary across
settings and clinical cases. In some
cases hospital drug acquisition costs
could be lower than the costs to
physicians’ offices, based on high
volume purchasing agreements, and in
other cases hospital acquisition costs
could be greater, based on their need for
emergency purchases outside of
negotiated contracts with preestablished
best rates. We also expect that pharmacy
overhead costs could vary across
hospital and physician’s office settings,
based on the drugs and biologicals
administered in those settings. Many
hospitals provide a range of drugs and
biologicals, including those with high
and low pharmacy overhead costs,
whereas physicians’ offices may be
more likely to provide drugs and
biologicals with typically high (or low)
pharmacy overhead costs. This
unknown variability in drug acquisition
and pharmacy overhead costs across
settings means that we cannot conclude
that the acquisition and pharmacy
overhead costs of drugs and biologicals
in the HOPD are greater or less than the
physician’s office costs. Finally, the
ASP-based payment rate for drugs
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furnished in physicians’ offices is
specified in the statute as ASP+6
percent, whereas the OPPS payment is
based on average hospital acquisition
cost and associated pharmacy overhead
cost. Therefore, we do not believe that
comparisons of OPPS drug payment
rates with physician’s office payment
rates suggesting that parity is necessary
are applicable to determining
appropriate payment rates for separately
payable drugs and biologicals under the
OPPS.
For our calculation of per day costs of
HCPCS codes for drugs and
nonimplantable biologicals in the CY
2010 OPPS/ASC final rule with
comment period, we proposed to use
ASP data from the first quarter of CY
2009, which is the basis for calculating
payment rates for drugs and biologicals
in the physician’s office setting using
the ASP methodology effective July 1,
2009, along with updated hospital
claims data from CY 2008 (74 FR
35320). We also proposed to use these
data for budget neutrality estimates and
impact analyses for this CY 2010 OPPS/
ASC final rule with comment period.
Payment rates for HCPCS codes for
separately payable drugs and
nonimplantable biologicals included in
Addenda A and B to this final rule with
comment period are based on ASP data
from the second quarter of CY 2009,
which are the basis for calculating
payment rates for drugs and biologicals
in the physician’s office setting using
the ASP methodology effective October
1, 2009.
Since implementing the ASP+X
methodology in CY 2006, we have used
the most recently available data to
establish our relative ASP payment rate
for the upcoming year, consistent with
our overall policy of updating the OPPS
of using the most recent claims and cost
report data. For the CY 2010 final rule,
this results in using July 2009 ASP
payment rates (based on first quarter CY
2009 sales), CY 2008 hospital claims
data, and the most recently available
hospital cost reports (in the majority of
cases cost reports beginning in CY
2007). As we have noted in previous
years, the relative ASP+X amount is
likely to change from the proposed rule
to the final rule as a result of updated
ASP data, hospital claims data, and
updated hospital cost reports. If we
were to introduce significant error into
our ASP+X percent calculation by not
aligning all pricing and cost data to a
single period of time, we would
consider changing the ASP data that we
use. However, we believe that if we
were to use an ASP file from CY 2008,
which commenters claim would more
accurately represent hospital costs
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14:52 Nov 19, 2009
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associated with procuring drugs and
biologicals for that claims year, we
would need to offset any increases in
the relative ASP amount resulting from
the use of a different ASP file with a
deflation adjustment for each hospital’s
CCRs for cost center 5600 ‘‘Drugs
Charged to Patients’’ in order to
simulate costs from claim charges in the
claim year. We make comparable CCR
deflation estimates when we set our
fixed dollar eligibility threshold for
outlier payments described in section
II.F. of this final rule with comment
period. Because over recent years
hospital charges have typically grown
faster than costs, we would expect such
an adjustment to reduce estimated costs
in our claims data. Therefore, we are
continuing our current policy of using
the most recently available claims, cost
report, and ASP data when performing
our ASP+X calculation under the final
CY 2010 redistribution methodology in
order to set payment rates for separately
payable drugs and biologicals.
For CY 2010, we again attempted to
address the issue of charge compression
by proposing a methodology that
reallocates pharmacy overhead costs
from packaged drugs and biologicals to
separately payable drugs and
biologicals. We have made several
proposals in the past to identify
pharmacy overhead costs and address
charge compression in the pharmacy
revenue center. For the CY 2006 OPPS,
we proposed to establish three distinct
Level II HCPCS C-codes and three
corresponding APCs for drug handling
categories to differentiate overhead costs
for drugs and biologicals (70 FR 42730).
In the CY 2008 OPPS/ASC proposed
rule (72 FR 42735), we proposed to
instruct hospitals to remove the
pharmacy overhead charge for both
packaged and separately payable drugs
and biologicals from the charge for the
drug or biological and report the
pharmacy overhead charge on an
uncoded revenue code line on the
claim. We believed that this would
provide us with an avenue for collecting
pharmacy handling cost data specific to
drugs in order to package the overhead
costs of these items into the associated
procedures, most likely drug
administration services. For CY 2009,
we proposed to split the ‘‘Drugs Charged
to Patients’’ cost center into two cost
centers: one for drugs with high
pharmacy overhead costs and one for
drugs with low pharmacy overhead
costs (73 FR 41492). We noted that we
expected that CCRs from the proposed
new cost centers would be available in
2 to 3 years to refine OPPS drug cost
estimates by accounting for differential
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hospital markup practices for drugs
with high and low overhead costs.
However, we did not finalize any of
these proposals due to concerns from
the hospital community that these
proposals would create an
overwhelming burden on hospitals and
staff. We have once again proposed to
address the issue of charge compression,
in this case without requiring any
changes to current hospital reporting
practices.
It has been our policy, since CY 2006,
to only use separately payable drugs and
biologicals in the calculation of the
equivalent average ASP-based payment
amount under the OPPS. We do not
include packaged drugs and biologicals
in this standard analysis because cost
data for these items are already
accounted for within the APC
ratesetting process through the median
cost calculation methodology discussed
in section II.A.2. of this final rule with
comment period. To include the costs of
coded packaged drugs and biologicals in
both our APC ratesetting process (for
associated procedures present on the
same claim) and in our ratesetting
process to establish an equivalent
average ASP-based payment amount for
separately payable drugs and biologicals
would give these data disproportionate
emphasis in the OPPS system by
skewing our analyses, as the costs of
these packaged items would be, in
effect, counted twice. Accordingly, we
are not adopting the suggestion from
commenters that we include all
packaged and separately payable drugs
and biologicals when establishing an
equivalent average ASP-based rate to
provide payment for the hospital
acquisition and pharmacy handling
costs of drugs and biologicals. However,
we remind commenters that because the
costs of packaged drugs and biologicals,
including their pharmacy overhead
costs, are packaged into the payments
for the procedures in which they are
administered, the OPPS provides
payment for both the drugs and the
associated pharmacy overhead costs
through the applicable procedural APC
payments. Furthermore, we disagree
with the commenters who recommend
that we should pay separately for all
drugs and biologicals with HCPCS
codes. We continue to believe that
packaging is a fundamental component
of a prospective payment system that
contributes to important flexibility and
efficiency in the delivery of high quality
hospital outpatient services and,
therefore, we believe it is appropriate to
maintain a modest drug packaging
threshold that packages the costs of
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inexpensive drugs into payment for the
associated procedures.
Moreover, we continue to believe that
excluding data from hospitals that
participate in the 340B program from
our ASP+X calculation, and paying
those hospitals at that derived payment
amount, would inappropriately
redistribute payment to drugs and
biologicals from payment for other
services under the OPPS. The ASPequivalent cost of drugs under the OPPS
that would be calculated only from
claims data for non-340B hospitals
would likely be higher than the cost of
all drugs from our aggregate claims for
all hospitals. To set drug payment rates
for all hospitals based on a subset of
hospital cost data, determined only from
claims data for non-340B hospitals
would increase the final APC payment
weights for drugs in a manner that does
not reflect the drug costs of all hospitals,
although all hospitals, including 340B
hospitals, would be paid at these rates
for drugs. Furthermore, as a
consequence of the statutory
requirement for budget neutrality,
increasing the payment weights for
drugs by excluding 340B hospital claims
would reduce the relative payment
weights for other services in a manner
that does not reflect the procedural costs
of all hospitals relative to the drug costs
of all hospitals, thereby distorting the
relativity of payment weights for
services based on hospital costs. Many
commenters on the CY 2009 OPPS/ASC
final rule with comment period were
generally opposed to differential
payment for hospitals based on their
340B participation status, and we do not
believe it would be appropriate to
exclude claims from this subset of
hospitals in the context of a CY 2010
drug and biological payment policy that
pays all hospitals at the same rate for
separately payable drugs and
biologicals.
Therefore, for CY 2010, we are
finalizing our proposed payment for
separately payable drugs and
biologicals, with modification. We are
redistributing $200 million from the
cost of packaged drugs and biologicals
to separately payable drugs and
biologicals. The $200 million consists of
$150 million (one-third of the pharmacy
overhead cost) from the coded packaged
drug and biological cost for drugs and
biologicals with an ASP and $50 million
from the packaged drug and biological
cost for drugs and biologicals without
an ASP. To model this policy for the CY
2010 final rule with comment period,
we reduced the cost of coded packaged
drugs and biologicals with an ASP by 24
percent (based on final rule data;
reduction was 27 percent based on
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14:52 Nov 19, 2009
Jkt 220001
proposed rule data) and the cost of
packaged drugs and biologicals without
a HCPCS code or an ASP by 8 percent
when we calculated the median cost of
the CY 2010 procedural APCs. This
redistribution results in payment for
separately payable drugs and biologicals
at a transitional rate of ASP+4 percent
for CY 2010 under a pharmacy overhead
adjustment methodology. We are,
therefore, not accepting the August 2009
recommendation of the APC Panel to
pay for separately payable drugs and
biologicals at ASP+6 percent.
Furthermore, because we are finalizing
payment of separately payable drugs at
APS+4 percent, we are not accepting the
August 2009 APC Panel
recommendations to analyze the impact
of ASP+6 percent payment on different
classes or for services that use packaged
drugs compared with payment at ASP+4
percent. We are accepting the
recommendation of the APC Panel to
continue to refine our analyses of
payment for drugs, biologicals, and
radiopharmaceuticals and continue to
welcome information and analyses from
the public regarding pharmacy overhead
costs.
Comment: One commenter requested
that CMS create a HCPCS J-code for
tositumomab, currently provided under
a radioimmunotherapy regimen and
billed as part of HCPCS code G3001
(Administration and supply of
tositumomab, 450 mg). The commenter
argued that because tositumomab is
listed in compendia, is approved by the
FDA as part of the BEXXAR® regimen,
and has its own National Drug Code
(NDC) number, it should be recognized
as a drug and, therefore, be paid as other
drugs are paid under the OPPS
methodology, instead of having a
payment rate determined by hospital
claims data. The commenter suggested
that a payment rate could be established
using the ASP methodology.
Response: We have consistently noted
that unlabeled tositumomab is not
approved as either a drug or a
radiopharmaceutical, but it is a supply
that is required as part of the
radioimmunotherapy treatment regimen
(November 18, 2008 OPPS/ASC final
rule with comment period (73 FR
68658); November 27, 2007 OPPS/ASC
final rule with comment period for CY
2008 (72 FR 66765); November 10, 2005
OPPS final rule with comment period
for CY 2006 (70 FR 68654); November
7, 2003 OPPS final rule with comment
period for CY 2004 (68 FR 63443)). We
do not make separate payment for
supplies used in services provided
under the OPPS. Payments for necessary
supplies are packaged into payments for
the separately payable services provided
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60517
by the hospital. Specifically,
administration of unlabeled
tositumomab is a complete service that
qualifies for separate payment under its
own clinical APC. This complete service
is currently described by HCPCS code
G3001. Therefore, we do not agree with
the commenter’s recommendation that
we should assign a separate HCPCS
code to the supply of unlabeled
tositumomab. Rather, we will continue
to make separate payment for the
administration of tositumomab, and
payment for the supply of unlabeled
tositumomab is packaged into the
administration payment.
We note that separately payable drug
and biological payment rates listed in
Addenda A and B to this final rule with
comment period, which illustrate the
final CY 2010 payment of ASP+4
percent for separately payable nonpassthrough drugs and nonimplantable
biologicals and ASP+6 percent for passthrough drugs and biologicals, reflect
either ASP information that is the basis
for calculating payment rates for drugs
and biologicals in the physician’s office
setting effective October 1, 2009 or
mean unit cost from CY 2008 claims
data and updated cost report
information available for this final rule
with comment period. In general, these
published payment rates are not
reflective of actual January 2010
payment rates. This is because payment
rates for drugs and biologicals with ASP
information for January 2010 will be
determined through the standard
quarterly process where ASP data
submitted by manufacturers for the
third quarter of 2009 (July 1, 2009
through September 30, 2009) are used to
set the payment rates that are released
for the quarter beginning in January
2010 near the end of December 2009. In
addition, payment rates for drugs and
biologicals for which there was no ASP
information available for October 2009
payment and, therefore, these products
would be paid based on mean unit cost
in CY 2010 based on available
information at the time of this final rule
with comment period, may have ASP
information available for payment for
the quarter beginning in January 2010.
These drugs and biologicals would then
be priced based on their newly available
ASP information. Finally, there may be
drugs and biologicals that have ASP
information available for this final rule
with comment period (reflecting
October 2009 ASP data) that do not have
ASP information available for the
quarter beginning in January 2010.
These drugs and biologicals would then
be paid based on mean unit cost data
derived from CY 2008 hospital claims.
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Therefore, the payment rates listed in
Addenda A and B to this final rule with
comment period are not for January
2010 payment purposes and are only
illustrative of the CY 2010 OPPS
payment methodology using the most
recently available information at the
time of this final rule with comment
period.
4. Payment for Blood Clotting Factors
For CY 2009, we are providing
payment for blood clotting factors under
the OPPS at ASP+4 percent, plus an
additional payment for the furnishing
fee. We note that when blood clotting
factors are provided in physicians’
offices under Medicare Part B and in
other Medicare settings, a furnishing fee
is also applied to the payment. The CY
2009 updated furnishing fee is $0.164
per unit.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35333), for CY 2010, we
proposed to pay for blood clotting
factors at ASP+4 percent, consistent
with our proposed payment policy for
other nonpass-through separately
payable drugs and biologicals, and to
continue our policy for payment of the
furnishing fee using an updated amount.
Because the furnishing fee update is
based on the percentage increase in the
Consumer Price Index (CPI) for medical
care for the 12-month period ending
with June of the previous year and the
Bureau of Labor Statistics releases the
applicable CPI data after the MPFS and
OPPS/ASC proposed rules are
published, we were not able to include
the actual updated furnishing fee in this
proposed rule and we also are not able
to include the actual updated furnishing
fee in this final rule with comment
period. Therefore, in accordance with
our policy as finalized in the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66765), we will announce
the actual figure for the percent change
in the applicable CPI and the updated
furnishing fee calculated based on that
figure through applicable program
instructions and posting on the CMS
Web site at: https://www.cms.hhs.gov/
McrPartBDrugAvgSalesPrice/.
Comment: One commenter expressed
support for CMS’ proposal to continue
to apply the furnishing fee for blood
clotting factors provided in the OPD.
The commenter stated that the
furnishing fee helps ensure patient
access to blood clotting factors by
increasing the payment rate for these
items. Another commenter disagreed
with CMS’ proposed payment rate of
ASP+4 percent for blood clotting factors
in CY 2010, even with the furnishing fee
add-on. The commenters stated that
ASP+4 percent was inadequate for all
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14:52 Nov 19, 2009
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drugs and biologicals, and is especially
inappropriate for blood clotting factors.
Finally, one commenter supported the
payment of blood clotting factors at the
same rate that applies to other nonpassthrough separately payable drugs and
biologicals in the HOPD.
Response: We continue to believe that
applying the furnishing fee for blood
clotting factors is appropriate for CY
2010. However, we see no compelling
reason to provide payment for blood
clotting factors under a different
methodology for OPPS purposes at this
time. We believe that the payment rate
of ASP+4 percent that we are finalizing
for payment of all nonpass-through
separately payable drugs and biologicals
in CY 2010 is appropriate. In addition,
we believe that it continues to be
appropriate to pay a furnishing fee for
blood clotting factors under the OPPS,
as is done in the physician’s office
setting and the inpatient hospital
setting.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to provide
payment for blood clotting factors under
the same methodology as other
separately payable drugs and biologicals
under the OPPS and to continue paying
an updated furnishing fee.
5. Payment for Therapeutic
Radiopharmaceuticals
a. Background
Section 303(h) of Public Law 108–173
exempted radiopharmaceuticals from
ASP pricing in the physician’s office
setting. Beginning in the CY 2005 OPPS
final rule with comment period, we
have exempted radiopharmaceutical
manufacturers from reporting ASP data
for payment purposes under the OPPS.
(For more information, we refer readers
to the CY 2005 OPPS final rule with
comment period (69 FR 65811) and the
CY 2006 OPPS final rule with comment
period (70 FR 68655).) Consequently,
we did not have ASP data for
radiopharmaceuticals for consideration
for previous years’ OPPS ratesetting. In
accordance with section
1833(t)(14)(B)(i)(I) of the Act, we have
classified radiopharmaceuticals under
the OPPS as SCODs. As such, we have
paid for radiopharmaceuticals at average
acquisition cost as determined by the
Secretary and subject to any adjustment
for overhead costs.
Radiopharmaceuticals also are subject to
the policies affecting all similarly
classified OPPS drugs and biologicals,
such as pass-through payment for
diagnostic and therapeutic
radiopharmaceuticals and individual
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packaging determinations for
therapeutic radiopharmaceuticals,
discussed earlier in this proposed rule.
For CYs 2006 and 2007, we used
mean unit cost data from hospital
claims to determine each
radiopharmaceutical’s packaging status
and implemented a temporary policy to
pay for separately payable
radiopharmaceuticals based on the
hospital’s charge for each
radiopharmaceutical adjusted to cost
using the hospital’s overall CCR. In
addition, in the CY 2006 OPPS final rule
with comment period (70 FR 68654), we
instructed hospitals to include charges
for radiopharmaceutical handling in
their charges for the
radiopharmaceutical products so these
costs would be reflected in the CY 2008
ratesetting process. The methodology of
providing separate radiopharmaceutical
payment based on charges adjusted to
cost through application of an
individual hospital’s overall CCR for
CYs 2006 and 2007 was finalized as an
interim proxy for average acquisition
cost because of the unique
circumstances associated with
providing radiopharmaceutical products
to Medicare beneficiaries. The single
OPPS payment represented Medicare
payment for both the acquisition cost of
the radiopharmaceutical and its
associated handling costs.
During the CY 2006 and CY 2007
rulemaking processes, we encouraged
hospitals and radiopharmaceutical
stakeholders to assist us in developing
a viable long-term prospective payment
methodology for these products under
the OPPS. As reiterated in the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66766), we were pleased
to note that we had many discussions
with interested parties regarding the
availability and limitations of
radiopharmaceutical cost data.
In considering payment options for
therapeutic radiopharmaceuticals for CY
2008, we examined several alternatives
that we discussed in the CY 2008 OPPS/
ASC proposed rule (72 FR 42738
through 42739) and CY 2008 OPPS/ASC
final rule with comment period (72 FR
66769 through 66770). After considering
the options and the public comments
received, we finalized a CY 2008
methodology to provide prospective
payment for therapeutic
radiopharmaceuticals (defined as those
Level II HCPCS codes that include the
term ‘‘therapeutic’’ along with a
radiopharmaceutical in their long code
descriptors) using mean costs derived
from the CY 2006 claims data, where the
costs were determined using our
standard methodology of applying
hospital-specific departmental CCRs to
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radiopharmaceutical charges, defaulting
to hospital-specific overall CCRs only if
appropriate departmental CCRs were
unavailable (72 FR 66772). In addition,
we finalized a policy to package
payment for all diagnostic
radiopharmaceuticals (defined as those
Level II HCPCS codes that include the
term ‘‘diagnostic’’ along with a
radiopharmaceutical in their long code
descriptors) for CY 2008. As discussed
in the CY 2008 OPPS/ASC proposed
rule (72 FR 42739), we believed that
adopting prospective payment for
therapeutic radiopharmaceuticals based
on historical hospital claims data was
appropriate because it served as our
most accurate available proxy for the
average hospital acquisition cost of
separately payable therapeutic
radiopharmaceuticals. In addition, we
noted that we have found that our
general prospective payment
methodology based on historical
hospital claims data results in more
consistent, predictable, and equitable
payment amounts across hospitals and
likely provides incentives to hospitals
for efficiently and economically
providing these outpatient services.
Prior to the implementation of the
final CY 2008 methodology of providing
a prospective payment for therapeutic
radiopharmaceuticals, section 106(b) of
Public Law 110–173 was enacted on
December 29, 2007 specifying payment
for therapeutic radiopharmaceuticals
based on individual hospital charges
adjusted to cost. Therefore, hospitals
continued to receive payment for
therapeutic radiopharmaceuticals by
applying the hospital-specific overall
CCR to each hospital’s charge for a
therapeutic radiopharmaceutical from
January 1, 2008, through June 30, 2008.
As we stated in the CY 2009 OPPS/ASC
proposed rule (73 FR 41493), thereafter,
the OPPS would provide payment for
separately payable therapeutic
radiopharmaceuticals on a prospective
basis, with payment rates based upon
mean costs from hospital claims data as
set forth in the CY 2008 OPPS/ASC final
rule with comment period, unless
otherwise required by law.
Following issuance of the CY 2009
OPPS/ASC proposed rule, section 142 of
Public Law 110–275 amended section
1833(t)(16)(C) of the Act, as amended by
section 106(a) of Public Law 110–173, to
further extend the payment period for
therapeutic radiopharmaceuticals based
on hospital’s charges adjusted to cost
through December 31, 2009. Therefore,
we are continuing to pay hospitals for
therapeutic radiopharmaceuticals at
charges adjusted to cost through the end
of CY 2009.
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b. Payment Policy
Since the start of the temporary costbased payment methodology for
radiopharmaceuticals in CY 2006, we
have met with several interested parties
on a number of occasions regarding
payment under the OPPS for
radiopharmaceuticals and have received
numerous different suggestions from
these stakeholders regarding payment
methodologies that we could employ for
future use under the OPPS.
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66771), we
solicited comments requesting
interested parties to provide information
related to whether the existing ASP
methodology could be used to establish
payment for specific therapeutic
radiopharmaceuticals under the OPPS.
Similar to the recommendations we
received during the CY 2008 OPPS/ASC
proposed rule comment period (72 FR
66770), we received several suggestions
regarding the establishment of an OPPSspecific methodology for
radiopharmaceutical payment that
would be similar to the ASP
methodology, without following the
established ASP procedures referenced
at section 1847A of the Act and
implemented through rulemaking. Some
commenters recommended using
external data submitted by a variety of
sources other than manufacturers. Along
this line, commenters suggested
gathering information from nuclear
pharmacies using methodologies with a
variety of names such as Nuclear
Pharmacy Calculated Invoiced Price
(Averaged) (CIP) and Calculated
Pharmacy Sales Price (CPSP). Other
commenters recommended that CMS
base payment for certain
radiopharmaceuticals on manufacturerreported ASP.
As noted in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66771), a ratesetting approach based on
external data would be administratively
burdensome for us because we would be
required to collect, process, and review
external information to ensure that it
was valid, reliable, and representative of
a diverse group of hospitals so that it
could be used to establish rates for all
hospitals. However, we specifically
requested additional comments
regarding the use of the existing ASP
reporting structure for therapeutic
radiopharmaceuticals as this established
methodology was already used for
payment of other drugs provided in the
hospital outpatient setting (72 FR
66771). While we received several
recommendations from commenters on
the CY 2008 OPPS/ASC final rule with
comment period regarding payment of
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therapeutic radiopharmaceuticals based
on estimated costs provided by
manufacturers or other parties, we
believe that the use of external data for
payment of therapeutic
radiopharmaceuticals should only be
adopted if those external data are
subject to the same well-established
regulatory framework as the ASP data
currently used for payment of separately
payable drugs and biologicals under the
OPPS. We have previously indicated
that nondevice external data used for
setting payment rates should be
representative of a diverse group of
hospitals both by location and type, and
should also identify the relevant data
sources. We do not believe that external
therapeutic radiopharmaceutical cost
data voluntarily provided outside of the
established ASP methodology, either by
manufacturers or nuclear pharmacies,
would generally satisfy these criteria
that are minimum standards for setting
OPPS payment rates.
We received public comments on the
CY 2008 OPPS/ASC final rule with
comment period from certain
radiopharmaceutical manufacturers who
indicated that the standard ASP
methodology could be used for payment
of certain therapeutic
radiopharmaceutical products.
Specifically, these manufacturers
expressed interest in providing ASP
data for their therapeutic
radiopharmaceutical products as a basis
for payment under the OPPS.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41495), we proposed to
allow manufacturers to submit ASP
information for any separately payable
therapeutic radiopharmaceutical for
payment purposes under the OPPS. If
ASP information was not submitted or
appropriately certified by the
manufacturer for a given calendar year
quarter, then for that quarter we
proposed to provide prospective
payment based on the therapeutic
radiopharmaceuticals mean cost from
hospital claims data. However, as stated
above, section 142 of Public Law 110–
275 amended section 1833(t)(16)(C) of
the Act, as amended by section 106(a)
of Public Law 110–173, to further
extend the payment period for
therapeutic radiopharmaceuticals based
on hospital’s charges adjusted to cost
through December 31, 2009, so we did
not finalize this proposal. We note that,
in response to our proposed therapeutic
radiopharmaceutical payment
methodology for CY 2009, we received
a number of public comments that were
supportive of the proposal for future
years.
At the February 2009 meeting of the
APC Panel, the APC Panel
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recommended that CMS use the ASP
methodology to pay for therapeutic
radiopharmaceuticals and, where ASP
data are not available, to pay based on
mean costs from claims data for CY
2010. We accepted this
recommendation, and for CY 2010, we
proposed to allow manufacturers to
submit ASP information for any
separately payable therapeutic
radiopharmaceutical in order for
therapeutic radiopharmaceuticals to be
paid based on ASP beginning in CY
2010 under the OPPS (74 FR 35334
through 35336). Similar to our CY 2009
proposal, for CY 2010, we did not
propose to compel manufacturers to
submit ASP information. Furthermore,
as discussed in the CY 2009 OPPS/ASC
proposed rule (73 FR 41495), we stated
that the ASP data submitted would need
to be provided for a patient-specific
dose, or patient-ready form, of the
therapeutic radiopharmaceutical in
order to properly calculate the ASP
amount for a given HCPCS code. In
addition, in those instances where there
is more than one manufacturer of a
particular therapeutic
radiopharmaceutical, we noted that all
manufacturers would need to submit
ASP information in order for payment to
be made on an ASP basis. We
specifically requested public comment
on the development of a crosswalk,
similar to the NDC/HCPCS crosswalk for
separately payable drugs and biologicals
posted on the CMS Web site at: https://
www.cms.hhs.gov/
McrPartBDrugAvgSalesPrice/
01a1_2009aspfiles.asp#TopOfPage, for
use for therapeutic
radiopharmaceuticals.
Comment: Several commenters
requested guidance on how costs
associated with the manufacturing,
compounding, and preparation of
therapeutic radiopharmaceuticals
should be reported when submitting
ASP. The commenters stated that there
are several activities that may take place
at a variety of locations in order to
prepare a radiopharmaceutical for
patient administration. These services
range in complexity from activities
typical to any hospital pharmacy, such
as drawing up a therapeutic
radiopharmaceutical into a syringe and
ensuring proper disposal of wasted
product, to more complex processing
such as preparing the therapeutic
radiopharmaceutical itself by
radiolabeling a cold kit (nonradioactive
compound or complex that is combined
with a radioisotope and results in a
radiopharmaceutical) supplied by the
manufacturer using a radioisotope
supplied by the manufacturer or another
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source. As CMS requested ASP
information from separately payable
radiopharmaceutical manufacturers in
the form of a patient-specific dose, or
patient-ready form, several commenters
argued that the ASP amount reported to
CMS should reflect all costs associated
with these additional activities or items,
such as the radioisotope and
radiolabeling processes, needed to
provide a patient-ready dose of a
radiopharmaceutical. Several
commenters pointed out that, based on
current business practices, a single
manufacturer might be unable to report
ASP data for a therapeutic
radiopharmaceutical described by a
HCPCS code that incorporated all of
these costs, and others were concerned
that CMS intended for the manufacturer
to collect and report the costs of the
activities of other entities, such as
freestanding radiopharmacies, that
would not typically be reflected in the
radiopharmaceutical manufacturer’s
sales price.
Response: In the following response,
we discuss our expectations for
manufacturer submission of ASP data to
CMS to set OPPS payment rates for
separately payable therapeutic
radiopharmaceuticals. This
methodology also would apply to
manufacturers submitting ASP data for
diagnostic and therapeutic
radiopharmaceuticals with pass-through
status. As discussed in section V.A. of
this final rule with comment period, we
would use any submitted ASP
information for separately payable
diagnostic and therapeutic
radiopharmaceuticals with pass-through
status to establish a payment rate of
ASP+6 percent, consistent with our
policy for pass-through payment of
drugs and biologicals. We note that ASP
submissions for radiopharmaceutical
payment under the OPPS would need to
meet all of the existing regulatory and
subregulatory requirements of the ASP
reporting process under sections 1847A
and 1927(b)(3) of the Act, except as
otherwise specified in this final rule
with comment period.
For CY 2010, when reporting an ASP
for a separately payable
radiopharmaceutical, we expect that the
ASP data reported by a manufacturer
would be representative of the item(s)
sold by the manufacturer. We used the
term ‘‘patient-ready’’ in our proposed
rule to ensure that ASP data submitted
for OPPS payment purposes for
separately payable
radiopharmaceuticals reflect the costs of
all the component materials of the
finished radiopharmaceutical product.
We expect that the ASP data would
represent the sales price of all of the
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component materials of the finished
radiopharmaceutical product sold by
the manufacturer in terms that reflect
the applicable HCPCS code descriptor,
such as ‘‘treatment dose’’ or
‘‘millicurie.’’ We understand that
manufacturers of separately payable
radiopharmaceuticals produce
radiopharmaceuticals that require a
variety of processing steps in order to
finalize the product for administration
to a beneficiary. For example, some
radiopharmaceuticals are the combined
product of a cold kit produced by one
manufacturer, which is then
radiolabeled with a radioisotope
provided by a freestanding or hospital
nuclear pharmacy. At a minimum, to be
used for separate OPPS
radiopharmaceutical payment, the ASP
data reported by a manufacturer must
represent sales of all of the component
materials associated with the
radiopharmaceutical. In the context of
radiopharmaceuticals used in the
HOPD, we would expect that the
component materials would include at
least the cold kit and the radioisotope
needed to radiolabel the cold kit in
order to make the radiopharmaceutical.
With regard to additional processing
steps, we believe manufacturers of
radiopharmaceuticals could include in
their calculations of ASP for OPPS
payment purposes in addition to the
prices for the component materials, the
portion of the sales price attributable to
the production of the manufactured
product as it is sold by the manufacturer
reporting ASP data.
Radiopharmaceuticals are unique in that
they require a radioisotope in addition
to the cold kit and, at a minimum, they
require radiolabeling the cold kit in
order to produce a final
radiopharmaceutical product. We note
that manufacturers have the discretion
to determine the form of the final
product that is sold, and that the
manufacturing process may include
processing of the component materials
in a variety of ways. To the extent that
the price includes processing steps that
are a service performed by the
manufacturer to produce a
radiopharmaceutical, we believe that
ASP data submitted for purposes of
calculating OPPS payment for
radiopharmaceuticals can appropriately
capture those additional processing
costs.
However, we do not believe that all
processing steps that may be needed to
prepare the separately payable
radiopharmaceutical for administration
to the beneficiary must be included in
the submitted ASP data in order for the
OPPS to use manufacturer-reported ASP
data as the basis for
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radiopharmaceutical payment. We
expect that the costs of any further
processing of the radiopharmaceutical
component materials after the
manufacturer’s sales, which could
include radiolabeling when a
manufacturer only sells the component
materials or could consist of additional
preparation besides radiolabeling,
would not be included in the ASP data
submitted by the manufacturer.
However, these processing costs would
be paid under the OPPS through the
single ASP+4 percent payment rate for
nonpass-through, separately payable
therapeutic radiopharmaceuticals, in the
same way that the OPPS currently pays
for the acquisition and pharmacy
overhead costs of separately payable
drugs and biologicals through this single
payment. We do not believe that it
would be appropriate to include in the
ASP for OPPS purposes the
radiopharmaceutical processing services
performed in a freestanding
radiopharmacy or hospital pharmacy to
prepare a final product or its component
materials for patient administration after
the manufactured product is sold by the
manufacturer reporting ASP. In this
case, the combined OPPS ASP+4
percent CY 2010 payment for the
acquisition and pharmacy overhead and
handling costs of the separately payable
therapeutic radiopharmaceuticals would
pay for these additional processing
activities.
To be sufficient for purposes of
calculating the OPPS payment, all
radiopharmaceutical ASP submissions
must meet the existing regulatory and
subregulatory requirements of the ASP
submission process under sections
1847A and 1927(b)(3) of the Act, except
as otherwise specified in this final rule
with comment period. In particular, we
believe the ‘‘bona fide service fee’’ test
in the ASP regulations is instructive
here, and we would expect
manufacturers to apply the ‘‘bona fide
service fee’’ test to determine whether
service fees it pays to another entity are
‘‘bona fide service fees.’’ We believe the
‘‘bona fide service fee’’ test can be used
in the OPPS ASP context to determine
whether a fee that the manufacturer
pays to a radiopharmacy for performing
a service on behalf of the
radiopharmaceutical manufacturer
could be excluded from the ASP
calculation—that is, it would not be
considered a price concession that
otherwise would reduce the ASP. The
definition of a ‘‘bona fide service fee’’ is
included in the ASP regulations
(§ 414.802), which defines these fees as
‘‘fees paid by a manufacturer to an
entity, that represent fair market value
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for a bona fide, itemized service actually
performed on behalf of the manufacturer
that the manufacturer would otherwise
perform (or contract for) in the absence
of the service arrangement, and that are
not passed on in whole or in part to a
client or customer of an entity whether
or not the entity takes title to the drug.’’
In the context of the ASP calculation
under section 1847A of the Act and its
implementing regulations, ‘‘bona fide
service fees’’ are not considered price
concessions that must be deducted from
the ASP. Similarly, we believe that for
OPPS purposes, fees that are paid by the
manufacturer that meet the ‘‘bona fide
service fee’’ test would not reduce the
ASP. Thus, a radiopharmaceutical
manufacturer could contract with an
entity, consistent with these regulations,
to perform certain steps in the
radiopharmaceutical manufacturing
process that the manufacturer would
otherwise perform itself in order to
make the final radiopharmaceutical
product, and the fees paid to the entity
could qualify as a ‘‘bona fide service
fee’’ that would be included in the ASP
calculation for OPPS purposes. In light
of the necessity of radiolabeling to the
production of radiopharmaceuticals, we
further believe that for OPPS purposes,
the manufacturer’s purchase of the
radioisotope and payment for
radiolabeling the cold kit could be
factored into the manufacturer’s price
for the finished product, and if the fees
the manufacturer paid meet the ‘‘bona
fide service fee’’ test, they would not
need to be netted against the price for
purposes of calculating the
manufacturer’s ASP for the therapeutic
radiopharmaceutical. Thus, in effect, for
OPPS purposes, if a manufacturer
chooses to contract for or purchase these
items or services, fees for these bona
fide services could be included in the
manufacturer-reported ASP. We fully
expect that the manufacturer would
comply with the ASP regulations and,
in particular, would factor these fees
into the ASP only if the prices of the
services performed by the
radiopharmacy are fair market value,
and the fees are not passed on to any
purchasers of the separately payable
radiopharmaceutical.
In summary, a patient-specific dose or
patient-ready form in the context of
OPPS ASP submission for
radiopharmaceutical payment means
that the ASP reflecting manufacturer
sales must represent sales of all of the
component materials for the
radiopharmaceutical, including a
minimum of a cold kit and a
radioisotope, and be reported in terms
that reflect the applicable HCPCS code
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60521
descriptor, such as ‘‘treatment dose’’ or
‘‘millicurie.’’ The ASP would not
necessarily take into account the
preparation of the final form of the
therapeutic radiopharmaceutical for
patient administration, including
radiolabeling, which may be conducted
by the manufacturer, freestanding
radiopharmacy, hospital pharmacy, or
other entity. With respect to the latter,
fees paid by the manufacturer for these
services would be excluded from the
ASP calculation (that is, would not be
considered price concessions that
reduce the ASP), only if they are ‘‘bona
fide service fees’’ as defined in the
regulations governing ASP. Thus, if the
manufacturer pays a ‘‘bona fide service’’
fee for the services of the freestanding
radiopharmacy, hospital pharmacy, or
other entity, and reflects that fee in its
price for the radiopharmaceutical, the
amount of the ‘‘bona fide service fee’’
would be taken into account in the
reported ASP data. However,
manufacturers are not required to pay
for the preparation of a
radiopharmaceutical (including
radiolabeling) in a freestanding
radiopharmacy, hospital pharmacy, or
other entity after sale of all of the
component materials, and in that case,
the cost of those services would not be
reflected in the ASP data submitted to
CMS. Manufacturers should submit ASP
data for a separately payable
radiopharmaceutical that incorporates
prices for sales of all of the component
materials by the manufacturer. Any
additional costs associated with the
preparation of the radiopharmaceutical
for administration to a beneficiary after
the manufacturer’s sale of the
component materials and any
processing that the manufacturer
conducts would be paid through the
single OPPS ASP+4 percent payment for
the acquisition and pharmacy overhead
and handling costs of the nonpassthrough, separately payable therapeutic
radiopharmaceutical.
Comment: Several commenters
expressed support for CMS’s proposal to
make prospective payment for
therapeutic radiopharmaceuticals using
the ASP methodology in CY 2010 to pay
the same ASP+4 percent payment rate
that CMS proposed for separately
payable nonpass-through drugs and
nonimplantable biologicals. A few
commenters suggested that CMS
consider alternatives to the percentagebased add-on to ASP inherent in the
single combined payment for
acquisition and handling costs of ASP+4
percent to better account for the more
intensive handling that
radiopharmaceuticals require. The
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commenters recommended a variety of
options, including a fixed add-on
payment comparable to the complexity
of handling involved, a consignment
ASP method that would account for the
costs associated with the handling of a
radiopharmaceutical, the preparation of
an invoice that would give a standard
drug percentage for handling charges, or
the establishment of some other separate
payment mechanism to capture the
costs of radiolabeling. One commenter
suggested that CMS could create a Level
II HCPCS code for hospitals to report
their charges for radiolabeling
conducted by a radiopharmacy, and
hospital cost information developed
from these charges could be used to
establish a separate payment for
radiolabeling services.
Response: We appreciate the
commenters’ support for our proposal to
make prospective payment for nonpassthrough, separately payable therapeutic
radiopharmaceuticals at the same
ASP+4 percent payment rate for a
‘‘patient-ready’’ dose of a
radiopharmaceutical that we establish
for separately payable drugs and
nonimplantable biologicals. In our
response to the previous comment, we
established our interpretation of
‘‘patient-ready’’ for purposes of the
OPPS to mean the ASP, reported in
terms that reflect the applicable HCPCS
code descriptor, for all component
materials of the radiopharmaceutical
and any additional processing,
including radiolabeling, that is reflected
in the price the manufacturer charges
for the radiopharmaceutical so long as
the fees paid for such additional
processing meet the ‘‘bona fide service
fee’’ test under the regulations
implementing section 1847A of the Act.
We explicitly note that because
radiopharmaceuticals uniquely require
radiolabeling of their component
materials, we believe that for purposes
of OPPS ASP reporting, radiolabeling
could constitute a bona fide service on
behalf of the manufacturer, and the fees
for which could meet the ‘‘bona fide
service fee’’ test. Given our position on
radiolabeling, we similarly believe that
significant processing costs associated
with handling a radiopharmaceutical
may be reflected in the prices used to
calculate the manufacturer’s ASP data
for OPPS purposes. As noted above, the
combined single payment for nonpassthrough, separately payable therapeutic
radiopharmaceutical acquisition and
overhead costs embodied in the ASP+4
percent payment rate for CY 2010 would
address any other processing after the
sale by the manufacturer, and we
believe this payment is sufficient for
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these additional handling costs borne by
the hospital. Under this interpretation of
‘‘patient-ready’’ dose, we do not believe
that making an additional payment for
more intensive handling costs is
necessary.
We also do not believe that
establishing a separate Level II HCPCS
code to exclusively capture
radiopharmaceutical handling costs is
an appropriate approach when we have
not adopted such an approach to
capture the pharmacy overhead costs of
other drugs and biologicals, which also
may be substantial in some cases. We
have heard from hospitals previously on
the issue of separately reporting charges
for pharmacy handling costs of drugs. In
the CY 2007 OPPS/ASC final rule with
comment period (71 FR 68090), we
discussed our efforts to create a set of
Level II HCPCS codes that hospitals
would be able to use to indicate the
relative resource levels of pharmacy
handling involved in preparing a
reported drug, biological, or
radiopharmaceutical for administration.
This methodology would have allowed
us to begin collecting data on pharmacy
overhead costs for possible use in future
ratesetting calculations, yet we did not
finalize this proposal due to the
overwhelming response from the
hospital community citing the
tremendous administrative burden
separately reporting these pharmacy
handling codes and charges would have
placed on hospital resources. We
continue to believe that hospitals would
likely view such an approach for
radiopharmaceuticals alone as
burdensome.
Comment: Several commenters
responded to CMS’ request for public
comments on the development of a
crosswalk similar to the NDC/HCPCS
crosswalk for separately payable drugs
and biologicals. These commenters
support a NDC/HCPCS ‘‘crosswalk’’ to
allow ASP to be utilized.
Response: We appreciate the
commenter’s support for implementing
a ‘‘crosswalk’’ for use for separately
payable radiopharmaceuticals. We
believe that an NDC/HCPCS crosswalk
for nonpass-through, separately payable
therapeutic radiopharmaceuticals and
pass-through diagnostic and therapeutic
radiopharmaceuticals that is similar to
the crosswalk for separately payable
drugs and biologicals is appropriate,
and we will, therefore, work to develop
and implement the appropriate NDC/
HCPCS crosswalk for separately payable
radiopharmaceuticals.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35335), we stated that we
continue to believe that the use of ASP
information for OPPS payment would
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provide an opportunity to improve
payment accuracy for separately payable
radiopharmaceuticals by applying an
established methodology that has
already been successfully implemented
under the OPPS for other separately
payable drugs and biologicals. As is the
case with other drugs and biologicals
subject to ASP reporting under section
1847A of the Act, we stated that in order
for a separately payable
radiopharmaceutical to receive OPPS
payment based on ASP beginning
January 1, 2010, we would need to
receive ASP information from the
manufacturer no later than November 2,
2009 that would reflect separately
payable radiopharmaceutical sales in
the third quarter of CY 2009 (July 1,
2009 through September 30, 2009). Our
normal deadline for January submission
is November 1, but because November 1
falls on a Sunday, the ASP submission
deadline for January 2010 payment is
November 2, 2009. We stated that these
data would not be available for
publication in the CY 2010 OPPS/ASC
final rule with comment period but
would be included in the January 2010
OPPS quarterly release that would
update the payment rates for separately
payable drugs, biologicals, and
therapeutic radiopharmaceuticals based
on the most recent ASP data, consistent
with our customary practice over the
past 4 years when we have used the
ASP methodology for payment of
separately payable drugs and biologicals
under the OPPS. In addition, we
proposed to receive information from
radiopharmaceutical manufacturers that
would allow us to calculate a unit dose
cost estimate based on the applicable
HCPCS code for the separately payable
radiopharmaceutical.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35335), we acknowledged
that we realized that not all therapeutic
radiopharmaceutical manufacturers may
be willing or able to submit ASP
information for a variety of reasons. We
proposed to provide payment at the
OPPS ASP rate if ASP information is
available for a given calendar year
quarter or, if ASP information is not
available, we proposed to provide
payment based on the most recent
hospital mean unit cost data that we
have available. We indicated our belief
that both methodologies represent an
appropriate and adequate proxy for
average hospital acquisition cost and
associated handling costs for these
products. Therefore, if ASP information
for the appropriate period of sales
related to payment in any CY 2010
quarter was not available, we proposed
to rely on the CY 2008 mean unit cost
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data derived from hospital claims to set
the payment rates for therapeutic
radiopharmaceuticals. We noted that
this is not the usual OPPS process that
relies on alternative data sources, such
as WAC or AWP, when ASP information
is temporarily unavailable, prior to
defaulting to the mean unit cost from
hospital claims data. We proposed a
methodology specific to nonpassthrough, separately payable therapeutic
radiopharmaceuticals where we would
immediately default to the mean unit
cost from hospital claims data if
sufficient ASP data were not available
because we did not propose to require
therapeutic radiopharmaceutical
manufacturers to report ASP data at this
time. We indicated that we did not
believe that WAC or AWP is an
appropriate proxy to provide OPPS
payment for average therapeutic
radiopharmaceutical acquisition cost
and associated handling costs when
manufacturers are not required to
submit ASP data. Payment based on
WAC or AWP under the established
OPPS ASP methodology for payment of
separately payable drugs and biologicals
is usually temporary for a calendar
quarter until a manufacturer is able to
submit the required ASP data in
accordance with the quarterly ASP
submission timeframes for reporting
under section 1847A of the Act.
However, we were concerned that
because ASP reporting for OPPS
payment of separately payable
therapeutic radiopharmaceuticals would
not be required for CY 2010, a
manufacturer’s choice to not submit
ASP could result in payment for a
separately payable therapeutic
radiopharmaceutical based on WAC or
AWP for a full year, a result which we
believed would be inappropriate.
Therefore, for separately payable
therapeutic radiopharmaceutical
payment under the OPPS, we proposed
that the OPPS ASP methodology would
pay based on ASP, with payment based
on mean unit cost from OPPS claims
data if ASP data were not available for
a calendar quarter.
Recognizing that we may need to
utilize mean unit cost data to pay for
nonpass-through, separately payable
therapeutic radiopharmaceuticals in CY
2010 if ASP data are not submitted, for
the CY 2010 proposed rule we evaluated
the mean unit cost information in the
CY 2010 claims data for all therapeutic
radiopharmaceuticals. We noticed that
we had numerous claims with service
units greater than one for HCPCS code
A9543 (Yttrium Y-90 ibritumomab
tiuxetan, therapeutic, per treatment
dose, up to 40 millicuries) and A9545
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(Iodine I-131 tositumomab, therapeutic,
per treatment dose), when the long
descriptors for these therapeutic
radiopharmaceuticals clearly indicate
‘‘per treatment dose’’ and, therefore, we
expected the service units on every
claim to be one. In contrast, the other
six therapeutic radiopharmaceuticals
that would be separately payable in CY
2010 all include ‘‘per millicurie’’ in
their HCPCS code descriptors, so
reporting multiple service units for
those items could be appropriate. We
did not believe that hospitals billing
more than one unit of HCPCS code
A9543 or A9545 on a claim were
correctly reporting these products and,
therefore, we believed that these claims
were incorrectly coded. Although we do
not normally examine hospital reporting
patterns for individual services, pricing
an individual item, such as a
therapeutic radiopharmaceutical with
low volume, may argue for more
aggressive trimming to remove
inaccurate claims. Therefore, we
removed all claims with units greater
than one for these two therapeutic
radiopharmaceuticals before estimating
their mean unit costs. Because we did
not have ASP data for therapeutic
radiopharmaceuticals that were used for
payment in April 2009, the proposed
payment rates included in Addenda A
and B to the proposed rule were based
on mean costs from historical hospital
claims data available for the proposed
rule, subject to the additional trimming
of incorrectly coded claims for HCPCS
codes A9543 and A9545 as described
above.
Similar to the ASP process already in
place for separately payable drugs and
biologicals under the OPPS, we
proposed to update ASP data for
therapeutic radiopharmaceuticals
through our quarterly process as
updates become available. In addition,
we proposed to assess the availability of
ASP data for therapeutic
radiopharmaceuticals quarterly, and if
ASP data become available midyear, we
proposed to transition at the next
available quarter to ASP-based payment.
For example, if ASP data are not
available for the quarter beginning
January 2010 (that is, ASP information
reflective of third quarter CY 2009 sales
are not submitted in November 2009),
then the next opportunity to begin
payment based on ASP data for a
therapeutic radiopharmaceutical would
be April 2010 if ASP data reflective of
fourth quarter CY 2009 sales were
submitted in February 2010.
Comment: Many commenters agreed
with CMS’ proposal to permit, but not
require, radiopharmaceutical
manufacturers to submit ASP data. One
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60523
commenter encouraged CMS to obtain
data from all therapeutic
radiopharmaceutical manufacturers
across all therapeutic
radiopharmaceuticals, not just a few.
Several commenters expressed concern
over the proposed immediate collection
of ASP data from manufacturers for the
January 2010 OPPS quarterly update.
They stated that manufacturers would
need an adequate amount of time to
submit ASP data for the third quarter of
CY 2009 (July 1, 2009 through
September 30, 2009).
A few commenters recommended that
CMS establish a transition period of 6
months or longer to provide more time
for manufacturers to compile and
submit ASP data. Another commenter
recommended that CMS accept
therapeutic radiopharmaceutical ASP
data 30 days after finalizing and
publishing CMS’ CY 2010 OPPS/ASC
final rule. This would extend the
deadline for which ASP data would be
submitted for the January 2010 OPPS
quarterly update from the usual
November 2, 2009 ASP submission
deadline to November 30, 2009.
During a transition period, several
commenters recommended that CMS
continue its current policy of paying for
therapeutic radiopharmaceuticals at
charges adjusted to cost, as opposed to
the proposed default of mean unit cost
derived from claims data. A number of
commenters requested open dialogue
with CMS on what a manufacturer
would need to submit to accurately
report ASP for a ‘‘patient-ready’’
radiopharmaceutical dose.
Response: We appreciate the
commenters’ support for our proposal to
pay for nonpass-through, separately
payable therapeutic
radiopharmaceuticals in CY 2010 using
the ASP methodology. We proposed to
allow manufacturers to submit ASP
information for any nonpass-through,
separately payable therapeutic
radiopharmaceutical in order to
establish an ASP+4 percent payment
rate under the OPPS for the therapeutic
radiopharmaceutical beginning in CY
2010. Consistent with our authority to
collect data in order to determine
payment amounts, we intend to collect
ASP data for separately payable
nonpass-through and pass-through
therapeutic radiopharmaceuticals (and
diagnostic radiopharmaceuticals with
pass-through status), adopting the same
submission requirements as we do for
drugs and biologicals under section
1847A of the Act and the corresponding
regulations, except as otherwise
specified in this final rule with
comment period for specific OPPS
purposes. As we stated in the CY 2010
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OPPS/ASC proposed rule (74 CR
35335), we continue to believe that the
use of ASP information for OPPS
payment would provide an opportunity
to improve payment accuracy for
separately payable
radiopharmaceuticals by applying an
established methodology that has
already been successfully implemented
under the OPPS to set prospective
payment rates for other separately
payable drugs and biologicals.
In recognizing the potential burden
involved in reporting ASP data and our
belief in the accuracy of prospective
payment rates based on claims data, we
did not propose to require
manufacturers to submit ASP
information. Although one commenter
suggested that we collect ASP from all
manufacturers of therapeutic
radiopharmaceuticals, we continue to
believe that the challenges involved in
reporting ASP for radiopharmaceuticals,
given the variety of manufacturing
processes, are significant in some cases
and, therefore, that payment based on
mean unit cost from historical hospital
claims data offers the best proxy for
average hospital acquisition cost and
associated handling costs for a
radiopharmaceutical in the absence of
ASP. We continue to believe that we
should allow, but not require,
manufacturers to submit ASP
information for therapeutic
radiopharmaceuticals. If ASP
information is unavailable for a
therapeutic radiopharmaceutical,
meaning if a manufacturer is not willing
or not able to submit ASP information,
we will provide payment based on the
mean unit cost of the product that is
applicable to payment rates for the year
the nonpass-through therapeutic
radiopharmaceutical is administered.
We continue to believe that both
methodologies represent an appropriate
proxy for average hospital acquisition
cost and associated handling costs for
nonpass-through, separately payable
therapeutic radiopharmaceuticals. We
expect manufacturers to submit ASP
data for all component materials and
any ‘‘bona fide service fees’’ that are
reflected in the price for additional
processing to produce the separately
payable radiopharmaceutical, in an
aggregated form in per millicurie or per
dosage unit that matches the HCPCS
code descriptor for that
radiopharmaceutical. We note that the
separately payable, nonpass-through
therapeutic radiopharmaceutical
payment rates listed in Addenda A and
B to this final rule with comment period
are the mean unit costs from CY 2008
hospital claims data, subject to the
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additional trimming of incorrectly
coded claims for HCPCS codes A9543
and A9545 as proposed and described
above, that we would use for payment
of a separately payable
radiopharmaceutical if ASP information
from the manufacturer were not
submitted for the product for the
applicable OPPS payment quarter.
For CY 2010, we are not
implementing a transition period of
payment at charges adjusted to cost for
therapeutic radiopharmaceuticals. We
note that section 1833(t)(16)(C) of the
Act continues the payment period for
therapeutic radiopharmaceuticals based
on a hospital’s charges adjusted to cost
through December 31, 2009, and this
requirement expires beginning CY 2010.
We believe it would not be consistent
with the statutory expiration of the
charges-adjusted-to-cost payment
methodology to continue payment using
this approach for any portion of CY
2010. For manufacturers that cannot
initially submit ASP data, we believe
that mean cost payment for a nonpassthrough, separately payable therapeutic
radiopharmaceutical provides our best
proxy estimate of average hospital
acquisition cost and associated handling
costs and implements prospective
payment. In examining the CY 2008
claims data, aggregate therapeutic
radiopharmaceutical payment at mean
unit cost would be comparable to
payment at charges adjusted to cost in
CY 2010 assuming no charge inflation
between CY 2008 and CY 2010, and we
observe deflation in per unit charges for
some therapeutic radiopharmaceuticals
between CY 2007 and CY 2008 claims.
Finally, because we proposed to update
payment based on ASP submissions on
a quarterly basis, manufacturers would
not need to wait one year to be paid
based on ASP but could work toward
submitting ASP data for April 2010
payment if they were unable to provide
data for January 2010 payment.
We recognize that the timeframe for
submitting ASP information by
November 2, 2009, to begin ASP-based
payment on January 1, 2010 is
extremely close to the display date of
this final rule with comment period.
While we expect that most
manufacturers interested in reporting
ASP for their therapeutic
radiopharmaceutical already have begun
the process of compiling that data given
that we have proposed ASP-based
payment under the OPPS for nonpassthrough, separately payable therapeutic
radiopharmaceuticals for 2 years in a
row, we understand that manufacturers
will not have had the opportunity to
consider our discussion in this final rule
with comment period that clarifies the
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term ‘‘patient-ready’’ in their
preparation of ASP data for OPPS
purposes. As suggested by the
commenters, we recognize that some
manufacturers may need to discuss with
us how to report ASP for a ‘‘patientready’’ dose of their particular
radiopharmaceutical. We encourage
manufacturers with questions regarding
their submissions to contact us,
especially if they intend to submit by
November 2, 2009. Manufacturers can
contact us immediately by sending an
email to the OPPS mailbox:
OutpatientPPS@cms.hhs.gov. We will
be monitoring this mailbox closely. We
will provide any assistance that we can
within the confines of the ASP quarterly
production schedule to facilitate
accurate and timely reporting of ASP
and payment based on ASP as early as
possible. To further our commitment to
helping manufacturers submit ASP data
in a timely fashion, we also intend to
post guidance on the definition of
‘‘patient-ready’’ dose for reporting
radiopharmaceutical ASP for OPPS use,
and on how manufacturers should
compile and submit ASP data for that
dose on the CMS Web site at:
https://www.cms.hhs.gov/
HospitalOutpatientPPS/
05_OPPSGuidance.asp#TopOfPage, at
about the time that this final rule with
comment period goes in display at the
Federal Register.
Comment: One commenter expressed
concern over CMS proposal to pay for
therapeutic radiopharmaceuticals using
the ASP methodology for CY 2010. The
commenter stated that the methodology
established in the proposal, to pay for
therapeutic radiopharmaceuticals under
the ASP methodology and if ASP is
unavailable to make payment based
upon the most recent hospital mean unit
cost data that CMS has available, would
not provide accurate data and, therefore,
would not pay accurately for
therapeutic radiopharmaceuticals. The
commenter was skeptical that
manufacturers would submit ASP data
in a timely and accurate manner,
because the commenter believed
manufacturers have little incentive to do
so. The commenter recommended that
CMS base payment on hospital invoice
data in order to provide accurate
payment.
Response: We disagree with the
commenter and continue to believe that
providing payment for therapeutic
radiopharmaceuticals based on ASP or
mean unit cost if ASP information is not
available would provide appropriate
payment for these products. We
acknowledge in the proposed rule (74
FR 35335) that some manufacturers may
be unable or unwilling to submit ASP
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data for the CY 2010 January OPPS
quarterly update and we, therefore,
proposed to make payment based on the
most recent hospital mean unit cost data
that we have available for therapeutic
radiopharmaceuticals if ASP is not
available. Many other commenters,
including radiopharmaceutical
manufacturers, stated that
manufacturers have a significant
incentive to submit ASP information
because they believe payment based on
the default of mean unit cost would not
be most reflective of the cost to
hospitals to acquire these products.
Furthermore, some therapeutic
radiopharmaceutical manufacturers
already submit ASP data for separately
payable drugs and biologicals and,
therefore, are familiar with the
submission process, including its timing
and other requirements. As we stated
previously, we continue to believe that
the use of ASP information for OPPS
payment would provide an opportunity
to improve payment accuracy for
nonpass-through, separately payable
therapeutic radiopharmaceuticals by
applying an established methodology
that has already been successfully
implemented under the OPPS for other
separately payable drugs and
biologicals. The OPPS has relied upon
ASP information as an accurate method
for providing payment for drugs and
biologicals for several years.
Comment: One commenter requested
that CMS not include payment rates
based on mean unit cost for therapeutic
radiopharmaceuticals in the Addenda to
the CY 2010 OPPS/ASC final rule with
comment period when a manufacturer
intends to report ASP information for
CY 2010. The commenter offered this
recommendation in order to avoid
having other payers that utilize
Medicare payment rates adopt these
payment rates that the commenter
believes will never be those paid to
hospitals in CY 2010.
Response: We believe that payment at
mean unit cost would appropriately pay
for the average hospital acquisition cost
and associated handling costs of
nonpass-through, separately payable
therapeutic radiopharmaceuticals if ASP
data are not available. Therefore, we
have included the mean unit cost
amounts for nonpass-through,
separately payable therapeutic
radiopharmaceuticals in Addenda A
and B to this CY 2010 OPPS/ASC final
rule with comment period that would be
used for payment in any CY 2010
calendar quarter for which ASP
information is not submitted by the
product’s manufacturer(s). Inclusion of
mean unit cost for all nonpass-through,
separately payable therapeutic
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radiopharmaceuticals in the addenda is
unique to CY 2010, because we have no
ASP information available for these
products based on their payment in CY
2009. For future years, based on our
usual final rule addenda publication
policy, we note that if a
radiopharmaceutical manufacturer has
submitted ASP for OPPS payment in
October 2010, as long as our CY 2011
payment methodology for nonpassthrough, separately payable therapeutic
radiopharmaceuticals relies on ASP, we
would publish a payment rate in the CY
2011 OPPS/ASC final rule with
comment period that reflects the
radiopharmaceutical’s third quarter CY
2010 ASP information.
We follow this final rule addenda
publication policy based on our general
expectation that drugs and biologicals
with ASP information available for
payment in the fourth quarter of CY
2009 will have ASP information
available for payment in the first quarter
of CY 2010. Therefore, we believe that
posting illustrative CY 2010 payment
rates for drugs and biologicals based on
the October 2009 ASP information,
rather than mean unit cost, provides a
better illustration of the likely payment
rates for these product in January 2010.
In the event that we have no ASP
information for a therapeutic
radiopharmaceutical or any other drug
or biological paid based on the ASP
methodology for any quarter of CY 2010,
the applicable mean unit cost for
payment of the product in CY 2010 is
available on the CMS web site in the
OPPS drug median file that is posted as
supporting information for this final
rule with comment period at:
https://www.cms.hhs.gov/
HospitalOutpatientPPS/HORD/
list.asp#TopOfPage.
Comment: One commenter requested
that CMS establish a temporary Level II
HCPCS C-code, effective January 1,
2010, to be used in CY 2010 to report
the product currently described by
HCPCS code A9605 (Samarium Sm-153
Lexidronam, per 50 millicuries). The
commenter recommended that CMS
replace the current ‘‘per 50 millicuries’’
in the code descriptor with ‘‘per
treatment dose’’ in the HCPCS C-code
descriptor. The commenter stated that
the current code descriptor for HCPCS
code A9605 is problematic for coding
and ASP reporting purposes because of
the decay in radiopharmaceutical
radioactivity. Under the existing code
descriptor of ‘‘per 50 millicuries,’’ while
the manufacturer would report ASP for
the HCPCS code based on the
radioactivity level of the product at the
time of sale, the hospital would report
units of the HCPCS code based on the
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60525
dose administered to the patient at a
later point in time, and there would be
a mismatch between the reported price
and the dose actually administered to
the patient. The commenter concluded
that reporting the sales and
administration of this product on a ‘‘per
treatment dose’’ basis would allow ASP
information to be aligned with payment
for the product under the OPPS, taking
into consideration radioactive decay
over time since administration would
always occur after the manufacturer’s
sale of the product.
Response: We understand the
concerns raised by the commenter in
regards to the current code descriptor
for A9605. In response to these
concerns, CMS’ HCPCS Workgroup has
decided to create a new HCPCS code,
A9604 Samarium SM-153 lexidronam,
therapeutic, per treatment dose, up to
150 millicuries), effective January 1,
2010, and delete existing HCPCS code
A9605. This new code should facilitate
alignment between ASP reporting by the
manufacturer and hospital reporting of
administration on a ‘‘per treatment
dose’’ basis. We note that the default
payment rate for HCPCS code A9604
included in Addendum A and B to this
final rule with comment period is based
on the per-day mean unit cost of HCPCS
code A9605. We believe that the CY
2008 hospital per-day cost of HCPCS
code A9605 reflects the cost of a single
treatment dose and, therefore, it is the
mean per-day cost that we will use for
payment of new HCPCS code A9604 in
CY 2010 if ASP information is not
available.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to pay all
nonpass-through, separately payable
therapeutic radiopharmaceuticals at
ASP+4 percent based on ASP
information, if available, for a ‘‘patientready’’ dose beginning on January 1,
2010, and updated on a quarterly basis
for products for which manufacturers
report ASP data. We are defining a
‘‘patient-ready’’ dose for OPPS purposes
as including all component materials of
the radiopharmaceutical, at a minimum,
and any other processing the
manufacturer requires to produce the
radiopharmaceutical that it sells that are
reflected in the sales price, including
radiolabeling, as long as any fees paid
for such processing done on behalf of
the manufacturer meet the definition of
‘‘bona fide service fees’’ under
§ 414.802. We also are finalizing our CY
2010 proposal, without modification, to
base nonpass-through, separately
payable therapeutic
radiopharmaceutical payment on mean
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unit cost derived from CY 2008 claims
data when ASP pricing is not available.
The nonpass-through therapeutic
radiopharmaceuticals that are separately
payable in CY 2010 are identified in
Table 42 below. The CY 2010 payment
rates for these products included in
Addenda A and B to this final rule with
comment period are based on mean unit
cost. Moreover, we note that, should
ASP be submitted timely for January
2010 OPPS payment, according to our
usual process for updating the payment
rates for separately payable drugs and
biologicals on a quarterly basis if
updated ASP information is available,
these payment rates will be updated
through the January 2010 OPPS
quarterly release.
TABLE 42—CY 2010 NONPASS-THROUGH, SEPARATELY PAYABLE THERAPEUTIC RADIOPHARMACEUTICALS
Final
CY 2010
APC
CY 2010 HCPCS code
CY 2010 long descriptor
A9517 ....................................................
A9530 ....................................................
A9543 ....................................................
Iodine I–131 sodium iodide capsule(s), therapeutic, per millicurie .....................
Iodine I–131 sodium iodide solution, therapeutic, per millicurie ..........................
Yttrium Y–90 ibritumomab tiuxetan, therapeutic, per treatment dose, up to 40
millicuries.
Iodine I–131 tositumomab, therapeutic, per treatment dose ...............................
Sodium phosphate P–32, therapeutic, per millicurie ...........................................
Chromic phosphate P–32 suspension, therapeutic, per millicurie ......................
Strontium Sr-89 chloride, therapeutic, per millicurie ............................................
Samarium SM–153 lexidronam, therapeutic, per treatment dose, up to 150
millicuries.
A9545
A9563
A9564
A9600
A9604
....................................................
....................................................
....................................................
....................................................
....................................................
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6. Payment for Nonpass-Through Drugs,
Biologicals, and Radiopharmaceuticals
With HCPCS Codes, but Without OPPS
Hospital Claims Data
Public Law 108–173 does not address
the OPPS payment in CY 2005 and after
for drugs, biologicals, and
radiopharmaceuticals that have assigned
HCPCS codes, but that do not have a
reference AWP or approval for payment
as pass-through drugs or biologicals.
Because there is no statutory provision
that dictated payment for such drugs,
biologicals, and radiopharmaceuticals in
CY 2005, and because we had no
hospital claims data to use in
establishing a payment rate for them, we
investigated several payment options for
CY 2005 and discussed them in detail
in the CY 2005 OPPS final rule with
comment period (69 FR 65797 through
65799).
For CYs 2005 to 2007, we
implemented a policy to provide
separate payment for new drugs,
biologicals, and radiopharmaceuticals
with HCPCS codes (specifically those
new drug, biological, and
radiopharmaceutical HCPCS codes in
each of those calendar years that did not
crosswalk to predecessor HCPCS codes)
but which did not have pass-through
status, at a rate that was equivalent to
the payment they received in the
physician’s office setting, established in
accordance with the ASP methodology
for drugs and biologicals, and based on
charges adjusted to cost for
radiopharmaceuticals. For CYs 2008 and
2009, we finalized a policy to provide
payment for new drugs (excluding
contrast agents) and biologicals
(excluding implantable biologicals for
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CY 2009) with HCPCS codes, but which
did not have pass-through status and
were without OPPS hospital claims
data, at ASP+5 percent and ASP+4
percent, respectively, consistent with
the final OPPS payment methodology
for other separately payable drugs and
biologicals. New therapeutic
radiopharmaceuticals were paid at
charges adjusted to cost based on the
statutory requirement for CY 2008 and
CY 2009 and payment for new
diagnostic radiopharmaceuticals was
packaged in both years. In the CY 2010
OPPS/ASC proposed rule (74 FR 35336
through 35337), for CY 2010, we
proposed to continue the CY 2009
payment methodology for new drugs
(excluding contrast agents) and
nonimplantable biologicals and extend
the methodology to payment for new
therapeutic radiopharmaceuticals, when
their period of payment at charges
adjusted to cost no longer would apply.
Therefore, for CY 2010, we proposed to
provide payment for new drugs
(excluding contrast agents),
nonimplantable biologicals, and
therapeutic radiopharmaceuticals with
HCPCS codes (those new CY 2010 drug
(excluding contrast agents),
nonimplantable biological, and
therapeutic radiopharmaceutical HCPCS
codes that do not crosswalk to CY 2009
HCPCS codes), but which do not have
pass-through status and are without
OPPS hospital claims data, at ASP+4
percent, consistent with the proposed
CY 2010 payment methodology for other
separately payable nonpass-through
drugs, nonimplantable biologicals, and
therapeutic radiopharmaceuticals. We
believed this proposed policy would
ensure that new nonpass-through drugs,
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Final
CY 2010
SI
1064
1150
1643
K
K
K
1645
1675
1676
0701
1295
K
K
K
K
K
nonimplantable biologicals, and
therapeutic radiopharmaceuticals would
be treated like other drugs,
nonimplantable biologicals, and
therapeutic radiopharmaceuticals under
the OPPS, unless they are granted passthrough status. Only if they are passthrough drugs, nonimplantable
biologicals, or therapeutic
radiopharmaceuticals would they
receive a different payment for CY 2010,
generally equivalent to the payment
these drugs and biologicals would
receive in the physician’s office setting,
consistent with the requirements of the
statute. We proposed to continue
packaging payment for all new nonpassthrough diagnostic
radiopharmaceuticals, contrast agents,
and implantable biologicals with
HCPCS codes (those new CY 2010
diagnostic radiopharmaceutical,
contrast agent, and implantable
biological HCPCS codes that do not
crosswalk to predecessor HCPCS codes),
consistent with the proposed packaging
of all existing nonpass-through
diagnostic radiopharmaceuticals,
contrast agents and implantable
biologicals, as discussed in more detail
in the proposed rule (74 FR 35323
through 35324).
In accordance with the OPPS ASP
methodology, in the absence of ASP
data, in the CY 2010 OPPS/ASC
proposed rule (74 FR 35336), for CY
2010, we proposed to continue the
policy we implemented beginning in CY
2005 of using the WAC for the product
to establish the initial payment rate for
new nonpass-through drugs and
biologicals with HCPCS codes, but
which are without OPPS claims data.
However, we note that if the WAC is
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also unavailable, we would make
payment at 95 percent of the product’s
most recent AWP. We also proposed to
assign status indicator ‘‘K’’ to HCPCS
codes for new drugs and
nonimplantable biologicals without
OPPS claims data and for which we
have not granted pass-through status.
We further noted that, with respect to
new items for which we do not have
ASP data, once their ASP data become
available in later quarter submissions,
their payment rates under the OPPS
would be adjusted so that the rates
would be based on the ASP
methodology and set to the finalized
ASP-based amount (proposed for CY
2010 at ASP+4 percent) for items that
have not been granted pass-through
status.
We did not receive any public
comments specific to these proposals.
While commenters, in general, objected
to payment for drugs and biologicals at
ASP+4 percent, these comments were
not specific to new drugs and
biologicals with HCPCS codes but
without OPPS claims data. Further, we
summarize the general public comments
on payment for separately payable drugs
and provide our responses in section
V.B.3.b. of this final rule with comment
period. In addition, commenters on the
CY 2010 OPPS/ASC proposed rule
objected to packaging payment for
diagnostic radiopharmaceuticals and
contrast agents in general, but these
comments were not directed to new
diagnostic radiopharmaceuticals or
contrast agents with HCPCS codes but
without OPPS claims data. We
summarize these comments and provide
our responses in section V.A.2.d. of this
final rule with comment period.
Therefore, we are finalizing our CY
2010 proposals, without modification,
as follows: Payment for new drugs
(excluding contrast agents),
nonimplantable biologicals, and
therapeutic radiopharmaceuticals with
HCPCS codes, but which do not have
pass-through status and are without
OPPS hospital claims data, will be made
at ASP+4 percent for CY 2010. In cases
where ASP information is not available,
payment will be made using WAC, and
if WAC is also unavailable payment will
be made at 95 percent of the most recent
AWP. Further, payment for all new
nonpass-through diagnostic
radiopharmaceuticals, contrast agents,
and implantable biologicals with
HCPCS codes but without OPPS claims
data will be packaged for CY 2010.
Finally, we are assigning status
indicator ‘‘K’’ to HCPCS codes for new
drugs and nonimplantable biologicals
without OPPS claims data and for
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which we have not granted pass-through
status in CY 2010.
For CY 2010, we also proposed to
base payment for new therapeutic
radiopharmaceuticals with HCPCS
codes as of January 1, 2010, but which
do not have pass-through status, on the
WACs for these products if ASP data for
these therapeutic radiopharmaceuticals
are not available. If the WACs are also
unavailable, we proposed to make
payment for new therapeutic
radiopharmaceuticals at 95 percent of
their most recent AWPs because we
would not have mean costs from
hospital claims data upon which to base
payment. Analogous to new drugs and
biologicals, we proposed to assign status
indicator ‘‘K’’ to HCPCS codes for new
therapeutic radiopharmaceuticals for
which we have not granted pass-through
status.
We did not receive any public
comments specific to our proposal for
new therapeutic radiopharmaceuticals
with HCPCS codes but without passthrough status. However, commenters
on the CY 2010 OPPS/ASC proposed
rule were supportive of the ASP
methodology, in general, for payment
for therapeutic radiopharmaceuticals in
the HOPD, and we are finalizing an ASP
payment methodology for separately
payable therapeutic radiopharmaceuticals for CY 2010 as
discussed in section V.B.5. of this final
rule with comment period.
Therefore, we are finalizing our CY
2010 proposals, without modification,
to provide payment for new therapeutic
radiopharmaceuticals with HCPCS
codes but without pass-through status, if
ASP information is not available, based
on WAC. If WAC information is also
unavailable, we will make payment for
new therapeutic radiopharmaceuticals
at 95 percent of their most recent AWP.
In addition, we are assigning status
indicator ‘‘K’’ to HCPCS codes for new
therapeutic radiopharmaceuticals in CY
2010 that do not have pass-through
status.
Consistent with other ASP-based
payments, for CY 2010, we proposed to
announce any changes to the payment
amounts for new drugs and biologicals
in the CY 2010 OPPS/ASC final rule
with comment period and also on a
quarterly basis on the CMS Web site
during CY 2010 if later quarter ASP
submissions (or more recent WACs or
AWPs) indicate that changes to the
payment rates for these drugs and
biologicals are necessary. The payment
rates for new therapeutic
radiopharmaceuticals would also be
changed accordingly, based on later
quarter ASP submissions. We note that
the new CY 2010 HCPCS codes for
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60527
drugs, biologicals, and therapeutic
radiopharmaceuticals were not available
at the time of development of the
proposed rule. However, they are
included in Addendum B to this CY
2010 OPPS/ASC final rule with
comment period. They are assigned
comment indicator ‘‘NI’’ in Addendum
B to reflect that their interim final OPPS
treatment is open to public comment on
the CY 2010 OPPS/ASC final rule with
comment period.
We did not receive any public
comments on our proposal to announce,
via the CMS Web site, any changes to
the OPPS payment amounts for new
drugs and biologicals on a quarterly
basis. Therefore, we are finalizing our
proposals and will update payment
rates for new drugs, biologicals, and
therapeutic radiopharmaceuticals, as
necessary, in association with our
quarterly update process and provide
this information on the CMS Web site.
There are several nonpass-through
drugs and biologicals that were payable
in CY 2008 and/or CY 2009 for which
we did not have any CY 2008 hospital
claims data available for the proposed
rule and for which there were no other
HCPCS codes that describe different
doses of the same drug but for which we
did have pricing information for the
ASP methodology. In the CY 2010
OPPS/ASC proposed rule (74 FR 35337),
we noted that there are currently no
therapeutic radiopharmaceuticals in this
category. In order to determine the
packaging status of these products for
CY 2010, we calculated an estimate of
the per day cost of each of these items
by multiplying the payment rate for
each product based on ASP+4 percent,
similar to other nonpass-through drugs
and biologicals paid separately under
the OPPS, by an estimated average
number of units of each product that
would typically be furnished to a
patient during one administration in the
hospital outpatient setting. We proposed
to package items for which we estimated
the per administration cost to be less
than or equal to $65, which is the
general packaging threshold that we
proposed for drugs, nonimplantable
biologicals, and therapeutic
radiopharmaceuticals in CY 2010. We
proposed to pay separately for items
with an estimated per day cost greater
than $65 (with the exception of
diagnostic radiopharmaceuticals,
contrast agents and implantable
biologicals, which we proposed to
continue to package regardless of cost,
as discussed in more detail in the
proposed rule (74 FR 35323 through
35324)) in CY 2010. We proposed that
the CY 2010 payment for separately
payable items without CY 2008 claims
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data would be ASP+4 percent, similar to
payment for other separately payable
nonpass-through drugs and biologicals
under the OPPS. In accordance with the
ASP methodology used in the
physician’s office setting, in the absence
of ASP data, we proposed to use the
WAC for the product to establish the
initial payment rate. However, we note
that if the WAC is also unavailable, we
would make payment at 95 percent of
the most recent AWP available.
We did not receive any public
comments on our proposal to use
estimated per day costs for these drugs
and biologicals or on the resulting
packaging status of these drugs and
biologicals. Therefore, we are finalizing
our CY 2010 proposal, without,
modification to use the estimated
number of units per day included in
Table 43 below to determine estimated
per day costs for the corresponding
drugs and biologicals for CY 2010.
Further, we are finalizing our proposal
to package those drugs with an
estimated per day cost less than or equal
to $65 and to provide separate payment
for those drugs and biologicals with
estimated per day costs over $65 for CY
2010. For those drugs and biologicals
that we determined to be separately
payable in CY 2010, payment will be
made at ASP+4 percent. If ASP
information is not available, payment
will be based on WAC or 95 percent of
the most recently published AWP if
WAC is not available. The final
estimated units per day and status
indicators for these items are displayed
in Table 43 below.
TABLE 43—DRUGS AND BIOLOGICALS WITHOUT CY 2008 CLAIMS DATA
Estimated
average
number
of units
per administration
CY 2010 HCPCS code
CY 2010 long descriptor
90681 ..............................................
Rotavirus vaccine, human, attenuated, 2 dose schedule, live, for oral
use.
Diphtheria, tetanus toxoids, acellular pertussis vaccine and poliovirus
vaccine, inactivated (DTaP–IPV), when administered to children 4
through 6 years of age, for intramuscular use.
Injection, apomorphine hydrochloride, 1 mg ..........................................
Injection, protein c concentrate, intravenous, human, 10 iu ..................
Injection, urofollitropin, 75 IU ..................................................................
Injection, interferon, alfa-n3, (human leukocyte derived), 250,000 iu ....
90696 ..............................................
J0364
J2724
J3355
J9215
..............................................
..............................................
..............................................
..............................................
dcolon on DSK2BSOYB1PROD with RULES2
Finally, there were eight drugs and
biologicals, shown in Table 31 of the CY
2010 OPPS/ASC proposed rule (74 FR
35337), that were payable in CY 2008,
but for which we lacked CY 2008 claims
data and any other pricing information
for the ASP methodology for the CY
2010 OPPS/ASC proposed rule. In CY
2009, for similar items without CY 2007
claims data and without pricing
information for the ASP methodology,
we stated that we were unable to
determine their per day cost and we
packaged these items for the year,
assigning these items status indicator
‘‘N.’’
For CY 2010, we proposed to change
the status indicator for eight drugs and
biologicals shown in Table 31 of the CY
2010 OPPS/ASC proposed rule (74 FR
35337) to status indicator ‘‘E’’ (Not paid
by Medicare when submitted on
outpatient claims (any outpatient bill
type)) as we understood that these drugs
and biologicals are not currently sold or
have been identified as obsolete. In
addition, we proposed to provide
separate payment for these drugs and
biologicals if pricing information
reflecting recent sales becomes available
mid-year in CY 2010 for the ASP
methodology. If pricing information
becomes available, we would assign the
products status indicator ‘‘K’’ and pay
for them separately for the remainder of
CY 2010.
We did not receive any public
comments on our proposal to change the
status indicators for drugs and
biologicals without claims data or
pricing information for the ASP
methodology. Therefore, we are
finalizing our CY 2010 proposal,
without modification, to assign status
indicator ‘‘E’’ to these drugs and
biologicals. As we have used updated
claims data and ASP pricing
information for this final rule with
comment period, we have newly
identified for this final rule with
comment period CPT codes 90393
(Vaccinia immune globulin, human, for
Final CY
2010 SI
Final CY
2010
APC
1
K
1239
1
N
................
12
2240
2
5
N
K
K
K
................
1139
1741
0865
intramuscular use); 90477 (Adenovirus
vaccine, type 7, live, for oral use); 90644
(Meningococcal conjugate vaccine,
serogroups C & Y and Hemophilus
influenza b vaccine, tetanus toxoid
conjugate (Hib-MenCY–TT), 4-dose
schedule, when administered to
children 2–15 months of age, for
intramuscular use); and 90670
(Pneumococcal conjugate vaccine, 13
valent, for intramuscular use) as lacking
CY 2008 claims data and any other
pricing information for the ASP
methodology. Therefore, in addition to
the HCPCS codes we proposed to assign
status indicator ‘‘E’’ for CY 2010 on this
basis in the proposed rule, we are
assigning status indicator ‘‘E’’ to CPT
codes 90393, 90477, 90644 and 90670
for CY 2010. All drugs and biologicals
without CY 2008 hospital claims data
and data based on the ASP methodology
that are assigned status indicator ‘‘E’’ on
this basis at the time of this final rule
with comment period for CY 2010 are
displayed in Table 44 below.
TABLE 44—DRUGS AND BIOLOGICALS WITHOUT CY 2008 CLAIMS DATA AND WITHOUT PRICING INFORMATION FOR THE
ASP METHODOLOGY
CY 2010 HCPCS code
CY 2010 long descriptor
Final CY
2010 SI
90296 ................................
90393 ................................
Diphtheria antitoxin, equine, any route ........................................................................................................
Vaccinia immune globulin, human, for intramuscular use ...........................................................................
E
E
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60529
TABLE 44—DRUGS AND BIOLOGICALS WITHOUT CY 2008 CLAIMS DATA AND WITHOUT PRICING INFORMATION FOR THE
ASP METHODOLOGY—Continued
CY 2010 HCPCS code
CY 2010 long descriptor
Final CY
2010 SI
90477 ................................
90581 ................................
90644 ................................
Adenovirus vaccine, type 7, live, for oral use ..............................................................................................
Anthrax vaccine, for subcutaneous use .......................................................................................................
Meningococcal conjugate vaccine, serogroups C & Y and Hemophilus influenza b vaccine, tetanus toxoid conjugate (Hib-MenCY–TT), 4-dose schedule, when administered to children 2–15 months of
age, for intramuscular use.
Pneumococcal conjugate vaccine, 13 valent, for intramuscular use ...........................................................
Plague vaccine, for intramuscular use .........................................................................................................
Injection, abarelix, 10 mg .............................................................................................................................
Injection, anistreplase, per 30 units .............................................................................................................
Injection, arbutamine hcl, 1 mg ....................................................................................................................
Injection, fomivirsen sodium, intraocular, 1.65 mg .......................................................................................
Injection, oxytetracycline HCL, up to 50 mg ................................................................................................
E
E
E
90670
90727
J0128
J0350
J0395
J1452
J2460
................................
................................
................................
................................
................................
................................
................................
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VI. Estimate of OPPS Transitional PassThrough Spending for Drugs,
Biologicals, Radiopharmaceuticals, and
Devices
A. Background
Section 1833(t)(6)(E) of the Act limits
the total projected amount of
transitional pass-through payments for
drugs, biologicals, radiopharmaceuticals, and categories of
devices for a given year to an
‘‘applicable percentage’’ of total
program payments estimated to be made
under section 1833(t) of the Act for all
covered services furnished for that year
under the hospital OPPS. For a year
before CY 2004, the applicable
percentage was 2.5 percent; for CY 2004
and subsequent years, we specify the
applicable percentage up to 2.0 percent.
If we estimate before the beginning of
the calendar year that the total amount
of pass-through payments in that year
would exceed the applicable percentage,
section 1833(t)(6)(E)(iii) of the Act
requires a uniform reduction in the
amount of each of the transitional passthrough payments made in that year to
ensure that the limit is not exceeded.
We make an estimate of pass-through
spending to determine not only whether
payments exceed the applicable
percentage, but also to determine the
appropriate reduction to the conversion
factor for the projected level of passthrough spending in the following year
in order to ensure that total estimated
pass-through spending for the
prospective payment year is budget
neutral as required by section
1883(t)(6)(E) of the Act.
For devices, developing an estimate of
pass-through spending in CY 2010
entails estimating spending for two
groups of items. The first group of items
consists of device categories that were
recently made eligible for pass-through
payment and that would continue to be
eligible for pass-through payment in CY
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14:52 Nov 19, 2009
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2010. The CY 2008 OPPS/ASC final rule
with comment period (72 FR 66778)
describes the methodology we have
used in previous years to develop the
pass-through spending estimate for
known device categories continuing into
the applicable update year. The second
group contains items that we know are
newly eligible, or project would be
newly eligible, for device pass-through
payment in the remaining quarters of
CY 2009 or beginning in CY 2010. As
discussed in section V.A.4. of this final
rule with comment period, we proposed
that, beginning in CY 2010, the passthrough evaluation process and passthrough payment for implantable
biologicals newly approved for passthrough payment beginning on or after
January 1, 2010, that are always
surgically inserted or implanted
(through a surgical incision or a natural
orifice) would be the device passthrough process and payment
methodology only. Therefore, we
proposed that the estimate of passthrough spending for implantable
biologicals newly eligible for passthrough payment beginning in CY 2010
would be included in the pass-through
spending estimate for this second group
of device categories. The sum of the CY
2010 pass-through estimates for these
two groups of device categories equals
the total CY 2010 pass-through spending
estimate for device categories with passthrough status.
For devices eligible for pass-through
payment, section 1833(t)(6)(D)(ii) of the
Act establishes the pass-through amount
as the amount by which the hospital’s
charges for the device, adjusted to cost,
exceeds the portion of the otherwise
applicable Medicare OPD fee schedule
that the Secretary determines is
associated with the device. As discussed
in section IV.A.2. of this final rule with
comment period, we deduct from the
pass-through payment for an identified
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E
E
E
E
E
E
E
device category eligible for pass-through
payment 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 device
APC offset amount, when we believe
that predecessor device costs for the
device category newly approved for
pass-through payment are already
packaged into the existing APC
structure. For each device category that
becomes newly eligible for device passthrough payment, including an
implantable biological under our CY
2010 proposal, we estimate passthrough spending to be the difference
between payment for the device
category and the device APC offset
amount, if applicable, for the
procedures that would use the device. If
we determine that predecessor device
costs for the new device category are not
already included in the existing APC
structure, the pass-through spending
estimate for the device category would
be the full payment at charges adjusted
to cost.
For drugs and biologicals eligible for
pass-through payment, section
1833(t)(6)(D)(i) of the Act establishes the
pass-through payment amount as the
amount by which the amount
authorized under section 1842(o) of the
Act (or, if the drug or biological is
covered under a competitive acquisition
contract under section 1847B of the Act,
an amount determined by the Secretary
equal to the average price for the drug
or biological for all competitive
acquisition areas and year established
under such section as calculated and
adjusted by the Secretary) exceeds the
portion of the otherwise applicable fee
schedule amount that the Secretary
determines is associated with the drug
or biological. As we proposed, we are
paying for most nonpass-through
separately payable drugs and
nonimplantable biologicals under the
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CY 2010 OPPS at ASP+4 percent, which
represents the otherwise applicable fee
schedule amount associated with most
pass-through drugs and biologicals, and
because we are paying for CY 2010 passthrough drugs and nonimplantable
biologicals at ASP+6 percent or the Part
B drug CAP rate, if applicable, our
estimate of drug and nonimplantable
biological pass-through payment for CY
2010 is not zero. Furthermore, payment
for certain drugs, specifically diagnostic
radiopharmaceuticals, contrast agents,
and implantable biologicals without
pass-through status, is always packaged
into payment for the associated
procedures because these products
would never be separately paid.
However, all pass-through diagnostic
radiopharmaceuticals, contrast agents,
and those implantable biologicals with
pass-through status approved prior to
CY 2010 are paid at ASP+6 percent or
the Part B drug CAP rate, if applicable,
like other pass-through drugs and
biologicals. Therefore, our estimate of
pass-through payment for all diagnostic
radiopharmaceuticals and contrast
agents and those implantable biologicals
with pass-through status approved prior
to CY 2010 is also not zero.
In section V.A.6. of this final rule
with comment period, we discuss our
policy to determine if the cost of certain
‘‘policy-packaged’’ drugs, including
diagnostic radiopharmaceuticals and
contrast agents, are already packaged
into the existing APC structure. If we
determine that a ‘‘policy-packaged’’
drug approved for pass-through
payment resembles predecessor
diagnostic radiopharmaceuticals or
contrast agents already included in the
costs of the APCs that would be
associated with the drug receiving passthrough payment, as we proposed, we
are offsetting the amount of passthrough payment for diagnostic
radiopharmaceuticals and contrast
agents. For these drugs, the APC offset
amount is the portion of the APC
payment for the specific procedure
performed with the pass-through
diagnostic radiopharmaceutical or
contrast agent that is attributable to
diagnostic radiopharmaceuticals or
contrast agents, which we refer to as the
‘‘policy-packaged’’ drug APC offset
amount. If we determine that an offset
is appropriate for a specific diagnostic
radiopharmaceutical or contrast agent
receiving pass-through payment, we
reduce our estimate of pass-through
payment for these drugs by this amount.
We have not established a policy to
offset pass-through payment for
implantable biologicals when approved
for pass-through payment as a drug or
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14:52 Nov 19, 2009
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biological, that is, for CY 2009 and
earlier, so we consider full payment at
ASP+6 percent for these implantable
biologicals receiving biological passthrough payment in our estimate of CY
2010 pass-through spending for drugs
and biologicals.
We note that the Part B drug CAP
program has been suspended beginning
January 1, 2009. We refer readers to the
Medicare Learning Network (MLN)
Matters Special Edition article SE0833
for more information on this
suspension. As of the publication of the
CY 2010 OPPS/ASC proposed rule and
this final rule with comment period, the
Part B drug CAP program has not been
reinstituted. Therefore, for this final rule
with comment period, we are
continuing to not have an effective Part
B drug CAP rate for pass-through drugs
and biologicals. Similar to estimates for
devices, the first group of drugs and
biologicals requiring a pass-through
payment estimate consists of those
products that were recently made
eligible for pass-through payment and
that continue to be eligible for passthrough payment in CY 2010. The
second group contains drugs and
nonimplantable biologicals that we
know are newly eligible, or project
would be newly eligible, in the
remaining quarters of CY 2009 or
beginning in CY 2010. The sum of the
CY 2010 pass-through estimates for
these two groups of drugs and
biologicals equals the total CY 2010
pass-through spending estimate for
drugs and biologicals with pass-through
status.
B. Estimate of Pass-Through Spending
For CY 2010, we proposed to set the
applicable pass-through payment
percentage limit at 2.0 percent of the
total projected OPPS payments for CY
2010, consistent with our OPPS policy
from CY 2004 through 2009 (74 FR
35339).
For the first group of devices for passthrough payment estimate purposes,
there were no device categories
receiving pass-through payment in CY
2009 that would continue for payment
during CY 2010 (74 FR 35339) and,
therefore, we proposed a device passthrough payment estimate for the first
group of pass-through device categories
of $0.
We also proposed for CY 2010 to use
the device pass-through process and
payment methodology for implantable
biologicals that are always surgically
inserted or implanted (through a
surgical incision or a natural orifice).
We proposed to consider existing
implantable biologicals approved for
pass-through payment under the drugs
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and biologicals pass-through provision
prior to CY 2010 as drugs and
biologicals for pass-through payment
estimate purposes. We proposed to
continue to consider these implantable
biologicals that have been approved for
pass-through status prior to CY 2010
drugs and biologicals until they expire
from pass-through status. Therefore, the
proposed pass-through spending
estimate for the first group of passthrough devices did not include
implantable biologicals that were
granted pass-through status prior to CY
2010. Finally, we proposed to provide
payment for implantable biologicals
newly eligible for pass-through payment
beginning in CY 2010 based on hospital
charges adjusted to cost, rather than the
ASP methodology that is applicable to
pass-through drugs and biologicals.
Therefore, we proposed that, beginning
in CY 2010, the estimate of pass-through
spending for implantable biologicals
first paid as pass-through devices in CY
2010 would be based on the payment
methodology for pass-through devices
and would be included in the device
pass-through spending estimate.
In estimating our proposed CY 2010
pass-through spending for device
categories in the second group, that is,
device categories that we knew at the
time of the development of the proposed
rule would be newly eligible for passthrough payment in CY 2010 (of which
there were none), additional device
categories (including categories that
describe implantable biologicals) that
we estimated could be approved for
pass-through status subsequent to the
development of the proposed rule and
before January 1, 2010, and contingent
projections for new categories
(including categories that describe
implantable biologicals in the second
through fourth quarters of CY 2010), we
proposed to use the general
methodology described in the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66778), while also taking
into account recent OPPS experience in
approving new pass-through device
categories. There were no new device
categories (including categories that
describe implantable biologicals) for CY
2010 of which we were aware at the
time of development of the proposed
rule. The estimate of CY 2010 passthrough spending for this second group
of device categories was $10.0 million
for the proposed rule (74 FR 35339).
Employing our established
methodology that the estimate of passthrough device spending in CY 2010
incorporates CY 2010 estimates of passthrough spending for known device
categories continuing in CY 2010, those
known or projected to be first effective
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January 1, 2010, and those device
categories projected to be approved
during subsequent quarters of CY 2009
or CY 2010, our proposed CY 2010
estimate of total pass-through spending
for device categories was $10.0 million
(74 FR 35339).
To estimate CY 2010 proposed passthrough spending for drugs and
biologicals in the first group,
specifically those drugs (including
radiopharmaceuticals and contrast
agents) and biologicals (including
implantable biologicals) recently made
eligible for pass-through payment and
continuing on pass-through status for
CY 2010, we proposed to utilize the
most recent Medicare physician’s office
data regarding their utilization,
information provided in the respective
pass-through applications, historical
hospital claims data, pharmaceutical
industry information, and clinical
information regarding those drugs or
biologicals, in order to project the CY
2010 OPPS utilization of the products.
For the known drugs and biologicals
(excluding diagnostic radiopharmaceuticals, contrast agents, and
implantable biologicals) that would be
continuing on pass-through status in CY
2010, we estimated the proposed passthrough payment amount as the
difference between ASP+6 percent or
the Part B drug CAP rate, as applicable,
and ASP+4 percent, aggregated across
the projected CY 2010 OPPS utilization
of these products. Because payment for
a diagnostic radiopharmaceutical or
contrast agent would be packaged if the
product were not paid separately due to
its pass-through status, we included in
the pass-through estimate the difference
between payment for the drug or
biological at ASP+6 percent (or WAC+6
percent, or 95 percent of AWP, if ASP
information is not available) and the
‘‘policy-packaged’’ drug APC offset
amount, if we determined that the
diagnostic radiopharmaceutical or
contrast agent approved for passthrough payment resembles predecessor
diagnostic radiopharmaceuticals or
contrast agents already included in the
costs of the APCs that would be
associated with the drug receiving passthrough payment. Because payment for
an implantable biological continuing on
pass-through status in CY 2010 would
be packaged if the product were not
paid separately due to its pass-through
status and because we have not
established a pass-through payment
offset policy for implantable biologicals
when approved for pass-through
payment as biologicals, that is, for CY
2009 and earlier, we included in the
proposed pass-through spending
estimate the full payment for these
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14:52 Nov 19, 2009
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implantable biologicals at ASP+6
percent (or WAC+6 percent or 95
percent of AWP, if ASP information is
not available). We note that our
spending estimate for this first group of
drugs and biologicals was stated in the
CY 2010 OPPS/ASC proposed rule as
$8.9 million (74 FR 35340), while our
estimate for the second group of drugs
and biologicals was reported as $19.1
million. We inadvertently mislabeled
these two spending estimates in the CY
2010 OPPS/ASC proposed rule. For this
first group of drugs and biologicals, the
proposed spending estimate should
have been reported as $19.1 million and
the second group should have been
reported as $8.9 million.
To estimate CY 2010 pass-through
spending for drugs and nonimplantable
biologicals in the second group (that is,
drugs and nonimplantable biologicals
that we knew at the time of
development of the proposed rule
would be newly eligible for passthrough payment in CY 2010, additional
drugs and nonimplantable biologicals
that we estimated could be approved for
pass-through status subsequent to the
development of the proposed rule and
before January 1, 2010, and projections
for new drugs and nonimplantable
biologicals that could be initially
eligible for pass-through payment in the
second through fourth quarters of CY
2010), we proposed to use utilization
estimates from pass-through applicants,
pharmaceutical industry data, clinical
information, recent trends in the per
unit ASPs of hospital outpatient drugs,
and projected annual changes in service
volume and intensity as our basis for
making the CY 2010 proposed passthrough payment estimate. We also
considered the most recent OPPS
experience in approving new passthrough drugs and nonimplantable
biologicals. As noted earlier, we also
proposed to include new implantable
biologicals that we expect to be
approved for pass-through status as
devices beginning in CY 2010 in the
second group of items considered for
device pass-through estimate purposes.
Therefore, we did not include
implantable biologicals in the second
group of items in the proposed drug and
biological pass-through spending
estimate.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35314 through 35317), we
proposed to revise our pass-through
payment policy regarding ‘‘new’’ drugs
and biologicals that were not receiving
hospital outpatient payment as of
December 31, 1996, and that also met
the other criteria for receiving passthrough payment. Specifically, we
proposed to change the start date of the
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60531
pass-through payment eligibility period
for a ‘‘new’’ drug or biological from the
first date on which pass-through
payment is made to the date on which
payment is first made for a drug or
biological as an outpatient hospital
service under Part B, using the date of
first sale of the drug or biological in the
United States after FDA approval as a
proxy, to better reflect the statutory
provisions for pass-through payment
under section 1833(t)(6) of the Act. We
expected that a number of the drugs and
biologicals currently receiving passthrough payment in CY 2009 would not
be eligible for pass-through payment
under the proposed revised definition of
the pass-through payment eligibility
period, Accordingly, for the CY 2010
OPPS/ASC proposed rule, we reduced
our estimate of CY 2010 pass-through
spending for new drugs and
nonimplantable biologicals in the
second group that could be initially
eligible for pass-through payment
beginning in CY 2010 to take into
consideration the potential effect of the
proposed CY 2010 pass-through
payment eligibility period policy on the
future number of drugs and biologicals
newly approved for pass-through
payment, in comparison with our
historical OPPS experience over the past
several years.
As noted above, we inadvertently
mislabeled the spending estimates for
the two groups of drugs and biologicals
in the CY 2010 OPPS/ASC proposed
rule. Therefore, while we reported that
the spending estimate for this second
group of drugs and biologicals in the CY
2010 OPPS/ASC proposed rule was
$19.1 million (74 FR 35340), the
estimate that should have been reported
for this second group of drugs and
biologicals was $8.9 million.
We did not receive any public
comments on the proposed
methodology to estimate pass-through
spending for drugs, biologicals,
radiopharmaceuticals, and device
categories in CY 2010. However, we did
receive public comments on our
proposal to use the first date of sale in
the United States after FDA approval as
a proxy for the first date of payment
under Medicare Part B as an outpatient
hospital service for determining the
pass-through payment eligibility period
for pass-through drugs and
nonimplantable biologicals under the
OPPS for CY 2010, which would have
reduced the pass-through payment
estimate for drugs and nonimplantable
biologicals. These public comments, our
responses, and our final policy for CY
2010 are discussed in section V.A.5 of
this final rule with comment period. As
with our current policy, in CY 2010 the
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pass-through payment eligibility period
and the period of pass-through payment
period will run concurrently. Thus, for
our final CY 2010 pass-through
spending estimate for new drugs and
nonimplantable biologicals that could
be initially eligible for pass-through
payment beginning in CY 2010, we have
no need to reduce our estimate of passthrough spending to take into
consideration a policy change in the
pass-through payment eligibility period.
Therefore, we are finalizing our
proposed methodology to estimate
annual pass-through spending for
devices and drugs and nonimplantable
biologicals, with the modification as
described above.
As stated in section V.A.4. of this
final rule with comment period, as we
proposed, beginning in CY 2010,
implantable biologicals that are always
surgically inserted or implanted
(through a surgical incision or a natural
orifice) will be evaluated under the
device pass-through process and paid
according to the device payment
methodology. We are continuing to
consider implantable biologicals
approved for pass-through payment
under the drug and biological passthrough provision prior to CY 2010 as
drugs and biologicals for pass-through
payment estimate purposes. These
implantable biologicals that have been
approved for pass-through status prior
to CY 2010 continue to be considered
drugs and biologicals until they expire
from pass-through status. Therefore, the
final pass-through spending estimate for
the first group of pass-through device
categories does not include implantable
biologicals that have been granted passthrough status prior to CY 2010.
In section V.A.4. of this final rule
with comment period, as we proposed,
we are providing that payment for
implantable biologicals newly eligible
for pass-through payment beginning in
CY 2010 is based on hospital charges
adjusted to cost, rather than the ASP
methodology that is applicable to passthrough drugs and biologicals.
Therefore, we are providing that,
beginning in CY 2010, the estimate of
pass-through spending for implantable
biologicals first paid as pass-through
devices in CY 2010 is based on the
payment methodology for pass-through
devices, and is included in the final CY
2010 device pass-through spending
estimate for the second group of passthrough device categories.
The final CY 2010 pass-through
spending estimate for the first group of
pass-through device categories is $0.
The estimate of CY 2010 pass-through
spending for the second group of passthrough device categories is $10.0
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14:52 Nov 19, 2009
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million for this final rule with comment
period, as it was for the proposed rule
(74 FR 35339). Our final CY 2010
estimate of total pass-through spending
for device categories is $10.0 million.
The estimate for pass-through
spending for the first group of drugs and
biologicals is $28.9 million for CY 2010.
The estimate for pass-through spending
for the second group of drugs and
biologicals is $6.7 million for CY 2010.
As stated above, the final estimates
differ, in part, from our proposed rule
estimates in order to reflect our final
policy regarding the pass-through
payment eligibility period. As discussed
in section V.A. of this final rule with
comment period, radiopharmaceuticals
are considered drugs for pass-through
purposes. Therefore, we have included
radiopharmaceuticals in our CY 2010
pass-through spending estimate for
drugs and biologicals. Our final CY 2010
estimate of total pass-through spending
for drugs and biologicals is $35.6
million.
In summary, in accordance with the
methodology described above in this
section, we estimate that total passthrough spending for the device
categories and the drugs and biologicals
that are continuing to receive passthrough payment in CY 2010 and those
device categories, drugs, and
nonimplantable biologicals that first
become eligible for pass-through
payment during CY 2010 is
approximately $45.5 million, which
represents 0.14 percent of total OPPS
projected payments for CY 2010. We
estimate that pass-through spending in
CY 2010 will not amount to 2.0 percent
of total projected OPPS CY 2010
program spending.
VII. OPPS Payment for Brachytherapy
Sources
A. Background
Section 1833(t)(2)(H) of the Act, as
added by section 621(b)(2)(C) of Public
Law 108–173 (MMA), mandated the
creation of additional groups of covered
OPD services that classify devices of
brachytherapy consisting of a seed or
seeds (or radioactive source)
(‘‘brachytherapy sources’’) separately
from other services or groups of
services. The additional groups must
reflect the number, isotope, and
radioactive intensity of the
brachytherapy sources furnished and
include separate groups for palladium103 and iodine-125 sources.
Section 1833(t)(16)(C) of the Act, as
added by section 621(b)(1) of Public
Law 108–173, established payment for
brachytherapy sources furnished from
January 1, 2004, through December 31,
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2006, based on a hospital’s charges for
each brachytherapy source furnished
adjusted to cost. Under section
1833(t)(16)(C) of the Act, charges for the
brachytherapy sources may not be used
in determining any outlier payments
under the OPPS for that period of
payment. Consistent with our practice
under the OPPS to exclude items paid
at cost from budget neutrality
consideration, these items were
excluded from budget neutrality for that
time period as well.
In our CY 2007 annual OPPS
rulemaking, we proposed and finalized
a policy of prospective payment based
on median costs for the 11
brachytherapy sources for which we had
claims data. We based the prospective
payment rates on median costs for each
source from our CY 2005 claims data (71
FR 68102 through 71 FR 68115).
Subsequent to publication of the CY
2007 OPPS/ASC final rule with
comment period, section 107 of Public
Law 109–432 (MIEA–TRHCA) amended
section 1833 of the Act. Specifically,
section 107(a) of Public Law 109–432
amended section 1833(t)(16)(C) of the
Act by extending the payment period for
brachytherapy sources based on a
hospital’s charges adjusted to cost for 1
additional year, through December 31,
2007. Therefore, we continued to pay
for brachytherapy sources based on
charges adjusted to cost for CY 2007.
Section 107(b)(1) of Public Law 109–
432 amended section 1833(t)(2)(H) of
the Act by adding a requirement for the
establishment of separate payment
groups for ‘‘stranded and non-stranded’’
brachytherapy sources furnished on or
after July 1, 2007, in addition to the
existing requirements for separate
payment groups based on the number,
isotope, and radioactive intensity of
brachytherapy sources under section
1833(t)(2)(H) of the Act. Section
107(b)(2) of Pub. L. 109–432 authorized
the Secretary to implement this
requirement by ‘‘program instruction or
otherwise.’’ We note that public
commenters who responded to the CY
2007 OPPS/ASC proposed rule asserted
that stranded sources, which they
described as embedded into the
stranded suture material and separated
within the strand by material of an
absorbable nature at specified intervals,
had greater production costs than nonstranded sources (71 FR 68113 through
68114).
As a result of the statutory
requirement to create separate groups
for stranded and non-stranded sources
as of July 1, 2007, we established several
coding changes through a transmittal,
effective July 1, 2007 (Transmittal 1259,
dated June 1, 2007). Based on public
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comments received on the CY 2007
OPPS/ASC proposed rule and industry
input, we were aware of three sources
available in stranded and non-stranded
forms at that time: iodine-125;
palladium-103; and cesium-131 (72 FR
42746). We created six new HCPCS
codes to differentiate the stranded and
non-stranded versions of iodine,
palladium, and cesium sources.
In Transmittal 1259, we indicated that
if we receive information that any of the
other sources now designated as nonstranded are also FDA-approved and
marketed as a stranded source, we
would create a code for the stranded
source. We also established two ‘‘Not
Otherwise Specified’’ (NOS) codes for
billing stranded and non-stranded
sources that are not yet known to us and
for which we do not have sourcespecific codes. We established HCPCS
code C2698 (Brachytherapy source,
stranded, not otherwise specified, per
source) for stranded NOS sources and
HCPCS code C2699 (Brachytherapy
source, non-stranded, not otherwise
specified, per source) for non-stranded
NOS sources.
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66784), we
again finalized prospective payment for
brachytherapy sources, beginning in CY
2008, with payment rates determined
using the CY 2006 claims-based costs
per source for each brachytherapy
source. Consistent with our policy
regarding APC payments made on a
prospective basis, we finalized the
policy in the CY 2008 OPPS/ASC final
rule with comment period (72 FR
66686) to subject the cost of
brachytherapy sources to the outlier
provision of section 1833(t)(5) of the
Act, and to also subject brachytherapy
source payment weights to scaling for
purposes of budget neutrality.
Therefore, brachytherapy sources could
receive outlier payments if the costs of
furnishing brachytherapy sources met
the criteria for outlier payment. In
addition, as noted in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66683), implementation of
prospective payment for brachytherapy
sources would provide opportunities for
hospitals to receive additional payments
under certain circumstances through the
7.1 percent rural SCH adjustment.
For CY 2008, we also proposed and
finalized a policy regarding payment for
new brachytherapy sources for which
we have no claims data (72 FR 42749
and 72 FR 66786, respectively). We
indicated we would assign future new
HCPCS codes for new brachytherapy
sources to their own APCs, with
prospective payment rates set based on
our consideration of external data and
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other relevant information regarding the
expected costs of the sources to
hospitals. Finally, we proposed and
finalized our policy to discontinue
using status indicator ‘‘H’’ (PassThrough Device Categories. Separate
cost based pass-through payment; not
subject to co-payment) because we
would not be paying charges adjusted to
costs after December 31, 2007, and
instead adopted a policy of using status
indicator ‘‘K’’ (which includes, among
others, ‘‘Brachytherapy Sources. Paid
under OPPS; separate APC payment’’)
for CY 2008 (72 FR 42749 and 72 FR
66785, respectively).
After we finalized these proposals for
CY 2008, section 106(a) of Pub. L. 110–
173 (MMSEA) extended the chargesadjusted-to-cost payment methodology
for brachytherapy sources for an
additional 6 months, through June 30,
2008. Because our final CY 2008
policies paid for brachytherapy sources
at prospective rates based on median
costs, we were unable to implement
these policies during this extension.
In the CY 2009 OPPS/ASC proposed
rule (73 FR 41502), we again proposed
prospective payment rates for
brachytherapy sources for CY 2009. We
proposed to pay for brachytherapy
sources at prospective rates based on
their source-specific median costs as
calculated from CY 2007 claims data
available for CY 2009 ratesetting.
Subsequent to issuance of the CY 2009
OPPS/ASC proposed rule, Public Law
110–275 (MIPPA) was enacted on July
15, 2008. Section 142 of Public Law
110–275 amended section 1833(t)(16)(C)
of the Act, as amended by section 106(a)
of Public Law 110–173 (MMSEA), to
further extend the payment period for
brachytherapy sources based on a
hospital’s charges adjusted to cost from
July 1, 2008, through December 31,
2009. Therefore, we continued to pay
for brachytherapy sources at charges
adjusted to cost in CY 2008 from July 1
through December 31, and we
maintained the assignment of status
indicator ‘‘H’’ to brachytherapy sources
for claims processing purposes in CY
2008. For CY 2009, we have continued
to pay for all separately payable
brachytherapy sources based on a
hospital’s charges adjusted to cost.
Because brachytherapy sources are paid
at charges adjusted to cost, we did not
subject them to outlier payments under
section 1833(t)(5) of the Act, or subject
brachytherapy source payment weights
to scaling for purposes of budget
neutrality. Moreover, during the CY
2009 period of payment at charges
adjusted to cost, brachytherapy sources
are not eligible for the 7.1 percent rural
SCH adjustment (as discussed in detail
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60533
in section II.E. of this final rule with
comment period).
Furthermore, for CY 2009, we did not
adopt the policy we established in the
CY 2008 OPPS/ASC final rule with
comment period of paying stranded and
non-stranded NOS codes for
brachytherapy sources, HCPCS codes
C2698 and C2699, based on a rate equal
to the lowest stranded or non-stranded
prospective payment for such sources.
Also, for CY 2009, we did not adopt the
policy we established in the CY 2008
OPPS/ASC final rule with comment
period regarding payment for new
brachytherapy sources for which we
have no claims data. NOS HCPCS codes
C2698 and C2699 and newly established
specific source codes are paid at charges
adjusted to cost through December 31,
2009, consistent with section 142 of
Public Law 110–275.
For CY 2009, we finalized our
proposal to create new status indicator
‘‘U’’ (Brachytherapy Sources. Paid
under OPPS; separate APC payment) for
brachytherapy source payment, instead
of using status indicator ‘‘K’’ as
proposed and finalized for CY 2008 for
prospective payment, or status indicator
‘‘H,’’ used during the period of charges
adjusted to cost payment. As noted in
the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68670),
assigning a status indicator, such as
status indicator ‘‘K,’’ to several types of
items and services with potentially
differing payment policies added
unnecessary complexity to our
operations. Status indicator ‘‘U’’ is used
only for brachytherapy sources,
regardless of their specific payment
methodology for any period of time.
At the February 2009 meeting, the
APC Panel recommended paying for
brachytherapy sources in CY 2010 using
a prospective payment methodology
based on median costs from claims data.
The APC Panel reviewed CY 2007 and
CY 2008 brachytherapy source median
costs from claims data and noted the
stability of the data from year to year.
B. OPPS Payment Policy
Under section 142 of Public Law 110–
275, payment for brachytherapy sources
is mandated at charges adjusted to cost
only through CY 2009. In the CY 2010
OPPS/ASC proposed rule (74 FR 35342),
we proposed to adopt for CY 2010 the
general OPPS prospective payment
methodology for brachytherapy sources,
consistent with section 1833(t)(2)(C) of
the Act.
As we have previously stated (72 FR
66780 and 73 FR 41502), we believe that
adopting the general OPPS prospective
payment methodology for
brachytherapy sources is appropriate for
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a number of reasons. The general OPPS
payment methodology uses median
costs based on claims data to set the
relative payment weights for hospital
outpatient services. This payment
methodology results in more consistent,
predictable, and equitable payment
amounts per source across hospitals by
eliminating some of the extremely high
and low payment amounts resulting
from payment based on hospitals’
charges adjusted to cost. We believe the
OPPS prospective payment
methodology would also provide
hospitals with incentives for efficiency
in the provision of brachytherapy
services to Medicare beneficiaries.
Moreover, this approach is consistent
with our payment methodology for the
vast majority of items and services paid
under the OPPS.
We proposed to use CY 2008 claims
data for setting the CY 2010 payment
rates for brachytherapy sources, as we
proposed for most other items and
services that will be paid under the CY
2010 OPPS. For CY 2008, we have a full
year of claims data for each of the
separately payable sources, including
iodine, palladium, and cesium sources
that have stranded and non-stranded
configurations. As indicated earlier, the
APC Panel, at the February 2009
meeting, recommended using the
median cost data for CY 2010 rates. Our
proposal was consistent with the APC
Panel’s recommendation.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35342), we proposed to
adopt the other payment policies for
brachytherapy sources we finalized in
previous final rules. We proposed to pay
for the stranded and non-stranded NOS
codes, HCPCS codes C2698 and C2699,
at a rate equal to the lowest stranded or
non-stranded prospective payment rate
for such sources, respectively, on a per
source basis (as opposed, for example,
to a per mCi), which is based on the
policy we established in the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66785). The proposed
payment methodology for NOS sources
would provide payment to a hospital for
new sources, while encouraging
interested parties to quickly bring new
sources to our attention so that specific
coding and payment could be
established.
We also proposed to implement the
policy we established in the CY 2008
OPPS/ASC final rule with comment
period (which was superseded by
section 142 of Public Law 110–275)
regarding payment for new
brachytherapy sources for which we
have no claims data, based on the same
reasons we discussed in that final rule
with comment period (72 FR 66786).
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That policy is intended to enable us to
assign future new HCPCS codes for new
brachytherapy sources to their own
APCs, with prospective payment rates
set based on our consideration of
external data and other relevant
information regarding the expected
costs of the sources to hospitals.
Consistent with our policy regarding
APC payments made on a prospective
basis, we proposed to subject
brachytherapy sources to outlier
payments under section 1833(t)(5) of the
Act, and also to subject brachytherapy
source payment weights to scaling for
purposes of budget neutrality.
Therefore, brachytherapy sources could
receive outlier payments if the costs of
furnishing brachytherapy sources meet
the criteria for outlier payment. In
addition, as noted in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66683), implementation of
prospective payments for brachytherapy
sources would provide opportunities for
hospitals to receive additional payments
in CY 2010 under certain circumstances
through the 7.1 percent rural adjustment
as described in section II.E. of the
proposed rule (74 FR 35295) and this
final rule with comment period.
Therefore, in the CY 2010 OPPS/ASC
proposed rule, we proposed to pay for
brachytherapy sources at prospective
payment rates based on their sourcespecific median costs for CY 2010. The
separately payable brachytherapy source
HCPCS codes, long descriptors, APCs,
status indicators, and approximate
median costs that we proposed for CY
2010 were presented in Table 32 of the
proposed rule (74 FR 35342).
Comment: A number of commenters
recommended that CMS continue to pay
for brachytherapy sources separately
based on hospitals’ charges adjusted to
cost due to the commenters’ ongoing
concerns regarding Medicare hospital
claims data for brachytherapy sources;
the commenters provided various
examples of issues of concern. Some
commenters were concerned that
characteristics of high dose rate (HDR)
iridium-192, which is a renewable
source whose life decays over a 90-day
period and is used to treat multiple
patients, makes establishment of fair
and adequate payment difficult on a
fixed prospective basis. The
commenters also claimed that the CMS
brachytherapy source data continue to
show huge variations in per unit costs
on claims across hospitals. Several
commenters stated that one half of the
current brachytherapy sources have
proposed payment rates based on 50 or
fewer hospitals reporting claims for
these sources. Some commenters also
indicated that ‘‘rank order anomalies’’
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exist in proposed payment rates for
brachytherapy sources, citing that
HCPCS code C2635 (Brachytherapy
source, non-stranded, High Activity,
Palladium-103, greater than 2.2 mCi
(NIST), per source) always costs more
than low activity sources (HCPCS code
C2640, Brachytherapy source, stranded,
Palladium-103, per source, and HCPCS
code C2641, Brachytherapy source, nonstranded, Palladium-103, per source),
yet hospital claims data do not reflect
this difference. A number of
commenters believed that the current
charges-adjusted-to-cost methodology is
more accurate and has been tested over
time. A few commenters argued that the
charges-adjusted-to-cost methodology
provides overall cost savings to the
Medicare program compared to the
prospective payment methodology
proposed for CY 2010, according to an
analysis performed by the
brachytherapy source industry. The
commenters thus concluded that
implementing prospective
brachytherapy source payment would
increase aggregate Medicare
expenditures for brachytherapy sources
compared with the charges-adjusted-tocost payment methodology.
Several commenters supported the CY
2010 proposal to pay for brachytherapy
sources prospectively based on median
costs from claims data. One commenter
asserted that hospital-specific payments
based on the charges-adjusted-to-cost
payment methodology violate the intent
of a prospective payment system,
namely to provide incentives to improve
efficiency and control costs. The
commenter believed that hospitalspecific payments could be manipulated
because hospitals know the CCR used to
determine payments for brachytherapy
sources.
Response: As we stated in the CY
2008 final rule with comment period (72
FR 66782), we believe that median costs
based on hospital claims data for
brachytherapy sources have produced
reasonably consistent per-source cost
estimates over the past several years,
comparable to the patterns we have
observed for many other OPPS services
whose payments are set based upon
relative payment weights from claims
data. We believe that our per-source
payment methodology specific to each
source’s radioisotope, radioactive
intensity, and stranded or non-stranded
configuration, supplemented by
payment based on the number of
sources used in a specific clinical case,
adequately accounts for the major
expected sources of variability across
treatments.
As we also explained in the CY 2008
OPPS/ASC final rule with comment
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period (72 FR 66782), a prospective
payment system such as the OPPS relies
on the concept of averaging, where the
payment may be more or less than the
estimated cost of providing a service for
a particular patient, but with the
exception of outlier cases, it is adequate
to ensure access to appropriate care. In
the case of brachytherapy sources for
which the law requires separate
payment groups, without packaging, the
costs of these individual items could be
expected to show greater variation than
some other APCs under the OPPS
because higher variability in costs for
some component items and services is
not balanced with lower variability for
others and because relative weights are
typically estimated using a smaller set
of claims.
Nevertheless, we believe that
prospective payment for brachytherapy
sources based on median costs from
claims calculated according to the
standard OPPS methodology is
appropriate at this time and would
provide hospitals with the greatest
incentives for efficiency in furnishing
brachytherapy treatment. Under the
budget-neutral OPPS, it is the relativity
of costs of services, not their absolute
costs, that is important, and we believe
that brachytherapy sources can now be
appropriately paid according to the
standard OPPS payment approach.
Moreover, OPPS payments for all
services are similarly subjected to the
same 2-year lag in costs from claims
data available for ratesetting. Therefore,
we believe the relative costs of OPPS
services should generally be
appropriate. It is important that the
same measure of central tendency
(median cost) from claims be used to
establish the payment weights for all
OPPS services in order to provide
appropriate payment for all of these
services. The inflation rate of medical
services is taken into consideration
through the conversion factor, which is
updated annually to account for
inflation and used to calculate payment
rates from the relative payment weights
based on median costs.
It is not uncommon for OPPS
prospective payment rates to be based
on claims from a relatively small
number of hospitals that furnished the
service in the year of claims data
available for the OPPS update year. We
are not concerned that some sources
may have median costs and proposed
payment rates based on 50 or fewer
providers, as are some commenters.
Fifty hospitals may report hundreds of
brachytherapy source claims for many
cases and comprise the universe of
providers using particular low volume
sources, for which we are required to
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14:52 Nov 19, 2009
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pay separately by statute. Further, our
methodology for estimating median
costs for brachytherapy sources utilizes
all line-item charges for those sources,
which allows us to use all hospital
reported charge and estimated cost
information to set payment rates for
these items. This is in contrast to our
limitation of relying on ‘‘natural’’ single
and ‘‘pseudo’’ single procedure claims
to set APC payment rates for services
with packaged costs. We have no reason
to believe that prospective payment
rates based on claims from those
providers furnishing a particular source
do not appropriately reflect the cost of
that source to hospitals.
As for most other OPPS services, we
note that the median costs for
brachytherapy sources are based upon
the costs of those providers that
furnished the sources in CY 2008.
Hospitals individually determine their
charge for an item or service, and one
of Medicare’s primary requirements for
setting a charge is that it be reasonably
and consistently related to the cost of
the item or service for that facility
(Medicare Provider Reimbursement
Manual-I, Section 2203). We then
estimate a cost from that charge using
the hospital’s most recent Medicare
hospital cost report data in our standard
OPPS ratesetting process. In as much as
we paid hospitals at charges adjusted to
cost for brachytherapy sources in CY
2008 based on these exact charges, we
believe hospital’s individual charges to
be accurate for their institution.
In the case of high and low activity
iodine-125 sources, our claims data
showed that the cost of the high activity
source is greater than the low activity
sources, yet this relationship is reversed
for palladium-103 sources, as the
commenter pointed out. We have no
information about the expected cost
differential between high and low
activity sources of various isotopes
other than what is available in our
claims and hospital cost report data. For
high activity palladium-103, only 16
hospitals provided this source in CY
2008, compared to 166 and 268
providers for low activity palladium
sources described by HCPCS codes
C2640 and C2641, respectively. Clearly,
fewer providers furnished high activity
palladium-103 sources, and we expect
that the hospital cost distribution for
those hospitals could be different than
the cost distribution of the large number
of providers reporting the low activity
sources. These varied cost distributions
clearly contribute to the observed
relationship in median costs between
the different types of sources, yet we see
no reason why our standard ratesetting
methodology for brachytherapy sources
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60535
that relies on all claims from all
hospitals furnishing brachytherapy
sources would not yield valid median
costs for those hospitals furnishing the
different brachytherapy sources upon
which CY 2010 prospective payments
rates are based.
When the statutory requirement for
payment of brachytherapy sources at a
hospital’s charges adjusted to cost ends
on December 31, 2009 (section
1833(t)(16)(C) of the Act), prospective
payment for brachytherapy sources
based on their median costs would
make the source payment an integral
part of the OPPS, rather than a separate
cost-based payment methodology within
the OPPS. We believe that consistent
and predictable prospectively
established payment rates under the
OPPS for brachytherapy sources are
appropriate because we do not believe
that the hospital resource costs
associated with specific brachytherapy
sources would vary greatly across
hospitals or clinical conditions under
treatment, other than through
differences in the numbers of sources
utilized that would be accounted for in
the standard OPPS payment
methodology we are finalizing.
We agree that sources such as HDR
irirdium-192 have a fixed active life and
must be replaced every 90 days; as a
result, hospitals’ per-treatment cost for
the source would be dependent on the
number of treatments furnished per
source. The source cost must be
amortized over the life of the source.
Therefore, in establishing their charges
for HDR iridium, we expect hospitals to
project the number of treatments that
would be provided over the life of the
source and establish their charges for
the source accordingly, as we have
stated previously (72 FR 66783). For
most such OPPS services, our practice is
to establish prospective payment rates
based on the median costs from
hospitals claims data, to provide
incentives for efficient and cost-effective
delivery of these services.
We do not agree with the commenters
that prospective brachytherapy source
payment based on median costs would
increase aggregate Medicare
expenditures compared to the chargesadjusted-to-cost methodology, or that
the charges-adjusted-to-cost
methodology would provide overall cost
savings to the Medicare program
compared to the prospective payment
methodology. We also do not believe
that the beneficiary copayment in the
aggregate would increase under the
prospective payment methodology. We
have traditionally estimated charge
inflation for brachytherapy sources as
higher than the market basket inflation
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update applicable to prospective
payment under the OPPS. We estimated
charge inflation for brachytherapy
sources between the 2 most recent years
of hospital claims data by comparing the
per-unit charge in CY 2008 claims to the
per-unit charge in CY 2007 claims
across all sources, and we used this
estimate in our budget neutrality
calculations. We are currently
estimating a charge inflation factor of
17.1 percent for brachytherapy sources
between CY 2007 and CY 2008 and,
over the past several years, we have
consistently estimated brachytherapy
source charge inflation factors higher
than 8 percent. Inflating payment at
hospitals’ charges adjusted to cost in the
CY 2008 claims to CY 2010 using this
most recent charge inflation factor and
comparing it to an estimate of
prospective payment for the same
sources suggest that aggregate
brachytherapy source payment for CY
2010 at charges adjusted to cost would
be slightly higher than prospective
payment for brachytherapy sources in
CY 2010. Although the commenters did
not include the details of their analysis
in their comments, it is possible that the
analysis did not include a charge
inflation factor to increase payment
estimated at charges adjusted to cost
from CY 2008 to CY 2010.
Comment: One commenter indicated
that the proposed source-specific
payments were consistent with its
experience with the cost per unit of the
sources, except for the proposed
payment for HCPCS code C2634
(Brachytherapy source, non-stranded,
High Activity, Iodine-125, greater than
1.01 mCi (NIST), per source). The
commenter noted that the proposed
payment rate for HCPCS code C2634 is
$60, yet its invoices for high activity I–
125, that is, HCPCS code C2634, range
between $174 and $689. The commenter
also stated that high activity I–125
sources are ordered based on a range of
activity levels. The commenter
suggested that there may have been
errors in hospital reporting of HCPCS
code C2634 in CY 2008 that resulted in
the low proposed payment rate. The
commenter requested that CMS
reevaluate the proposed payment rate
for HCPCS code C2634 for CY 2010
using average cost data from
manufacturers.
Response: We are pleased that the
proposed CY 2010 payment rates for all
but one of the brachytherapy sources are
consistent with the commenter’s
experience. The CY 2008 median cost of
HCPCS code C2634 for this final rule
with comment period is approximately
$59, compared with approximately $31
in CY 2006 and approximately $38 in
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14:52 Nov 19, 2009
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CY 2007. The CY 2008 median cost is
somewhat higher than the previous 2
years, and we acknowledge that the
variability in the activity of sources
reported with HCPCS code C2634 could
explain some of the variability in cost
for this source. Furthermore, we note
that the CY 2008 median cost for HCPCS
code C2634 is based on 18,602 units,
over 267 days, from 48 providers. We
believe that some variation in relative
cost from year to year is to be expected
in a prospective payment system,
particularly for low volume items.
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 payments. 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 the
purpose of ratesetting. Moreover, we do
not believe it is necessary to incorporate
external cost data from manufacturers of
brachytherapy sources or others
because, in a relative weight system like
the OPPS, it is the relativity of the costs
to one another, rather than absolute
cost, that is important in 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 when costs derives
from hospital claims and cost report
data for services are available.
Comment: One commenter suggested
that brachytherapy sources are not
reported consistently by all providers
using a specific revenue center and
recommended that CMS maintain
payment at charges adjusted to cost
until cost data are improved by refined
information resulting from the new cost
center for high cost supplies.
Response: In analyzing the reporting
of brachytherapy sources in CY 2008
claims, we found that the great majority
of brachytherapy sources are reported
under revenue code 0278 (Other
Implants). Under the policy finalized in
the FY 2009 IPPS final rule (73 FR
48462 through 48463), we finalized a
definition of a new’’ Implantable
Devices Charged to Patients’’ cost center
to which costs and charges under
revenue code 0278 would map in the
future. Thus, brachytherapy sources
would generally be subject to the
‘‘Implantable Devices Charged to
Patients’’ cost center for future cost
estimation under the OPPS, potentially
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C:\20NOR2.SGM
leading to greater accuracy in cost
estimation for these devices as noted by
the commenter. This new cost center
was available for use for cost reporting
periods beginning on or after May 1,
2009, and was discussed in Transmittal
20 (dated July 2009) that updated
Chapter 36, Hospital and Hospital
Health Care Complex Cost Report (Form
CMS 2552–96) of the Medicare Provider
Reimbursement Manual, Part 2, to
provide Line 55.30 to report
‘‘Implantable Devices Charged to
Patients.’’ The proposed draft cost
report Form CMS–2552–10, published
in the Federal Register for public
comment on July 2, 2009 (74 FR 31738),
provides new line 69 to report
‘‘Implantable Devices Charged to
Patients.’’ The proposed cost report can
be viewed at: https://www.cms.hhs.gov/
PaperworkReductionActof1995/PRAL/
itemdetail.asp?filterType=none&filter
ByDID=-99&sortByDID=2&sortOrder=
descending&itemID=CMS1224069
&intNumPerPage=10.
We have stated previously that we
continue to emphasize our preference
for long-term cost reporting changes and
broad education initiatives to address
the accuracy of claims data (73 FR
68524). This recent change to include a
new cost center will ultimately
influence both the IPPS and OPPS
relative weights in the future.
Nevertheless, in the meantime, we
believe it is fully appropriate to utilize
our current cost estimates for
brachytherapy sources and all other
implantable devices in calculating
payment weights under the OPPS
because these are our best current
estimates of costs as derived from
claims and cost report data. When
hospital-specific CCRs from the new
cost center are available for ratesetting
in several years, we will incorporate
those into the revenue code-to-cost
center crosswalk that we use for OPPS
cost estimation. However, at the present
time, we believe our current
methodology that generally utilizes the
available single medical supply CCR
leads to appropriate cost estimates for
brachytherapy sources, and we see no
reason why payment at charges adjusted
to cost, which applies an hospitalspecific overall ancillary CCR to
hospital charges for brachytherapy
sources, would lead to a more accurate
cost estimate for these items. The
hospital-specific overall ancillary CCR
is based on costs and charges for a wide
range of OPPS services, and we have no
reason to believe that hospital markup
practices for brachytherapy sources are
similar to the relationship between costs
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and charges represented in this very
general CCR.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to pay for
brachytherapy sources prospectively
based on CY 2008 median costs from
historical hospital claims data. In
addition, we will pay the stranded and
non-stranded NOS codes, HCPCS codes
C2698 and C2699, at a rate equal to the
lowest stranded or non-stranded
prospective payment rate for such
sources, respectively, on a per source
basis. Payment for new brachytherapy
sources, which may be established
quarterly, will be made through their
own APCs, with prospective payment
rates set based on our consideration of
external data and other relevant
information regarding the expected
costs of the sources to hospitals because
we would have no information from
claims data on the costs of these new
sources to hospitals. Finally, in CY
60537
2010, brachytherapy sources will be
subject to outlier payments, their
payment weights subject to scaling for
purposes of budget neutrality, and,
under some circumstances, their
payment subject to the 7.1 percent rural
adjustment as discussed in section II.E.
of this final rule with comment period.
Table 45 below displays the
separately payable brachytherapy source
HCPCS codes, long descriptors, APCs,
status indicators, and approximate
median costs for CY 2010.
TABLE 45—SEPARATELY PAYABLE BRACHYTHERAPY SOURCES FOR CY 2010
CY 2010 HCPCS
Code
A9527
C1716
C1717
C1719
......................
......................
......................
......................
C2616 ......................
C2634 ......................
C2635 ......................
C2636
C2638
C2639
C2640
C2641
C2642
C2643
C2698
C2699
......................
......................
......................
......................
......................
......................
......................
......................
......................
Final CY
2010 APC
CY 2010 long descriptor
Iodine I–125, sodium iodide solution, therapeutic, per millicurie ..........................
Brachytherapy source, non-stranded, Gold-198, per source ................................
Brachytherapy source, non-stranded, High Dose Rate Iridium-192, per source ..
Brachytherapy source, non-stranded, Non-High Dose Rate Iridium-192, per
source.
Brachytherapy source, non-stranded, Yttrium-90, per source ..............................
Brachytherapy source, non-stranded, High Activity, Iodine-125, greater than
1.01 mCi (NIST), per source.
Brachytherapy source, non-stranded, High Activity, Palladium-103, greater than
2.2 mCi (NIST), per source.
Brachytherapy linear source, non-stranded, Palladium-103, per 1MM .................
Brachytherapy source, stranded, Iodine-125, per source .....................................
Brachytherapy source, non-stranded, Iodine-125, per source ..............................
Brachytherapy source, stranded, Palladium-103, per source ...............................
Brachytherapy source, non-stranded, Palladium-103, per source ........................
Brachytherapy source, stranded, Cesium-131, per source ...................................
Brachytherapy source, non-stranded, Cesium-131, per source ............................
Brachytherapy source, stranded, not otherwise specified, per source .................
Brachytherapy source, non-stranded, not otherwise specified, per source ..........
Final CY
2010 SI
Final CY
2010 approximate
APC median cost
2632
1716
1717
1719
U
U
U
U
$38
42
229
63
2616
2634
U
U
15,635
59
2635
U
28
2636
2638
2639
2640
2641
2642
2643
2698
2699
U
U
U
U
U
U
U
U
U
19
42
36
60
57
109
65
*42
*28
* Median cost is that of the lowest cost stranded or non-stranded source upon which CY 2010 payment for the NOS HCPCS code is based.
We continue to invite hospitals and
other parties to submit
recommendations to us for new HCPCS
codes to describe new brachytherapy
sources consisting of a radioactive
isotope, including a detailed rationale to
support recommended new sources.
Such recommendations should be
directed to the Division of Outpatient
Care, Mail Stop C4–05–17, Centers for
Medicare and Medicaid Services, 7500
Security Boulevard, Baltimore, MD
21244. We will continue to add new
brachytherapy source codes and
descriptors to our systems for payment
on a quarterly basis.
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VIII. OPPS Payment for Drug
Administration Services
A. Background
In CY 2005, in response to the
recommendations made by public
commenters and the hospital industry,
OPPS transitioned from Level II HCPCS
Q-codes to the use of CPT codes for drug
administration services. These CPT
codes allowed specific reporting of
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14:52 Nov 19, 2009
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services regarding the number of hours
for an infusion and provided
consistency in coding between Medicare
and other payers. (For a discussion
regarding coding and payment for drug
administration services prior to CY
2005, we refer readers to the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66787).)
While hospitals began adopting CPT
codes for outpatient drug administration
services in CY 2005, physicians paid
under the MPFS were using HCPCS Gcodes in CY 2005 to report office-based
drug administration services. These
HCPCS G-codes were developed in
anticipation of substantial revisions to
the drug administration CPT codes by
the CPT Editorial Panel that were
expected for CY 2006.
In CY 2006, as anticipated, the CPT
Editorial Panel revised its coding
structure for drug administration
services and incorporated new concepts,
such as initial, sequential, and
concurrent services, into a structure that
previously distinguished services based
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on type of administration
(chemotherapy/nonchemotherapy),
method of administration (injection/
infusion/push), and for infusion
services, first hour and additional hours.
For CY 2006, we implemented the CY
2006 drug administration CPT codes
that did not reflect the concepts of
initial, sequential, and concurrent
services under the OPPS, and we
created HCPCS C-codes that generally
paralleled the CY 2005 CPT codes for
reporting these other services.
For CY 2007, as a result of public
comments on the proposed rule and
feedback from the hospital community
and the APC Panel, we implemented the
full set of CPT codes for drug
administration services, including codes
incorporating the concepts of initial,
sequential, and concurrent services. In
addition, the CY 2007 update process
offered us the first opportunity to
consider data gathered from the use of
CY 2005 CPT codes for purposes of
ratesetting. For CY 2007, we used CY
2005 claims data to implement a six-
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level APC structure for drug
administration services. In CY 2008, we
continued to use the full set of CPT
codes for drug administration services
and continued our assignment of drug
administration services to this six-level
APC structure.
For CY 2009, we continued to allow
hospitals to use the full set of CPT codes
for drug administration services but
moved from a six-level APC structure to
a five-level APC structure. We note that,
while there were changes in the CPT
numerical coding for nonchemotherapy
drug administration services in CY
2009, the existing CPT codes were only
renumbered, and there were no
significant changes to the code
descriptors themselves. As we discussed
in the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68672), the
CY 2009 ratesetting process afforded us
the first opportunity to examine hospital
claims data for the full set of CPT codes
that reflected the concepts of initial,
sequential, and concurrent services. For
CY 2009, we performed our standard
annual OPPS review of the clinical and
resource characteristics of the drug
administration CPT codes assigned to
the six-level CY 2008 APC structure
based on the CY 2007 claims data
available for the CY 2009 OPPS/ASC
proposed rule. As a result of our
hospital cost analysis and detailed
clinical review, we adopted a five-level
APC structure for CY 2009 drug
administration services to more
appropriately reflect their resource
utilization in APCs that also group
clinically similar services. As we noted
in the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68671),
these APCs generally demonstrated the
clinically expected and actually
observed comparative relationships
between the median costs of different
types of drug administration services,
including initial and additional
services; chemotherapy and other
diagnostic, prophylactic, or therapeutic
services; injections and infusions; and
simple and complex methods of drug
administration. In the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68673), we indicated our belief that
the five-level APC structure was the
most appropriate structure based on
updated hospital claims data for the full
range of CPT codes for drug
administration for the CY 2009 OPPS/
ASC final rule with comment period
because the structure resulted in
payment groups with greater clinical
and resource homogeneity.
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14:52 Nov 19, 2009
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B. Coding and Payment for Drug
Administration Services
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35343), we proposed for CY
2010 to continue to use the full set of
CPT codes for drug administration
services. In addition, as a part of our
standard annual review, we analyzed
the assignments of CPT codes for drug
administration into the five-level APC
structure and, based on the results of
this review, proposed to continue a fivelevel APC structure for CY 2010.
Further, we proposed some minor
reconfigurations of the APCs as
described below to account for changes
in HCPCS code-specific median costs
resulting from updated CY 2008 claims
data and the most recent cost report
data, and the CY 2010 drug payment
proposal that is discussed in section
V.B.3.b. of the proposed rule (74 FR
35326 through 35333) and this final rule
with comment period.
In the CY 2007 OPPS/ASC final rule
with comment period (71 FR 68117), we
explained that we expected CPT codes
for additional hours of infusion to be
reported with CPT codes for the initial
hour of drug infusion. This would result
in a substantial number of claims for
drug administration services that were
unusable for ratesetting purposes
because multiple services would be
present on the same bill and result in
essentially no correctly coded claims
upon which to set the median costs for
the CPT codes describing additional
hours of infusion. (We refer readers to
section II.A.1.b. of the proposed rule (74
FR 35239 through 35241) and this final
rule with comment period for a further
discussion of multiple bills and our
ratesetting methodology.) In order to use
these claims for ratesetting purposes for
both the initial drug administration
codes and the additional hour drug
administration codes, we adopted the
policy of adding the additional hour
drug administration codes to the bypass
list in order to create ‘‘pseudo’’ single
claims that would be useable for OPPS
ratesetting purposes. After the creation
of these ‘‘pseudo’’ single claims, we
applied the standard OPPS methodology
to calculate HCPCS code-specific
median costs for these initial and
additional hour drug administration
codes.
As we explained further in the CY
2007 OPPS/ASC final rule with
comment period, bypassing these
additional hour drug administration
CPT codes and developing additional
‘‘per unit’’ claims provided a
methodology for calculating median
costs for these previously packaged drug
administration services which attributed
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C:\20NOR2.SGM
all of their line-item cost data to their
assigned APCs. However, we noted that
this methodology allocates all packaged
costs on claims for drug administration
services to the associated initial hour of
infusion code. Because these additional
hours of infusion codes were always
reported with other drug administration
services, we expected that the packaging
related to additional hours of infusion
would be appropriately assigned to the
initial drug administration service also
included on the same claim. While we
stated our belief that there are some
packaged costs that are clinically related
to the second and subsequent hours of
infusion, especially for infusions of
packaged drugs spanning several hours,
we were not able to accurately assign
representative portions of packaged
costs to multiple different services due
to the limitations of our claims data.
We indicated that, while this
methodology did not assign any
packaged costs to the additional hours
of drug administration codes, we
believed this methodology took into
account all of the packaging on claims
for drug administration services and
provided a reasonable framework for
developing median costs for drug
administration services that were often
provided in combination with one
another.
Since this approach was first adopted
for CY 2007, we have updated and
expanded the bypass methodology to
reflect changing drug administration
HCPCS codes that are recognized under
the OPPS. We placed all of the add-on
CPT codes for drug administration
services, including the sequential
infusion and intravenous push codes,
on the bypass list in CY 2009 (73 FR
68513) and proposed to include them in
CY 2010 (74 FR 35242 through 35252)
in order to continue this framework for
transforming these otherwise unusable
multiple bills into ‘‘pseudo’’ single
claims that can be used for OPPS
ratesetting purposes. Table 33 of the
proposed rule (74 FR 35345 through
35349) displayed the proposed
configurations of the five drug
administration APCs for CY 2010. In
proposing to reassign several HCPCS
codes for CY 2010, we took into
consideration the resource
characteristics of the services, as
reflected in their HCPCS code-specific
median costs and their clinical
characteristics. We believed the
proposed APC configurations group
drug administration services that share
sufficiently similar clinical and resource
characteristics, taking into consideration
updated CY 2008 claims data and the
most recent cost report data and
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common clinical scenarios that have
been described to us.
Comment: Several commenters
supported the proposal to include the
drug administration add-on codes on
the bypass list. The commenters stated
that, by including these codes in the
bypass methodology, more single bills
can be used for ratesetting purposes.
One commenter recommended that
CPT code 96368 (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: As stated in the CY 2007
OPPS/ASC final rule with comment
period (71 FR 68117), we expect CPT
codes for additional hours of infusion to
be reported with CPT codes for the
initial hour of drug infusion. This
would result in a substantial number of
claims for drug administration services
that would be unusable for ratesetting
purposes because multiple services
would be present on the same bill and
result in essentially no correctly coded
claims upon which to set the median
costs for the CPT codes describing
additional hours of infusion. In order to
use these claims for ratesetting purposes
for both the initial drug administration
codes and the additional hour drug
administration codes, we adopted the
policy of adding the additional hour
drug administration codes on the bypass
list in order to create ‘‘pseudo’’ single
claims that would be useable for OPPS
ratesetting purposes. We continue to
believe that bypassing these additional
hour drug administration CPT codes
and developing additional ‘‘per unit’’
claims provide a methodology for
calculating median costs for these
previously packaged additional hour
drug administration services, which
attributes all of their line-item cost data
to their assigned APCs. Although we
understand that this methodology does
not assign any packaged costs to the
additional hours of drug administration
codes, we continue to believe this
methodology takes into account all of
the packaging on claims for drug
administration services and provides a
reasonable framework for developing
median costs for drug administration
services that are often provided in
combination with one another.
As discussed above, since this
approach was first adopted for CY 2007,
we have updated and expanded the
bypass methodology to reflect changing
drug administration HCPCS codes that
are recognized under the OPPS. We
placed all of the add-on CPT codes for
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drug administration services, including
the sequential infusion and intravenous
push codes, on the bypass list in CY
2009 (73 FR 68513) and proposed to
include them in CY 2010 (74 FR 35242
through 35252) in order to continue this
framework for transforming these
otherwise unusable multiple bills into
‘‘pseudo’’ single claims that can be used
for OPPS ratesetting purposes.
We have not added CPT code 96368
(or its predecessor CPT code 90768) on
the bypass list because our CY 2010
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.
We refer readers to section II.A.1.b. of
this final rule with comment period for
a full discussion of our final bypass
policy and list for CY 2010.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to use the full set
of CPT codes for drug administration
and include all separately paid drug
administration add-on HCPCS codes on
the CY 2010 bypass list. We will not add
CPT code 96368 on the bypass list
because it is not a separately paid
service and, therefore, it is not a
candidate for the bypass list.
Comment: Several commenters
expressed support for the proposed fivelevel APC structure for drug
administration services. Some
commenters requested that CMS
continue to evaluate the five-level
structure annually. In addition, several
commenters specifically supported the
proposed CY 2010 reconfiguration of the
HCPCS code assignments to the drug
administration APCs.
One commenter stated that the data
used to propose reassignments of drug
administration codes to drug
administration APCs for the proposed
rule were inadequate. The commenter
explained that changes to CPT codes
require hospitals to train staff and
implement guidelines for code use and,
therefore, accurate claims hospital data
for updated CPT codes are not
immediately available from the first year
of their use. The commenter added that
differences in definitions for drug
administration codes by Medicare
contractors contribute to incomplete
and inconsistent data.
Response: In proposing to reassign
several HCPCS codes for CY 2010, we
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C:\20NOR2.SGM
60539
took into consideration the resource
characteristics of the services, as
reflected in their HCPCS code-specific
median costs and their clinical
characteristics. We believe the proposed
APC configurations group drug
administration services that share
sufficiently similar clinical and resource
characteristics, taking into consideration
updated CY 2008 claims data and the
most recent cost report data and
common clinical scenarios that have
been described to us.
We disagree with the commenter who
believed that our costs from hospital
claims data are inadequate. We believe
that the hospital claims data for drug
administration HCPCS codes are robust
and representative of the costs of the
many hospitals performing these
services. Multiple drug administration
HCPCS codes are reported on several
hundred thousand hospital outpatient
claims annually and almost all drug
administration HCPCS codes are
reported on at least several thousand
claims. The data that we have reviewed
for CY 2010 do not dramatically differ
from previous years’ data for these high
volume services furnished by thousands
of hospitals. This is evidenced in the
number of hospitals billing for drug
administration services, the frequency
of specific drug administration services,
and the resulting median costs of the
drug administration services.
Finally, we note that it is our standard
practice to annually review the
configuration of all APCs. Therefore, as
part of our standard methodology, we
expect to continue to review the
configuration of drug administration
APCs in future years.
Comment: A few commenters
requested that HCPCS code C8957
(Intravenous infusion for therapy/
diagnosis; initiation of prolonged
infusion (more than eight hours),
requiring use of portable or implantable
pump) not be reassigned to APC 0439
(Level IV Drug Administration) as
proposed for CY 2010. Instead, the
commenters requested that HCPCS code
C8957 continue to be assigned to APC
0440 (Level V Drug Administration) for
CY 2010. In addition, one commenter
requested that CPT code 96521
(Refilling and maintenance of portable
pump) not be reassigned to APC 0439 as
proposed for CY 2010. Instead, the
commenter requested that CPT code
96521 continue to be assigned to APC
0440. The commenters stated that
HCPCS code C8957 and CPT code 96521
represent prolonged infusions that
require the use of a pump and a
significant amount of time and nursing
resources.
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Response: As is our standard process,
for the CY 2010 proposed rule, we
reviewed each APC for clinical
cohesiveness and resource homogeneity.
As the commenters noted, we proposed
to reassign HCPCS code C8957 to APC
0439 because we believed that the
proposed HCPCS-specific median cost
more closely matched the proposed
median cost of APC 0439. Upon further
review, we agree with the commenters
that the clinical characteristics of the
procedure described by HCPCS code
C8957 that describes a prolonged
intravenous infusion lasting more than
8 hours more closely resemble those of
procedures assigned to APC 0440.
Further, the HCPCS-specific median
cost of HCPCS code C8957
(approximately $179) is only slightly
less than the median cost of APC 0440
(approximately $218), resulting in our
belief that APC 0440 would be the most
appropriate assignment of HCPCS code
C8957 for CY 2010.
In addition, we proposed to reassign
CPT code 96521 to APC 0439 because
we believed that the proposed HCPCSspecific median cost more closely
matched the median cost of APC 0439.
We continue to believe that the HCPCSspecific median cost of CPT code 96521
(approximately $133) closely resembles
the median cost of APC 0439
(approximately $126). In addition, we
note that while HCPCS code C8957
describes the initiation of a prolonged
infusion that we would expect to be
resource-intensive, CPT code 96521
describes the refilling and maintenance
of a portable infusion pump, a drug
administration service that we would
expect to require less hospital resources.
Therefore, while we believe that there is
a compelling reason to assign HCPCS
code C8957 to the higher level drug
administration APC 0440, we do not
find a compelling reason to do the same
for CPT code 96521.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal for the
five-level APC structure for drug
administration services, with a
modification to not reassign HCPCS
code C8957 to APC 0439 as proposed.
Instead, we will continue to assign
HCPCS code C8957 to APC 0440 for CY
2010, with a final APC median cost of
approximately $218. We are finalizing
our proposed CY 2010 assignment of
CPT code 96521 to APC 0439, with a
final APC median cost of approximately
$126.
Comment: A few commenters
requested that CPT codes 96376
(Therapeutic, prophylactic, or
diagnostic injection (specify substance
or drug); each additional sequential
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intravenous push of the same substance/
drug provided in a facility) and 96368
(Intravenous infusion, for therapy,
prophylaxis, or diagnosis (specify
substance or drug); concurrent infusion)
be paid separately in CY 2010. Some
commenters stated that CPT code 96376
is similar to CPT code 96374
(Therapeutic, prophylactic, or
diagnostic injection (specify substance
or drug); intravenous push, single or
initial substance/drug) and should be
assigned to the same APC as CPT code
96374 for CY 2010. In addition, some
commenters indicated that CPT code
96368 is similar to CPT code 96375
(Therapeutic, prophylactic, or
diagnostic injection (specify substance
or drug); each additional sequential
intravenous push of a new substance/
drug (List separately in additional to
code for primary procedure)) and
should be assigned to the same APC as
CPT code 96375 for CY 2010. Other
commenters noted that because CMS
now has claims data upon which to set
specific payment rate for these services,
the OPPS should pay separately for CPT
codes 96376 and 96368.
Response: We agree with the
commenters that we have cost data for
these CPT codes based on historical
hospital claims data. However, we also
believe that these codes remain
appropriate for packaging and,
therefore, we include their costs in
payment for the independent services
with which they are always associated.
As we discussed in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66787 through 66788) and in the CY
2009 OPPS/ASC final rule with
comment period (73 FR 68674), in
deciding whether to package a service or
pay for it separately, we consider a
variety of factors, including whether the
service is normally provided separately
or in conjunction with other services;
how likely it is for the costs of the
packaged code to be appropriately
mapped to the separately payable codes
with which it was performed; and
whether the expected cost of the service
is relatively low. CPT codes 96376 and
96368, by definition, are always
provided in association with other drug
administration services, and we
continue to believe that they are most
appropriately packaged under the OPPS.
Furthermore, we do not agree with the
commenters that the services described
by CPT code 96376 are similar to those
described by CPT code 96374. CPT code
96374 is an initial intravenous push
code, and, per CPT instructions, special
billing guidelines apply. Commonly,
this service requires the initial
establishment of intravenous access in a
patient, a resource-intensive task
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C:\20NOR2.SGM
performed by hospital staff using special
supplies. In contrast, CPT code 96376 is
an add-on code and is reported for each
additional sequential intravenous push
of the same substance/drug. In the case
of this sequential service, the patient
already has established intravenous
access, so we would expect the service
to require fewer hospital resources. In
addition, we do not agree with
commenters that the services described
by CPT code 96368 are similar to those
described by CPT code 96375. CPT code
96368 describes a concurrent
intravenous infusion while CPT code
96375 describes a sequential
intravenous push, and we would expect
these services to require different
hospital resources.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to
unconditionally package payment for
CPT codes 96368 and 96376. These CPT
codes are, therefore, assigned status
indicator ‘‘N’’ in Addendum B to this
final rule with comment period.
Comment: Several commenters
submitted questions related to coding
for drug administration services. Some
commenters requested information on
how to code for specific clinical
scenarios, while other commenters were
concerned about documentation
requirements for a stop time for an
infusion.
Response: Each of these comments
and questions is outside of the scope of
the proposals in the CY 2010 OPPS/ASC
proposed rule. However, we will
consider the possibility of addressing
these concerns through other available
mechanisms, as appropriate.
In summary, after review of the public
comments we received, we are
finalizing our proposed coding and
payment structure for drug
administration as follows. We are
finalizing, without modification, our
proposal to include all separately
payable drug administration add-on
codes on the bypass list for CY 2010. In
addition, we are finalizing our proposed
five-level APC structure for payment of
drug administration services in the
HOPD for CY 2010, with the exception
of a modification to continue to assign
HCPCS code C8957 to APC 0440 for CY
2010, rather than APC 0439 as we
proposed. Finally, we are finalizing our
CY 2010 proposal, without
modification, to continue to package
payment for CPT codes 96376 and
96368 for CY 2010.
Table 46 below displays the final
configurations of the five drug
administration APCs for CY 2010.
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14:52 Nov 19, 2009
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60542
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14:52 Nov 19, 2009
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60544
Federal Register / Vol. 74, No. 223 / Friday, November 20, 2009 / Rules and Regulations
IX. OPPS Payment for Hospital
Outpatient Visits
A. Background
Currently, hospitals report visit
HCPCS codes to describe three types of
OPPS services: Clinic visits, emergency
department visits, and critical care
services. For OPPS purposes, we
recognize clinic visit codes as those
codes defined in the CPT codebook to
report evaluation and management (E/
M) services provided in the physician’s
office or in an outpatient or other
ambulatory facility. We recognize
emergency department visit codes as
those codes used to report E/M services
provided in the emergency department.
Emergency department visit codes
consist of five CPT codes that apply to
Type A emergency departments, and
five Level II HCPCS codes that apply to
Type B emergency departments. For
OPPS purposes, we recognize critical
care codes as those CPT codes used by
hospitals to report critical care services
that involve the ‘‘direct delivery by a
physician(s) of medical care for a
critically ill or critically injured
patient,’’ as defined by the CPT
codebook. In Transmittal 1139, Change
Request 5438, dated December 22, 2006,
we stated that, under the OPPS, the time
that can be reported as critical care is
the time spent by a physician and/or
hospital staff engaged in active face-to-
60545
face critical care of a critically ill or
critically injured patient. Under the
OPPS, we also recognize HCPCS code
G0390 (Trauma response team
associated with hospital critical care
service) for the reporting of a trauma
response in association with critical
care services.
As we proposed in the CY 2010
OPPS/ASC proposed rule (74 FR 35349
through 35350), we are continuing to
recognize these CPT and HCPCS codes
describing clinic visits, Type A and B
emergency department visits, critical
care services, and trauma team
activation provided in association with
critical care services for CY 2010. These
codes are listed below in Table 47.
CY 2010
HCPCS
Code
CY 2010 Descriptor
Clinic Visit HCPCS Codes
99201 ................
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Office or other outpatient visit for the evaluation and management of a new patient (Level 1).
14:52 Nov 19, 2009
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TABLE 47—HCPCS CODES USED TO REPORT CLINIC AND EMERGENCY DEPARTMENT VISITS AND CRITICAL CARE
SERVICES
60546
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TABLE 47—HCPCS CODES USED TO REPORT CLINIC AND EMERGENCY DEPARTMENT VISITS AND CRITICAL CARE
SERVICES—Continued
CY 2010
HCPCS
Code
99202
99203
99204
99205
99211
99212
99213
99214
99215
CY 2010 Descriptor
................
................
................
................
................
................
................
................
................
Office
Office
Office
Office
Office
Office
Office
Office
Office
or
or
or
or
or
or
or
or
or
other
other
other
other
other
other
other
other
other
outpatient
outpatient
outpatient
outpatient
outpatient
outpatient
outpatient
outpatient
outpatient
visit
visit
visit
visit
visit
visit
visit
visit
visit
for
for
for
for
for
for
for
for
for
the
the
the
the
the
the
the
the
the
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
evaluation
and
and
and
and
and
and
and
and
and
management
management
management
management
management
management
management
management
management
of
of
of
of
of
of
of
of
of
a new patient (Level 2).
a new patient (Level 3).
a new patient (Level 4).
a new patient (Level 5).
an established patient (Level
an established patient (Level
an established patient (Level
an established patient (Level
an established patient (Level
1).
2).
3).
4).
5).
Emergency Department Visit HCPCS Codes
99281 ................
99282 ................
99283 ................
99284 ................
99285 ................
G0380 ...............
G0381 ...............
G0382 ...............
G0383 ...............
G0384 ...............
Emergency department visit for the evaluation
Emergency department visit for the evaluation
Emergency department visit for the evaluation
Emergency department visit for the evaluation
Emergency department visit for the evaluation
Type B emergency department visit (Level 1).
Type B emergency department visit (Level 2).
Type B emergency department visit (Level 3).
Type B emergency department visit (Level 4).
Type B emergency department visit (Level 5).
and
and
and
and
and
management
management
management
management
management
of
of
of
of
of
a
a
a
a
a
patient
patient
patient
patient
patient
(Level
(Level
(Level
(Level
(Level
1).
2).
3).
4).
5).
Critical Care Services HCPCS Codes
dcolon on DSK2BSOYB1PROD with RULES2
99291 ................
99292 ................
G0390 ...............
Critical care, evaluation and management of the critically ill or critically injured patient; first 30–74 minutes.
Critical care, evaluation and management of the critically ill or critically injured patient; each additional 30 minutes.
Trauma response associated with hospital critical care service.
During the February 2009 APC Panel
meeting, the APC Panel recommended
that CMS present at the next APC Panel
meeting an analysis of the most
common diagnoses and services
associated with Type A and Type B
emergency department visits, including
an analysis by hospital-specific
characteristics, as well as an analysis of
CY 2008 claims data for clinic and
emergency department (Types A and B)
visits. The APC Panel also
recommended that the work of the
Visits and Observation Subcommittee
continue. We adopted these
recommendations in the CY 2010 OPPS/
ASC proposed rule (74 FR 35350) and
provided frequency and cost data from
CY 2008 claims for clinic and
emergency department visits at the
August 2009 meeting of the APC Panel.
We plan to provide the requested
analysis of the most common diagnoses
and services associated with Type A
and Type B emergency department
visits to the APC Panel at the winter
2010 meeting of the APC Panel.
At its August 2009 meeting, the APC
Panel recommended that CMS present
an analysis of CY 2009 claims data for
clinic and emergency department (Type
A and B) visits at the next meeting of
the APC Panel. The APC Panel
recommended again that CMS provide
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analyses of the most common diagnoses
and services associated with Type A
and Type B emergency department
visits at the next meeting of the APC
Panel, including analysis by hospitalspecific characteristics. We are
accepting all of these recommendations
and will present the available requested
data at the winter 2010 meeting of the
APC Panel.
B. Policies for Hospital Outpatient Visits
1. Clinic Visits: New and Established
Patient Visits
As reflected in Table 47, hospitals use
different CPT codes for clinic visits
based on whether the patient being
treated is a new or an established
patient. Beginning in CY 2009, we
refined the definitions of new and
established patients to reflect whether
or not the patient has been registered as
an inpatient or outpatient of the hospital
within the past 3 years. A patient who
has been registered as an inpatient or
outpatient of the hospital within the 3
years prior to a visit would be
considered to be an established patient
for that visit, while a patient who has
not been registered as an inpatient or
outpatient of the hospital within the 3
years prior to a visit would be
considered to be a new patient for that
visit. We refer readers to the CY 2009
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OPPS/ASC final rule with comment
period (73 FR 68677 through 68680) for
a full discussion of the refined
definitions.
We stated in the CY 2010 OPPS/ASC
proposed rule (74 FR 35350) that we
continue to believe that defining new or
established patient status based on
whether the patient has been registered
as an inpatient or outpatient of the
hospital within the 3 years prior to a
visit will reduce hospitals’
administrative burden associated with
reporting appropriate clinic visit CPT
codes. For CY 2010, we proposed to
continue recognizing the refined
definitions of new and established
patients, and our policy of calculating
median costs for clinic visits under the
OPPS using historical hospital claims
data.
Comment: Several commenters
recommended that CMS remove the
distinction between new and
established patient clinic visits, arguing
that facilities must expend the same
level of resources regardless of whether
the patient was registered as an
inpatient or an outpatient in the
hospital within the past 3 years.
According to some commenters, CMS’
use of the CPT codes for visits, which
differentiate between new and
established patients, is contrary to CMS’
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past statements that the CPT guidelines
and definitions for E/M visit codes are
not applicable in the hospital outpatient
setting because they fail to reflect
hospital services and resource
consumption. In addition, some
commenters stated there are significant
operational issues involved with
implementing the 3-year criterion for
hospital clinic visit billing purposes,
and expressed concerns that hospitals’
incorrect compliance with this
requirement could be targeted by
Recovery Audit Contractor (RAC) audits
and other types of audits. Some
commenters argued that any differential
in costs that is evident in claims data for
new versus established patient visits
would be the result of hospitals’
erroneous reporting of these codes,
rather than any real difference in the
level of resources expended treating a
new versus an established patient. One
commenter characterized the median
cost differences between new and
established patient visit codes as
random and suggested that some
providers report CPT codes 99201 and
99211 as ‘‘default codes’’ when
reporting clinic visits, which, according
to the commenter, raises the costs
reflected in the claims data for these
codes and artificially impacts the
overall APC ratesetting process.
Some commenters asserted that CMS’
proposal in the CY 2010 MPFS
proposed rule to eliminate the use of
consultation codes for physician
payment purposes provides a precedent
for discontinuing the use of the CPT
E/M codes by hospitals. According to
the commenters, CMS cited findings in
the March 2006 OIG report entitled
‘‘Consultations in Medicare: Coding and
Reimbursement’’ that physicians
frequently misuse CPT codes for
consultation services as a basis for no
longer recognizing those codes under
the MPFS. The commenters stated that
hospitals similarly misuse the clinic
visit codes, and that CMS should cease
to recognize the clinic visit CPT codes
under the OPPS for this reason.
Many commenters suggested that, as
an alternative to the clinic visit CPT
codes for new and established patients,
hospitals bill for visits based on the
resources expended in the visit at a
level determined by the hospitals’
internal reporting guidelines, regardless
of whether the patient is new or
established. Some commenters
supported the use of Level II HCPCS
G-codes for hospital clinic visits to
represent hospital resources expended,
without the distinction between new
and established patients. According to
the commenters, creation of these
HCPCS G-codes would streamline
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14:52 Nov 19, 2009
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hospital reporting of visits, enable
hospitals to correctly code for visits
based on established definitions, and
facilitate elimination of the new versus
established patient visit concept for
hospital reporting. The commenters
noted that, in the past, providers have
resisted implementing hospital-specific
HCPCS codes for reporting visits before
the implementation of national visit
reporting guidelines for hospitals, but
suggested that providers may now favor
HCPCS G-codes over the existing CPT
codes for visits that are tied to CMS’
definition of new and established
patients for purposes of reporting those
codes. Some commenters suggested that
CMS discuss the development of clinic
visit HCPCS G-codes at the winter 2010
APC Panel meeting and include a
proposal for clinic visit HCPCS G-codes
in the CY 2011 OPPS/ASC proposed
rule.
Response: Because hospital claims
data continue to show significant cost
differences between new and
established patient visits, we continue
to believe it is necessary and
appropriate to recognize the CPT codes
for both new and established patient
visits and, in some cases, provide
differential payment for new and
established patient visits of the same
level. For example, the final CY 2010
median cost for the level 3 new patient
clinic visit, described by CPT code
99203 and calculated using over
200,000 single claims from CY 2008, is
approximately $96, while the final CY
2010 median cost for the level 3
established patient clinic visit,
described by CPT code 99213 and
calculated using over 4.5 million single
claims from CY 2008, is approximately
$70. We believe this difference in
median costs warrants continued
assignment of these CPT codes to
different APCs for CY 2010.
Given that we have a substantial
volume of single claims from a
significant number of hospitals upon
which to calculate the median costs for
all levels of clinic visits, we do not agree
with the commenters that the
differences in costs for new versus
established patient visits are random or
the result of erroneous billing. We
expect hospitals to report all HCPCS
codes in accordance with correct coding
principles, CPT code descriptions, and
relevant CMS guidance, which, in this
case, specifies that the meanings of
‘‘new’’ and ‘‘established’’ patients as
included in the clinic visit CPT code
descriptors pertain to whether or not the
patient has been registered as an
inpatient or an outpatient of the hospital
within the past 3 years (73 FR 68679).
We have no reason to believe that
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60547
hospitals are systematically disregarding
these principles to the extent that our
median costs for clinic visits, which are
based on data from millions of single
claims, would be artificially skewed.
We also do not agree with the
commenters that CMS’ proposal in the
CY 2010 MPFS proposed rule to
eliminate the use of consultation codes
for physician payment purposes (74 FR
33553 through 33554) has any direct
relevance to the distinction between
new and established patient visits under
the OPPS. As we stated previously, we
have no reason to believe that hospitals
are not correctly reporting these
services. Furthermore, unlike the MPFS
proposal that would require physicians
to report the existing CPT codes for new
and established patient visits instead of
the consultation CPT codes, we could
not easily implement a policy to
eliminate the use of the clinic visit CPT
codes under the OPPS, because there are
no other existing codes that hospitals
could use to report these services.
We recognize that some commenters
believe hospitals would now support
the creation of Level II HCPCS G-codes
for hospital clinic visits, whereas in the
past they generally opposed hospitalspecific codes for visits in the absence
of national visit reporting guidelines.
We welcome any comments hospitals
have on alternative coding schemes for
reporting hospital clinic visits that
would not require hospitals to
distinguish between new and
established patients, such as the
creation of hospital-specific clinic visit
HCPCS G-codes or the exclusive use of
established patient clinic visit codes.
We are particularly interested in
commenters’ thoughts on how we
would develop payment rates for clinic
visits under another coding scheme,
considering the claims data that we
have now for these services demonstrate
significant differences in costs between
new and established patient clinic visits
and could not be easily crosswalked to
a structure that does not distinguish
between new and established patients.
We will consider any ideas that we
receive as we prepare for the CY 2011
OPPS/ASC proposed rule.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to continue to
define new or established patient status
for the purpose of reporting the clinic
visit CPT codes, on the basis of whether
or not the patient has been registered as
an inpatient or outpatient of the hospital
within the past 3 years. We also are
finalizing our CY 2010 proposal,
without modification, to continue our
policy of calculating median costs for
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dcolon on DSK2BSOYB1PROD with RULES2
clinic visits under the OPPS using
historical hospital claims data. As
discussed in detail in section II.A.2.e.(1)
of this final rule with comment period
and consistent with our CY 2009 policy,
when calculating the median costs for
the clinic visit APCs (0604 through
0608), we utilized our methodology that
excludes those claims for visits that are
eligible for payment through the
extended assessment and management
composite APC 8002 (Level I Extended
Assessment and Management
Composite). We continue to believe that
this approach results in the most
accurate cost estimates for APCs 0604
through 0608 for CY 2010.
2. Emergency Department Visits
Since CY 2007, we have recognized
two different types of emergency
departments for payment purposes
under the OPPS—Type A emergency
departments and Type B emergency
departments. As described in greater
detail below, by providing payment for
two types of emergency departments,
we recognize for OPPS payment
purposes both the CPT definition of an
emergency department, which requires
the facility to be available 24 hours, and
the requirements for emergency
departments specified in the provisions
of the Emergency Medical Treatment
and Labor Act (EMTALA) (Pub. L. 99–
272), which do not stipulate 24-hour
availability but do specify other
obligations for hospitals that offer
emergency services. For more detailed
information on the EMTALA provisions,
we refer readers to the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68680).
In the CY 2007 OPPS/ASC final rule
with comment period (71 FR 68132), we
finalized the definition of Type A
emergency departments to distinguish
them from Type B emergency
departments. A Type A emergency
department must be available to provide
services 24 hours a day, 7 days a week,
and meet one or both of the following
requirements related to the EMTALA
definition of a dedicated emergency
department specified at § 489.24(b),
specifically: (1) It is licensed by the
State in which it is located under the
applicable State law as an emergency
room or emergency department; or (2) it
is held out to the public (by name,
posted signs, advertising, or other
means) as a place that provides care for
emergency medical conditions on an
urgent basis without requiring a
previously scheduled appointment. For
CY 2007 (71 FR 68140), we assigned the
five CPT E/M emergency department
visit codes for services provided in Type
A emergency departments to five
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created Emergency Visit APCs,
specifically APC 0609 (Level 1
Emergency Visits), APC 0613 (Level 2
Emergency Visits), APC 0614 (Level 3
Emergency Visits), APC 0615 (Level 4
Emergency Visits), and APC 0616 (Level
5 Emergency Visits). We defined a Type
B emergency department as any
dedicated emergency department that
incurred EMTALA obligations, but did
not meet the CPT definition of an
emergency department. For example, a
hospital department that may be
characterized as a Type B emergency
department would meet the definition
of a dedicated emergency department,
but may not be available 24 hours a day,
7 days a week. Hospitals with such
dedicated emergency departments incur
EMTALA obligations with respect to an
individual who presents to the
department and requests, or has a
request made on his or her behalf,
examination or treatment for a medical
condition.
To determine whether visits to Type
B emergency departments have different
resource costs than visits to either
clinics or Type A emergency
departments, in the CY 2007 OPPS/ASC
final rule with comment period (71 FR
68132), we finalized a set of five HCPCS
G-codes for use by hospitals to report
visits to all entities that meet the
definition of a dedicated emergency
department under the EMTALA
regulations but that are not Type A
emergency departments. These codes
are called ‘‘Type B emergency
department visit codes.’’ In the CY 2007
OPPS/ASC final rule with comment
period (71 FR 68132), we explained that
these new HCPCS G-codes would serve
as a vehicle to capture median cost and
resource differences among visits
provided by Type A emergency
departments, Type B emergency
departments, and clinics. We stated that
the reporting of specific HCPCS G-codes
for emergency department visits
provided in Type B emergency
departments would permit us to
specifically collect and analyze the
hospital resource costs of visits to these
facilities in order to determine if, in the
future, a proposal for an alternative
payment policy might be warranted. We
expected hospitals to adjust their
charges appropriately to reflect
differences in Type A and Type B
emergency department visit costs.
As we noted in the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68681), the CY 2007 claims data
used for that rulemaking were from the
first year of claims data available for
analysis that included hospital’s cost
data for these new Type B emergency
department HCPCS visit codes. Based
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on our analysis of the CY 2007 claims
data, we confirmed that the median
costs of Type B emergency department
visits were less than the median costs of
Type A emergency department visits for
all but the level 5 visit. In other words,
the median costs from the CY 2007
hospital claims represented real
differences in the hospital resource
costs for the same level of visits in a
Type A or Type B emergency
department. Therefore, for CY 2009, we
adopted the August 2008 APC Panel
recommendation to assign levels 1
through 4 Type B emergency
department visits to their own APCs and
to assign the level 5 Type B emergency
department visit to the same APC as the
level 5 Type A emergency department
visit.
We now have CY 2008 cost data for
CY 2010 ratesetting for the Type B
emergency department HCPCS G-codes,
representing a second year of claims
data for these Type B emergency
department visit HCPCS codes. In the
CY 2010 OPPS/ASC proposed rule (74
FR 35351 through 35353), we presented
our observation of frequency and
patterns of billing based on the CY 2008
claims available at that time. We also
repeated some of our analyses of Type
B emergency department visits using the
available CY 2008 claims and cost
report data to confirm that Type B
emergency department visit costs are
generally lower than Type A emergency
department visit costs and to assess
whether there are systematic differences
in the costs of Type A and Type B
emergency department visits by
Medicare contractor. The pattern of
relative cost differences between Type A
and Type B emergency department
visits was largely consistent with the
distributions we observed in the CY
2007 data, with the exception that, in
the CY 2008 claims data available for
the proposed rule, we observed a
relatively lower HCPCS code-specific
median cost associated with level 5
Type B emergency department visits
compared to the HCPCS-code specific
median cost of level 5 Type A
emergency department visits. In
contrast, in our CY 2007 claims data, we
observed similar resource costs for level
5 Type A and Type B emergency
department visits. We also determined
that there are no significant differences
in how Medicare contractors have
interpreted our Type A and Type B
emergency department visit reporting
policies.
We shared cost and frequency data
with the Visits and Observation
Subcommittee of the APC Panel during
the February 2009 meeting, and in the
CY 2010 OPPS/ASC proposed rule (74
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FR 35353), we proposed to pay for Type
B emergency department visits in CY
2010 consistent with their median costs.
Specifically, we proposed to pay for
levels 1 through 4 Type B emergency
department visits through four levels of
APCs: APC 0626 (Level 1 Type B
Emergency Visits), APC 0627 (Level 2
Type B Emergency Visits), APC 0628
(Level 3 Type B Emergency Visits), and
APC 0629 (Level 4 Type B Emergency
Visits). In addition, we proposed to
adopt new APC 0630 (Level 5 Type B
Emergency Visits) and to pay for level
5 Type B emergency department visits
through this new APC. We proposed to
assign HCPCS codes G0380, G0381,
G0382, G0383, and G0384 (the levels 1,
2, 3, 4, and 5 Type B emergency
department visit Level II HCPCS codes)
to APCs 0626, 0627, 0628, 0629, and
0630, respectively, for CY 2010. These
HCPCS codes would be the only HCPCS
codes assigned to these APCs.
Furthermore, to distinguish new APC
0630 from the APC for the level 5 Type
A emergency visits, we proposed to
modify the title of the current level 5
Type A emergency visit APC to
incorporate Type A in the title.
60549
based on estimated resource costs from
more recent claims data.
For this final rule with comment
period, based on updated CY 2008
claims data, we note that 344 hospitals
billed at least one Type B emergency
department visit code in CY 2008, with
a total frequency of visits provided in
Type B emergency departments of
approximately 220,000. All except 5 of
the 344 hospitals reporting Type B
emergency department visits in CY 2008
also reported Type A emergency
department visits. Overall, many more
hospitals (approximately 3,238 total
hospitals) reported Type A emergency
department visits than Type B
emergency department visits. For
comparison purposes, the total
frequency of visits provided in hospital
outpatient clinics and Type A
emergency departments is
approximately 17.5 million and 11.6
million, respectively. The median costs
for the Type B emergency department
visit APCs, as compared to the Type A
emergency department visit APCs and
the clinic visit APCs, are shown in
Table 48 below.
Therefore, the revised title of APC 0616
would be ‘‘Level 5 Type A Emergency
Visits.’’
We noted in the CY 2010 OPPS/ASC
proposed rule (74 FR 35353) that the
proposed policy to pay for Type B
emergency department visits based on
their median costs is consistent with the
APC Panel’s March 2008
recommendation for payment of Type B
emergency department visits. As part of
its recommended configuration of APCs
for Type B emergency department visits
in CY 2009, the APC Panel also stated
that, given the limited CY 2007 claims
data available for Type B emergency
department visits, CMS should
reconsider payment adjustments as
more claims data become available. In
general, the APC Panel’s recommended
CY 2009 configuration paid
appropriately for each level of the Type
B emergency department visits, based
on the resource costs of the Type B
emergency department visits that are
reflected in claims data. We stated in
the proposed rule that we believe our
proposed CY 2010 configuration also
would pay appropriately for each level
of Type B emergency department visits
TABLE 48—COMPARISON OF MEDIAN COSTS FOR CLINIC VISIT APCS, TYPE B EMERGENCY DEPARTMENT VISIT APCS,
AND TYPE A EMERGENCY DEPARTMENT VISIT APCS
Final CY 2010
clinic visit
approximate
APC median
cost
Visit level
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Level
Level
Level
Level
Level
1
2
3
4
5
Final CY 2010
type B emergency department approximate
APC median
cost
Final CY 2010
type A emergency visit
approximate
APC median
cost
$57
69
88
112
166
$45
62
97
141
230
$53
87
139
221
327
.........................................................................................................................................
.........................................................................................................................................
.........................................................................................................................................
.........................................................................................................................................
.........................................................................................................................................
As demonstrated in Table 48, the
median costs of the lowest level visits,
based on the CY 2008 claims and cost
report data available for this final rule
with comment period, continue to be
similar across all settings, including
clinic and Type A and B emergency
departments. Visit levels 2 and 3 share
similar resource costs in the clinic and
Type B emergency department settings,
while visits provided in Type A
emergency departments have higher
estimated resource costs at these levels.
The level 4 clinic visit APC is less
resource-intensive than the level 4 Type
B emergency department visit APC,
which is similarly less resourceintensive than the level 4 Type A
emergency department visit APC.
Similarly, the level 5 clinic visit APC is
less resource-intensive than the level 5
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Type B emergency department visit
APC, which is less resource-intensive
than the level 5 Type A emergency
department visit APC.
This pattern of relative cost
differences between Type A and Type B
emergency department visits is largely
consistent with the distributions we
observed in the CY 2007 data, with the
exception that, in the updated CY 2008
claims data, we observe a relatively
lower HCPCS code-specific median cost
associated with level 5 Type B
emergency department visits compared
to the HCPCS-code specific median cost
of level 5 Type A emergency department
visits. In contrast, in our CY 2007 claims
data, we observed similar resource costs
for level 5 Type A and Type B
emergency department visits. In the CY
2009 OPPS/ASC final rule with
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comment period (73 FR 68683), we
hypothesized that, for the highest level
of emergency department visits, the
resources required would be the same in
both emergency department settings.
Now that more data on Type B
emergency department visits are
available and hospitals have more
experience billing for Type B services,
we observe differences in the resources
for the highest level emergency
department visits to Type A and Type
B emergency departments.
As noted in the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68683), we performed data analyses
regarding the costs of Type A and Type
B emergency department visits in
addition to our standard median cost
calculations. These analyses included
studying the emergency department
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visit costs of hospitals that billed Type
B emergency department visits only,
analyzing the cost data for hospitals that
billed both Type A and Type B
emergency department visits, and
evaluating whether there were
differences in the costs of Type A and
Type B emergency department visits by
Medicare contractor to ascertain
whether there were differences in how
Medicare contractors have interpreted
our Type A and Type B emergency
department visit policies. In the CY
2007 data, we observed that hospitals
that billed both Type A and Type B
emergency department visits had lower
costs for Type B emergency department
visits than Type A emergency
department visits at all levels except for
the level 5 Type B emergency
department visit. Our analyses of the
differences in Type A and Type B
emergency department visit median
costs by Medicare contractors did not
identify concerning differences. Overall,
we observed a distribution of visit costs
as expected, including generally lower
Type B emergency department visit
costs in comparison with Type A
emergency department visits, and
increasing costs for Type B emergency
department visits from levels 1 through
5, similar to the cost increases we
observed from levels 1 through 5 for
Type A emergency department visits.
We also observed a few contractors with
more unusual cost distributions for
Type B emergency department visits,
including relatively similar or higher
costs across levels 1 through 5 for Type
B emergency department visits. For CY
2009, we concluded that we had no
reason to believe that the cost
differences between Type A and Type B
emergency department visits evident in
our aggregate OPPS claims data resulted
from varying Medicare contractor
criteria as to what defines Type A and
Type B emergency departments. We also
committed to monitoring these
distributions in future years.
As we did for the CY 2010 OPPS/ASC
proposed rule, for this final rule with
comment period, we repeated some of
our analyses of Type B emergency
department visits using updated CY
2008 claims data to confirm that Type
B emergency department visit costs are
generally lower than Type A emergency
department visit costs and to again
assess whether there are systematic
differences in the costs of Type A and
Type B emergency department visits by
Medicare contractor. As noted above,
we observed that hospitals that billed
both Type A and Type B emergency
department visits had lower costs for
Type B emergency department visits
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14:52 Nov 19, 2009
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than Type A emergency department
visits, including level 5 Type B
emergency department visits, which is a
change from the CY 2007 data. We
further evaluated differences in the
costs of Type A and Type B emergency
department visits by Medicare
contractor. Based on our updated
analysis of CY 2008 claims, we continue
to observe similar patterns in HCPCS
code-specific median cost differences
between Type A and Type B emergency
department visits as observed in the CY
2007 claims. Hospitals in the
jurisdictions of most Medicare
contractors have generally lower Type B
emergency department visit costs in
comparison with Type A emergency
department visits, as well as increasing
costs for Type B emergency department
visits from levels 1 through 5, similar to
the cost increases we observed from
levels 1 through 5 for Type A emergency
department visits.
Like last year, we also continue to
observe a few Medicare contractors with
more unusual cost distributions for
Type B emergency department visits,
including those with Type B emergency
department visit costs that are relatively
similar or higher than Type A
emergency department visit costs across
levels 1 through 5. Some of these
Medicare contractors are the same
contractors that we noted had more
unusual cost distributions for Type B
emergency department visits relative to
Type A emergency department visit
costs in the CY 2007 claims data. In
order to confirm that these Medicare
contractors are applying our policies
consistently, we examined the HCPCS
code-specific median costs for Type A
and Type B emergency department
visits for the hospitals in each Medicare
contractor’s area. For almost all of these
Medicare contractors, we see one or two
hospitals with relatively high Type B
emergency department visit costs
relative to Type B emergency
department visit costs nationwide or
with Type B emergency department
visit costs that are relatively similar to
or higher than Type A emergency
department visit costs. These one or two
hospitals have sufficient visit volumes
to influence the calculation of the
HCPCS code-specific median costs for
their respective Medicare contractors.
Comment: Several commenters
supported CMS’ proposal to create a
new APC for level 5 Type B emergency
department visits. One commenter
encouraged CMS to adopt the
recommendation made by the APC
Panel at the August 2009 meeting to
provide an analysis of the most common
diagnoses and services associated with
Type A and Type B emergency
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department visits at the next meeting of
the APC Panel, including analysis by
hospital-specific characteristics, as well
as an analysis of CY 2009 claims data
for Type A and B emergency department
visit APCs.
Response: We appreciate commenters’
support of our proposal to create a new
APC for level 5 Type B emergency
department visits. Our updated analyses
of Type B emergency department visits
costs for this CY 2010 OPPS/ASC final
rule with comment period confirm that
the median costs of Type B emergency
department visits are less than the
median costs of Type A emergency
department visits across all levels. Our
updated analyses also confirm that there
are no significant differences in how
Medicare contractors have interpreted
our Type A and Type B emergency
department visit reporting policies. The
median costs from CY 2008 hospital
claims represent real differences in the
hospital resource costs for the same
level of visit in a Type A or Type B
emergency department.
Therefore, as we proposed, for the CY
2010 OPPS, we are continuing to pay for
Type B emergency department visits in
CY 2010 consistent with their median
costs. Specifically, we are continuing to
pay levels 1 through 4 Type B
emergency department visits through
four levels of APCs: APC 0626 (Level 1
Type B Emergency Visits), APC 0627
(Level 2 Type B Emergency Visits), APC
0628 (Level 3 Type B Emergency Visits),
and APC 0629 (Level 4 Type B
Emergency Visits). In addition, we are
adopting new APC 0630 (Level 5 Type
B Emergency Visits) and will pay for
level 5 Type B emergency department
visits through this new APC. We are
assigning HCPCS codes G0380, G0381,
G0382, G0383, and G0384 (the levels 1,
2, 3, 4, and 5 Type B emergency
department visit Level II HCPCS codes)
to APCs 0626, 0627, 0628, 0629, and
0630, respectively, for CY 2010. These
HCPCS codes are the only HCPCS codes
assigned to these APCs. Furthermore, to
distinguish new APC 0630 from the
APC for the level 5 Type A emergency
visits, as we proposed, we are modifying
the title of the current level 5 Type A
emergency visit APC to incorporate
Type A in the title. Therefore, the
revised title of APC 0616 is ‘‘Level 5
Type A Emergency Visits.’’ We believe
our CY 2010 configuration pays
appropriately for each level of Type B
emergency department visits based on
estimated resource costs from more
recent claims data.
As stated previously, we plan to
provide the requested analysis of the
most common diagnoses and services
associated with Type A and Type B
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emergency department visits to the APC
Panel at the winter 2010 meeting of the
APC Panel, as well as an analysis of CY
2009 claims data for Type A and B
emergency department visit APCs
available at that time.
Comment: One commenter expressed
concerns regarding the 30 minute
minimum to bill critical care services,
described by CPT code 99291. The
commenter argued that the resources
expended in less than 30 minutes
warrant payment at the highest level of
E/M payment, and recommended that
CMS change the criteria for payment for
critical care services to include
instances of 15 minutes of critical care
and instances in which the patient
expires in less than 30 minutes, despite
the critical care services furnished.
According to the commenter, the
significant resources utilized during
these critical care episodes are not
appropriately recognized for payment
purposes because they cannot be
reported with CPT code 99291 under
existing guidelines.
Another commenter requested that
CMS consider extending payment for
trauma team activations, described by
HCPCS code G0390, to level 5
emergency department visits, in
addition to critical care services when
all other trauma activation criteria are
met. According to the commenter, an
emergency department that is extremely
efficient can send a patient in need of
a trauma team to surgery before the 30
minute time threshold for reporting
critical care services is met. The
commenter stated that, because the
hospital would bill a level 5 emergency
department visit code, rather than a
critical care code, the encounter would
not qualify for trauma response payment
even though a trauma response team
was utilized. The commenter argued
that hospitals should receive an APC
payment for HCPCS code G0390 under
these circumstances because equivalent
trauma team resources are expended
even though the encounter lasted fewer
than 30 minutes and cannot be reported
with CPT code 99291.
Response: As we have stated in the
past (72 FR 66806), the CPT instructions
for reporting of critical care services
with CPT code 99291 and the CPT code
descriptor specify that the code can only
be billed if 30 minutes or more of
critical care services are provided.
Hospitals must continue to provide a
minimum of 30 minutes of critical care
services in order to bill CPT code 99291,
according to the CPT code descriptor
and CPT instructions. We note that
hospitals can report the appropriate
clinic or emergency department visit
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14:52 Nov 19, 2009
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code consistent with their internal
guidelines if fewer than 30 minutes of
critical care is provided. These CPT
instructions and our payment policies
for covered hospital outpatient services
do not apply any differently if the
patient dies while undergoing
treatment. We do allow hospitals to use
the 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. We refer
readers to section II.A.2.d.(7) of this
final rule with comment period for more
information on how these services are
paid under the OPPS.
We do not agree with the commenter
that we should modify our policy to
recognize HCPCS code G0390 for the
reporting of a trauma response in
association with critical care services
when the hospital provides fewer than
30 minutes of critical care and cannot
report CPT code 99291. We believe that
it would be extremely unusual for a
patient to require trauma team services,
be rushed to surgery within 30 minutes
of arrival in the emergency department,
and not be subsequently admitted to the
hospital as an inpatient. Furthermore,
hospitals that provide less than 30
minutes of critical care when trauma
activation occurs under the
circumstances described by the NUBC
guidelines that would permit reporting
a charge under revenue code series 68x
may report a charge under 68x, but they
may not report HCPCS code G0390. In
these cases, payment for the trauma
team activation is packaged into
payment for the other services provided
to the patient in the encounter,
including the associated emergency
department visit that is reported.
Comment: One commenter requested
clarification regarding ‘‘triage only’’
visits in which a patient is seen by a
nurse and triaged in the hospital
emergency department but leaves prior
to a physician’s examination and
treatment. The commenter asked if
hospitals can bill visit codes for such
cases if the patient is not seen by a
physician.
Response: As we have stated in the
past (73 FR 68686), under the OPPS,
unless indicated otherwise, we do not
specify the type of hospital staff (for
example, nurses or pharmacists) who
may provide services in hospitals
because the OPPS only makes payment
for services provided incident to
physicians’ services. Hospitals
providing services incident to
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60551
physicians’ services may choose a
variety of staffing configurations to
provide those services, taking into
account other relevant factors, including
State and local laws, hospital policies,
and other Federal requirements such as
EMTALA and the Medicare conditions
of participation related to hospital
staffing. Billing a visit code in addition
to another service merely because the
patient interacted with hospital staff or
spent time in a room for that service is
inappropriate. A hospital may bill a
visit code based on the hospital’s own
coding guidelines which must
reasonably relate the intensity of
hospital resources to different levels of
HCPCS codes. Services furnished must
be medically necessary and
documented.
As described previously in this
section, we are adopting our proposal,
without modification, to continue
paying for Type B emergency
department visits in CY 2010 consistent
with their median costs through 5 levels
of Type emergency department visit
APCs.
Table 49 below displays the APC
median costs for each level of Type B
emergency department visit under our
CY 2010 configuration. As more cost
data become available and hospitals
gain additional experience with
reporting visits to Type B emergency
departments, we will continue to
regularly reevaluate patterns of Type A
and Type B emergency department visit
reporting to ensure that hospitals
continue to bill appropriately and
differentially for these services. In
addition, according to our usual
practice, we will examine trends in cost
data over time and consider proposing
alternative emergency department visit
APC configurations in the future if
updated data indicate that changes to
the payment structure should be
considered.
We also note that, as discussed in
section II.A.2.e.(1) of this final rule with
comment period and consistent with
our CY 2009 policy, when calculating
the median costs for the emergency
department visit and critical care APCs
(0609 through 0617 and 0626 through
0630), we utilized our methodology that
excludes those claims for visits that are
eligible for payment through the
extended assessment and management
composite APC 8002 (Level I Extended
Assessment and Management
Composite). We continue to believe that
this approach will result in the most
accurate cost estimates for APCs 0604
through 0608 for CY 2010.
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TABLE 49—CY 2010 TYPE B EMERGENCY DEPARTMENT VISIT APC ASSIGNMENTS AND MEDIAN COSTS
Final CY 2010
APC assignment
Type B emergency department level
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Level
Level
Level
Level
Level
1
2
3
4
5
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
3. Visit Reporting Guidelines
Since April 7, 2000, we have
instructed hospitals to report facility
resources for clinic and emergency
department hospital outpatient visits
using the CPT E/M codes and to develop
internal hospital guidelines for
reporting the appropriate visit level.
Because a national set of hospitalspecific codes and guidelines do not
currently exist, we have advised
hospitals that each hospital’s internal
guidelines that determine the levels of
clinic and emergency department visits
to be reported should follow the intent
of the CPT code descriptors, in that the
guidelines should be designed to
reasonably relate the intensity of
hospital resources to the different levels
of effort represented by the codes.
As noted in detail in the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66802 through 66805), we
observed a normal and stable
distribution of clinic and emergency
department visit levels in hospital
claims over the past several years. The
data indicated that hospitals, on
average, were billing all five levels of
visit codes with varying frequency, in a
consistent pattern over time. Overall,
both the clinic and emergency
department visit distributions indicated
that hospitals were billing consistently
over time and in a manner that
distinguished between visit levels,
resulting in relatively normal
distributions nationally for the OPPS, as
well as for specific classes of hospitals.
The results of these analyses were
generally consistent with our
understanding of the clinical and
resource characteristics of different
levels of hospital outpatient clinic and
emergency department visits. In the CY
2008 OPPS/ASC proposed rule (72 FR
42764 through 42765), we specifically
invited public comment as to whether a
pressing need for national guidelines
continued at this point in the
maturation of the OPPS, or if the current
system where hospitals create and apply
their own internal guidelines to report
visits was currently more practical and
appropriately flexible for hospitals. We
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explained that although we have
reiterated our goal since CY 2000 of
creating national guidelines, this
complex undertaking for these
important and common hospital
services was proving more challenging
than we initially thought as we received
new and expanded information from the
public on current hospital reporting
practices that led to appropriate
payment for the hospital resources
associated with clinic and emergency
department visits. We stated our belief
that many hospitals had worked
diligently and carefully to develop and
implement their own internal guidelines
that reflected the scope and types of
services they provided throughout the
hospital outpatient system. Based on
public comments, as well as our own
knowledge of how clinics operate, it
seemed unlikely that one set of
straightforward national guidelines
could apply to the reporting of visits in
all hospitals and specialty clinics. In
addition, the stable distribution of clinic
and emergency department visits
reported under the OPPS over the past
several years indicated that hospitals,
both nationally in the aggregate and
grouped by specific hospital classes,
were generally billing in an appropriate
and consistent manner as we would
expect in a system that accurately
distinguished among different levels of
service based on the associated hospital
resources.
Therefore, we did not propose to
implement national visit guidelines for
clinic or emergency department visits
for CY 2008. Since publication of the CY
2008 OPPS/ASC final rule with
comment period, we have again
examined the distribution of clinic and
Type A emergency department visit
levels based upon updated CY 2008
claims data available for the CY 2010
proposed rule and for this final rule
with comment period and confirmed
that we continue to observe a normal
and stable distribution of clinic and
emergency department visit levels in
hospital claims. We continue to believe
that, based on the use of their own
internal guidelines, hospitals are
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Final CY 2010
approximate
APC median
cost
0626
0627
0628
0629
0630
$45
62
97
141
230
generally billing in an appropriate and
consistent manner that distinguishes
among different levels of visits based on
their required hospital resources. As a
result of our updated analyses, we are
encouraging hospitals to continue to
report visits during CY 2010 according
to their own internal hospital
guidelines. In the absence of national
guidelines, we will continue to regularly
reevaluate patterns of hospital
outpatient visit reporting at varying
levels of disaggregation below the
national level to ensure that hospitals
continue to bill appropriately and
differentially for these services. As
originally noted in detail in the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66648), we continue to
expect that hospitals will not purposely
change their visit guidelines or
otherwise upcode clinic and emergency
department visits for purposes of
extended assessment and management
composite APC payment.
In addition, we note our continued
expectation that hospitals’ internal
guidelines will comport with the
principles listed in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66805). We encourage hospitals with
more specific questions related to the
creation of internal guidelines to contact
their local fiscal intermediary or MAC.
Comment: Several commenters
supported CMS’ policy of requiring
hospitals to use their own internal
guidelines to distinguish among
different levels of visits based on their
required hospital resources and did not
favor the implementation of national
guidelines at any point in the future.
Other commenters expressed
appreciation for CMS’ approach of
studying the challenges associated with
national guidelines prior to their
implementation. However, many
commenters urged CMS to move
forward with the implementation of
national guidelines for hospitals to
report clinic visits because of several
problems that they believe continue to
exist due to the lack of such guidelines,
such as variations in hospitals’ internal
guidelines that may result in
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inconsistent cost data upon which
payment rates for visits are based. Some
commenters noted that some Medicare
contractors, including RACs, use their
own auditing methods rather than
reviewing each hospital’s internal
guidelines while conducting medical
review.
The commenters urged CMS to adopt
national guidelines no later than CY
2011 due to the burden hospitals would
face if they had to implement national
visit coding guidelines concurrently
with the ICD–10–CM and ICD–10–PCS
changes required by FY 2013. According
to the commenters, the national
guidelines should be clear, concise, and
specific with little or no room for
varying interpretations, and hospitals
should have at least 1 year to prepare for
the transition. Many commenters
indicated that the American Hospital
Association (AHA) will reconvene an
expert panel to submit a request to the
AMA CPT Editorial Panel to create CPT
codes for hospital visits and encouraged
CMS to be engaged in and supportive of
the recommendations of the expert
panel.
Several commenters also
recommended that, in the absence of
national guidelines for hospital visit
reporting, CMS provide additional
guidance relating to the specific services
that should be included or bundled into
the visit levels reported by hospitals.
One commenter requested that CMS ask
the AMA to supplement its CPT
Codebook to include a compilation of
instructions from CMS regarding
appropriate reporting of hospital visits,
such as the 11 principles specified in
the CY 2008 OPPS/ASC final rule with
comment period that hospitals should
follow in developing internal guidelines
for reporting visits.
Another commenter performed
extensive review of a large sample of
hospital emergency department visits to
determine whether the distributions
observed in this sample resembled the
distribution described by CMS and
printed in the CY 2008 OPPS/ASC final
rule with comment period (72 FR
66804). The commenter explained that
the results are similar to those of CMS
at the national level, but that emergency
departments have increased the
proportion of level 4 and 5 emergency
department visits in recent years, and
that several outlier providers are billing
significantly more high level visits than
expected based on their geographic
location and hospital type. Therefore,
the commenter concluded that national
guidelines could help slow rapidly
increasing health care costs.
Response: We acknowledge that it
would be desirable to many hospitals to
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have national guidelines. However, we
also understand that it would be
disruptive and administratively
burdensome to other hospitals that have
successfully adopted internal guidelines
to implement any new set of national
guidelines while we address the
problems that would be inevitable in the
case of any new set of guidelines that
would be applied by thousands of
hospitals. As noted in the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66806), we encourage
fiscal intermediaries and MACs to
review a hospital’s internal guidelines
when an audit occurs. While we also
would encourage RACs to review a
hospital’s internal guidelines when an
audit occurs, we note that currently
there are no RAC activities involving
visit services. RAC audits may involve
CMS-approved issues only and must be
posted to each RAC’s Web site.
We agree with the commenters that
national guidelines should be clear,
concise, and specific with little or no
room for varying interpretations, and
that hospitals should have at least 1 year
to prepare for the transition. We look
forward to reviewing any
recommendations that result from the
AHA-convened expert panel referenced
by the commenters. If the AMA were to
create facility-specific CPT codes for
reporting visits provided in HOPDs, we
would certainly consider such codes for
OPPS use. We also appreciate the visit
level distribution analysis provided to
us by one commenter and note that, in
the absence of national guidelines, we
will continue to regularly reevaluate
patterns of hospital outpatient visit
reporting at varying levels of
disaggregation below the national level
to ensure that hospitals continue to bill
appropriately and differentially for
these services. We reiterate our
expectation that hospitals’ internal
guidelines fully comply with the
principles listed in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 68805).
Regarding the public comments
requesting clarification of services that
should be included or bundled into visit
codes, as we have stated in the past (73
FR 68685), hospitals should separately
report all HCPCS codes in accordance
with correct coding principles, CPT
code descriptions, and any additional
CMS guidance, when applicable. We
refer readers to the July 2008 OPPS
quarterly update (Transmittal 1536,
Change Request 6094, issued on June
19, 2008) for further clarification about
the reporting of CPT codes for hospital
outpatient services paid under the
OPPS. In that transmittal, we note that,
while CPT codes generally are created to
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60553
describe and report physician services,
they also are used by other providers/
suppliers to describe and report services
that they provide. Therefore, the CPT
code descriptors do not necessarily
reflect the facility component of a
service furnished by the hospital. Some
CPT code descriptors include reference
to a physician performing a service. For
OPPS purposes, unless indicated
otherwise, the usage of the term
‘‘physician’’ does not restrict the
reporting of the code or application of
related policies to physicians only, but
applies to all practitioners, hospitals,
providers, or suppliers eligible to bill
the relevant CPT codes in accordance
with applicable portions of the Act, the
Medicare regulations, and other
Medicare guidance. In cases where there
are separate codes for the technical
component, professional component,
and/or complete procedure, hospitals
should report the code that represents
the technical component for their
facility services. If there is no separate
technical component code for the
service, hospitals should report the code
that represents the complete procedure.
Consistent with past input we have
received from many hospitals, hospital
associations, the APC Panel, and others,
we will continue to utilize CPT codes
for reporting services under the OPPS
whenever possible to minimize
hospitals’ reporting burden.
We do not agree with the commenter
that we should ask the AMA to
supplement its CPT Codebook to
include a compilation of instructions
from CMS regarding appropriate
reporting of hospital visits. Under the
OPPS, we develop policies specifically
and exclusively for purposes of the
Medicare program, while the CPT
Codebook provides instructions that are
applicable to hospital coding for all
payers, unless those payers choose to
implement different individual policies.
If hospitals believe the inclusion of such
information in the CPT Codebook is
necessary and appropriate, they may
directly request the AMA to do so.
Comment: One commenter requested
that CMS recognize CPT codes 99363
(Anticoagulation management for an
outpatient taking warfarin, physician
review and interpretation of
International Normalized Ratio (INR)
testing, patient instructions, dosage
adjustment (as needed), and ordering of
additional tests; initial 90 days of
therapy (must include a minimum of 8
INR measurements)) and 99364
(Anticoagulation management for an
outpatient taking warfarin, physician
review and interpretation of
International Normalized Ratio (INR)
testing, patient instructions, dosage
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adjustment (as needed), and ordering of
additional tests; each subsequent 90
days of therapy (must include a
minimum of 3 INR measurements)),
which are currently assigned status
indicator ‘‘B’’ (Codes that are not
recognized by OPPS when submitted on
an outpatient hospital Part B bill type
(12x and 13x)), as payable under the
OPPS. The commenter stated that
making these CPT codes payable under
the OPPS is appropriate because they
accurately describe anticoagulation
management services. The commenter
argued that recognition of these CPT
codes would reduce patient liability
because they are billed only once every
90 days.
Response: While we appreciate the
commenter’s concern about patient
liability, we cannot assess whether
recognition of CPT codes 99363 and
99364 as payable under the OPPS would
actually reduce the cumulative amount
of copayment a patient may have to pay
for all of the different services that may
be involved in anticoagulation
management, which may be provided at
varying time intervals and with very
different levels of intensity for
individual patients. We expect that a
patient undergoing anticoagulation
management by hospital staff for a
significant medical condition would
periodically have hospital visits, and we
would package payment for the nonface-to-face management of the patient’s
therapy between visits into payment for
the visits themselves. Our usual policy
is to package payment for the hospital
resources associated with managing
patients’ medical conditions between
hospital encounters for patients who
undergo surgery or receive hospital
visits for any medical condition,
including diabetes, hypertension, or
cardiac arrhythmias, and we do not
believe that payment for anticoagulation
management services should be made
differently than payment for other
medical or surgical management
services. Therefore, we see no reason to
recognize CPT codes 99363 and 99364
for payment under the OPPS.
After consideration of the public
comment we received, we are finalizing
our CY 2010 proposal, without
modification, to continue to assign
status indicator ‘‘B’’ to CPT codes 99363
and 99364 to indicate that these codes
are not recognized for payment under
the OPPS. We expect that hospitals will
continue to consider the hospital
resources required to manage patients,
including patients requiring
anticoagulation management, between
hospital encounters when setting their
charges for the services furnished in
those encounters.
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As we have stated in the past (73 FR
68686), we note that billing a visit code
in addition to another service merely
because the patient interacted with
hospital staff or spent time in a room for
that service is inappropriate. A hospital
may bill a visit code based on the
hospital’s own coding guidelines, which
must reasonably relate the intensity of
hospital resources to the different levels
of HCPCS codes. Services furnished
must be medically necessary and
documented. For example, CPT code
85610 (Prothrombin time) is a code that
describes performance of the
prothrombin time test. If the only
service provided is a venipuncture and
laboratory test to determine the
prothrombin time, this service is the
only service that should be billed. If a
hospital provides a distinct, separately
identifiable service in addition to the
test, the hospital is responsible for
billing the code that most closely
describes the service provided.
We appreciate all of the comments we
have received in the past from the
public on visit guidelines, and we
encourage continued submission of
comments throughout the year that
would assist us and other stakeholders
interested in the development of
national guidelines. Until national
guidelines are established, hospitals
should continue using their own
internal guidelines to determine the
appropriate reporting of different levels
of clinic and emergency department
visits. While we understand the interest
of some hospitals in having us move
quickly to promulgate national
guidelines that would ensure
standardized reporting of hospital
outpatient visit levels, we believe that
the issues and concerns identified both
by us and others are important and
require serious consideration prior to
the implementation of national
guidelines. Because of our commitment
to provide hospitals with 6 to 12 months
notice prior to implementation of
national guidelines, we would not
implement national guidelines prior to
CY 2011. Our goal is to ensure that
OPPS national or hospital-specific visit
guidelines continue to facilitate
consistent and accurate reporting of
hospital outpatient visits in a manner
that is resource-based and supportive of
appropriate OPPS payments for the
efficient and effective provision of visits
in hospital outpatient settings.
X. Payment for Partial Hospitalization
Services
A. Background
Partial hospitalization is an intensive
outpatient program of psychiatric
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services provided to patients as an
alternative to inpatient psychiatric care
for individuals who have an acute
mental illness. Section 1833(t)(1)(B)(i) of
the Act provides the Secretary with the
authority to designate the HOPD
services to be covered under the OPPS.
The Medicare regulations at § 419.21
that implement this provision specify
that payments under the OPPS will be
made for partial hospitalization services
furnished by community mental health
centers (CMHCs) as well as those
services furnished by hospitals to their
outpatients. Section 1833(t)(2)(C) of the
Act requires the Secretary to establish
relative payment weights for covered
HOPD services (and any APCs) based on
median (or mean, at the election of the
Secretary) hospital costs using data on
claims from 1996 and data from the
most recent available cost reports.
Because a day of care is the unit that
defines the structure and scheduling of
partial hospitalization services, we
established a per diem payment
methodology for the partial
hospitalization program (PHP) APC,
effective for services furnished on or
after August 1, 2000 (65 FR 18452).
Historically, the median per diem cost
for CMHCs greatly exceeded the median
per diem cost for hospital-based PHPs
and fluctuated significantly from year to
year, while the median per diem cost for
hospital-based PHPs remained relatively
constant ($200–$225). We believe that
CMHCs may have increased and
decreased their charges in response to
Medicare payment policies. In
developing the CY 2008 update, we
began an effort to strengthen the PHP
benefit through extensive data analysis
and policy and payment changes. We
began this effort as a result of the
significant fluctuations and declines in
the CMHC PHP median per diem costs
(we refer readers to the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66670 through 66676) for a detailed
discussion). The analysis included an
examination of revenue-to-cost center
mapping, refinements to the per diem
methodology, and an in-depth analysis
of the number of units of service
furnished per day.
For CY 2008, we proposed and
finalized two refinements to the
methodology for computing the PHP
median that we believe resulted in more
accurate per diem medians. First, we
remapped 10 revenue codes that are
common among hospital-based PHP
claims to the most appropriate cost
centers (72 FR 66671 through 66672).
Typically, we map the revenue code to
the most specific cost center with a
provider-specific CCR. However, if the
hospital does not have a CCR for any of
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the listed cost centers, we consider the
overall hospital CCR as the default. For
partial hospitalization services, the
revenue center codes billed by hospitalbased PHPs are mapped to Primary Cost
Center 3550 (Psychiatric/Psychological
Services). If that cost center is not
available, they are mapped to the
Secondary Cost Center 6000 (Clinic). We
use the overall facility CCR for CMHCs
because PHPs are CMHCs’ only
Medicare cost, and CMHCs do not have
the same cost structure as hospitals.
Therefore, for CMHCs, we use the CCR
from the outpatient provider-specific
file. A closer examination of the
revenue-code-to-cost-center crosswalk
revealed that 10 of the revenue center
codes used by hospital-based PHPs did
not map to a Primary Cost Center of
3550 or a Secondary Cost Center of
6000. We believe this occurred because
these codes may also be used for
services that are not furnished in a PHP
or services that are not psychiatric
related (for example, occupational
therapy). As discussed in the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66671 through 66672), we
updated this analysis using more recent
PHP claims and CCR data. After
remapping codes, we computed an
alternate cost for each line item of the
hospital-based PHP claims. Remapping
those 10 revenue center codes reduced
the number of lines that defaulted to the
hospitals’ overall CCR and thus created
a more accurate estimate of PHP per
diem costs for a significant number of
claims.
Secondly, we refined our
methodology for calculating median
PHP per diem costs by computing a
separate per diem cost for each day
rather than for each claim. When there
were multiple days of care entered on a
claim, a unique cost was computed for
each day of care. We only assigned costs
for line items on days when a payment
was made. All of these costs were then
arrayed from lowest to highest, and the
middle value of the array was
considered the median per diem cost. A
complete discussion of the refined
method of computing the PHP median
per diem cost can be found in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66672).
After completing extensive data
analysis, we continued to observe a
clear downward trend in the median per
diem cost based on the CY 2006 data
used to develop the median per diem
cost under the CY 2008 OPPS/ASC final
rule with comment period. The analysis
revealed that fewer PHP services were
being provided in a given day. We
believed, and continue to believe, that
the data reflect the level of cost for the
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type of services that were being
provided and continue to be provided.
Because partial hospitalization is
provided in lieu of inpatient care, it
should be a highly structured and
clinically intensive program, usually
lasting most of the day. In order to
improve the level of services furnished
in a PHP day, in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66673), we reiterated our expectation
that hospitals and CMHCs must provide
a comprehensive program consistent
with the statutory intent. We also
indicated our intent to explore changes
to our regulations and claims processing
systems in order to deny payment for
low intensity days.
For CY 2009, we implemented several
regulatory, policy, and payment
changes, including a two-tiered
payment approach for PHP services
under which we pay one amount for
days with 3 units of service (APC 0172
(Level I Partial Hospitalization)) and a
higher amount for days with 4 or more
units of service (APC 0173 (Level II
Partial Hospitalization)). We
implemented this payment approach to
reflect the lower costs of a less intensive
day while still paying programs that
provide 4 or more units of service an
amount that recognizes that they have
provided a more intensive day of care.
In this way, we pay more appropriately
for the level of care provided while still
allowing PHPs necessary scheduling
flexibility (73 FR 68689). As we stated
in the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68688), it
was never our intention that days with
only 3 units of service become the
number of services provided in a typical
day. Our intention was to provide
payment to cover days that consisted of
3 units of service only in certain limited
circumstances. For example, we believe
3 units of service a day may be
appropriate when a patient is
transitioning towards discharge or when
a patient is required to leave the PHP
early for the day due to an unexpected
medical appointment. We refer readers
to section X.C.2. of the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68688 through 68695) for a full
discussion of this requirement.
For CY 2009, we proposed to
calculate the payment rates for PHP
APCs 0172 and 0173 using both
hospital-based and CMHC PHP data (73
FR 41513). After consideration of the
public comments received on our
proposal, we decided to base payment
rates for the two-tiered approach on
hospital-based PHP data only. As we
explained in the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68689), using the CMHC data for CY
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60555
2009 would have significantly reduced
the CY 2009 PHP rates and negatively
impacted hospital-based PHPs. Because
hospital-based PHPs are geographically
diverse, whereas CMHCs are located in
only a few States, we were concerned
that a significant drop in the rate could
result in hospital-based PHPs closing
and lead to possible beneficiary access
to care problems. To calculate the CY
2009 PHP payment rate for APC 0172,
we used the median per diem cost for
hospital-based PHP days with 3 units of
service to derive a PHP payment rate of
$157. For APC 0173, we used the
median per diem cost for hospital-based
PHP days with 4 or more units of
service to derive a CY 2009 PHP
payment rate of $200.
In addition, for CY 2009, we finalized
our policy to deny payment for any PHP
claims for days when fewer than 3 units
of therapeutic services are provided. As
noted in the CY 2009 OPPS/ASC final
rule with comment period (73 FR
68694), we believe that 3 units of
service should be the minimum number
of services allowed in a PHP day
because a day with 1 or 2 units of
service does not meet the statutory
intent of a PHP program. Three units of
service are a minimum threshold that
permits unforeseen circumstances, such
as medical appointments, while
allowing payment, but maintains the
integrity of the PHP benefit.
Further, for CY 2009, we revised the
regulations at § 410.43 to codify existing
basic PHP patient eligibility criteria and
added a reference to current physician
certification requirements at § 424.24.
We believed these changes would help
strengthen the PHP benefit by
conforming our regulations to our
longstanding policy (73 FR 68694
through 68695). Specifically, we revised
§ 410.43 to add a reference to existing
regulations at § 424.24(e) that require
that PHP services be furnished pursuant
to a physician certification and plan of
care. While the requirements at
§ 424.24(e) are not new, we included the
reference in § 410.43 to provide a more
complete description of our
expectations for PHP programs in one
regulatory section. We also revised
§ 410.43 to add the following patient
eligibility criteria and clarify that PHPs
are intended for patients who—(1)
require a minimum of 20 hours per
week of therapeutic services as
evidenced in their plan of care; (2) are
likely to benefit from a coordinated
program of services and require more
than isolated sessions of outpatient
treatment; (3) do not require 24-hour
care; (4) have an adequate support
system while not actively engaged in the
program; (5) have a mental health
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diagnosis; (6) are not judged to be
dangerous to self or others; and (7) have
the cognitive and emotional ability to
participate in the active treatment
process and can tolerate the intensity of
the PHP. We refer readers to section
X.C.2. of the CY 2009 OPPS/ASC final
rule with comment period (73 FR 68694
through 68695) for a full discussion of
this requirement.
Lastly, in the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68695 through 68697), we revised the
partial hospitalization benefit to include
several coding updates. We removed
three PHP billable codes (CPT codes
90899 (Unlisted psychiatric service or
procedure), 90853 (Group
psychotherapy other than of a multiplefamily group), and 90857 (Interactive
group psychotherapy)), and created two
new timed HCPCS codes (GO410 (Group
psychotherapy other than of a multiplefamily group, in a partial hospitalization
setting, approximately 45 to 50 minutes)
and G0411 (Interactive group
psychotherapy in a partial
hospitalization setting, approximately
45 to 50 minutes)). The elimination of
CPT code 90899 was a result of our
concerns about the type of services that
may be billed using an unlisted CPT
code when a more appropriate code may
be available that better describes the
services for which PHP payment may be
made. The decision to eliminate the two
group therapy CPT codes (90853 and
90857) and replace them with two new
parallel timed HCPCS G-codes (G–0410
and G–0411) was based on the need for
consistency. As most of the current PHP
codes already include time estimates,
we wanted to maintain consistency with
the existing HCPCS codes used in the
PHP by applying a time descriptor to the
group therapy codes. In addition to
these coding updates, we also decided
to eliminate CPT code 90849 (multifamily group psychotherapy) as a
billable PHP code because we believed
that CPT code 90849 focuses the service
on the needs of the family and not
specifically on the needs of the patient,
which is not consistent with the intent
of the statute that treatment in a PHP be
focused on the patient’s condition (73
FR 68696).
B. PHP APC Update for CY 2010
For the CY 2010 OPPS/ASC proposed
rule (74 FR 35356), we used CY 2008
claims data and computed median per
diem costs in the following three
categories: (1) All days; (2) days with 3
units of service; and (3) days with 4 or
more units of service. These updated
median per diem costs were computed
separately for CMHCs and hospitalbased PHPs and are shown in Table 50
below.
TABLE 50—PHP MEDIAN PER DIEM COSTS FOR CMHCS AND HOSPITAL–BASED PHPS, BY CATEGORY, BASED ON CY
2008 CLAIMS DATA
CMHCs
All Days ....................................................................................................................................................
Days with 3 units of service ....................................................................................................................
Days with 4 units or more units of service ..............................................................................................
Using CY 2008 data and the refined
methodology for computing PHP per
diem costs that we adopted in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66672), we
computed the median per diem cost
from all claims of $144. The data
indicate that CMHCs continue to
provide far fewer days with 4 or more
units of service (33 percent compared to
70 percent for hospital-based PHPs) and
that the CMHC median per diem cost for
4 or more units of service ($173) is
substantially lower than the comparable
data from hospital-based PHPs ($213).
The median per diem cost for claims
containing 4 or more units of service for
all PHP claims, regardless of site of
service, is $175. Medians for claims
containing 3 units of service are $129
for CMHCs, $149 for hospital-based
PHPs, and $131 for all PHP claims,
regardless of site of service.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35356), for CY 2010, we
proposed to continue to use the twotiered payment approach for PHP
services established in CY 2009. In
addition, for CY 2010, we proposed to
use only hospital-based PHP data to
develop the two PHP APC per diem
payment rates for the following reasons.
If we used combined CMHC and
hospital-based PHP data to develop the
Hospitalbased PHPs
$140
129
173
$200
149
213
Combined
$144
131
175
rates, the two per diem payment rates
would be reduced by approximately $26
for APC 0172 and $25 for APC 0173. We
are concerned about further reducing
both PHP APC per diem payment rates
without knowing the impact of the
policy and payment changes we made
in CY 2009. Because there is a 2-year
delay between data collection and
rulemaking, the changes we made in CY
2009 will not be reflected in the claims
data until next year when we are
developing the update for CY 2011. The
two proposed APCs median per diem
rates for PHP services were as follows:
TABLE 51—CY 2010 PROPOSED MEDIAN PER DIEM RATES FOR PHP SERVICES
Proposed median per diem
rate
Group title
0172 ...............................
0173 ...............................
dcolon on DSK2BSOYB1PROD with RULES2
Proposed APC
Level I Partial Hospitalization (3 services) ..............................................................................................
Level II Partial Hospitalization (4 or more services) ...............................................................................
In general, public commenters
supported the two-tiered PHP APC per
diem payment approach in the proposed
rule, the proposed CY 2010 payment
rates, and the use of hospital-based PHP
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data only for generating the PHP APC
payment rates.
Comment: A majority of the
commenters supported the proposed
PHP rates for CY 2010, as well as the
two-tiered PHP APC payment structure
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$149
213
(with high and low intensity rates).
Many of these commenters strongly
recommended that CMS use only
hospital-based PHP data to determine
the final rates. The commenters believed
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that hospital-based data are more
reliable, predictable, national in scope,
consistent, and stable, and that hospitalbased data are meeting the intent of the
PHP statute and CMS rules.
Several commenters urged CMS not to
combine the CMHC and hospital-based
PHP data to set the final CY 2010 PHP
payment rates. The commenters pointed
out that the volatility and significant
fluctuation of the CMHC costs and
changes in data since 2000 has
continued to place the reliability of the
CMHC data in doubt. One commenter
urged CMS to use PHP hospital-based
data only to set the rates because CMS
does not know the impact of the
comprehensive policy and payment
changes made to PHP services during
2009.
The commenters also recommended
that, if CMS were to change the
methodology to establish the per diem
payment rate in CY 2010 and beyond,
CMS adopt two additional APCs for
separate CMHCs PHP payment rates.
The commenter recommended
establishing site specific APCs for PHP
services where the hospital-based PHP
APCs for Level I (3 units of service) and
Level II (4 or more units of service)
would be established using hospital cost
data and CMHC-based PHP APCs for
Level I (3 units of service) and Level II
(4 or more units of service) would be
established using CMHC data. One
commenter pointed out that while the
aggregate number of PHP service
providers has remained relatively stable
over time, the number of hospital-based
PHPs has dropped by 16 percent, while
the number of CMHC PHPs has
increased by 53 percent (with the
majority of CMHCs located in Florida,
Louisiana, and Texas). The commenters
reported that 80 percent of the States
have two or more hospital-based
programs, and only 30 percent of States
have more than one CMHC.
Response: We appreciate the
commenters’ support for our proposals
on the two-tiered payment approach
and use of hospital-based PHP data only
to develop the CY 2010 payment rates.
As we continue to evaluate ways to
reflect CMHC costs in establishing PHP
future rates, we will take the
recommendation to establish sitespecific PHP APCs into consideration.
After consideration of the public
comments we received, we have
decided to retain the two-tiered
payment approach for CY 2010, using
hospital-based PHP data only.
Comment: Several commenters urged
CMS to propose an APC code or
payment rate for PHP claims for days
with fewer than 3 units of service or, at
a minimum, the commenters want CMS
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to suspend for medical review claims
with fewer than units of services per
day.
Response: We continue to believe that
days with 1 or 2 units of service are
inconsistent with a benefit designed as
a full-day program to substitute for
inpatient care. PHP is furnished in lieu
of an inpatient psychiatric
hospitalization and is intended to be a
highly structured and clinically intense
program, usually lasting most of the
day. We believe that 3 units of service
should be the minimum number of
services allowed in a PHP day because
a day with 1 or 2 units of service does
not meet the statutory intent of a PHP
program. Our intention was to provide
payment to cover days that consisted of
3 units of service only in certain limited
circumstances. Therefore, we believe
that 3 units of service are a minimum
threshold that permits unforeseen
circumstances, such as medical
appointments, while allowing payment,
but still maintains the integrity of a
comprehensive program. If there are
legitimate instances when 1 or 2 units
of service days are justified, the
provider has the option of appealing the
denial of payment for that day, as
specified in the Medicare Claims
Processing Manual (Pub. 100–04),
Chapter 29 and Chapter 30, Section
30.2.2.
Comment: One commenter stated that
the number of rural hospital-based PHPs
has declined during the CY 2003–2006
period and indicated that a study
conducted last year found that rural
areas are being hit with the loss of PHP
programs. A few commenters were
greatly relieved by the projection of an
increase in the reimbursement rate for
Level II PHP services. They believed
another cut in rates would jeopardize
the existence of the PHP benefit, reduce
the financial viability of PHPs, and
probably lead to closure of many PHPs,
thus affecting access to care for this
vulnerable population. In addition,
because hospital outpatient mental
health services paid under the OPPS are
capped at the PHP per diem payment
rate, many commenters were concerned
about overall access to outpatient
mental health treatment. The
commenters urged CMS to keep mental
health services available to all.
Response: We have established the
final CY 2010 payment rate based on
hospital-based PHP data, yielding an
increase in the median for days with 4
or more units of service compared to CY
2009 payment rates. This increase will
benefit all PHP programs, including
those in rural areas. The CY 2010
payment rates for Level I (3 units of
service) shows a decrease in CY 2010
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60557
compared to CY 2009. We believe using
the CMHC data would significantly
reduce the current rate and negatively
impact hospital-based PHPs and
CMHCs, resulting possibly in reduced
access to care. Because hospital-based
PHPs are geographically diverse,
whereas CMHCs are located in only a
few states, we are concerned that a
significant drop in the rate could result
in hospital-based PHPs closing and
leading to possible access problems. For
this reason, we are using hospital-based
PHP data only to calculate the CY 2010
median per diem payment rates.
Comment: One commenter expressed
concern that CMS’ data and analysis
regarding the median per diem costs for
PHP services have been and remain
fundamentally flawed. The commenter
recommended that CMS conduct further
research and, in particular, conduct
detailed provider-level research to better
understand the costs necessary to
deliver PHP services in hospital and
CMHC settings. The commenter
recommended the payment rate for PHP
services (APC 0173) be set at
approximately $325 per patient day and
no less than the CY 2007 payment rate
of $234.73.
Response: We base the PHP APC per
diem payment rates on providers’
charges reported on claims adjusted by
the providers’ CCRs. This approach is
consistent with the method used to
compute payment rates for other APCs
under the OPPS, except that, for PHPs
for which the unit of service is a day,
we sum the charges for a given day and
then determine the median cost of all
days. We expect that a provider’s
charges will reflect the level of services
provided, which has a relationship to
the cost of providing those services. In
Medicare cost reporting, the total
charges are to be reported along with the
provider’s cost. To the extent that a
provider is submitting bills that have
charges that do not directly relate to the
delivery or provision of services, its
CCRs will be unpredictable and would
distort the costs of the services
provided.
In developing the CY 2010 PHP APC
per diem payment rates, we excluded
days that have only 1 or 2 units of
service. In addition, we did not include
days where no payment was made to
avoid diluting the cost. To calculate the
Level I PHP APC payment rate, we used
days with 3 units of service, and to
calculate the Level II PHP APC payment
rate, we used days with 4 or more units
of service. We believe our methodology
accurately reflects the median cost of
providing these two levels of PHP
services. As discussed previously, we
made several refinements to our
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methodology for computing the per
diem costs that more accurately reflect
the per diem cost of providing PHP
services.
Comment: Many commenters stated
that cost report information for CMHCs
is not currently included in the
Healthcare Cost Report Information
System (HCRIS) and recommended that
CMS base its calculations only on the
cost report information that the agency
can verify directly and not on data
provided by the fiscal intermediaries or
MACs. The commenters believed that
CMS should calculate payment rates
using only cost data from those cost
reports currently in and accessible
through the HCRIS.
Response: We understand the
commenters concern about making
CMHC data available through the
HCRIS, and we are taking steps to make
the data available in the future. For CY
2010, we will use PHP hospital-based
data only to set the PHP APC payment
rates. The hospital-based PHP data are
based on cost report data currently in
and accessible through the HCRIS.
Comment: Several commenters
expressed concern that there are
additional services furnished by CMHCs
that are currently provided to PHP
patients for which the providers are not
reimbursed. The commenters pointed
out that the Substance Abuse and
Mental Health Services Administration
recognizes these additional services by
including payment for treatment of
mental illness, not just for substance
abuse treatment, and for costs for other
services, including locating housing.
The commenter included a list of
HCPCS H-codes as an example of
additional services as specified in Table
52 below.
TABLE 52—ADDITONAL HCPCS HCODES RECOMMENDED BY A COMMENTER FOR PAYMENT AS PHP
SERVICES
HCPCS Hcode
Description
H0001 ...........
Alcohol and/or drug assessment.
Behavioral health counseling
and therapy, per 15 minutes.
Alcohol and/or drug prevention problem identification
and referral service (e.g.,
student assistance and employee assistance programs), does not include
assessment.
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H0004 ...........
H0028 ...........
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TABLE 52—ADDITONAL HCPCS HCODES RECOMMENDED BY A COMMENTER FOR PAYMENT AS PHP
SERVICES—Continued
HCPCS Hcode
Description
H0029 ...........
Alcohol and/or drug prevention alternatives service
(services for populations
that exclude alcohol and
other drug use, e.g. alcohol
free social events).
Behavioral health hotline
service.
Mental health assessment, by
non-physician.
Mental health service plan development by non-physician.
Oral medication administration, direct observation.
Medication training and support, per 15 minutes.
Alcohol and/or other drug
abuse services, not otherwise specified.
Alcohol and/or drug screening.
Alcohol and/or drug services,
brief intervention, per 15
minutes.
Family assessment by licensed behavioral health
professional for state defined purposes.
Comprehensive multidisciplinary evaluation.
Comprehensive medication
services, per 15 minutes.
Crisis intervention service, per
15 minutes.
Skills training and development, per 15 minutes.
Psycho educational service,
per 15 minutes.
H0030 ...........
H0031 ...........
H0032 ...........
H0033 ...........
H0034 ...........
H0047 ...........
H0049 ...........
H0050 ...........
H1011 ...........
H2000 ...........
H2010 ...........
H2011 ...........
H2014 ...........
H2027 ...........
Response: Partial hospitalization
services are specifically defined in
section 1861(ff) of the Act and are a
Medicare benefit category. Because
there is no benefit category for
substance abuse programs, any such
program would have to meet
requirements established for PHPs,
including the requirements that a
physician certify that the patient would
otherwise require inpatient psychiatric
care in the absence of the partial
hospitalization services and that the
program provides active treatment
(section 1835(a)(2)(F) of the Act and 42
CFR 424.27(e)). PHP services involving
direct patient care costs are payable
under Medicare. The HCPCS H-codes
listed above are not payable by
Medicare. However, certain services for
substance abuse are payable under a
PHP because a PHP provides for patient
education, mental health assessment,
occupational therapy, and behavioral
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health treatment/services among other
services. For a complete list of services
covered under a PHP under Medicare,
we refer readers to the Medicare Claims
Processing Manual (Pub. 100–04),
Chapter 4, Section 260. Medicare does
not pay for services such as 12-step
programs. Many of the HCPCS H-codes
listed duplicate allowable PHP service
codes, for example, patient education
and training. However, the PHP service
codes generally are not defined in 15minute increments.
Comment: One commenter suggested
that CMS consider alternative
arrangements for partial hospitalization
and hospital outpatient services for the
future. The commenter suggested
removing PHP from the APC codes and
instead establish a separate payment
system (similar to home health) by
establishing a reasonable base rate for
PHP for Level II PHP services at a
slightly higher level (such as $220–$225
per day), annually adjusting the base
rate by a conservative inflation factor
such as the CPI, establishing quality
criteria to judge performance, and
dropping the payment level for Level I
PHP services so that only 4 or more
services are recognized for payment.
Response: Currently, the statute does
not provide for a separate payment
system for partial hospitalization
services. Therefore, a statutory change
would be required to establish an
independent payment system for PHPs.
Regarding the commenter’s
recommendation to establish quality
criteria, we agree that establishing
benchmarks and indicators would be
useful, and we encourage providers to
share that information with us. We
believe that creating a rate specific to
days with three services is consistent
with our policy to require CMHCs and
hospital-based PHPs to provide a
minimum of 3 units of service per day
in order to receive payment. Although
we do not expect Level I PHP service
days to be frequent, we do recognize
that there are times when a patient may
need a less intensive day of service.
Therefore, we continue to recognize the
need for a two-tiered payment system:
one payment for those less intensive
days with three services; and another
payment for those more intensive days
with four or more services.
Comment: A few commenters urged
CMS to find a way to strengthen the
integrity of the program by developing
and implementing standards of
participation. The commenters
recommended the implementation of
standards of care with emphasis on
quality of services and urged CMS to
develop conditions of participation that
would be a useful regulatory tool for
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PHP providers. The commenters
suggested that the development process
must include all providers and other
stakeholders. Several commenters
offered to work with CMS to reform and
improve the PHP by establishing
standards for quality of PHP services
provided; adopting CMHC facility-level
quality measures and a reporting
regime; and assisting with accreditation
and cost reporting reforms.
Response: We agree with the
commenters that standards of
participation is an area that should be
addressed, and we are exploring
proposing conditions for coverage for
CMHCs to establish minimum standards
for patient rights, physical environment,
staffing, and documentation
requirements. We believe that adding
conditions for coverage would
contribute to more consistency between
CMHCs and hospital-based PHPs.
Comment: One commenter suggested
that CMS use fiscal intermediaries and
MACs to work with hospitals and
CMHC providers to establish separate
PHP lines on their appropriate Medicare
cost reports to arrive at a CCR for PHPs
rather than the default psychiatric,
clinics, or overall outpatient CCR lines.
The commenter believed that,
nationally, the CCRs for the PHPs are
being understated by applying overall
CCRs and/or clinic CCRs and, thus,
penalizing the structured intensive
partial programs.
Response: We note that most hospitals
do not have a cost center for partial
hospitalization; therefore, we have used
the CCR as specific to PHP as possible.
As described earlier in section X.A. of
this final rule with comment period, for
CY 2008, we proposed and finalized two
refinements to the methodology for
computing the PHP median per diem
cost that we believe resulted in a more
accurate median per diem cost. The first
of the two CY 2008 refinements was a
remapping of 10 revenue codes-to-cost
centers for hospital-based PHP claims.
We believe that the CY 2008 refinement
to the mapping approach continues to
be the best method for assigning the
most appropriate cost center for
hospital-based PHP claims. For a
detailed explanation of the remapping
of revenue codes for hospital-based PHP
claims, we refer readers to the CY 2008
OPPS/ASC proposed rule (72 FR 42691
through 42692) and the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66671 through 66672).
In addition, we note that this
remapping refinement applies only to
hospital-based PHP claims and not to
CMHC claims. In the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68690), in response to commenters’
request that CMS apply the remapping
of revenue codes to cost centers to
CMHC claims, we stated that we cannot
apply the same mapping method to
CMHCs because PHP is the CMHCs’
only Medicare cost and CMHCs do not
have the same cost structure as
hospitals.
Comment: One commenter expressed
concern that the PHP benefit lacked
flexibility. The commenter believed that
the rigid guidelines for attendance of 5
plus days a week (20 hours) could create
excessive overutilization at times. The
commenter stated that it would be more
beneficial to restructure PHP to be a
more flexible, less costly, outcomebased system of care.
Response: Partial hospitalization is an
intensive outpatient program of
psychiatric services provided to patients
as an alternative to inpatient psychiatric
hospitalization or as a step down to
shorten an inpatient stay and transition
a patient to a less intensive level of care.
We understand the commenters’
concerns about the 20 hours per week
requirement with regard to scheduling
flexibility, but we were concerned that
if we reduce the minimum number of
hours lower than the current guideline,
the low end of the range will become
the new minimum. Therefore, instead of
reducing the number of hours a patient
needs in order to be eligible to receive
60559
the benefit, we clarified that the patient
eligibility requirement that patients
require 20 hours of therapeutic services
is evidenced in a patient’s plan of care
rather than in the actual hours of
therapeutic services a patient receives.
The intent of this eligibility requirement
is that, for most weeks, we expect
attendance conforming to the patient’s
plan of care. We recognize that there
may be times at the beginning (or end)
of a patient’s transition into (or out of)
a PHP where the patient may not receive
20 hours of therapeutic services.
Comment: One commenter expressed
concern about the proposed cuts for
Partial Hospitalization (APC 0173) and
the impact the cuts will have on its
hospital and community. The
commenter reviewed the history of APC
payment rates for these services and
noted the trend of the payment rates
decreasing over the past 7 years. The
commenter pointed out that it
experienced a significant increase in the
staff salary and benefit costs. The
commenter expressed concern that the
decreasing payment rate and increasing
expenses will make it difficult for the
hospital to sustain these services and
access to care for Medicare beneficiaries
could worsen.
Response: Hospital costs per day for
PHP services for APC 0173 have
remained in the range of $200—$225 for
CY 2000 through CY 2010. This is the
reason we have decided to use hospitalbased PHP data only for computing the
CY 2010 PHP payment rates, as this
approach will lead to payment stability
for CY 2010.
In summary, after consideration of the
public comments we received, we are
adopting as final our CY 2010 proposal
to retain the two-tiered payment
approach for PHP services and to use
only hospital-based PHP data in
computing the payment. The two
updated PHP APC per diem median
costs that we are finalizing for CY 2010
are shown in Table 53 below.
TABLE 53—CY 2010 PHP APC PER DIEM MEDIAN COSTS
Median per
diem costs
Group title
0172 .........
0173 .........
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APC
Level I Partial Hospitalization (3 services) ........................................................................................................................
Level II Partial Hospitalization (4 or more services) .........................................................................................................
C. Separate Threshold for Outlier
Payments to CMHCs
In the November 7, 2003 final rule
with comment period (68 FR 63469), we
indicated that, given the difference in
PHP charges between hospitals and
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CMHCs, we did not believe it was
appropriate to make outlier payments to
CMHCs using the outlier percentage
target amount and threshold established
for hospitals. Prior to that time, there
was a significant difference in the
amount of outlier payments made to
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$148
209
hospitals and CMHCs for PHP services.
In addition, further analysis indicated
that using the same OPPS outlier
threshold for both hospitals and CMHCs
did not limit outlier payments to high
cost cases and resulted in excessive
outlier payments to CMHCs. Therefore,
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beginning in CY 2004, we established a
separate outlier threshold for CMHCs.
The separate outlier threshold for
CMHCs has resulted in more
commensurate outlier payments.
In CY 2004, the separate outlier
threshold for CMHCs resulted in $1.8
million in outlier payments to CMHCs.
In CY 2005, the separate outlier
threshold for CMHCs resulted in $0.5
million in outlier payments to CMHCs.
In contrast, in CY 2003, more than $30
million was paid to CMHCs in outlier
payments. We believe this difference in
outlier payments indicates that the
separate outlier threshold for CMHCs
has been successful in keeping outlier
payments to CMHCs in line with the
percentage of OPPS payments made to
CMHCs. Table 54 below includes a
listing of the outlier target amounts and
the portion of the target amount
allocated to CMHCs for PHP outliers for
CYs 2004 through 2009.
TABLE 54—OUTLIER TARGET AMOUNT
PERCENTAGES AND PORTIONS ALLOCATED TO CMHCS FOR PHP
OUTLIERS—CY 2004 THROUGH CY
2007
Outlier target amount
percentage
Year
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CY
CY
CY
CY
CY
CY
2004
2005
2006
2007
2008
2009
........
........
........
........
........
........
Portion of target amount allocated to
CMHCs for
PHP outliers
(in percent)
2.0
2.0
1.0
1.0
1.0
1.0
0.5
0.6
0.6
0.15
0.02
0.12
As noted in section II.F. of the CY
2010 OPPS/ASC proposed rule (74 FR
35296), for CY 2010, we proposed to
continue our policy of identifying 1.0
percent of the aggregate total payments
under the OPPS for outlier payments.
We proposed that a portion of that 1.0
percent, an amount equal to 0.02
percent of outlier payments (or 0.0002
percent of total OPPS payments), would
be allocated to CMHCs for PHP outliers.
As discussed in section II.F. of the CY
2010 OPPS/ASC proposed rule (74 FR
35296), we proposed to set a dollar
threshold in addition to an APC
multiplier threshold for OPPS outlier
payments. However, because the PHP
APC is the only APC for which CMHCs
may receive payment under the OPPS,
we would not expect to redirect outlier
payments by imposing a dollar
threshold. Therefore, we did not
propose to set a dollar threshold for
CMHC outliers. As noted in section II.F.
of the CY 2010 OPPS/ASC proposed
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rule (74 FR 35296), we proposed to set
the outlier threshold for CMHCs for CY
2010 at 3.40 times the APC payment
amount and the CY 2010 outlier
payment percentage applicable to costs
in excess of the threshold at 50 percent.
Specifically, we proposed that if a
CMHC’s cost for partial hospitalization
services, paid under either APC 0172 or
APC 0173, exceeds 3.40 times the
payment for APC 0173, the outlier
payment would be calculated as 50
percent of the amount by which the cost
exceeds 3.40 times the APC 0173
payment rate.
Comment: Several commenters
suggested that instead of creating
separate threshold for outlier payments
to CMHCs, it would be beneficial to
eliminate the outlier payment and use
those funds allocated to outlier
payments to bolster payments for
services provided by CMHCs.
Response: We note that the Secretary
shall provide an outlier payment for
each covered OPD service (or group of
services) in accordance with the
requirements set forth in
section1833(t)(5) of the Act and the
applicable regulations. Because CMHCs
are a provider of PHP services, outlier
payments must be provided for them in
accordance with the statute. We note
that eliminating outlier payments for
CMHCs would not result in an increase
in the PHP rate, but rather would
provide additional funding for hospital
outlier payments for all HOPD services.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal to set
a separate outlier threshold for CMHCs.
As discussed in section II.F. of this final
rule with comment period, using more
recent data for this final rule with
comment period, we set the target for
hospital outpatient outlier payments at
1.0 percent of total estimated OPPS
payments. We allocated a portion of that
1.0 percent, an amount equal to 0.03
percent of outlier payments and 0.0003
percent of total estimated OPPS
payments to CMHCs for PHP outliers.
For CY 2010, as proposed, we are setting
the outlier threshold at 3.40 multiplied
by the APC amount and CY 2010 outlier
percentage applicable to costs in excess
of the threshold at 50 percent.
XI. Procedures That Will Be Paid Only
as Inpatient Procedures
A. Background
Section 1833(t)(1)(B)(i) of the Act
gives the Secretary broad authority to
determine the services to be covered
and paid for under the OPPS. Before
implementation of the OPPS in August
2000, Medicare paid reasonable costs for
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services provided in the HOPD. The
claims submitted were subject to
medical review by the fiscal
intermediaries to determine the
appropriateness of providing certain
services in the outpatient setting. We
did not specify in our regulations those
services that were appropriate to
provide only in the inpatient setting and
that, therefore, should be payable only
when provided in that setting.
In the April 7, 2000 final rule with
comment period (65 FR 18455), we
identified procedures that are typically
provided only in an inpatient setting
and, therefore, would not be paid by
Medicare under the OPPS. These
procedures comprise what is referred to
as the ‘‘inpatient list.’’ The inpatient list
specifies those services for which the
hospital will be paid only when
provided in the inpatient setting
because of the nature of the procedure,
the underlying physical condition of the
patient, or the need for at least 24 hours
of postoperative recovery time or
monitoring before the patient can be
safely discharged. As we discussed in
that rule and in the November 30, 2001
final rule with comment period (66 FR
59856), we may use any of a number of
criteria we have specified when
reviewing procedures to determine
whether or not they should be removed
from the inpatient list and assigned to
an APC group for payment under the
OPPS when provided in the hospital
outpatient setting. Those criteria
include the following:
• Most outpatient departments are
equipped to provide the services to the
Medicare population.
• The simplest procedure described
by the code may be performed in most
outpatient departments.
• The procedure is related to codes
that we have already removed from the
inpatient list.
In the November 1, 2002 final rule
with comment period (67 FR 66741), we
added the following criteria for use in
reviewing procedures to determine
whether they should be removed from
the inpatient list and assigned to an
APC group for payment under the
OPPS:
• A determination is made that the
procedure is being performed in
numerous hospitals on an outpatient
basis; or
• A determination is made that the
procedure can be appropriately and
safely performed in an ASC, and is on
the list of approved ASC procedures or
has been proposed by us for addition to
the ASC list.
The list of codes that we proposed to
be paid by Medicare in CY 2010 only as
inpatient procedures was included as
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Addendum E to the CY 2010 OPPS/ASC
proposed rule.
B. Changes to the Inpatient List
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35358), we proposed to use
for the CY 2010 OPPS the same
methodology as described in the
November 15, 2004 final rule with
comment period (69 FR 65835) to
identify a subset of procedures currently
on the inpatient list that are being
performed a significant amount of the
time on an outpatient basis. Using this
methodology, we identified three
procedures that met the criteria for
potential removal from the inpatient
list. We then clinically reviewed these
three potential procedures for possible
removal from the inpatient list and
found them to be appropriate candidates
for removal from the inpatient list.
During the February 2009 meeting of the
APC Panel, we solicited the APC Panel’s
input on the appropriateness of
removing the following three
procedures from the CY 2010 inpatient
list: CPT codes 21256 (Reconstruction of
orbit with osteotomies (extracranial) and
with bone grafts (includes obtaining
autografts) (eg, micro-ophthalmia));
27179 (Open treatment of slipped
femoral epiphysis; osteoplasty of
femoral neck (Heyman type procedure));
and 51060 (Transvesical
ureterolithotomy).
In addition to presenting to the APC
Panel the three procedures above, we
also presented utilization data for the
first 9 months of CY 2008 for two other
specific procedures, in response to a
request by the APC Panel from the
March 2008 meeting: CPT code 20660
(Application of cranial tongs, caliper or
stereotactic frame, including removal
(separate procedure)), a procedure that
we removed from the inpatient list for
CY 2009; and CPT code 64818
(Sympathectomy, lumbar), a procedure
that we maintained on the inpatient list
for CY 2009.
Following the discussion at the
February 2009 meeting, the APC Panel
recommended that CMS remove from
the CY 2010 inpatient list CPT codes
21256, 27179, and 51060. The APC
Panel also recommended that CPT code
64818 remain on the inpatient list for
CY 2010. The APC Panel made no
recommendation regarding CPT code
20660.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35358), we proposed to
accept the APC Panel’s
recommendations to remove the
procedures described by CPT codes
21256, 27179, and 51060 from the
inpatient list because we agree with the
APC Panel that the procedures may be
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appropriately provided as hospital
outpatient procedures for some
Medicare beneficiaries. We also
proposed to retain CPT code 64818 on
the inpatient list because we agree with
the APC Panel that this procedure
should be provided to Medicare
beneficiaries only in the hospital
inpatient setting. The three procedures
we proposed to remove from the
inpatient list for CY 2010 and their CPT
codes, long descriptors, and proposed
APC assignments were displayed in
Table 37 of the CY 2010 OPPS/ASC
proposed rule (74 FR 35358).
Comment: Several commenters
supported the proposal to remove the
procedures reported by CPT codes
21256, 27179, and 51060 from the
inpatient list, one commenter opposed
removing the procedure coded by CPT
code 51060, and one commenter
expressed concern about removing any
of the three procedures proposed for
removal from the inpatient list. The
commenter that requested that CMS
retain CPT code 51060 on the inpatient
list reported that the procedure is an
open surgical procedure that is much
more extensive than a hernia repair. In
that commenter’s experience, patients
who undergo this surgery are not able to
go home the same day as surgery
because most require parenteral pain
medication and ongoing monitoring of
the pain, and of possible ileus or
hematuria. Another commenter
provided no rationale for objecting to
the removal of the three procedures as
proposed by CMS beyond stating that if
CMS does not eliminate the entire
inpatient list, then the commenter
would have serious concerns about
removing the three procedures.
Response: We appreciate the
commenters’ support of our proposal. In
response to the commenters who
expressed concern about removing one
or more of the three procedures from the
inpatient list, we reevaluated the three
procedures using more recent utilization
data and further clinical review by CMS
medical advisors. As a result of that
reevaluation, we remain convinced that
all three procedures may be safely
performed in the HOPD for some
Medicare beneficiaries. As we have
indicated previously, the removal of a
procedure from the inpatient list does
not signify a determination by CMS that
the procedure should be performed in
the HOPD for all beneficiaries. The
removal only indicated that CMS is
relying on the individual beneficiary’s
surgeon to advise the most appropriate
setting for the procedure based on the
beneficiary’s medical condition. In fact,
as evidenced by the utilization data over
the years, most of the newly-removed
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60561
procedures from the inpatient list
continue to be commonly provided in
the inpatient setting after they are
removed from the list. The removal of
a procedure from the inpatient list
simply is recognition that there is
evidence that the procedure may be
safely performed for some beneficiaries
who are outpatients and represents no
directive about whether the inpatient
setting or the outpatient setting is more
appropriate in any particular
circumstance.
Comment: Several commenters
requested the removal of additional
procedures from the inpatient list.
Although the commenters requested
that CMS remove a total of 20 additional
procedures from the inpatient list, 4 of
the requested codes were not on the
proposed CY 2010 inpatient list. All of
the codes requested for removal are
displayed in Table 55 below.
As identified by asterisks, 11 of the
procedures displayed in the chart below
were submitted by one commenter
representing a group of hospitals. This
commenter stated that each of the
procedures requested for removal from
the inpatient list was carefully reviewed
and could be safely provided to
Medicare beneficiaries in the HOPD.
The commenter reported that research
and investigation indicated that clinical
criteria sets such as the Milliman Care
Guidelines support the safe provision of
the 11 procedures in outpatient settings.
In addition, the commenter stated that
the group’s hospitals have physicians
providing the procedures safely in the
outpatient setting for non-Medicare
patients who are in the same age group
as the Medicare population.
TABLE 55—ADDITIONAL PROCEDURES
REQUESTED BY COMMENTERS FOR
REMOVAL FROM THE INPATIENT LIST
FOR CY 2010
CY 2009
HCPCS
code
CY 2009 short
descriptor
Proposed
CY 2010 SI
01402 .....
Anesth, knee
arthroplasty.
Neck spine fusion
Neck spine fusion
Additional spinal
fusion.
Apply spine prosth
device.
Total knee
arthroplasty.
Amputation thru
metatarsal.
Thoracoscopy,
surgical.
Insert hepatic
shunt (tips).
Transcath stent,
cca w/eps.
C
22548 .....
*22554 ....
*22585 ....
*22851 ....
27447 .....
28805 .....
*32662 ....
*37182 ....
*37215 ....
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C
C
C
T
C
C
C
C
C
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Comment: Many commenters
TABLE 55—ADDITIONAL PROCEDURES
REQUESTED BY COMMENTERS FOR suggested that CMS eliminate the
REMOVAL FROM THE INPATIENT LIST inpatient list. They believed that each
patient’s status should be determined by
FOR CY 2010—Continued
CY 2009
HCPCS
code
CY 2009 short
descriptor
Proposed
CY 2010 SI
*44950 ....
44955 .....
Appendectomy .....
Appendectomy,
add-on.
Appendectomy .....
Laparo radical
prostatectomy.
Explore parathyroid glands.
Removal spinal
lamina.
Neck spine disk
surgery.
Neck spine disk
surgery.
Excise intraspinal
lesion.
Nervous system
surgery.
C
C
44960 .....
55866 .....
*60505 ....
*63047 ....
63075 .....
*63076 ....
*63267 ....
64999 .....
C
C
C
T
T
C
C
T
dcolon on DSK2BSOYB1PROD with RULES2
* Submitted by commenter representing a
group of hospitals.
Response: In response to the
commenters’ requests, we reviewed
utilization and clinical information for
each of the procedures suggested for
removal from the inpatient list. Of the
16 procedures reviewed (those with
status indicator ‘‘C’’ in the chart above)
our medical advisors agreed with the
commenters that it would be
appropriate to remove 5 of them from
the inpatient list. Thus, for CY 2010, we
are removing from the inpatient list the
procedures reported by CPT codes
28805 (Amputation, foot;
transmetatarsal); 37215 (Transcatheter
placement of intravascular stent(s),
cervical carotid artery, percutaneous;
with distal embolic protection); 44950
(Appendectomy); 44955
(Appendectomy; when done for
indicated purpose at time of other major
procedure (not as separate procedure)
(List separately in addition to code for
primary procedure)); and 63076
(Discectomy, anterior, with
decompression of spinal cord and/or
nerve root(s), including
osteophytectomy; cervical, each
additional interspace (List separately in
addition to code for primary
procedure)). These procedures and the
APCs to which they are assigned for CY
2010 are displayed in Table 56 below.
The clinical and utilization data for
the other 11 procedures did not support
the appropriateness of providing the
procedures to Medicare beneficiaries in
the HOPD. We believe that Medicare
beneficiaries who undergo any of these
11 procedures should do so only as
inpatients.
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the physician who can establish the
most appropriate care plan for the
individual. The commenters pointed out
the many safety provisions that are met
by hospitals participating in the
Medicare program as evidence that
hospitals would provide care safely and
appropriately.
A few of the commenters stated that
the inconsistency between the Medicare
payment policies for hospitals and
physicians of allowing physicians to
receive full payment for inpatient
procedures that are performed on
Medicare beneficiaries in the HOPD
who are not inpatients, but denying
hospitals payment for those same
procedures, gives physicians little
incentive to avoid providing inpatient
procedures to Medicare beneficiaries
who are outpatients. Several
commenters suggested that if CMS
maintains the inpatient list, the
associated payment restrictions be
applied consistently to both hospitals
and physicians in order to promote a
collaborative effort in documentation
and clinical care plans.
One commenter stated that the
inpatient list, which requires that
Medicare beneficiaries be handled
differently than the rest of the patient
population in some circumstances,
creates chaos for the physicians and
hospitals who are trying to apply
consistent clinical criteria to determine
appropriate levels of care for all of their
patients.
Many of the commenters argued that
there are a variety of circumstances that
result in procedures on the inpatient list
being performed without an inpatient
admission and that hospitals should not
be held accountable for those situations.
For example, they explained that
sometimes during the intraoperative
period, due to clinical circumstances,
the surgeon performs a procedure that is
on the inpatient list in addition to, or
rather than, the procedure that was
planned.
Finally, the commenters believed that
the inpatient list penalizes hospitals
unfairly and suggested that if CMS is
unwilling to eliminate the inpatient list,
it consider developing an appeals
process to address circumstances in
which payment for a service provided
on an outpatient basis is denied due to
its presence on the inpatient list. The
commenters believed that the appeal
would give the hospital the opportunity
to submit documentation on the
physician’s intent, the patient’s clinical
condition, and the circumstances that
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enabled the patient to be sent home
safely without an inpatient stay.
Response: While we understand the
commenters’ reasons for advocating the
elimination of the inpatient list, we
continue to believe that the inpatient
list serves an important purpose in
identifying procedures that cannot be
safely and effectively provided to
Medicare beneficiaries in the HOPD. We
are concerned that the elimination of
the inpatient list could result in unsafe
or prolonged care in hospital outpatient
departments for Medicare beneficiaries.
Therefore, we are not discontinuing our
use of the inpatient list at this time.
Although the commenters suggested
that we apply the same payment
restrictions to physicians and hospitals
when inpatient procedures are
performed inappropriately, payment for
physicians’ services are outside of the
scope of OPPS payment policy and of
this OPPS/ASC final rule with comment
period. We continue to believe that it is
very important for hospitals to educate
physicians on Medicare services
covered under the OPPS to avoid
inadvertently providing services in a
hospital outpatient setting that only are
covered during an inpatient stay.
We also are concerned about the
potential results of eliminating the
inpatient list on Medicare beneficiary
liability. For instance, we are concerned
that, without the inpatient list, Medicare
beneficiaries could experience longer
stays in HOPDs after some procedures.
The APC Panel has discussed its
concern about these long stays that
frequently exceed 24 hours. Moreover,
the financial liability for OPPS
copayments for complex surgical
procedures and long periods of care in
the HOPD and coverage of items such as
usually self-administered drugs differs
significantly from a beneficiary’s
inpatient cost-sharing responsibilities
and coverage, and the beneficiary may
incur higher out-of-pocket costs for
prolonged outpatient encounters than
for an inpatient stay for the same
surgical intervention.
We continue to encourage physicians’
awareness of the implications for
Medicare beneficiaries and hospitals of
performing inpatient list procedures in
the HOPD on beneficiaries who are not
inpatients. We do not plan to adopt a
specific appeals process for claims
related to inpatient list procedures
performed in the HOPD at this time. The
existing processes established for a
beneficiary or a provider to appeal a
specific claim remain in effect.
Comment: One commenter suggested
that CMS implement a method to
identify scheduled outpatient
procedures that become, through
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intraoperative circumstances, inpatient
procedures. The commenter asserted
that, due to hospital billing practices,
hospital coding staff do not know until
well after the surgery is completed that
an unscheduled inpatient procedure
was performed on an outpatient who
was not admitted as an inpatient. The
commenter suggested that CMS
implement a HCPCS modifier that the
hospital could append to the inpatient
procedure on the claim and that
payment for the claim could be made at
the same rate as those coded with the
–CA modifier (APC 0375 (Ancillary
Outpatient Services When Patient
Expires)).
Response: While we appreciate the
commenter’s suggestion for addressing
circumstances when unplanned
inpatient list procedures are performed
during operative sessions where
outpatient surgical procedures were
planned, we do not believe there is a
need for a modifier to identify those
situations. We continue to believe that
the inpatient list procedures are not
appropriate for performance on
Medicare beneficiaries in the HOPD
and, therefore, we expect that when
such a procedure is performed, the
beneficiary would be admitted as an
inpatient.
We established payment for ancillary
services reported in association with an
inpatient procedure to which the –CA
modifier is appended in order to
provide payment to hospitals for
services furnished in those rare cases in
which procedures on the inpatient list
are performed to resuscitate or stabilize
a patient (whose status is that of an
outpatient) with an emergent, lifethreatening condition, and the patient
dies before being admitted as an
inpatient. In these situations, hospitals
are unable to admit the patients as
inpatients. In the circumstances
described by the commenter, we see no
insurmountable hospital barriers to
admitting the patients as inpatients of
the hospital and do not believe it would
be appropriate to provide payment
(through APC 0375) for a mix of surgical
procedures provided to patients who
survive at the rate developed
specifically to pay for the ancillary
services furnished in association with
procedures reported with the –CA
modifier when a patient dies prior to
admission as an inpatient. The
calculation of the payment rate for APC
0375 is discussed in detail in section
II.A.2.d.(7) of this final rule with
comment period.
We understand hospitals’ dilemma
when the decision is made
intraoperatively to perform an
unscheduled procedure. However, we
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continue to believe that it is important
for hospitals to educate physicians on
Medicare services paid under the OPPS
to avoid inadvertently providing
services in a hospital outpatient setting
that would be paid only during an
inpatient stay because we believe that
the HOPD is not an appropriate site of
service for inpatient list procedures.
Comment: Another commenter
recommended that CMS expand the use
of the –CA modifier to allow payments
to the hospitals for performance of
procedures on the inpatient list that
must be performed to resuscitate or
stabilize an outpatient with an
emergency, life-threatening condition,
but the patient is stabilized medically
and transferred to another acute care
hospital for admission. In other words,
the commenter added, the patient is
never admitted to the hospital where the
inpatient list procedure was performed.
Response: We established the –CA
modifier policy to provide payment to
hospitals for services provided in the
specific and rare situations in which
procedures on the inpatient list are
performed in the HOPD to resuscitate or
stabilize a patient (whose status is that
of an outpatient) with an emergent, lifethreatening condition, and the patient
dies before being admitted as an
inpatient, not as a method for hospitals
to recoup costs incurred when inpatient
procedures are performed
inappropriately on a Medicare
beneficiary in the HOPD.
We see no rationale for allowing
hospitals to report the –CA modifier for
any circumstances other than those for
which it was created. In the scenario
described by the commenter, there is no
evidence of the hospital’s
insurmountable barriers to admitting the
patient, a criterion for use of the –CA
modifier. In addition, we are not
convinced that there is a need for a
modifier to describe these rare events.
We also do not believe it would be
appropriate to provide payment at the
rate developed specifically to pay for
the ancillary services furnished in
association with procedures reported
with the –CA modifier when a patient
dies prior to admission as an inpatient
(APC 0375), for a mix of surgical
procedures provided to patients who
survive. The calculation of the payment
rate for APC 0375 is discussed in detail
in section II.A.2.d.(7) of this final rule
with comment period.
Comment: One commenter suggested
that CMS may lack information on the
types of inpatient procedures that are
performed for beneficiaries who are
outpatients because those claims are
returned to the provider by the I/OCE,
thereby preventing CMS from capturing
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60563
the unpaid services in its claims data.
To address this situation, the
commenter recommended that CMS
modify the I/OCE so that claims for
inpatient procedures provided on an
outpatient basis could be processed as
not payable rather than returned to the
provider. The commenter believed that
this modification would enable CMS to
gather claims data on these procedures
and to see how many and what types of
procedures physicians believe are
appropriate for performance in the
HOPD. The claims data also would
provide CMS information about the
hospital resources expended to care for
these Medicare beneficiaries. In
addition, the commenter suggested that
CMS could share the data with the APC
Panel for discussion and review in
support of their evaluations of which
procedures may appropriately be
removed from the inpatient list.
Response: We believe that our
outpatient claims data include the
claims for inpatient procedures that are
performed on Medicare beneficiaries
who are outpatients. As would be
expected, the volume for these
nonpayable procedures is low compared
to the number of payable outpatient
claims, but we believe that the claims
hospitals submit are available to us for
examination in our OPPS claims data
each year.
The I/OCE logic does not result in
claims for inpatient procedures being
returned to the provider. Rather, once
the inpatient procedure is identified, it
is line-item denied and then, with very
few exceptions (for example, claims
with the –CA modifier and an
indication that the beneficiary expired),
it assigns line-item edits to result in
payment denial for each of the other
services on the claim because these
services were furnished on the same day
as the inpatient procedure. A full
description of the I/OCE logic and edits
is available on the CMS Web site at:
https://www.cms.hhs.gov/
OutpatientCodeEdit/.
After consideration of the public
comments we received, we are
finalizing our proposal to remove the
procedures reported by CPT codes
21256, 27179, and 51060 from the
inpatient list. We also are removing five
additional procedures that public
commenters requested be removed from
the inpatient list. These procedures are
reported by CPT codes 28805
(Amputation, foot; transmetatarsal);
37215 (Transcatheter placement of
intravascular stent(s), cervical carotid
artery, percutaneous; with distal
embolic protection); 44950
(Appendectomy); 44955
(Appendectomy; when done for
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indicated purpose at time of other major
procedure (not as separate procedure)
(List separately in addition to code for
primary procedure)); and 63076
(Discectomy, anterior, with
decompression of spinal cord and/or
nerve root(s), including
osteophytectomy; cervical, each
additional interspace (List separately in
addition to code for primary
procedure)). The final eight procedures
we are removing from the inpatient list
for CY 2010 and their CPT codes, long
descriptors, and final APC assignments
are displayed in Table 56 below.
TABLE 56—PROCEDURES REMOVED FROM THE INPATIENT LIST AND THEIR FINAL APC ASSIGNMENTS FOR CY 2010
Final CY 2010
APC assignment
CY 2010 HCPCS
Code
CY 2010 long descriptor
21256 .........................
Reconstruction of orbit with osteotomies (extracranial) and with bone grafts (includes
obtaining autografts) (eg, micro-ophthalmia).
Open treatment of slipped femoral epiphysis; osteoplasty of femoral neck (Heyman
type procedure).
Amputation, foot; transmetatarsal ....................................................................................
Transcatheter placement of intravascular stent(s), cervical carotid artery,
percutaneous; with distal embolic protection.
Appendectomy .................................................................................................................
Appendectomy; when done for indicated purpose at time of other major procedure
(not as separate procedure) (List separately in addition to code for primary procedure).
Transvesical ureterolithotomy ..........................................................................................
Discectomy, anterior, with decompression of spinal cord and/or nerve root(s), including osteophytectomy; cervical, each additional interspace (List separately in addition to code for primary procedure).
27179 .........................
28805 .........................
37215 .........................
44950 .........................
44955 .........................
51060 .........................
63076 .........................
XII. OPPS Nonrecurring Technical and
Policy Changes and Clarifications
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A. Kidney Disease Education Services
1. Background
Section 152(b) of Public Law 110–275
(MIPPA) amended section 1861(s)(2) of
the Act by adding a new subsection (EE)
to provide for coverage of kidney
disease education (KDE) services as a
Medicare Part B benefit for Medicare
beneficiaries diagnosed with stage IV
chronic kidney disease (CKD) who,
according to accepted clinical
guidelines identified by the Secretary,
will require dialysis or a kidney
transplant, effective for services
furnished on or after January 1, 2010.
Section 152(b) also added a new
subsection (ggg) to section 1861 of the
Act to define ‘‘kidney disease education
services’’ and to specify who may
furnish these services as a ‘‘qualified
person.’’ Section 1861(ggg)(2)(A)(i) of
the Act, as added by section 152(b) of
Public Law 110–275, defines a qualified
person as a physician (as defined in
section 1861(r)(1) of the Act); or a
physician assistant, nurse practitioner,
or clinical nurse specialist (as defined in
section 1861(aa)(5) of the Act) who
furnishes services for which payment
may be made under the fee schedule
established under section 1848 of the
Act. Section 1861(ggg)(2)(A)(ii) of the
Act also defines a qualified person as a
‘‘provider of services located in a rural
area (as defined in section 1886(d)(2)(D)
[of the Act]).’’ The definition of a
‘‘qualified person’’ for this benefit
includes certain rural providers of
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services, such as hospitals, critical
access hospitals (CAHs), skilled nursing
facilities (SNFs), home health agencies
(HHAs), comprehensive outpatient
rehabilitation facilities (CORFs), and
hospices. Section 1861(ggg)(2)(B) of the
Act provides that a qualified person
does not include a provider of services
(other than a provider of services
described in section 1861(ggg)(2)(A)(ii))
or a renal dialysis facility.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35358), we proposed to
implement the provisions of section
1861(s)(2)(EE) and 1861(ggg) of the Act,
as added by section 152(b) of Pub. L.
110–275, mainly through the June 2009
CY 2010 MPFS proposed rule (CMS–
1413–P; Medicare Program; Payment
Policies under the Physician Fee
Schedule and Other Revisions to Part B
for CY 2010), hereinafter referred to as
the CY 2010 MPFS proposed rule.
Specifically, in section II.G.10. of the CY
2010 MPFS proposed rule (74 FR
33617), we proposed to define the
Medicare coverage criteria that would
be applicable to KDE services and who
may provide these services (that is, a
‘‘qualified person’’), consistent with the
provisions of sections 1861(s)(2)(EE)
and 1861(ggg) of the Act. In that
proposed rule, we also proposed to
define a provider of services in a rural
area as defined in section 1886(d)(2)(D)
of the Act as a hospital, CAH, SNF,
CORF, HHA, or hospice that is
physically located in a rural area as
defined in § 412.64(b)(ii)(C) of the
regulations or a hospital or CAH that is
reclassified from urban to rural status
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Final CY 2010
status indicator
0256
T
0052
T
0055
0229
T
T
0153
0153
T
T
0163
0208
T
T
pursuant to section 1886(d)(8)(E) of the
Act, as defined in § 412.103 of the
regulations. According to the proposal
included in the CY 2010 MPFS
proposed rule, a hospital, CAH, SNF,
CORF, HHA, or hospice would not be
considered to be a qualified person if
the facility providing KDE services is
located outside of a rural area unless the
service is furnished in a hospital or
CAH that has reclassified from urban to
rural status under § 412.103.
In addition, in the CY 2010 MPFS
proposed rule (74 FR 33614), consistent
with the provisions of section 1861(ggg)
of the Act, we proposed a payment
amount for KDE services furnished by a
‘‘qualified person.’’ Specifically, we
proposed to establish two new Level II
HCPCS G-codes to describe KDE
services and to specify the associated
relative value units (RVUs) under the
MPFS for payment for these codes.
We instructed individuals who
wished to comment on the proposed
coverage criteria for KDE services under
section 1861(ggg) of the Act, including
the definition of a ‘‘qualified person,’’
the proposed HCPCS G-codes, and the
proposed RVUs for KDE services to
submit their comments to CMS in
response to the CY 2010 MPFS
proposed rule that we describe above.
Below we discuss our proposed
payment for KDE services furnished by
providers of services located in a rural
area. We instructed individuals who
wished to submit public comments
relating to payment for KDE services
furnished by providers of services
located in a rural area to submit those
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comments in response to the CY 2010
OPPS/ASC proposed rule.
2. Payment for Services Furnished by
Providers of Services Located in a Rural
Area
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35358), we proposed to pay
under the MPFS for KDE services under
section 1861(ggg) of the Act when the
services are furnished by a qualified
person that is a hospital, CAH, SNF,
CORF, HHA, or hospice that is located
in a rural area as defined in section
1886(d)(2)(D) of the Act or a hospital or
CAH that is reclassified from urban to
rural status pursuant to section
1886(d)(8)(E) of the Act, as defined in
§ 412.103 of the regulations. Section
152(b) of Public Law 110–275 amended
section 1848(j)(3) of the Act to add
section 1861(s)(2)(EE) (kidney disease
education services) to the list of
subsections of section 1861(s)(2) of the
Act, which are included in the
definition of physician services in
section 1848(j)(3) of the Act. However,
the statute does not specify the payment
methodology for KDE services furnished
by providers of these services located in
rural areas.
Given that the statute provides the
Secretary with the flexibility to pay all
qualified persons under the MPFS and
there is precedent for paying both
diabetes self-management training and
medical nutrition therapy services
(which we believe KDE is similar to in
terms of resource use, specifically
staffing and infrastructure) under the
MPFS, we proposed to pay all qualified
persons for KDE services under the
MPFS. This single payment
methodology would apply to all
qualified persons, including providers
of services in a rural area as we
proposed to define such providers in the
CY 2010 MPFS proposed rule.
The language in section 1861(ggg) of
the Act that defines KDE services is
similar to the language in section
1861(qq) of the Act that defines
‘‘diabetes self-management training
services,’’ which is a medical or other
health service under section
1861(s)(2)(S) of the Act. In addition, the
language in section 1861(ggg) of the Act
is similar to the language in section
1861(vv) of the Act that defines
‘‘medical nutrition therapy services,’’
which is also a medical or other health
service under section 1861(s)(2)(V) of
the Act. Finally, both diabetes selfmanagement training and medical
nutrition therapy are included in the
definition of ‘‘physicians’ services’’ for
purposes of the MPFS at section
1848(j)(3) of the Act, and our standard
policy is to pay for both services under
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the MPFS when they are furnished in an
HOPD. Given that the statute permits us
to pay all qualified persons under the
MPFS and the precedent for paying both
diabetes self-management training and
medical nutrition therapy under the
MPFS when these services are provided
in the hospital outpatient setting, we
believe that payment under the MPFS is
the most appropriate methodology for
payment to qualified persons who are
providers of services located in a rural
area or who are hospitals or CAHs that
have been reclassified from urban to
rural status pursuant to § 412.103 of the
regulations for the KDE services they
furnish.
The proposed CY 2010 MPFS
payments for HCPCS codes GXX26
(Educational services related to the care
of chronic kidney disease; individual,
per session; face-to-face), now finalized
in the CY 2010 MPFS final rule with
comment period as G0420 (Educational
services related to the care of chronic
kidney disease; individual per session,
per hour, face-to-face), and GXX27
(Educational services related to the care
of chronic kidney disease; group, per
session; face-to-face), now finalized in
the CY 2010 MPFS final rule with
comment period as G0421(Educational
services related to the care of chronic
kidney disease; group, per session, per
hour, face-to-face), are discussed in the
CY 2010 MPFS proposed rule (74 FR
33619). When the qualified person is a
rural provider, we proposed to pay the
provider the applicable amount under
the MPFS and a single payment would
be made for each KDE session, limited
to no more than six sessions as
discussed in the CY 2010 MPFS
proposed rule. Subsequently, we would
not provide separate payment for both a
physician’s professional services and
the associated facility services if a single
session of KDE services was furnished
in a rural hospital or CAH. Therefore,
because of operational constraints, we
proposed that payment would be made
to only one qualified person for KDE
services on the same day for the same
beneficiary. We also note that the MPFS’
geographic practice cost index would
apply to the calculation of the payment
in a particular fee schedule locality
because this locality adjustment
methodology is applicable to payment
for all services paid under the MPFS.
We proposed to assign status indicator
‘‘A’’ to HCPCS codes GXX26 and GXX27
in Addendum B to the CY 2010 OPPS/
ASC proposed rule to signify that these
services, when covered, would be paid
under a payment system other than the
OPPS, specifically the MPFS in the case
of both HCPCS codes.
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60565
We instructed individuals who
wished to submit public comments on
this proposal to pay under the MPFS for
covered KDE services furnished by
qualified persons who are hospitals,
CAHs, SNFs, CORFs, HHAs, or hospices
that are located in a rural area or are
treated as being rural under § 412.103 to
submit those comments in accordance
with the instructions for commenting on
the CY 2010 OPPS/ASC proposed rule.
We instructed individuals who wished
to submit public comments on all other
aspects of the proposed implementation
of sections 1861(s)(2)(EE) and 1861(ggg)
of the Act, including, but not limited to,
the proposed criteria for coverage of the
services, the proposed definition of
‘‘session,’’ the proposed HCPCS Gcodes, and the proposed content of the
program, to submit those comments in
response to the CY 2010 MPFS
proposed rule.
Comment: A few commenters
objected to the proposed payment to
rural providers for KDE services. The
commenters believed that the proposed
rates were too low for appropriate
payment for KDE services and
recommended that CMS revise its KDE
payment rates to reflect the greater
resources required for rural provider to
furnish KDE services.
Response: As a result of our review of
the public comments and further
analysis, we are adjusting the final CY
2010 MPFS RVUs for HCPCS codes
G0420 and G0421. Specifically, we
reviewed the medical nutrition therapy
CPT codes, 97802 (Medical nutrition
therapy; initial assessment and
intervention, individual, face-to-face
with the patient, each 15 minutes) and
97804 (Medical nutrition therapy; group
(2 or more individual(s)), each 30
minutes), that we are crosswalking to
the KDE codes for payment under the
MPFS. We have adjusted the final CY
2010 values for HCPCS codes G0420
and G0421 to reflect not only the final
specification of the time of one hour for
an individual or group KDE session but
also to reflect the appropriate supplies
and equipment without duplication. We
multiplied the physician work RVUs for
HCPCS code G0420 by four and the
work RVUs for HCPCS code G0421 by
two to account for the fact that we are
crosswalking a 15 minute MNT code to
a 60 minute KDE code for the individual
service and a 30 minute MNT code to
a 60 minute KDE code for the group
service case. We refer readers to the CY
2010 MPFS final rule with comment
period for the CY 2010 RVUs for KDE
services that determine payment to rural
providers for HCPCS codes G0420 and
G0421.
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After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to pay under the
MPFS for covered KDE services
furnished by qualified persons that are
hospitals, CAHs, SNFs, CORFs, HHAs,
or hospices that are located in a rural
area or are treated as being rural under
§ 412.103. Public comments concerning
the definition of a ‘‘qualified person,’’
the proposed HCPCS G-codes, the
proposed RVUs for KDE services, the
proposed criteria for coverage of the
services, the proposed definition of
‘‘session,’’ and the proposed content of
the program are discussed in the CY
2010 MPFS final rule with comment
period.
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B. Pulmonary Rehabilitation, Cardiac
Rehabilitation, and Intensive Cardiac
Rehabilitation Services
1. Legislative Changes
Section 144(a) of Public Law 110–275
(MIPPA) made a number of changes to
the Act to provide Medicare Part B
coverage and payment for pulmonary
and cardiac rehabilitation services
furnished to beneficiaries with chronic
obstructive pulmonary disease and
certain other conditions, respectively,
effective January 1, 2010. Specifically,
section 144(a)(1) of the Act amended
section 1861(s)(2) of the Act by adding
new subparagraphs (CC) and (DD) to
specify Medicare Part B coverage of
items and services furnished under (1)
a cardiac rehabilitation (CR) program (as
defined in an added new section
1861(eee)(1) of the Act) or under a
pulmonary rehabilitation (PR) program
(as defined under an added new section
1861(fff)(1) of the Act; and (2) an
intensive cardiac rehabilitation (ICR)
program (as defined in an added new
section 1861(eee)(4) of the Act). The
amendments made by section 144(a) of
Public Law 110–275 provide for
coverage of CR, PR, and ICR services
provided in a physician’s office, in a
hospital on an outpatient basis, or in
other settings as the Secretary
determines appropriate. Section
144(a)(2) of Public Law 110–275
amended section 1848(j)(3) to provide
for payment for services furnished in an
ICR program under the MPFS and also
added a new section 1848(b)(5) to
provide specific language governing
payment for ICR services. Under that
specific section, the Secretary shall
substitute the Medicare OPD fee
schedule amount established under the
prospective payment system for hospital
outpatient department services under
section 1833(t)(3)(D) of the Act for CR
(under HCPCS codes 93797 (Physician
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services for outpatient cardiac
rehabilitation; without continuous ECG
monitoring (per session)) and 93798
(Physician services for outpatient
cardiac rehabilitation; with continuous
ECG monitoring (per session)) for CY
2007, or any succeeding HCPCS codes
established for cardiac rehabilitation).
Section 144(a)(2) also defines under the
new section 1848(b)(5) a ‘‘session’’ for
each of the component CR items and
services defined in subparagraphs (A)
through (E) of section 1861(eee)(3) of the
Act, when furnished for one hour, as a
separate session of ICR, and specified
that payment may be made for up to 6
sessions per day of the series of 72 onehour sessions of ICR services. Section
144(a)(1)(B) also requires that a
physician must be immediately
available and accessible for medical
consultations and medical emergencies
at all times items and services are being
furnished under CR, ICR, and PR
programs, except that in the case of such
items and services furnished under such
a program in a hospital, such
availability shall be presumed.
As we discuss in detail in section
II.G.8. of the CY 2010 MPFS proposed
rule (74 FR 33606), we proposed to use
the MPFS and the OPPS rulemaking
processes, and may use the national
coverage determination (NCD) process
as well, to implement the amendments
made by section 144(a) of Public Law
110–275. In the CY 2010 MPFS
proposed rule, we specified our policy
proposals for implementing Medicare
Part B coverage and payment for
services furnished in a CR, ICR, and PR
program under the MPFS. In the CY
2010 OPPS/ASC proposed rule (74 FR
35360), we proposed the CY 2010 OPPS
payment for services in a CR, ICR, or PR
program furnished to hospital
outpatients.
Comment: A number of commenters
asked that CMS confirm that the
services of physical therapists are not
part of the PR, CR, or ICR benefits
authorized by section 144(a)(1) of Public
Law 100–275 and are always paid under
the physical therapy benefit and that,
therefore, the therapy services do not
require physician supervision when
furnished as part of a PR, CR, or ICR
program, including in the HOPD. With
regard to PR, they stated that CMS has
a longstanding history of recognizing
the services of a physical therapist as an
integral part of a PR program and
requiring that these services be reported
and paid as physical therapy services.
Specifically, the commenters indicated
that in the CY 2002 MPFS regulation (66
FR 55246) and in the current Medicare
Claims Processing Manual (Pub. 100–04,
Chapter 5, Section 20.A), CMS specifies
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that when physical therapists treat
respiratory conditions, they should
report CPT codes for physical therapy in
the 97000 series and should not report
HCPCS codes G0237 (Therapeutic
procedures to increase strength or
endurance of respiratory muscles, one
on one, face to face, per 15 minutes
(includes monitoring)); G0238
(Therapeutic procedures to improve
respiratory function or increase strength
or endurance of respiratory muscles,
one on one, face to face, per 15 minutes
(includes monitoring)); or G0239
(Therapeutic procedures to improve
respiratory function or increase strength
or endurance of respiratory muscles,
two or more individuals (includes
monitoring)). The commenters added
that in the September 25, 2007 Decision
Memo for Pulmonary Rehabilitation
(CAG–00356N), CMS recognized the
importance of physical therapy to
patients with pulmonary conditions and
stated that these services should be
billed and paid under the physical
therapy benefit. The commenters argued
that a plan of care developed by a
physical therapist to improve
pulmonary function for a patient with
chronic obstructive pulmonary disease
(COPD), which meets the medical
necessity criteria for physical therapy
services, is covered and paid under the
physical therapy benefit. They
explained that, although it is a covered
PR service, the therapy plan of care is
separate from the PR benefit authorized
by section 144(a)(1) of Public Law 100–
275, should continue to be reported
under the CPT codes for physical
therapy services, and should be paid
under the physical therapy benefit. In
addition, the commenters requested that
CMS confirm that skilled physical
therapy services that are rendered in the
CR setting by a qualified physical
therapist should be conducted, reported,
and paid as physical therapy services,
and that physician supervision is not
necessary in the CR setting when the
physical therapist is delivering
treatment that clearly meets the criteria
for a physical therapy service. The
commenters explained that CMS has
recognized and codified that physical
therapy is a separate benefit and that
physical therapists are qualified to
perform certain services independent of
direct physician supervision.
Response: We expect that most
patients participating in PR, CR, or ICR
programs authorized by section
144(a)(1) of Public Law 100–275 and
covered by Medicare Part B will be
debilitated based on their underlying
medical condition, age, or other factors.
In order to develop a PR, CR, or ICR
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treatment plan, some debilitated
patients may require evaluations by
therapists on the multidisciplinary
team, in addition to assessments by
other team members. In order to
participate successfully in the
prescribed exercise component of the
PR, CR, or ICR program, we also expect
that these patients may receive
individualized treatments by therapists
on the multidisciplinary team and
others to promote the increased
functionality that is a principle goal of
PR, CR, and ICR programs. As we stated
in the CY 2010 MPFS proposed rule, the
items and services furnished by a CR or
PR program are individualized and set
forth in written treatment plans for each
beneficiary (74 FR 33607 and 33611).
We believe these evaluations and
individualized treatments are a part of
the PR, CR, or ICR program. As such, we
believe they should be conducted by
one or more members of the
multidisciplinary team of the PR, CR, or
ICR program with the appropriate
expertise.
While we have not defined PR, CR, or
ICR services as always including
therapists’ services as part of the
comprehensive benefit (74 FR 33608
and 33614), we acknowledged that
written treatment plans are highly
individualized and that there should be
flexibility in the type, amount,
frequency, and duration of services
provided in each session (74 FR 33607).
We expect that physical therapists could
conduct assessments and individualized
treatments as part of the PR, CR, or ICR
program because physical therapists
have the knowledge and skills to assist
in addressing common problems that
lead to physicians ordering PR, CR, or
ICR services for their patients, including
poor aerobic capacity, poor endurance,
and shortness of breath in the context of
chronic pulmonary or cardiovascular
disease. In the context of PR, while we
also stated that individuals requiring PR
services have a chronic respiratory
disease and are in need of supervised
aerobic exercise, we acknowledged that
patients require assessments to address
individualized needs and the provision
of a mix of services necessary to address
those needs (74 FR 33613).
Patients in PR, CR, or ICR programs
must receive the full complement of
care as defined under these benefits, in
accordance with their individualized
treatment plan, including assessments
and prescribed exercise. Additionally,
the standard HCPCS coding guidance
instructs practitioners and providers to
report the code for the procedure or
service that most accurately describes
the service performed. As stated in
Section 20.12.1.b. of Chapter 5 of the
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Medicare Contractor Beneficiary and
Provider Communications Manual, in
instances where several component
services, which have different CPT/
HCPCS codes, may be described in one
more comprehensive code, only the
single code most accurately describing
the procedure performed or service
rendered should be reported. Therefore,
we would expect that when therapists
provide these evaluations and
individualized treatment services under
a comprehensive PR, CR, or ICR
treatment plan, these services would be
billed by the hospital as PR, CR, or ICR
services under the comprehensive PR,
CR, or ICR CPT codes or Level II HCPCS
G-codes that apply, and not as physical
therapy services. Furthermore, as
discussed in section XII.B.4. of this final
rule with comment period, for purposes
of PR, CR, and ICR services, direct
supervision must be provided by a
doctor of medicine or osteopathy as
defined in section 1861(r)(1) of the Act.
This direct supervision rule would also
apply to services furnished by therapists
on the multidisciplinary team, and these
services would be paid to the hospital
as PR, CR, or ICR services.
We expect that most patients who
meet the diagnosis requirements for
coverage of PR, CR, or ICR would
receive component services covered
under the PR, CR, or ICR benefit as part
of a comprehensive PR, CR, or ICR
program, subject to the coverage and
payment policies that we are finalizing
in this CY 2010 OPPS/ASC final rule
with comment period and the CY 2010
MPFS final rule with comment period.
We understand that some component
services of PR, CR, or ICR have
previously been furnished to
beneficiaries and paid by Medicare
under other benefits, such as the
outpatient physical therapy benefit.
Because section 144(a)(1) of Public Law
100–275 authorized a new
comprehensive PR benefit and codified
specific benefits for CR and ICR, we
believe that hospitals should furnish the
full scope of the PR, CR, or ICR benefit,
where services will be paid as hospital
outpatient services under the OPPS, as
comprehensive programs to those
patients who qualify for coverage. We
would not expect the component
services of PR, CR, and ICR programs to
be unbundled and billed separately by
different providers or practitioners
under other benefit categories, such as
the physical therapy benefit where
services would be paid under the MPFS.
Therefore, we expect that it would be
uncommon for a patient receiving care
under a PR, CR, or ICR treatment plan
to also be receiving physical therapy
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60567
services under a separate physical
therapy plan of care. There may be
patients with therapy needs that are
outside the treatment plan appropriate
for PR, CR, or ICR, and such patients
should receive medically necessary
physical therapy services specific to
those other needs. However, we would
not expect this to be the norm. Clearly,
a single period of care can only be billed
as one type of treatment service, so
hospitals could never bill both physical
therapy and PR, CR, or ICR services for
the same time period for the same
patient (for example, an hour session
from 10 a.m. to 11 a.m. on a single date
of service).
We plan to monitor claims data for
PR, CR, and ICR services, as well as any
additional claims for therapy services. If
we detect patterns of care that are
inconsistent with our stated
expectations for PR, CR, or ICR services
and therapy services, we may encourage
Medicare contractors to review cases in
which a hospital reports both types of
services for the same patient during the
same span of time (for example, over a
several month period) or we may
propose changes to our payment
methodologies for these services.
After considering the public
comments we received, we are
clarifying that we would expect
component services that are furnished
under a PR, CR, or ICR treatment plan
to beneficiaries who qualify for PR, CR,
or ICR services to be furnished as PR,
CR, or ICR services, regardless of
whether they are furnished by a
physical therapist or other healthcare
practitioner, and that all of the coverage
and payment requirements for hospital
outpatient services, including, but not
limited to, the physician supervision
requirements for hospital outpatient
therapeutic services, apply to those PR,
CR, or ICR services. We refer readers to
section XII.D.3. of this final rule with
comment period for a discussion of the
final CY 2010 policies for the direct
supervision of hospital outpatient
therapeutic services. We expect that
hospitals will furnish the
comprehensive set of services that is
contemplated in the criteria for PR, CR,
or ICR programs to beneficiaries who
qualify for the benefit.
2. Payments for Services Furnished to
Hospital Outpatients in a Pulmonary
Rehabilitation Program
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35360), we proposed to
create for CY 2010 one new Level II
HCPCS code for hospitals to report and
bill for the services furnished under a
PR program as specified in section
1861(fff) of the Act. Specifically, we
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proposed to use HCPCS code GXX30
(Pulmonary rehabilitation, including
aerobic exercise (includes monitoring),
per session, per day). This proposed
new HCPCS G-code would be used by
hospitals to report PR services furnished
to patients performing physicianprescribed exercises that are targeted to
improving the patient’s physical
functioning and may also include the
provision of other aspects of PR, such as
education and training. Consistent with
our proposal in the CY 2010 MPFS
proposed rule, we proposed that
hospitals would use HCPCS code
GXX30 to report sessions lasting a
minimum of 60 minutes each, generally
for two to three sessions of PR per week,
under the OPPS. We also proposed to
allow no more than one session per day
because individuals who are furnished
services in a PR program have
significant respiratory compromise and
would not typically be capable of
performing more than one session of
exercise per day.
We proposed that PR described by
HCPCS code GXX30 would be a new
comprehensive service. We did not
believe there was an existing clinical
APC to which this service could be
appropriately assigned under the OPPS
based on the information currently
available to us. We did not believe that
any services currently paid under the
OPPS were sufficiently similar to PR,
based on both clinical and resource
characteristics, to justify the initial
assignment of HCPCS code GXX30 to
the same clinical APC as an existing
service. Historically, individual
component services that comprise
comprehensive PR have been reported
separately with existing HCPCS codes
that are paid under the OPPS through
the individual APC that is most
appropriate for each service described
by the specific HCPCS code reported.
For payment under the MPFS, we
proposed relative value units for new
HCPCS code GXX30 for CY 2010 based
on the estimated resources and work
intensity associated with existing CR
and respiratory therapy services. The
nonfacility practice expense amount is
the component of the MPFS payment
that is most comparable to what
Medicare pays under the OPPS. Both
the MPFS nonfacility practice expense
payment and the OPPS payment include
payment for the service costs other than
the physician professional services that
are billed and paid under the MPFS in
all service settings. The CY 2010
proposed nonfacility practice expense
payment amount under the MPFS was
between $10 and $20.
For the CY 2010 OPPS, we proposed
to assign HCPCS code GXX30 to New
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Technology APC 1492 (New
Technology—Level IB ($10-$20)), the
New Technology APC that provides
payment for new services with
estimated facility costs between $10 and
$20, because we believed that we lacked
appropriate hospital cost data from
claims to guide the initial assignment of
the new HCPCS code that would
describe services furnished under the
new PR benefit. The New Technology
APC payment of $15, at the midpoint of
the cost band, would be approximately
the same as the proposed CY 2010
MPFS nonfacility practice expense
amount for PR services described by
HCPCS code GXX30. As discussed
above, this is the portion of the
proposed MPFS payment that is most
comparable to what Medicare would
pay under the OPPS. We believed that
this proposed temporary assignment to
a New Technology APC would allow us
to pay appropriately for the service
under the OPPS at a rate that is similar
to the corresponding physician’s office
payment amount, while we gathered
hospital claims data and experience
with the new service on which to base
a clinically relevant APC assignment in
the future.
Comment: Many commenters claimed
that 90 percent of PR services are
furnished in HOPDs and that CMS is
currently paying considerably more for
these services than the proposed
payment. The commenters indicated the
PR services are commonly furnished in
the group setting in the HOPD, although
they added that patients commonly
require significant one-on-one
assistance from hospital staff to
encourage and facilitate their full
participation in supervised exercise.
The commenters objected to the
proposal to pay $15 per session under
New Technology APC 1492 because
they believed that it would reduce
payment for PR services to such an
extent that hospitals would no longer be
able to afford to furnish the services and
that access to care would be diminished,
rather than expanded as the law
intended. Specifically, the commenters
were concerned about the proposed
payment rate because PR services would
be reported under a new HCPCS G-code
that would include all component
services and assessments furnished in a
single session per day with a minimum
session duration of 60 minutes and a
maximum of 1 session per day. The
commenters estimated that the proposed
payment for PR services would result in
less than 25 percent of the current
payment to hospitals for the same
component services that are reported
under existing HCPCS codes.
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The commenters opposed the
proposed payment of PR services under
a New Technology APC because they
believe that CMS has considerable
experience with payment for these
services under HCPCS codes G0237,
G0238, or G0239, which are currently
assigned to APC 0077 (Level I
Pulmonary Treatment) under the OPPS.
They argued that these three existing
HCPCS G-codes are now being reported
for PR services in HOPDs and that OPPS
payment should be made for
comprehensive PR services as
authorized by section 144(a)(1) of Public
Law 100–275 based on the historical
payments made for services reported
using these codes. They stated that the
OPPS currently pays approximately $27
per unit for HCPCS codes G0237, G0238
and G0239 and that, therefore, the
proposed payment for PR services
would be much less than hospitals are
currently being paid for the same
services and would seriously erode the
quality and quantity of care currently
being furnished. The commenters
indicated that PR services require
considerable hospital staff and overhead
costs that include, but are not limited to,
the costs of respiratory therapists and
the purchase and maintenance of a wide
range of expensive exercise equipment,
such as oximeters with printers, one
channel ECG monitors, dedicated
emergency cart/resuscitation
equipment, and portable oxygen
equipment. They reasoned that payment
at $15 per session of one hour’s duration
would be insufficient to permit hospital
PR programs to continue to function
because the current sessions are at least
1 hour (and typically 2 hours) long and,
therefore, OPPS payment for 1 hour of
service reported using HCPCS codes
G0237 and G0238 is currently about
$100 per hour. Further, they noted that
the OPPS pays separately for all
assessments and tests under the current
policy. They identified the assessment
services that are currently paid
separately but for which payment would
be included in the per session payment
for PR services according to the
proposal as including, but not limited
to, CPT codes 94620 (Pulmonary stress
testing; simple (e.g., 6-minute walk test,
prolonged exercise test for
bronchospasm with pre- and postspirometry and oximetry)); 94664
(Demonstration and/or evaluation of
patient utilization of an aerosol
generator, nebulizer, metered dose
inhaler or IPPB device); and 94667
(Manipulation chest wall, such as
cupping, percussion and vibration to
facilitate lung function; initial
demonstration and/or evaluation). One
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commenter requested that CMS create
two new Level II HCPCS codes for PR
sessions, one including the assessment
services and one excluding the
assessment services.
Some commenters claimed that it is
not appropriate to compare the costs of
CR to PR services because the overhead
costs for PR services are higher than for
CR services. They also indicated that it
is contradictory for CMS to require that
lung volume reduction surgery patients
receive no less than 2 hours of PR
services per day but to limit coverage of
PR for moderate to severe COPD
patients to 1 session per day.
The commenters suggested three
alternatives to the proposed payment for
a single PR HCPCS code through a New
Technology APC. One alternative would
be to continue to permit hospitals to bill
HCPCS codes G0237, G0238, and G0239
for PR services and also to bill
separately for the assessment services
proposed to be included in the single
comprehensive PR HCPCS code (with a
separate visit payment for the initial
physician or hospital staff assessment of
the patient that commenters claimed
requires 60 to 90 minutes of
professional time). Payment for HCPCS
codes G0237, G0238, and G0239 would
continue to be made through APC 0077
and the assessment services would be
paid through their existing clinical
APCs as well. Some commenters
suggested a variation of this alternative
that would establish an APC with a
payment rate of $50 to which HCPCS
codes G0237, G0238, and G0239, as
currently defined, would be assigned.
As a second alternative, the commenters
suggested that CMS assign the new
comprehensive PR HCPCS code to APC
0078 (Level II Pulmonary Treatment),
which had a proposed payment rate of
approximately $96, and not allow
separate reporting and payment for CPT
codes 94620, 94664, and 94667 and the
60 to 90 minute intake visit. Finally, the
commenters stated that CMS could
establish a payment rate for the new
comprehensive PR HCPCS code by
multiplying the OPPS payment rate for
APC 0077 by 4 because the cost of the
new per hour PR code would be at least
4 times the cost of HCPCS codes G0237
and G0238 that describe 15 minutes of
care and are assigned to APC 0077. The
commenters believed that any of these
alternatives would result in a PR
payment to hospitals that is appropriate
for the cost of the services being
furnished.
Response: We examined our hospital
and physician claims data for HCPCS
codes G0237, G0238, and G0239, and
we agree with the commenters that most
services for restoration of pulmonary
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function have historically been
furnished in hospitals and that there is
considerable evidence of hospital
outpatient utilization and cost in our
claims data. We found that, in CY 2008,
Medicare paid approximately $20
million in aggregate to about 900
hospitals for services reported under
HCPCS codes G0237, G0238, and
G0239, which describe pulmonary
therapy services that commenters
believe reflect the costs of the same
types of hospital staff, supplies, and
overhead that would be used to furnish
PR services.
Therefore, for the CY 2010 OPPS, we
will pay for PR services in HOPDs under
the OPPS through a new clinical APC
with a median ‘‘per session’’ cost
simulated from historical hospital
claims data for similar pulmonary
therapy services, rather than assigning
the new PR HCPCS G-code to a New
Technology APC as we proposed. We
have previously used a simulation
approach to develop a median cost
estimate for a single new CPT or Level
II HCPCS code that would previously
have been reported under several
existing HCPCS codes when furnished
in the HOPD, most recently for
echocardiography services as discussed
in detail in section II.A.2.d.(4) of this
final rule with comment period.
Specifically, we are assigning the
comprehensive Level II HCPCS code
G0424 (Pulmonary rehabilitation,
including exercise (includes
monitoring), per hour, per session) to
new clinical APC 0102 (Level II
Pulmonary Treatment), with payment
based on the aggregate per day
simulated ‘‘per session’’ hospital
median cost of approximately $50 as
calculated from claims data for the
existing pulmonary therapy HCPCS
G-codes and associated assessments and
tests. No other HCPCS codes are
assigned to APC 0102 for CY 2010. (APC
0078 has been renamed Level III
Pulmonary Treatment without any
change in its configuration for CY 2010.)
Our claims data show that, in most
cases patients furnished the pulmonary
therapy services reported by HCPCS
codes G0237, G0238, and G0239 in the
HOPD on a single date of service
received some individual and some
group services (approximately 2.4 units
of service per day) and, less often,
associated assessments and tests. We
found approximately 19,000 days of
care for patients who had diagnoses
consistent with moderate to very severe
COPD, consistent with the coverage
requirements for PR in CY 2010, and
that included both an individual and
group service on the same day. The
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60569
claims for these days of care, for which
we calculated a ‘‘per session’’ median
cost of approximately $50, were similar
to the time duration and services that
will be reported under new HCPCS code
G0424 in CY 2010.
Specifically, to simulate the ‘‘per
session’’ median cost of new HCPCS
code G0424 from claims data for
existing services, we used only claims
that contained at least one unit of
HCPCS code G0239, the group code that
is without limitation on time duration,
and one unit of HCPCS code G0237 or
G0238, the individual, face-to-face
codes that report 15 minutes of service,
on the same date of service. We
reasoned that patients in a PR program
would typically receive individual and
group services in each session of
approximately 1 hour in duration. The
approach was consistent with the public
comments that suggested that PR is
often provided in group sessions in the
HOPD, although patients commonly
require additional one-on-one care in
order to fully participate in the program.
We note that our use of ‘‘per session’’
claims reporting one unit of HCPCS
code G0237 or G0238 and one unit of
HCPCS code G0239 in this simulation
methodology was also consistent with
our overall finding of approximately 2.4
service units of the HCPCS G-codes per
day on a single date of service, usually
consisting of both individual and group
services, for patients receiving
pulmonary therapy services in the
HOPD based upon CY 2008 claims. We
concluded that the typical session of PR
would be 1 hour based on public
comments that indicated that a session
of PR is typically 1 hour and based on
our findings that the most commonly
reported HCPCS code for pulmonary
treatment is HCPCS code G0239, which
has no time definition for this group
service.
We included all costs of the related
tests and assessment services (CPT
codes 94620, 94664, and 94667 and all
CPT codes for established patient clinic
visits) on the same date of service as the
HCPCS G-codes in the claims we used
to simulate the median cost for HCPCS
code G0424. After identifying these ‘‘per
session’’ claims, which we believe to
represent 1 hour of care, we summed
the costs on them and calculated the
median cost for the set of selected
claims. In light of the cost and clinical
similarities of PR and the existing
services described by HCPCS codes
G0237, G0238, and G0239 and the CPT
codes for related assessments and tests,
and the significant number of ‘‘per
session’’ hospital claims we found, we
are confident that the simulated median
cost for HCPCS code G0424 is a valid
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estimate of the expected hospital cost of
a PR session. Since there is no existing
clinical APC to which HCPCS code
G0424 could be appropriately assigned
based on considerations of the clinical
and resource characteristics of PR
services, we are creating new APC 0102
(Level II Pulmonary Treatment) for CY
2010. Existing APC 0078 (Level II
Pulmonary Treatment) has been
renamed ‘‘Level III Pulmonary
Treatment’’ for CY 2010, with no change
in its configuration.
We also are adding the phrase ‘‘per
hour’’ to the new HCPCS code G0424
descriptor to conform the descriptor of
the code to the basis for the payment
being made for one unit of the code and
to enable providers to determine when
one session of PR ends and the second
session begins. Because we are
modifying our final policy to cover up
to 2 sessions of PR per day in response
to public comments that we should
permit more than 1 session of PR on the
same date, it became necessary to add
a time to the definition of HCPCS code
G0424 so that providers could
determine when they could report a
second session. Moreover, when we
based the payment for new APC 0102 on
the per session costs derived from the
OPPS claims data for HCPCS codes
G0237, G0238, and G0239, we assumed
that a session represented 1 hour of
care; and therefore, adding ‘‘per hour’’
to the descriptor for the new HCPCS Gcode for PR conforms the HCPCS G-code
to the payment we are establishing.
We do not agree with the commenters’
suggestion that we permit hospitals to
report and be paid for PR services under
the existing HCPCS codes G0237,
G0238, and G0239 and the CPT codes
for assessments and tests because PR is
a comprehensive program that consists
of multiple component items and
services as specified in the statute and
discussed in the CY 2010 MPFS final
rule with comment period. These three
HCPCS G-codes were developed
principally to describe services
furnished by respiratory therapists in
CORFs, and the services consist of
therapeutic procedures to increase the
strength and endurance of respiratory
muscles or to improve respiratory
function. When the HCPCS G-codes
were established, we indicated that
these were developed to provide more
specific information about the services
being delivered since those services
were not previously clearly described by
existing CPT codes (66 FR 55311). We
also noted that there was no respiratory
or pulmonary rehabilitation benefit (67
FR 79999).
The existing HCPCS G-codes do not
represent the full scope of services in a
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comprehensive PR program as now
authorized by section 144(a)(1) of Public
Law 100–275. We want to ensure that
when hospitals bill and are paid for PR
services, they attest to meeting all
requirements of the comprehensive PR
program by the reporting of a HCPCS
G-code specific to a PR session. As
discussed above in the context of
therapy services, patients in PR, CR, or
ICR programs must receive the full
complement of care defined under the
benefit, including assessments and
individualized treatments in accordance
with their PR treatment plan. When
hospitals furnish these evaluations and
individualized treatment services under
a PR treatment plan, we would not
expect the component services of PR,
CR, and ICR programs to be unbundled
and billed separately. Instead, the
services must be billed by the hospital
as PR services under the new Level II
HCPCS G-code for PR services, not the
existing HCPCS codes G0237, G0238,
and G0239 for respiratory treatment
services, the CPT codes for the
individual assessment services
discussed above, or HCPCS codes for
physical therapy or other services.
Furthermore, we also expect that it
would be uncommon for a patient
receiving care under a PR treatment
plan to also be receiving services under
a separate plan of care to improve their
respiratory strength and function, such
as physical therapy or respiratory
treatment. Only those patients whose
medical needs for treatment to improve
their respiratory strength and function
are outside the treatment plan
appropriate for PR should receive
medically necessary services specific to
those other needs. However, we would
not expect this to be the norm.
As discussed above, a single period of
care can only be billed as one type of
treatment service, so hospitals could
never bill services reported by HCPCS
codes G0237, G0238, or G0239 and PR
services for the same time period for the
same patient (for example, an hour
session from 10:00 a.m. to 11:00 a.m. on
a single date of service). We plan to
monitor claims data for PR services, as
well as any additional claims for these
other services. If we detect patterns of
care that are inconsistent with our
stated expectations for PR services, we
may encourage Medicare contractors to
review cases in which a hospital reports
both types of services for the same
patient during the same span of time
(for example, over a period of several
months) or we may propose changes to
our payment methodologies for these
services.
In addition, we note that a specific
code for PR services allows us to
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administratively account for the limit on
the number of covered sessions.
Furthermore, we are not creating
different HCPCS codes for PR sessions
provided with and without assessments
because we continue to believe PR is a
comprehensive program and all sessions
should be reported and paid through a
single HCPCS G-code. We believe that it
is most appropriate to pay for all of the
assessments and tests that may be
furnished in the program as required for
coverage through our single per-session
PR payment, and we took the hospital
costs of these related services into
consideration in establishing the CY
2010 OPPS payment rate for HCPCS
code G0424. We also do not agree with
the commenters’ recommendation to
assign the new PR per session HCPCS
code to APC 0078 because the median
cost of APC 0078 is almost twice the
simulated ‘‘per session’’ median cost of
HCPCS code G0424 that we calculated
based on historical hospital claims data
for existing, similar HCPCS codes
through our ‘‘per session’’ methodology
as described above. Finally, we do not
agree with the commenters’ suggestion
to establish a payment rate for PR
HCPCS code G0424 at the rate of 4 times
the payment for APC 0077 because that
also would pay for PR services at more
than twice the simulated median cost
for a typical session of PR as reported
in our claims data.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal, with
modification, for OPPS payment for PR
services furnished as a part of the
comprehensive PR program benefit for
CY 2010. We are adopting new HCPCS
code G0424 (Pulmonary rehabilitation,
including exercise (includes
monitoring), per hour, per session) and
are assigning the G-code to new APC
0102 (Level II Pulmonary Treatment),
with a simulated ‘‘per-session’’ median
cost of approximately $50. As discussed
in the CY 2010 MPFS final rule with
comment period, PR is covered for up
to 36 one-hour sessions, with a
maximum of 2 sessions per day, and
with contractor discretion to approve up
to 72 sessions.
3. Payment for Services Furnished to
Hospital Outpatients Under a Cardiac
Rehabilitation or an Intensive Cardiac
Rehabilitation Program
Currently, CR services furnished by
hospitals are reported using CPT codes
93797 and 93798. In the CY 2010 MPFS
proposed rule (74 FR 33607), we
proposed that each day CR items and
services are furnished to a patient,
aerobic exercises along with other
exercises must be included (that is, a
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patient must exercise aerobically every
day he or she attends a CR session). In
addition, we proposed that each session
must be a minimum of 60 minutes and
patients must participate in a minimum
of two CR sessions a week, with a
maximum of two CR sessions a day.
With respect to ICR services, section
1861(eee)(4)(C) of the Act, states that
‘‘an intensive cardiac rehabilitation
program may be provided in a series of
72 one-hour sessions (as defined in
section 1848(b)(5)), up to 6 sessions per
day, over a period of up to 18 weeks.’’
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35361), for the CY 2010
OPPS, we proposed to create two new
Level II HCPCS codes to report the
services of an ICR program that are
furnished to hospital outpatients,
consistent with the provisions of section
1861(eee)(4)(C) of the Act: HCPCS code
GXX28 (Intensive cardiac rehabilitation;
with or without continuous ECG
monitoring with exercise, per session)
and HCPCS code GXX29 (Intensive
cardiac rehabilitation; with or without
continuous ECG monitoring; without
exercise, per session). These proposed
new HCPCS G-codes would be used to
report ICR services furnished by
hospitals that have an ICR program that
has received a designation as a qualified
ICR program. Consistent with the
proposal in the CY 2010 MPFS
proposed rule, we proposed that each
session of ICR must be a minimum of 60
minutes and that each day ICR items
and services are provided to a patient,
aerobic exercises along with other
exercises must be included (that is, a
patient must exercise aerobically every
day he or she attends a ICR session).
For the CY 2010 OPPS, we proposed
to assign HCPCS codes GXX28 and
GXX29 to APC 0095 (Cardiac
Rehabilitation) with a status indicator of
‘‘S.’’ The proposed median cost of APC
0095 for CY 2010 was approximately
$39. This proposed median cost
reflected historical hospital cost data for
one session of general CR services
reported with CPT code 93797 or 93798.
Both CR and ICR programs consist of
exercise, cardiac risk factor
modification, psychosocial assessment,
outcomes assessment, and other
services, as described in the CY 2010
MPFS proposed rule (74 CR 33607).
Although more sessions per day for a
beneficiary may be provided in an ICR
program than a CR program, in the CY
2010 OPPS/ASC proposed rule (74 FR
35361) we noted our belief the hospital
costs for a single session would be
similar, and OPPS payment for CR and
ICR services would be provided on a per
session basis. Therefore, because CR and
ICR services are similar from both
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clinical and resource perspectives, we
believed that it would be appropriate to
assign the two proposed new Level II
HCPCS codes for ICR services to APC
0095 while we collect cost information
from hospitals specific to ICR. We
proposed to make a single payment
through APC 0095 for each session of
ICR reported on hospital outpatient
claims.
Comment: Some commenters
supported the proposal to create two
new HCPCS G-codes for ICR services
and to pay them at the same rate as CR
services through APC 0095. Other
commenters objected to setting the
payment for ICR services at the same
level as CR services on the basis that
ICR services should be more costly than
CR services because of their intensive
nature. Some commenters were
concerned about basing payment for CR
on historical hospital costs because
these costs do not include the new level
of physician and clinical staff work
required for coverage of CR and ICR, in
particular, the psychosocial and
outcome assessments that are required
by section 144(a)(1) of Public Law 100–
275. Under CMS’ proposal, these
assessments would not be paid
separately but, instead, would be paid
through payment for the per session CR
CPT codes or ICR HCPCS codes.
Some commenters believed the
proposed median cost for APC 0095 was
too low on the basis that the July 2008
RTI final report for CMS entitled
‘‘Refining Cost to Charge Ratios for
Calculating APC and DRG Relative
Payment Weights’’ indicated that the
current payment calculations for CR are
significantly flawed because hospitals
misclassify CR costs and that, therefore,
the resulting APC 0095 median cost
understates the cost of CR. The
commenters indicated that the study
showed that the cost of CR is
approximately $100 per session when
an appropriate CCR, based on the costs
and charges for CR and not on the
application of a hospital-specific overall
ancillary CCR, is applied to the charges
for CR services. The commenters were
concerned about CMS’ stated delay in
implementing a specific nonstandard
cost center for CR until 2011 because
the true cost of CR would not be
captured by the OPPS for ratesetting
until CY 2013 or later. The commenters
encouraged CMS to correct the
underpayment of CR services for CY
2010 in order to ensure the availability
of CR programs for Medicare
beneficiaries.
Response: We have no reason to
believe that ICR services as defined in
the coverage criteria are more costly to
furnish per session than CR services. We
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60571
note that one of the major differences
between CR and ICR services is that ICR
may be furnished in up to six sessions
per day, in comparison with the two
sessions per day that are covered for CR.
In the case of a Medicare beneficiary
who receives six ICR sessions in one
day, payment also would be six times
the payment for one session and,
therefore, the total hospital payment
would appropriately pay for the
additional costs of more services in a
day.
With regard to the comment that our
claims data do not reflect the costs of
the additional assessments that are now
required for CR and ICR coverage, we
analyzed the per session cost of CR in
our historical hospital claims data and
incorporated the costs of hospital
outpatient visits that we believe would
have been previously reported for
assessments furnished on the same day
to CR patients into our estimate of the
median cost for APC 0095. We found
that the APC median cost was
essentially unchanged. We believe that
psychosocial and outcomes assessments
are already a part of high quality CR/ICR
programs and that our per session
payment for CR and ICR services
through APC 0095 will appropriately
provide payment for all required
components of CR and ICR, including
the necessary assessments.
The median cost on which the CY
2010 payment for APC 0095 is based is
approximately $38, which is an increase
over the median cost of approximately
$36 on which the CY 2009 payment is
based. As we explained in the CY 2009
OPPS/ASC final rule with comment
period (74 FR 68525), we recognize that
there are areas of concern with the cost
report that are integral to our estimation
of hospital costs for OPPS ratesetting
and we are taking steps to address some
of them, including adopting a
nonstandard cost center for CR. This
cost center will be available for use in
cost reporting periods beginning on or
after February 2010. We refer readers to
section II.A.1.c.(2) of this final rule with
comment for further discussion of the
creation of this new cost center.
However, as we have previously
explained (74 FR 68522), modifying the
cost report data from its submitted form
for use in OPPS ratesetting based upon
assumptions about the data typically
would be contrary to our principle of
using the data as submitted by hospitals.
Therefore, we are not making changes or
adjustments to our OPPS cost estimation
for CR services for CY 2010 but, instead,
will await more accurate information for
future ratesetting that may be submitted
to us by hospitals when the nonstandard
cost center for CR services is available.
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We currently have no reason to believe
that Medicare beneficiaries have limited
access to CR services or that our
payment is inappropriate. We have over
2.5 million claims for CR sessions from
CY 2008 claims data, and further note
that the overall number of services and
the number of providers furnishing CR
have been stable over the past several
years.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to continue to
assign the CPT codes for CR, specifically
CPT codes 93797 and 93798, to APC
0095. We also are finalizing our CY
2010 proposal to assign the new HCPCS
G-codes for ICR, specifically G0422
(Intensive cardiac rehabilitation; with or
without continuous ECG monitoring,
with exercise, per hour, per session) and
G0423 (Intensive cardiac rehabilitation;
with or without continuous ECG
monitoring, without exercise, per hour,
per session) to APC 0095. We have
added the phrase ‘‘per hour’’ to the
descriptors of these codes because we
expect that the OPPS cost data for CR
services from the claims submitted for
CPT codes 93978 and 93979 generally
reflect 1 hour of CR services, in
accordance with our reporting
instructions for more than one session
per day of CR services in Section 200.1
of Chapter 4 of the Medicare Claims
Processing Manual. We believe that 1
hour of service is the standard for a
session of CR. Section 1861(eee)(4)(C) of
the Act provides for up to 72 one-hour
sessions of ICR and hence, adding ‘‘per
hour’’ to the two new HCPCS code
descriptors for ICR services implements
the statutory definition of an ICR
session as being one hour of service.
Moreover, we have established the
payment for ICR services on the
presumption that one session represents
one hour of care. Therefore, we believe
that it is appropriate to specify in the
descriptors of the HCPCS codes for ICR
services that one unit of the code
represents one hour of care. The final
APC median cost of APC 0095 is
approximately $38. As discussed in the
CY 2010 MPFS final rule with comment
period, CR is covered for up to 36 onehour sessions, with a minimum of 1
session per week and a maximum of 2
sessions per day, and Medicare
contractors have the authority to
approve additional sessions, up to 72
sessions, over an additional period of
time. With respect to ICR, section
144(a)(1) of Public Law 100–275
authorizes coverage of ICR programs in
a series of 72 one-hour sessions, up to
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6 sessions per day, over a period of 18
weeks.
We also note that as discussed in
section II.G.9. of the CY 2010 MPFS
final rule with comment period, we are
requiring that all ICR programs be
approved through the NCD process.
Once we have approved an ICR program
or programs through the NCD process,
individual sites wishing to furnish ICR
items and services via an approved ICR
program may enroll with their local
Medicare contractor to become an ICR
program supplier as outlined in
§ 424.510. This enrollment is designed
to ensure that the specific sites meet the
specific statutory and regulatory
requirements to furnish these services
and will provide a mechanism to appeal
a disapproval of a prospective ICR
program site. With regards to billing and
payment for CR and ICR services,
hospital providers will continue to use
their CMS Certification Number (CCN or
provider number) and appeals related to
the payment of claims will follow those
established processes. CMS will provide
further instructions for the NCD and
individual site enrollment processes.
4. Physician Supervision for Pulmonary
Rehabilitation, Cardiac Rehabilitation,
and Intensive Cardiac Rehabilitation
Services
Section 144 of Public Law 110–275
includes requirements for immediate
and ongoing physician availability and
accessibility for both medical
consultations and medical emergencies
at all times items and services are being
furnished under CR, ICR, and PR
programs. In section II.G.8. of the CY
2010 MPFS proposed rule (74 FR
33606), we proposed that these
requirements would be met through
existing definitions for direct physician
supervision in physicians’ offices and
hospital outpatient departments at
§ 410.26(a)(2) (defined through cross
reference to § 410.32(b)(3)(ii)) and
§ 410.27, respectively). We noted that
direct supervision, as defined in the
regulations, is consistent with the
requirements of Public Law 110–275
because the physician must be present
and immediately available where the
services are being furnished. The
physician must also be able to furnish
assistance and direction throughout the
performance of the services, which
would include medical consultations
and medical emergencies.
For CR, ICR, and PR services provided
to hospital outpatients, direct physician
supervision is the standard set forth in
the April 7, 2000 OPPS final rule with
comment period (68 FR 18524 through
18526) for supervision of hospital
outpatient therapeutic services covered
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and paid by Medicare in hospitals and
provider-based departments of
hospitals. We noted in the discussions
of CR and PR in the CY 2010 MPFS
proposed rule (74 FR 33609 and 33614)
that if we were to propose future
changes to the physician office or
hospital outpatient policies for direct
physician supervision, we would
provide our assessment of the
implications of those proposals for the
supervision of CR and PR services at
that time.
As discussed in more detail in the CY
2010 OPPS/ASC proposed rule (74 FR
35362), we proposed to refine the
definition of the direct supervision of
hospital outpatient therapeutic services
for those services provided in the
hospital and in an on-campus PBD of
the hospital. For services, including CR,
ICR, and PR services, provided in the
hospital and in an on-campus PBD of
the hospital, direct supervision would
mean that the physician must be present
on the same campus, in the hospital or
the on-campus PBD of the hospital, as
defined in § 413.65, and immediately
available to furnish assistance and
direction throughout the performance of
the procedure. We also proposed to
define ‘‘in the hospital’’ in proposed
new paragraph § 410.27(g) to mean areas
in the main building(s) of the hospital
that are under the ownership, financial,
and administrative control of the
hospital; are operated as part of the
hospital; and for which the hospital
bills the services furnished under the
hospital’s CCN. We did not propose
significant change to the definition or
requirements for direct supervision of
hospital outpatient therapeutic services
provided in off-campus PBDs of a
hospital. Thus, with respect to CR, ICR,
and PR services furnished in off-campus
PBDs of the hospital, direct supervision
would continue to mean that the
physician must be in the off-campus
PBD and immediately available to
furnish assistance and direction
throughout the performance of the
procedure. We believe that direct
supervision, as defined in the proposed
regulations for hospital outpatient
therapeutic services, continues to be
consistent with the requirements of Pub.
L. 110–275 for CR, ICR, and PR services
because the physician must be present
and immediately available where the
services are being furnished. The
physician must also be able to furnish
assistance and direction throughout the
performance of the services, which
would include medical consultations
and medical emergencies. For a
complete discussion of the current and
proposed requirements for the direct
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supervision of hospital outpatient
therapeutic services, we refer readers to
section XII.D. of the CY 2010 OPPS/ASC
proposed rule (74 FR 35362 through
35368).
Section 144 of Public Law 110–275
also states that in the case of items and
services furnished under such a CR,
ICR, or PR program in a hospital,
physician availability shall be
presumed. As we have stated in the CY
2009 OPPS/ASC final rule with
comment period (73 FR 68702 through
68704), the longstanding presumption of
direct physician supervision for hospital
outpatient services means that direct
physician supervision is the standard
for supervision of hospital outpatient
therapeutic services covered and paid
by Medicare in hospitals and PBDs of
hospitals, and we expect that hospitals
are providing services in accordance
with this standard.
We note that in the CY 2010 OPPS/
ASC proposed rule (74 FR 35362), we
also proposed that nonphysician
practitioners, defined for the purpose of
proposed revised § 410.27 of the
regulations as clinical psychologists,
physician assistants, nurse practitioners,
clinical nurse specialists, and certified
nurse-midwives, may directly supervise
all hospital outpatient therapeutic
services that they may perform
themselves within their State scope of
practice and hospital-granted privileges,
provided that they meet all additional
requirements, including any
collaboration or supervision
requirements as specified in §§ 410.71,
410.74, 410.75, 410.76, and 410.77.
However, in the CY 2010 MPFS
proposed rule and in the corresponding
proposed regulation text (74 FR 33674
and 33675, respectively), we proposed a
different requirement for the direct
supervision of CR, ICR, and PR services.
We proposed that services provided in
CR, ICR, and PR programs must be
supervised by a doctor of medicine or
osteopathy, as defined in section
1861(r)(1) of the Act. In addition, we
proposed specific requirements for the
expertise and licensure of physicians
supervising CR and ICR services. It
would not be in accordance with the
proposed regulations for a nonphysician
practitioner to supervise services
furnished in a CR, ICR, or PR program.
The physician supervision and expertise
requirements proposed in the coverage
policy and regulations for CR, ICR, and
PR services must be met for those
services to be covered and, therefore,
paid by Medicare in hospital outpatient
settings.
Comment: One commenter supported
the proposed requirements for physician
supervision of CR programs and
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requested that CMS confirm that the
proposed definition of ‘‘direct
supervision’’ that would apply to
therapeutic services in the HOPD would
also apply to CR services. Many
commenters objected to the requirement
that a physician must be present when
PR or CR/ICR services are furnished.
They indicated that the law presumes
that physician supervision exists in
hospitals and that, therefore, the same
rules that apply to other hospital
outpatient therapeutic services provided
in hospitals should apply to PR, CR, and
ICR services. The commenters also
asked that CMS permit physician
assistants, nurse practitioners, clinical
nurse specialists, and certified nurse
midwives who are functioning within
their State licensure and scope of
practice and who are permitted to
supervise the services under the
hospital bylaws to supervise PR, CR,
and ICR services. The commenters
expressed concern that the CY 2010
proposals in the MPFS proposed rule
did not include a justification for why
it would be necessary to impose
physician-only direct supervision for
PR, CR, and ICR services in HOPDs than
for other outpatient services. Some
commenters explained that rural
providers have great difficulty securing
physician services and rely heavily on
nonphysician practitioners to furnish
care in hospitals. They argued that to
require physician-only supervision
would mean that some PR, CR, and ICR
programs in rural areas would have to
close for lack of physician supervision
and that there would be no access to the
PR, CR, and ICR services for
beneficiaries in those communities.
Response: We understand the
reasoning of the commenters that PR,
CR, and ICR services should require
direct supervision by physicians and
certain nonphysician practitioners, as
we proposed for other hospital
outpatient therapeutic services, given
that PR, CR and ICR services are similar
to other hospital outpatient therapeutic
services. However, we are unable to
revise the regulations to permit
nonphysician practitioners to supervise
PR, CR, and ICR services. We do not
believe that the law provides the
flexibility for us to permit anyone other
than a physician to supervise hospital
outpatient PR, CR, and ICR services
because nonphysician practitioners are
not physicians as defined in section
1861(r)(1) of the Act. The statutory
language of section 144(a)(1) of Public
Law 100–275 defines PR, CR and ICR
programs as ‘‘physician-supervised.’’
More specifically, it establishes in
section 1861(eee)(2)(B) of the Act that
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60573
for PR, CR and ICR programs, ‘‘a
physician is immediately available and
accessible for medical consultation and
medical emergencies at all times items
and services are being furnished under
the program, except that, in the case of
items and service furnished under such
a program in a hospital, such
availability shall be presumed * * *.’’
The text of the statute uses the word
‘‘physician’’ and does not include
nonphysician practitioners. Also, as we
explained in the CY 2009 OPPS/ASC
proposed rule and final rule with
comment period (73 FR 41518 through
41519 and 73 FR 68702 through 68704,
referencing the April 7, 2000 OPPS final
rule (65 FR 18525)), the ‘‘presumption’’
or ‘‘assumption’’ of direct supervision
means that direct physician supervision
is the standard for all hospital
outpatient therapeutic services. We have
assumed this requirement is met on
hospital premises (meaning we have
expected that hospitals are meeting this
requirement) because staff physicians
would always be nearby in the hospital.
In other words, the requirement is not
negated by a presumption that the
requirement is being met. Hence, unlike
the standards for the direct supervision
of other hospital outpatient therapeutic
services, which we have established
through regulation based on section
1861(s) of the Act, in the case of PR, CR,
and ICR services, the authorizing
provision of the Act at section
1861(eee)(2)(B) explicitly requires direct
physician supervision of these services.
While we have some flexibility to
determine the type of practitioner who
may supervise other hospital outpatient
therapeutic services, as discussed in
XII.D.3. of this final rule with comment
period, in the case of PR, CR, and ICR
services specifically, the statutory
language of section 144(a)(1) of Public
Law 100–275 does not provide such
flexibility. Instead, the statute imposes
strict requirements, describing the direct
physician supervision standard for PR,
CR, and ICR services, and gives us no
flexibility to modify the requirement to
allow for other supervisory
practitioners.
After consideration of the public
comments we received, and in
accordance with the final policies set
forth in sections II.G.8. and II.G.9. of the
CY 2010 MPFS final rule with comment
period, we are finalizing our CY 2010
proposal, without modification, to
require the direct physician supervision
(by a doctor of medicine or doctor of
osteopathy) of PR, CR, and ICR services
that are furnished to hospital
outpatients. We note that we define
‘‘direct supervision’’ with regard to
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what it means to be immediately
available and accessible for medical
consultation and medical emergencies
in the same manner for PR, CR, and ICR
programs as we do for other therapeutic
services furnished in HOPDs. The final
CY 2010 definitions of direct
supervision for hospital outpatient
therapeutic services provided on the
campus and in off-campus providerbased departments also apply. These
definitions are discussed in detail in
section XII.D.3. of this final rule with
comment period, including the new and
revised regulations.
C. Stem Cell Transplant
Stem cell transplantation is a
treatment in which stem cells that are
harvested from either a patient’s or a
donor’s bone marrow or peripheral
blood are later infused into that patient
to treat an illness. Autologous stem cell
transplantation is a technique for
providing additional stem cells using
the patient’s own previously harvested
stem cells. Allogeneic stem cell
transplantation is a procedure in which
stem cells from a healthy donor are
acquired and prepared to provide a
patient with new stem cells.
We recently revised section 90.3.3 of
Chapter 3 of the Medicare Claims
Processing Manual (Pub. 100–04) and
created new section 231.10 of Chapter 4
of the Medicare Claims Processing
Manual in order to clarify billing under
Medicare for autologous and allogeneic
stem cell transplant services. As stated
in the cited new and revised manual
sections, autologous stem cell
transplants performed on Medicare
beneficiaries may be provided on an
inpatient or an outpatient basis.
Hospitals are instructed to bill and show
all charges for autologous stem cell
harvesting, processing, and transplant
procedures based on the status of the
patient (that is, inpatient or outpatient)
when the individual services are
furnished. The CPT codes describing
these services may be billed and are
separately payable under the OPPS
when the services are provided in the
hospital outpatient setting.
In contrast, we stated in the CY 2010
OPPS/ASC proposed rule (74 FR 35362)
that we believe allogeneic stem cell
transplants performed on Medicare
beneficiaries are provided on an
inpatient basis only, and all services
related to acquiring the stem cells from
a donor (whether performed on an
inpatient or outpatient basis) are billed
and are payable under Medicare Part A
through the IPPS MS–DRG payment for
the stem cell transplant. In addition to
payment for the stem cell transplant
procedure itself, the MS–DRG payment
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for the stem cell transplant includes
payment for stem cell acquisition
services, which include, but are not
limited to, National Marrow Donor
Program fees for stem cells from an
unrelated donor (if applicable); tissue
typing of a donor and a recipient; donor
evaluation; physician pre-admission/
pre-procedure donor evaluation
services; costs associated with the
harvesting procedure; post-operative/
post-procedure evaluation of a donor;
and preparation and processing of stem
cells. While certain acquisition services,
such as donor harvesting procedures,
may be performed in the hospital
outpatient setting, hospitals are
instructed to include the charges for
these services in the recipient’s
inpatient transplant bill as acquisition
services and not to bill them under the
OPPS.
In order to be consistent with the
revised Section 90.3.3 and the new
Section 231.10 of the Medicare Claims
Processing Manual cited earlier, which
reflect what we believed at the time to
be the current clinical practice of
performing allogeneic stem cell
transplants on Medicare beneficiaries on
an inpatient basis only, in the CY 2010
OPPS/ASC proposed rule (74 FR 35362),
we proposed to revise the status
indicator assignments of certain stem
cell transplant-related CPT codes under
the OPPS. Specifically, we proposed to
change the status indicator for CPT code
38205 (Blood-derived hematopoietic
progenitor cell harvesting for
transplantation, per collection;
allogenic) from ‘‘S’’ to ‘‘E’’ for the CY
2010 OPPS to reflect that, while an
allogeneic stem cell harvesting
procedure performed on the donor may
take place in the HOPD, payment for the
service is made through the IPPS MS–
DRG payment for the associated
transplant procedure performed on the
recipient. We also proposed to change
the status indicators for CPT code 38240
(Bone marrow or blood-derived
peripheral stem cell transplantation;
allogenic) and CPT code 38242 (Bone
marrow or blood-derived peripheral
stem cell transplantation; allogeneic
donor lymphocyte infusions) from ‘‘S’’
to ‘‘C’’ for the CY 2010 OPPS to reflect
that these allogeneic stem cell
transplant procedures are payable by
Medicare as inpatient procedures only.
At its August 2009 meeting, the APC
Panel heard from presenters who stated
that reduced intensity conditioning
(RIC) regimens have made outpatient
allogeneic stem cell transplants feasible
for some Medicare beneficiaries. The
presenters stated that revising the status
indicators for CPT codes 38205, 38240,
and 38242 to make them nonpayable on
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outpatient claims would impede the
current clinical practice of providing
allogeneic stem cell transplant and
harvesting procedures on an outpatient
basis, which, according to public
commenters on the proposed rule,
would lower costs, provide greater
patient comfort, optimize hospital
resources, and decrease the risk of
nosocomial infections. The APC Panel
agreed with the presenters and
recommended that CMS maintain the
CY 2009 APC assignments and status
indicators for CPT codes 38205 and
38242, which are both currently
assigned to APC 0111 (Blood Product
Exchange), and for CPT code 38240,
which is currently assigned to APC 0112
(Apheresis and Stem Cell Procedures)
for CY 2009.
Comment: Several commenters on the
CY 2010 proposed rule disagreed with
CMS’ assertion that allogeneic stem cell
transplants performed on Medicare
beneficiaries are provided on an
inpatient basis only. According to the
commenters, allogeneic stem cell
transplants are currently performed in
both the inpatient and outpatient
settings and are considered safe and
clinically appropriate for many
Medicare patients. The commenters
argued that CMS’ proposal would create
strong financial incentives for hospitals
to unnecessarily admit patients who
could have otherwise been treated in the
outpatient setting and requested that
CMS maintain the current CY 2009
status indicators and APC assignments
of CPT codes 38205, 38240, and 38242
for CY 2010. The commenters urged
CMS to continue to pay for CPT code
38205 separately under the OPPS,
regardless of where the transplant
ultimately occurs, because CMS’ policy
of bundling payment for stem cell
harvesting procedures into the payment
for the transplant procedure is overly
complicated and burdensome,
particularly when the harvesting
procedure is performed in a different
hospital from the hospital where the
transplant is performed. The
commenters also requested that CMS
revise its manual guidance to reflect that
hospitals should report all allogeneic
stem cell harvesting, processing, and
transplant services and their associated
charges based on the status of the
patient (that is, inpatient or outpatient)
when the individual services are
furnished.
Some commenters summarized other
billing and payment issues related to
allogeneic stem cell transplants for
which they are seeking further direction
and policy development from CMS,
such as how hospitals could be paid for
search and procurement costs related to
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allogeneic stem cell transplants that do
not occur due to a change in the
patient’s health status and the potential
creation of separate MS–DRGs for
allogeneic and autologous stem cell
transplant services. The commenters
recognized that greater analysis of these
complex and unique issues would be
required before CMS could address
them fully.
Response: We appreciate the
information on current clinical practice
for allogeneic stem cell transplants
provided by commenters. Upon further
review, we agree with the commenters
and the APC Panel that the allogeneic
stem cell transplant procedures
described by CPT codes 38240 and
38242 can be safely and appropriately
performed on some Medicare
beneficiaries on an outpatient basis.
Therefore, we are not adopting our CY
2010 proposal to change the status
indicators for CPT codes 38240 and
38242 from ‘‘S’’ to ‘‘C’’ in order to
indicate that Medicare would only pay
for these procedures when furnished in
the hospital inpatient setting. Rather, we
are continuing to assign CPT code 38240
to APC 0112 and CPT code 38242 to
APC 0111 for CY 2010 for purposes of
hospital outpatient payment, and are
maintaining the assignment of status
indicator ‘‘S’’ to both CPT codes that
describe these procedures. CPT codes
38240 and 38242 are assigned to these
same APCs for CY 2009, and we believe
the allogeneic stem cell transplantrelated procedures they describe share
the clinical and resource characteristics
of other procedures assigned to those
APCs for CY 2010.
We do not agree with the public
commenters and the APC Panel that the
allogeneic stem cell harvesting
procedure described by CPT code 38205
should be separately payable with status
indicator ‘‘S’’ under the OPPS for CY
2010 because hospitals may bill and
receive payment only for services
provided to the Medicare beneficiary
who is the recipient of the stem cell
transplant and whose illness is being
treated with the stem cell transplant. We
do not agree with the commenters that
we should pay for allogeneic stem cell
harvesting services separately because
these services are not directly furnished
to beneficiaries. Instead, we believe that
it continues to be appropriate to pay for
these services through payment for the
associated stem cell transplant
procedure. The hospital should report
all allogeneic stem cell acquisition
charges, including costs associated with
the harvesting procedure, on the
recipient’s inpatient or outpatient
transplant bill under revenue code 0819.
Payment for the allogeneic stem cell
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harvesting procedure performed on the
donor and reported under revenue code
0819 is packaged into the IPPS MS–DRG
payment or the OPPS APC payment for
the associated transplant procedure
performed on the recipient, depending
on whether the transplant procedure is
performed in the inpatient setting or the
outpatient setting. Therefore, we are
modifying our CY 2010 proposal to
change the status indicator for CPT code
38205 from ‘‘S’’ to ‘‘E’’ for the CY 2010
OPPS. Instead, we are assigning status
indicator ‘‘B’’ to CPT code 38205 for CY
2010 to reflect that the code is not
recognized by OPPS when submitted on
an outpatient hospital Part B bill type.
We will update section 90.3.3 of
Chapter 3 and section 231.10 of Chapter
4 of the Medicare Claims Processing
Manual to comport with these billing
and payment changes for allogeneic
stem cell transplants and related
services as described in this section.
We appreciate the commenters’
summaries of other billing and payment
issues related to allogeneic stem cell
transplants for which they sought
further direction and policy
development from CMS. While we
consider these issues to be outside of
the scope of the proposed rule, we will
consider the commenters’ suggestions as
we explore this policy area more
broadly in the future. We note that
current guidance in Section 90.3.3 of
Chapter 3 of the Medicare Claims
Processing Manual instructs providers
to include on the Medicare cost report
any costs associated with acquisition
services for allogeneic stem cell
acquisition services in cases that do not
result in transplant due to death of the
intended recipient or other causes.
After consideration of the public
comments we received, we are
modifying our CY 2010 proposal for
allogeneic stem cell transplant
procedures. Specifically, for CY 2010,
we are accepting the APC Panel’s
recommendation and continuing to
assign CPT code 38240 to APC 0112 and
CPT code 38242 to APC 0111, which is
consistent with their CY 2009
assignments. The final APC median
costs of APC 0112 and APC 0111 are
approximately $2,225 and $798,
respectively, for CY 2010. We are
maintaining status indicator ‘‘S’’ for the
procedures described by both of these
CPT codes. In addition, we are not
adopting the APC Panel’s
recommendation or the public
commenters’ suggestion to maintain the
CY 2009 status indicator and APC
assignment for CPT code 38205. Instead,
we are assigning status indicator ‘‘B’’ to
CPT code 38205 for CY 2010 to reflect
that the code is not recognized by OPPS
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60575
when submitted on an outpatient
hospital Part B bill type because
payment is made for allogeneic stem
cell harvesting through payment for the
recipient’s transplant procedure,
whether the transplant is provided in
the hospital inpatient setting or the
outpatient setting.
D. Physician Supervision
1. Background
In the CY 2009 OPPS/ASC proposed
rule and final rule with comment period
(73 FR 41518 through 41519 and 73 FR
68702 through 68704, respectively), we
provided a restatement and clarification
of the requirements for physician
supervision of hospital outpatient
diagnostic and therapeutic services that
were set forth in the April 2000 OPPS
final rule with comment period (65 FR
18524 through 18526). As we stated in
those rules, section 1861(s)(2)(C) of the
Act authorizes payment for diagnostic
services that are furnished to a hospital
outpatient for the purpose of diagnostic
study. We have further defined the
requirements for diagnostic services
furnished to hospital outpatients,
including requirements for physician
supervision of diagnostic services, in
§§ 410.28 and 410.32 of our regulations.
Section 410.28(e) states that Medicare
Part B makes payment for diagnostic
services furnished at provider-based
departments (PBDs) of hospitals ‘‘only
when the diagnostic services are
furnished under the appropriate level of
physician supervision specified by CMS
in accordance with the definitions in
§§ 410.32(b)(3)(i), (b)(3)(ii), and
(b)(3)(iii).’’ In addition, in the April
2000 OPPS final rule with comment
period (65 FR 18526), we stated that our
model for the requirement was the
requirement for physician supervision
of diagnostic tests payable under the
MPFS that was set forth in the CY 1998
MPFS final rule (62 FR 59048). In 2000,
we also explained with respect to the
supervision requirements for individual
diagnostic tests that we intended to
instruct hospitals and fiscal
intermediaries to use the MPFS as a
guide pending issuance of updated
requirements. For diagnostic services
not listed in the MPFS, we stated that
fiscal intermediaries, in consultation
with their medical directors, would
define appropriate supervision levels in
order to determine whether claims for
these services are reasonable and
necessary. Since 2000, we have
continued to follow the supervision
requirements for individual diagnostic
tests as listed in the MPFS Relative
Value File. The file is updated quarterly
and is available on the CMS Web site at:
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https://www.cms.hhs.gov/
PhysicianFeeSched/.
In the CY 2009 OPPS/ASC proposed
rule and final rule with comment period
(73 FR 41518 through 41519 and 73 FR
68702 through 68704, respectively), we
also reiterated that direct physician
supervision is the standard for
physician supervision as set forth in the
April 2000 OPPS final rule with
comment period for supervision of
hospital outpatient therapeutic services
covered and paid by Medicare in
hospitals and PBDs of hospitals. We
noted that section 1861(s)(2)(B) of the
Act authorizes payment for hospital
services ‘‘incident to physicians’
services rendered to outpatients.’’ We
have further defined the supervision
requirements for hospital outpatient
therapeutic services and supplies
‘‘incident to’’ a physician’s service in
§ 410.27 of our regulations. More
specifically, § 410.27(f) states: ‘‘Services
furnished at a department of a provider,
as defined in § 413.65(a)(2) of this
subchapter, that has provider-based
status in relation to a hospital under
§ 413.65 of this subchapter, must be
under the direct supervision of a
physician. ‘Direct supervision’ means
the physician must be present and on
the premises of the location and
immediately available to furnish
assistance and direction throughout the
performance of the procedure. It does
not mean that the physician must be
present in the room when the procedure
is performed.’’ This language makes no
distinction between on-campus and offcampus PBDs.
In the preamble of the April 2000
OPPS final rule with comment period
(65 FR 18525), we further discussed the
requirement for physician supervision
and the finalization of the proposed
regulation text. In that discussion, we
stated that the language of § 410.27(f)
‘‘applies to services furnished at an
entity that is located off the campus of
a hospital that we designate as having
provider-based status as a department of
a hospital in accordance with § 413.65.’’
We also stated that, for services
furnished in a department of a hospital
that is located on the campus of a
hospital, ‘‘we assume the direct
supervision requirement to be met as we
explain in Section 3112.4(a) of the
Intermediary Manual.’’ We further
stated that ‘‘we assume the physician
supervision requirement is met on
hospital premises because staff
physicians would always be nearby
within the hospital.’’
In the CY 2009 OPPS/ASC proposed
rule and final rule with comment period
(73 FR 41518 through 41519 and 73 FR
68702 through 68704, respectively), we
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restated the existing physician
supervision policy for hospital
outpatient therapeutic services because
we were concerned that some
stakeholders may have misunderstood
our use of the term ‘‘assume’’ in the
April 2000 OPPS final rule with
comment period, believing that our
statement meant that we do not require
any supervision in the hospital or in an
on-campus PBD for hospital outpatient
therapeutic services, or that we only
require general supervision for those
services. This is not the case. It has been
our expectation that hospital outpatient
therapeutic services are provided under
the direct supervision of physicians in
the hospital and in all PBDs of the
hospital, specifically, both on-campus
and off-campus departments of the
hospital. The expectation that a
physician would always be nearby
predates the OPPS and is related to the
statutory authority for payment of
hospital outpatient services—that
Medicare makes payment for hospital
outpatient services ‘‘incident to’’ the
services of physicians in the treatment
of patients as described in section
1861(s)(2)(B) of the Act. Section
410.27(a)(1)(ii) of the regulations states
that Medicare Part B pays for hospital
services and supplies furnished incident
to a physician service to outpatients if
they are provided ‘‘as an integral though
incidental part of a physician’s
services.’’ In addition, we have stated in
Section 20 of Chapter 6 of the Medicare
Benefit Policy Manual (Pub. 100–2) that
hospitals provide two distinct types of
services to outpatients: Services that are
diagnostic in nature, and other services
that aid the physician in the treatment
of the patient. We further defined these
therapeutic services and supplies in
Section 20.5.1 of the Medicare Benefit
Policy Manual, stating ‘‘therapeutic
services and supplies which hospitals
provide on an outpatient basis are those
services and supplies (including the use
of hospital facilities) which are incident
to the services of physicians in the
treatment of patients.’’ We also provide
in Section 20.5.1 that services and
supplies must be furnished on a
physician’s order and delivered under
physician supervision. However, the
manual indicates further that each
occasion of a service by a nonphysician
does not need to also be the occasion of
the actual rendition of a personal
professional service by the physician
responsible for the care of the patient.
Nevertheless, as stipulated in that same
section of the manual ‘‘during any
course of treatment rendered by
auxiliary personnel, the physician must
personally see the patient periodically
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and sufficiently often enough to assess
the course of treatment and the patient’s
progress and, where necessary, to
change the treatment regimen.’’
The expectation that a physician
would always be nearby within the
hospital also dates back to a time when
hospital inpatient services provided in a
single hospital building represented the
majority of hospital payments by
Medicare. Since that time, advances in
medical technology, changes in the
patterns of health care delivery, and
changes in the organizational structure
of hospitals have led to the development
of extensive hospital campuses,
sometimes spanning several city blocks,
as well as off-campus and satellite
provider-based campuses at different
locations. In the April 2000 OPPS final
rule with comment period (65 FR
18525), we described the focus of the
direct physician supervision
requirement for off-campus PBDs. In the
CY 2009 OPPS/ASC final rule with
comment period (73 FR 68703), we
stated that we do expect direct
physician supervision of all hospital
outpatient therapeutic services,
regardless of their on-campus or offcampus location, but that we would
continue to emphasize the physician
supervision requirement for off-campus
PBDs. However, we also noted that if
there were problems with outpatient
care in a hospital or in an on-campus
PBD where direct supervision was not
in place (that is, the expectation of
direct physician supervision was not
met), we would consider that to be a
quality concern. We noted that we want
to ensure that payment is made for high
quality hospital outpatient services
provided to beneficiaries in a safe and
effective manner and consistent with
Medicare requirements.
Finally, we noted that the definition
of direct supervision in § 410.27(f) for
PBDs requires that the physician must
be present and on the premises of the
location and immediately available to
furnish assistance and direction
throughout the performance of the
procedure. In the April 2000 OPPS final
rule with comment period (65 FR
18525), we further distinguished ‘‘on
the premises of the location’’ by stating
‘‘* * * a physician must be present on
the premises of the entity accorded
status as a department of the hospital
and therefore, immediately available to
furnish assistance and direction for as
long as patients are being treated at the
site.’’ We also stated that this
characterization does not mean that the
physician must be physically in the
room where a procedure or service is
furnished. We noted in the CY 2009
OPPS/ASC final rule with comment
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period (73 FR 68703) that although we
have not further defined the term
‘‘immediately available’’ for this specific
context, the lack of timely physician
response to a problem in the HOPD
would represent a quality concern from
our perspective that hospitals should
consider in structuring their provision
of services in ways that meet the direct
physician supervision requirement for
HOPD services.
In response to a comment requesting
clarification, we also discussed in the
CY 2009 OPPS/ASC final rule with
comment period (73 FR 68703 through
68704) that a nonphysician practitioner
may not provide the physician
supervision in a PBD, even if a nurse
practitioner’s or a physician assistant’s
professional service was being billed as
a nurse practitioner or a physician
assistant service and not a physician
service. We noted that section 1861(r) of
the Act defines a physician as follows:
‘‘[t]he term ‘physician’, when used in
connection with the performance of any
function or action, means (1) a doctor of
medicine or osteopathy legally
authorized to practice medicine and
surgery by the State in which he
performs such function or action * * *;
(2) a doctor of dental surgery or of
dental medicine [legally authorized to
practice in the State and acting within
the scope of his license]; (3) a doctor of
podiatric medicine [for certain purposes
and to the extent authorized by the
State]; (4) a doctor of optometry [for
certain purposes and to the extent
legally authorized by the State]; or (5) a
chiropractor [for certain purposes and to
the extent legally authorized by the
State and consistent with the Secretary’s
standards].’’ In addition, we pointed out
that the conditions of participation for
hospitals under § 482.12(c)(1)(i) through
(c)(1)(vi) of our regulations require that
every Medicare hospital patient is under
the care of a doctor of medicine or
osteopathy, a doctor of dental surgery or
dental medicine, a doctor of podiatric
medicine, a doctor of optometry, a
chiropractor, or a clinical psychologist;
each practicing within the extent of the
Act, the Federal regulations, and State
law. Further, § 482.12(c)(4) of our
regulations requires that a doctor of
medicine or osteopathy must be
responsible for the care of each
Medicare patient with respect to any
medical or psychiatric condition that is
present on admission or develops
during hospitalization and is not
specifically within the scope of practice
of one of the other practitioners listed in
§ 482.12(c)(1)(ii) through (c)(1)(vi).
Moreover, section 1861(s)(2)(B) of the
Act authorizes payment for hospital
services ‘‘incident to physicians’
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services rendered to outpatients.’’ We
have further defined the requirements
for hospital outpatient therapeutic
services and supplies ‘‘incident to’’ a
physician’s service in § 410.27 of our
regulations. Section 410.27(a)(1)(ii)
describes payment for hospital
outpatient services when they are ‘‘an
integral though incidental part of a
physician’s services.’’ Also, § 410.27(f)
requires that hospital outpatient
services provided in PBDs must be
under the direct supervision of a
physician. We stated that the language
of the statute and regulations does not
include nonphysician practitioners
other than clinical psychologists.
Therefore, it would not be in accordance
with the law and regulations for a
nonphysician practitioner other than a
clinical psychologist to be providing the
physician supervision in a PBD, even if
a nurse practitioner’s or a physician
assistant’s professional service was
being billed as a nurse practitioner or a
physician assistant service and not a
physician service.
2. Issues Regarding the Physician
Supervision of Hospital Outpatient
Services Raised by Hospitals and Other
Stakeholders
Although we received a few public
comments on the discussion of
physician supervision in the CY 2009
OPPS/ASC proposed rule, since
publication of the CY 2009 OPPS/ASC
final rule with comment period on
November 18, 2008, we have received
many questions and concerns about the
current policies from hospitals and
other stakeholders, as we discussed in
the CY 2010 OPPS/ASC proposed rule
(74 FR 35364). Some stakeholders
expressed appreciation for the CMS
clarification, stating that the supervision
policies were clear and represented
needed safeguards for beneficiaries. On
the other hand, we have received
numerous questions about the
application of the policies to hospital
outpatient therapeutic services
furnished in areas of the hospital that
some stakeholders believe have not
clearly been discussed, such as the
application of direct supervision to
hospital outpatient therapeutic services
furnished within the main buildings of
the hospital that may not be PBDs of the
hospital. Some hospitals expressed
difficulty in determining whether
certain areas of their hospitals were
considered provider-based. Other
stakeholders cited the direct supervision
policy as first articulated in 2000 as
problematic because they believe that
CMS failed to consider hospitals’
current organizational structures. Some
hospitals and other stakeholders
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60577
inquired about a physician’s
qualifications for providing supervision
or questioned whether physician
supervision must be provided by a
physician in a particular medical
specialty. A number of stakeholders
challenged the current policy that
nonphysician practitioners cannot
provide direct supervision for those
hospital outpatient therapeutic services
they may personally perform or that
they may order to be provided by other
hospital staff incident to the
nonphysician practitioner’s services. In
addition, numerous stakeholders,
especially rural hospitals, raised
budgetary and patient access concerns
related to ensuring adequate physician
staffing, especially because
nonphysician practitioners may not
directly supervise the delivery of
hospital outpatient therapeutic services.
Furthermore, rural hospitals and CAHs
raised concerns regarding the
inconsistency of the direct supervision
requirements for CAHs with other CAH
policies, pointing out that the Medicare
conditions of participation for CAHs
allow nurse practitioners and physician
assistants to be responsible for the care
of Medicare patients in CAHs. Some
stakeholders specifically questioned
whether § 410.27(f) applied to CAHs
because the term ‘‘CAH’’ is not in the
heading of § 410.27, which currently
reads ‘‘Outpatient hospital services and
supplies incident to a physician service:
Conditions.’’ Other stakeholders
complained about the significant burden
on hospitals to provide direct physician
supervision because they believe there
is no clear clinical need for such
supervision, particularly a uniform level
of supervision for all types of hospital
outpatient therapeutic services. Some
stakeholders challenged the
applicability of the direct supervision
requirements to specific types of
hospital outpatient services, such as
partial hospitalization or chemotherapy
administration services.
Similar to the issues related to direct
supervision of hospital outpatient
therapeutic services raised by hospitals
and other stakeholders, we have
received questions since publication of
the CY 2009 OPPS/ASC final rule with
comment period regarding the
application of physician supervision
policies for hospital outpatient
diagnostic services, especially with
respect to services provided within the
main buildings of the hospital that are
not PBDs. In addition, some
stakeholders have pointed out that there
is no site-of-service requirement for
hospital outpatient diagnostic services,
and that, therefore, hospitals may send
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patients to independent diagnostic
testing facilities (IDTFs) or other entities
to receive diagnostic services under
arrangement. They added that although
these facilities are not PBDs, the
hospital would bill for these services as
hospital outpatient services in
accordance with the hospital bundling
rules. Some of these stakeholders have
asked what type of physician
supervision is required for diagnostic
services provided under arrangement.
A number of stakeholders urged CMS
to withdraw or delay the physician
supervision policies discussed in the CY
2009 OPPS/ASC final rule with
comment period, arguing that this rule
included policy changes rather than
clarification and, therefore, sufficient
opportunity for public notice and
comment was not provided. Some
further argued that CMS should suspend
enforcement of these policies while
CMS gathers additional public input
and considered alternatives. These
stakeholders suggested a variety of
additional approaches to soliciting full
feedback from the hospital and
physician communities on the
supervision policies and their impact,
including holding an open door forum
or town hall meeting and reopening the
discussion during the CY 2010 OPPS
rulemaking process.
As discussed in the CY 2010 OPPS/
ASC proposed rule (74 FR 35365), we
provided a restatement and clarification
of existing policy in the CY 2009 OPPS/
ASC proposed rule (73 FR 41518
through 41519), citing numerous
existing statutory, regulatory, manual,
and prior rule preamble statements in
section XII.A. of that rule specifically
titled, ‘‘Physician Supervision of HOPD
Services.’’ The CY 2009 OPPS/ASC
proposed rule provided for a 60-day
comment period. We stated that we
continue to believe that the CY 2009
restatement and clarification made no
change to longstanding hospital
outpatient physician supervision
policies as incorporated in prior
statements of policy, including the
codified Federal regulations. In
addition, we provided for public notice
and comment regarding these physician
supervision polices through the CY
2009 OPPS/ASC proposed rule in
which, as noted above, we discussed
physician supervision in a distinct
section of the proposed rule. However,
we received only a few public
comments on that section. We also
noted that the physician supervision
policies for hospital outpatient
diagnostic and therapeutic services as
described in the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68702 through 68704) continue to be in
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Jkt 220001
effect for CY 2009. In the CY 2010
OPPS/ASC proposed rule (74 FR 35365),
we stated that we have not instructed
contractors to delay initiation of
enforcement actions or to discontinue
pursuing pending enforcement actions
regarding the physician supervision of
hospital outpatient services.
However, while we did not propose to
withdraw the longstanding physician
supervision policies for hospital
outpatient services in CY 2009, we
stated in the CY 2010 OPPS/ASC
proposed rule (74 FR 35365) that we
had extensively considered the many
questions and concerns on this topic
raised to us by stakeholders in the
course of developing the proposed rule
in order to assess whether proposed
changes to the existing policies should
be considered. We appreciated the many
detailed comments and suggestions
interested stakeholders have raised in
the first few months since publication of
the CY 2009 OPPS/ASC final rule with
comment period. We considered a wide
variety of potential modifications to our
physician supervision policies in
response to this information about
current health care delivery practices
and challenges. The dialogue with
interested stakeholders provided us
with sufficient information to develop
proposals for certain changes to the
supervision policies for hospital
outpatient services for CY 2010 in order
to take into full consideration current
clinical practice and patterns of care,
the need to ensure patient access, the
associated hospital and physician
responsibilities, consistency among
requirements for different sites of
services, and other important factors.
We indicated our belief that the
proposals we were making for CY 2010
would address many of the concerns
and questions regarding our existing
policies that had been raised to us by
stakeholders over the first 6 months of
CY 2009. In the CY 2010 OPPS/ASC
proposed rule (74 FR 35365), we
welcomed robust public comments
regarding our CY 2010 proposals for
physician supervision in order to inform
our decisions regarding final policies for
CY 2010.
In considering the questions and
concerns that had been raised over the
first 6 months of CY 2009, we identified
three areas within our existing hospital
outpatient physician supervision
policies for which we stated our belief
that proposals of policy changes were
appropriate for CY 2010, two related to
the supervision of therapeutic services
and one related to the supervision of
diagnostic services. Our specific CY
2010 proposals, including the proposed
changes to our regulations to conform to
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these proposals, the public comments
on the proposals and our responses, and
our final CY 2010 supervision policies
for hospital outpatient therapeutic and
diagnostic services are discussed below.
3. Policies for Direct Supervision of
Hospital and CAH Outpatient
Therapeutic Services
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35365), we proposed that
nonphysician practitioners, specifically
physician assistants, nurse practitioners,
clinical nurse specialists, and certified
nurse-midwives, may directly supervise
all hospital outpatient therapeutic
services that they may perform
themselves in accordance with their
State law and scope of practice and
hospital-granted privileges, provided
that they continue to meet all additional
requirements, including any
collaboration or supervision
requirements as specified in the
regulations at §§ 410.74 through 410.77.
Clinical psychologists may already
provide direct supervision, as we
mentioned in the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68703 through 68704) because they,
along with physicians (as defined in
section 1861(r)(1) of the Act), may be
responsible for the care of a hospital
patient, as discussed in the Medicare
conditions of participation for hospitals
in § 482.12(c) of our regulations. We
stated our belief that allowing certain
nonphysician practitioners (nurse
practitioners, physician assistants,
clinical nurse specialists, and certified
nurse-midwives) to provide direct
supervision of certain hospital
outpatient therapeutic services is
appropriate because, even though these
practitioners are not physicians, they
are recognized in statute and regulation
as providing services that are analogous
to physicians’ services. Medicare Part B
covers the professional services of
clinical psychologists, nurse
practitioners, physician assistants,
clinical nurse specialists, and certified
nurse-midwives when the services
would be physicians’ services if
furnished by a physician (a doctor of
medicine or osteopathy, as set forth in
section 1861(r)(1) of the Act). Their
services are described in §§ 410.71(a),
410.74(a), 410.75(a) and (c), 410.76(a)
and (c), and 410.77(a), respectively, of
our regulations. Medicare also makes
payment for services provided incident
to the services of these nonphysician
practitioners as specified in
§§ 410.71(a)(2)(iii), 410.74(b), 410.75(d),
410.76(d), and 410.77(c), respectively.
We also noted that section 1861(r) of
the Act does not include clinical
psychologists, nurse practitioners,
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physician assistants, clinical nurse
specialists, or certified nurse-midwives
in the definition of a physician.
However, as previously mentioned, the
conditions of participation for hospitals
at § 482.12(c)(1)(vi) of our regulations do
include clinical psychologists as
practitioners who may be responsible
for the care of Medicare patients. The
conditions of participation at
§§ 482.12(c)(1)(i) through (c)(1)(vi)
require that every Medicare hospital
patient be under the care of a doctor of
medicine or osteopathy, a doctor of
dental surgery or dental medicine, a
doctor of podiatric medicine, a doctor of
optometry, a chiropractor, or a clinical
psychologist; each practicing in
accordance with the Act, Federal
regulations, and State law. Further,
§ 482.12(c)(4) of our regulations requires
that a doctor of medicine or osteopathy
must be responsible for the care of each
Medicare patient with respect to any
medical or psychiatric condition that is
present on admission or develops
during hospitalization and is not
specifically within the scope of practice
of one of the other practitioners listed in
§§ 482.12(c)(1)(ii) through (c)(1)(vi).
Also, as permitted by State law, certain
nonphysician practitioners may admit
individuals to a hospital or CAH and
order and provide therapeutic services
to them. Since 1998, we have allowed
payment for the professional services of
these nonphysician practitioners in
addition to payment for physicians’
services when the nonphysician
practitioner’s professional services are
furnished in an HOPD. We also have
made outpatient facility payments to the
hospital for those facility services
provided incident to the professional
services of these nonphysician
practitioners (63 FR 58873). In addition,
the conditions of participation for CAHs
at § 485.631 require that a doctor of
medicine or osteopathy, a nurse
practitioner, a physician assistant, or a
clinical nurse specialist be available to
furnish patient care services at all times
the CAH operates. A doctor of medicine
or osteopathy must be present for
sufficient periods of time to provide
medical direction, medical care
services, consultation and supervision
as described in the conditions of
participation and must be available
through radio or telephone contact for
assistance with medical emergencies or
patient referral.
Taking into consideration the totality
of these existing conditions and
requirements, we proposed to revise
§ 410.27 of the regulations to make clear
that Medicare Part B payment may be
made for hospital outpatient services
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14:52 Nov 19, 2009
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and supplies furnished incident to the
services of a physician, clinical
psychologist, nurse practitioner,
physician assistant, clinical nurse
specialist, or certified nurse-midwife
service; and to add that, effective
January 1, 2010, clinical psychologists,
nurse practitioners, physician assistants,
clinical nurse specialists, or certified
nurse-midwives may provide direct
supervision for hospital outpatient
therapeutic services that they may
perform themselves under State law and
within their scope of practice and
hospital-granted privileges in the
context of the existing requirements in
§§ 410.71, 410.74, 410.75, 410.76, and
410.77. However, we note that, in the
CY 2010 OPPS/ASC proposed rule (74
FR 35366), we proposed that the direct
supervision of CR, ICR, and PR services
must be furnished by a doctor of
medicine or osteopathy, as specified in
the proposed coverage policy and
regulations for CR, ICR, and PR services.
We also noted that Medicare does not
make a payment to a physician under
the MPFS when the physician solely
provides the direct physician
supervision of hospital outpatient
therapeutic services but furnishes no
direct professional services to a patient.
This also would apply to the
supervision of hospital outpatient
therapeutic services provided by
nonphysician practitioners.
We also indicated that we did not
propose to modify requirements relating
to physician supervision or
collaboration for these nonphysician
practitioners. In regard to the
supervision of physician assistants,
§ 410.74(a)(iv) requires that physician
assistants perform services under the
general supervision of a physician. We
have further defined this general
supervision in section 190(c) of Chapter
15 of the Medicare Benefit Policy
Manual. Section 190(c) states that ‘‘the
PA’s physician supervisor (or a
physician designated by the supervising
physician or employer as provided
under State law or regulations) is
primarily responsible for the overall
direction and management of the
physician assistant’s professional
activities and for assuring that the
services provided are medically
appropriate for the patient. The
physician supervisor (or physician
designee) need not be physically present
with the physician assistant when a
service is being furnished to a patient
and may be contacted by telephone, if
necessary, unless State law or
regulations require otherwise.’’
The requirements for collaboration of
nurse practitioners are defined in
§ 410.75(c)(3) of the regulations and
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60579
Section 200(D) of Chapter 15 of the
Medicare Benefit Policy Manual. The
requirements for clinical nurse
specialists are located in § 410.76(c)(3)
of the regulations and Section 210(D) of
Chapter 15 of the Medicare Benefit
Policy Manual. These sections define
collaboration as a process in which the
nurse practitioner or the clinical nurse
specialist works with one or more
physicians (doctors of medicine or
osteopathy) to deliver health care
services within the scope of the
practitioner’s expertise, with medical
direction and appropriate supervision as
required by the law of the State in
which the services are being furnished.
In the absence of more stringent State
law requirements governing
collaboration, collaboration is to be
evidenced by the nurse practitioner or
the clinical nurse specialist
documenting his or her scope of
practice and indicating the relationships
that he or she has with physicians to
deal with issues outside their scope of
practice. The collaborating physician
does not need to be present with the
nurse practitioner or clinical nurse
specialist when the services are
furnished or to make an independent
evaluation of each patient who is seen
by the nurse practitioner or clinical
nurse specialist.
In addition, for CY 2010, we proposed
to refine the definition of direct
supervision of hospital outpatient
therapeutic services for those services
furnished in a hospital and in oncampus PBDs of a hospital. For services
furnished on a hospital’s main campus,
we proposed that direct supervision
means that the supervisory physician or
nonphysician practitioner must be
present on the same campus, in the
hospital or the on-campus PBD of the
hospital as defined in § 413.65, and
immediately available to furnish
assistance and direction throughout the
performance of the procedure. We
proposed to add a new paragraph
(a)(1)(iv)(A) to § 410.27 to reflect this
requirement. We also proposed to define
‘‘in the hospital’’ in new paragraph
§ 410.27(g) as meaning areas in the main
building(s) of a hospital that are under
the ownership, financial, and
administrative control of the hospital;
that are operated as part of the hospital;
and for which the hospital bills the
services furnished under the hospital’s
CCN. Therefore, to be present in the
hospital or the on-campus PBD of the
hospital and immediately available
requires that the physician or
nonphysician practitioner must be
physically present in areas on the
campus of the hospital that are part of
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the hospital, including on-campus
PBDs, that are operated by the hospital,
and where services furnished in those
areas are billed under the hospital’s
CCN. Under the CY 2010 proposal, the
supervisory physician or nonphysician
practitioner of the hospital’s outpatient
therapeutic services may not be located
in any other entity, such as a
physician’s office, IDTF, co-located
hospital, or hospital-operated provider
or supplier such as a skilled nursing
facility (SNF), end-stage renal disease
(ESRD) facility, or home health agency
(HHA), or any other nonhospital space
that may be co-located on the hospital’s
campus, as ‘‘hospital campus’’ is
defined in § 413.65(a)(2) of the
regulations.
We stated that while we have not
previously specified in policy guidance
a definition for the term ‘‘immediately
available’’ with respect to services
provided in areas of the hospital on its
main campus that are not PBDs, we
believe that the existing definitions of
direct supervision in §§ 410.27(f) and
410.32(b)(3)(ii) that apply to PBDs and
physician office settings indicate that
the physician must be physically
present in order to provide direct
supervision of services. With regard to
services provided in PBDs of hospitals
or physicians’ offices, these regulations
specify that the physician must be
present in the PBD or in the office suite,
respectively. Thus, we have previously
established that direct supervision
requires immediate physical presence.
While we also have not specifically
defined the word ‘‘immediate’’ for direct
supervision in terms of time or distance,
we noted that the general definition of
the word means ‘‘without interval of
time.’’ Therefore, the supervisory
physician or nonphysician practitioner
could not be immediately available
while, for example, performing another
procedure or service that he or she
could not interrupt. In addition, we
stated that we understand that advances
in medical technology, changes in the
patterns of health care delivery, and
changes in the organizational structure
of hospitals have led to the development
of extensive hospital campuses,
sometimes spanning several city blocks.
However, in the context of direct
physician or nonphysician practitioner
supervision, we believed that it would
be neither appropriate nor ‘‘immediate’’
for the supervisory physician or
nonphysician practitioner to be so
physically far away on the main campus
from the location where hospital
outpatient services are being furnished
that he or she could not intervene right
away. As we stated in the CY 2009
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OPPS/ASC final rule with comment
period (73 FR 68703), if there were
problems with outpatient care in a
hospital or in an on-campus PBD where
the requirement for direct supervision
was not met, we would consider that to
be a quality concern. Appropriate
supervision is a key aspect of the
delivery of safe and high quality
hospital outpatient services that are
paid under Medicare.
In addition, the definition of direct
supervision in existing § 410.27(f) has
included and would continue to specify
under our CY 2010 proposal that the
physician or nonphysician practitioner
must be available to furnish assistance
and direction throughout the
performance of the procedure. This
means that the physician or
nonphysician practitioner must be
prepared to step in and perform the
service, not just to respond to an
emergency. This includes the ability to
take over performance of a procedure
and, as appropriate to both the
supervisory physician or nonphysician
practitioner and the patient, to change a
procedure or the course of treatment
being provided to a particular patient.
We originally stated in the April 2000
OPPS final rule (65 FR 18525) that the
physician does not ‘‘necessarily need to
be of the same specialty as the
procedure or service that is being
performed.’’ We also have stated in
manual guidance that hospital medical
staff that supervises the services ‘‘need
not be in the same department as the
ordering physician’’ (Section 20.5.1 of
Chapter 6 of the Medicare Benefits
Policy Manual). However, in order to
furnish appropriate assistance and
direction for any given service or
procedure, we believed the supervisory
physician or nonphysician practitioner
must have, within his or her State scope
of practice and hospital-granted
privileges, the ability to perform the
service or procedure.
We did not propose significant
changes to the definition or
requirements for direct supervision in
off-campus PBDs of the hospital other
than to allow nonphysician
practitioners to provide direct
supervision in these PBDs for the
services that these practitioners may
perform. With respect to off-campus
PBDs of hospitals, direct supervision
would continue to mean that the
physician or nonphysician practitioner
must be in the off-campus PBD and
immediately available to furnish
assistance and direction throughout the
performance of the procedure. We
proposed to revise existing § 410.27(f)
and include the revised language as
§ 410.27(a)(1)(iv) and make a technical
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change in § 410.27(a)(i)(iv)(B) to clarify
the current language by removing
‘‘present and on the premises of the
location’’ and replacing it with ‘‘present
in the off-campus provider-based
department.’’ While the meaning of this
provision is the same, we believed that
this proposed modification to the
language defining direct supervision is
more consistent with the language of the
other proposed changes to § 410.27. As
we clarified in the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68704), the supervisory physician for
hospital outpatient therapeutic services
must be in each PBD of a particular offcampus outpatient location, but that
does not mean that the physician must
be in the room when the procedure is
performed. In the April 2000 OPPS final
rule (65 FR 18525), we responded to
public commenters who asserted that
requiring a physician to be onsite at a
PBD throughout the performance of all
‘‘incident to’’ (therapeutic) services
would be burdensome and costly for
hospitals where there are a limited
number of physicians available to
provide coverage, particularly in rural
settings. We disagreed then that the
supervision requirement was
unnecessary and burdensome because
hospitals, prior to 2000, were already
required to ‘‘meet a direct supervision of
‘incident to’ services requirement that is
unrelated to the provider-based rules.
That is, we require that hospital services
and supplies furnished to outpatients
that are incident to physician services
be furnished on a physician’s order by
hospital personnel and under a
physician’s supervision’’ (Section
3112.4 of the Medicare Intermediary
Manual). In addition, when we
discussed the ‘‘assumption’’ or
expectation that the physician
supervision requirement is met on the
hospital’s main campus in the April
2000 OPPS final rule (65 FR 18525), we
specifically did not extend that
assumption to off-campus departments
of the hospital. We stated that we
continue to believe that it would be
inappropriate to allow one physician or
nonphysician practitioner to supervise
all services being provided in all PBDs
at a particular off-campus outpatient
location. Since first allowing off-campus
sites to be considered PBDs of hospitals,
we have placed particular emphasis on
ensuring the quality and safety of the
services provided in these locations,
which can be many miles from the main
hospital campus, through both
additional provider-based requirements
in § 413.65(e) and our emphasis on
direct physician supervision under
existing § 410.27(f). In addition, because
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the physician or nonphysician
practitioner must be immediately
available and have, within his or her
State scope of practice and hospitalgranted privileges, the ability to perform
the services being supervised, we
believed it would be highly unlikely
that one physician or nonphysician
practitioner would be both immediately
available at all times that therapeutic
services are being provided and would
have the knowledge and ability to
adequately supervise all services being
performed at once in multiple offcampus PBDs at a single location.
To reflect these proposed changes for
the provision of direct supervision of
therapeutic services provided to
hospital outpatients in our regulations,
we proposed to revise the language of
the existing § 410.27(f) and include the
revised language in a new paragraph
(a)(1)(iv) of § 410.27 to specify that
direct physician or nonphysician
practitioner supervision of hospital
outpatient therapeutic services is
required for Medicare Part B payment.
We proposed to add a new paragraph
(a)(1)(iv)(A) to § 410.27 to state that, for
services provided on the hospital’s main
campus, direct supervision means that
the physician or nonphysician
practitioner must be present on the
same campus, in the hospital or oncampus PBD of the hospital, as defined
in § 413.65, and immediately available
to furnish assistance and direction
throughout the performance of the
procedure. It does not mean that the
physician or nonphysician practitioner
must be in the room when the
procedure is performed. We also
proposed to add new paragraph
(a)(1)(iv)(B) to § 410.27 to reflect that,
for off-campus PBDs of hospitals, the
physician or nonphysician practitioner
must be present in the off-campus PBD,
as defined in § 413.65, and immediately
available to furnish assistance and
direction throughout the performance of
the procedure. It does not mean that the
physician or nonphysician practitioner
must be in the room when the
procedure is performed. As we stated
previously, the proposed language of
paragraph (a)(1)(iv)(B) is similar to
existing § 410.27(f) that we proposed to
revise. Furthermore, we proposed to
make a technical change to clarify the
language in this paragraph to remove
‘‘present and on the premises of the
location’’ and replace it with ‘‘present in
the off-campus provider-based
department.’’ Also, in the CY 2010
OPPS/ASC proposed rule (74 FR 35368)
and as proposed in the CY 2010 MPFS
proposed rule (74 FR 33674), we
proposed that the direct supervision of
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CR, ICR, and PR services must be
furnished by a doctor of medicine or
osteopathy, as specified in proposed
§§ 410.47 and 410.49, respectively. We
proposed to include this exception in
proposed paragraphs (a)(1)(iv)(A) and
(a)(1)(iv)(B) in § 410.27. In addition, we
proposed to add a new paragraph (f) to
§ 410.27 to define a nonphysician
practitioner for purposes of § 410.27 as
a clinical psychologist, a physician
assistant, a nurse practitioner, a clinical
nurse specialist, or a certified nursemidwife. Proposed new
§ 410.27(a)(1)(iv) would provide that
these nonphysician practitioners may
directly supervise services that they
could furnish themselves in accordance
with State law and within their scope of
practice and hospital-granted privileges,
as long as all requirements for coverage,
including the physician supervision or
collaboration for these nonphysician
practitioners, are met in accordance
with §§ 410.71, 410.74, 410.75, 410.76,
and 410.77, respectively. We also
proposed to define ‘‘in the hospital’’ in
new paragraph § 410.27(g) to mean areas
in the main building(s) of the hospital
that are under the ownership, financial,
and administrative control of the
hospital; that are operated as part of the
hospital; and for which the hospital
bills the services furnished under the
hospital’s CCN. Finally, we proposed to
make a technical correction to the title
of § 410.27 to read, ‘‘Outpatient hospital
or CAH services and supplies incident
to a physician service: Conditions’’ to
clarify in the title that the requirements
for payment of hospital outpatient
therapeutic services incident to a
physician or nonphysician practitioner
service in that section apply to both
hospitals and CAHs. Similarly, we
proposed to include the phrase
‘‘hospital or CAH’’ throughout the text
of § 410.27 wherever the text currently
refers just to ‘‘hospital.’’ The omission
of the term ‘‘CAH’’ from § 410.27 was a
drafting oversight. However, we have
applied the requirements of § 410.27,
including ‘‘incident to’’ requirements
such as the site-of-service requirement
and physician supervision, as well as
other hospital policies, such as the
bundling rules, to CAHs, just as we have
in 42 CFR Part 409 (Subparts A through
D and F through H) and § 410.28 and
§ 413.65 of the regulations where CAHs
are explicitly mentioned.
Comment: All commenters who
addressed the proposed direct
supervision by nonphysician
practitioners (specifically physician
assistants, nurse practitioners, clinical
nurse specialists, and certified nursemidwives) supported the proposal.
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60581
Some commenters also requested that
CMS include licensed clinical social
workers in the list of nonphysician
practitioners who are permitted to
supervise outpatient psychiatric
services and partial hospitalization
program (PHP) services. Other
commenters requested that pharmacists
be permitted to supervise medication
therapy management services and that
specialty certified registered nurses,
such as wound care nurses, also be able
to provide the direct supervision of
hospital outpatient therapeutic services.
One commenter stated that because
physicians do not furnish nursing
services or the services of other
ancillary health professionals, they
should not be expected to supervise
those services and it would be
inappropriate to expect physicians to
accept responsibility for care that they
have not personally furnished.
Response: We appreciate the
commenters’ support for our proposal to
revise § 410.27 of the regulations to
allow certain nonphysician practitioners
to directly supervise services that they
may perform themselves under their
State scope of practice and hospitalgranted privileges in the context of the
existing requirements in §§ 410.71,
410.74, 410.75, 410.76 and 410.77. We
agree with the commenters that we
should add licensed clinical social
workers to the group of nonphysician
practitioners permitted to provide direct
supervision for hospital outpatient
therapeutic services. We believe this is
appropriate because licensed clinical
social workers are recognized under the
Medicare program as independent
practitioners who may furnish services
for the diagnosis and treatment of
mental illness that they are legally
authorized to perform under State law
of the State in which the services are
performed. We further agree with the
commenters that the inclusion of
licensed clinical social workers would
help to ensure continued access to
mental health services, especially in
rural hospitals and CAHs where other
types of practitioners may be less
available. We emphasize though, that
licensed clinical social workers, like
other nonphysician practitioners, may
only supervise those therapeutic
services within their own scope of
practice and hospital-granted privileges.
We are not expanding the regulations
further to allow supervision by
pharmacists, registered nurses, or other
medical professionals. These
professionals are not recognized in the
Social Security Act as providing
services that would be physicians’
services if performed by a physician and
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they may not enroll in Medicare as
independent practitioners and receive
payment directly for their professional
services.
With regard to the comments about
physician scope of practice and
supervision, we remind hospitals that
the only statutory basis for payment of
hospital outpatient therapeutic services
is incident to the services of a
physician, meaning the services are
ordered by the physician or qualified
practitioner and furnished as an integral
though incidental part of his or her
services. It follows, then, that a qualified
physician or nonphysician practitioner
would supervise the provision of those
services to ensure the service or
procedure is being furnished
appropriately.
Comment: One commenter supported
the proposed requirements for the direct
physician supervision of CR programs
and requested that CMS confirm that the
proposed definition of ‘‘direct
supervision’’ that would apply to
therapeutic services in the HOPD would
also apply to CR services. However,
many commenters, especially CAHs and
rural hospitals, asked that CMS permit
physician assistants, nurse practitioners,
clinical nurse specialists, and certified
nurse-midwives who are functioning
within their State licensure and scope of
practice and who are permitted to
supervise the services under the
hospital or CAH bylaws to supervise CR,
ICR, and PR services.
Response: As discussed in detail in
sections sections II.G.8. and II.G.9. of
the CY 2010 MPFS final rule with
comment period and in section XII.B.4.
of this final rule with comment period,
section 144(a)(1) of Public Law 100–275
imposes strict requirements for the
direct physician supervision of PR, CR,
and ICR services and gives us no
flexibility to modify the requirement.
Therefore, we are finalizing our CY 2010
proposal, without modification, to
require the direct physician supervision
(by a doctor of medicine or a doctor of
osteopathy) of PR, CR, and ICR services
that are furnished to hospital
outpatients. We note that we define
‘‘direct supervision’’ with regard to
what it means to be immediately
available and accessible for medical
consultation and medical emergencies
in the same manner for PR, CR, and ICR
services as we do for other therapeutic
services furnished in HOPDs, as
discussed below. Also, the final
definitions of direct supervision in
§ 410.27 for therapeutic services
provided on campus and in off-campus
PBDs also apply. These definitions and
the final regulation text of
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§§ 410.27(a)(1)(iv)(A) and (B) are
discussed in detail below.
Comment: With respect to the
proposed definition of direct
supervision of hospital outpatient
therapeutic services, some commenters
fully supported the proposals as
appropriate and necessary for ensuring
that Medicare beneficiaries receive safe
and high quality care. Many
commenters acknowledged that the
proposal to broaden the location of the
supervising physician from in the
department on campus to ‘‘in the
hospital’’ would give hospitals
significantly more flexibility. However,
the commenters stated that, while the
proposal would be more flexible, it
would still limit access to care and
would cost hospitals and the Medicare
program. Other commenters questioned
why CMS has a supervision requirement
at all, stating that there is no such
specified requirement for hospital
inpatient services. Many commenters
believed that the proposals would not
help CAHs and rural hospitals, where
physicians often maintain offices offcampus and qualified nonphysician
practitioners may not be readily
available to provide services in the
hospital. The commenters claimed that
the proposed definition of direct
supervision would mean that CAHs and
rural hospitals would be required to hire
staff solely to supervise services and
that this extra cost would force these
hospitals and CAHs to eliminate
services. These commenters requested
that CMS not apply the ‘‘incident to’’
requirements of § 410.27 to CAHs.
Response: We appreciate the
commenters’ support and the
acknowledgement that we are striving to
provide more flexibility for hospitals,
while maintaining appropriate
supervision of hospital outpatient
therapeutic services that helps to ensure
safe, high quality care and providing
Medicare payment that is consistent
with the statutory requirements for
coverage. We have received numerous
comments and questions since
publication of the CY 2009 OPPS/ASC
final rule with comment period, met
with interested stakeholders to hear
their questions and concerns throughout
the year, and reviewed many thoughtful,
wide-ranging comments on the CY 2010
OPPS/ASC proposed rule. In
considering all of this information, we
have taken into full consideration
current clinical practice and patterns of
care, the need to ensure patient access,
the associated hospital and physician
responsibilities, consistency among
requirements for different sites of
services, and other important factors.
We believe that our final policies
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address many of the concerns and
questions regarding our proposals.
Through the expansion of supervisory
authority to nonphysician practitioners
and a modification to the requirement
for direct supervision of on-campus
therapeutic services, discussed in more
detail below, we believe our final
policies allow more flexibility for
hospitals and CAHs and help ensure
access to care for Medicare beneficiaries
while maintaining our standards for
safe, high quality care and consistent
interpretation of longstanding
regulations.
We disagree with the commenters
who suggested that there should be no
supervision requirements for hospital
outpatient services because there are not
similar codified supervision
requirements for hospital inpatient
services. Hospitals provide a wide
variety of complex services to their
outpatients who may or may not have
an established relationship with the
supervising physician or nonphysician
practitioner and hospital staff on the
day the hospital outpatient services are
furnished. A treating physician or
nonpractitioner in the community may
not even be aware that ordered
outpatient services are being furnished
by the hospital on a given day.
Therefore, we believe it is appropriate
for CMS to set requirements for the safe
and effective diagnosis and treatment of
Medicare beneficiaries, including
standards for the appropriate
supervision of hospital outpatient
services by a physician or nonphysician
practitioner, in accordance with the
statutory basis for payment of hospital
outpatient services in section
1861(s)(2)(B) of the Act, which is
‘‘incident to physicians’ services
rendered to outpatients.’’
We set the standard for direct
supervision of hospital outpatient
therapeutic services that we have held
since the implementation of the OPPS
in 2000, and we have assumed that this
standard was being met because we
assumed that a physician would always
be nearby in the hospital. Given that
hospital inpatients generally have
medically complex conditions requiring
a high level of acute care, we have not
established explicit supervision
requirements in regulations because we
believe hospitals would have physicians
or other qualified practitioners available
at all times that complex hospital
inpatient services are being furnished. If
this is not the case, we may consider
addressing the supervision of hospital
inpatient services in the future.
In regard to hospital and CAH
concerns about hiring physician and
nonphysician staff solely for
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supervisory services, we reiterate that
the supervisor need only be available
when outpatient therapeutic services
and procedures are being furnished,
meaning that many services or
departments would not require 24 hour
per day, 7 days per week direct
supervision, as some commenters
believed. We also believe that allowing
the supervisory physician or
nonphysician practitioner to be located
anywhere on the hospital campus, as
discussed more fully below, should
alleviate this concern for many hospitals
and CAHs. In addition, we remind
CAHs that the conditions of
participation for CAHs at § 485.631
require that a doctor of medicine or
osteopathy, a nurse practitioner, a
physician assistant, or a clinical nurse
specialist is available ‘‘to furnish patient
care services at all times the CAH
operates’’ (emphasis added). It follows
then that this physician or nonphysician
practitioner who is available at all times
the CAH operates would be directly
furnishing services that are within his or
her State scope of practice and CAHgranted privileges and that the CAH
would not be furnishing services that
are not within this practitioner’s scope.
Comment: Many commenters stated
that it is overly restrictive and arbitrary
to not allow direct supervision by
practitioners located in other entities
on-campus and to require the immediate
physical presence of the physician.
Several commenters pointed out that,
because of the varying ways that
hospitals have structured their services
and campuses, a physician’s office may
be next door or closer to the HOPD in
which services that he or she would be
supervising are furnished, than a
practitioner located in another HOPD.
Other commenters stated that the
proposal would preclude physicians
from taking a lunch break, patronizing
the retail establishments in the hospital,
or going to other areas such as parking
lots.
The commenters were particularly
concerned about specialized services
such as chemotherapy, blood
transfusions, and radiation therapy
services. Several hospital associations
and other commenters requested that
CMS remove the phrase ‘‘immediately
available to furnish assistance and
direction throughout the performance of
the procedure.’’ They instead
recommended that CMS redefine direct
supervision for therapeutic services to
mean that the physician may be on or
in close proximity to the campus and
able to respond in a timely manner
according to hospital’s policies and
bylaws. The commenters also believed
that ‘‘immediate availability’’ does not
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and should not mean immediate
physical presence and that requiring
physical presence in every instance is
impractical. Instead, the commenters
believed the supervising practitioner
should be able to directly supervise
services and procedures remotely by
telephone, radio, robotic device, or
electronic media.
Response: We appreciate the many
public comments that we received on
the proposed definition of direct
supervision for hospital outpatient
therapeutic services provided on the
campus of the hospital. We
acknowledge the comments related to
hospital building and campus structures
and the physical proximity of
physicians’ offices and other entities to
the hospital department where a
particular hospital outpatient service is
furnished. We agree with the
commenters that allowing the
supervising physician to be in
nonhospital space on the campus could
make it easier for a supervising
physician or nonphysician practitioner
to respond immediately. Therefore, we
believe it would be appropriate to allow
the supervising physician or
nonphysician practitioner to be located
anywhere on the same campus of the
hospital, as long as he or she was
immediately available to furnish
assistance and direction throughout the
performance of the procedure.
This is consistent with our
longstanding definition of ‘‘direct
supervision’’ as it has been applied
across settings in terms of the
immediate physical presence of the
physician and what it means to ‘‘furnish
assistance and direction throughout the
performance of the procedure.’’
However, we continue to believe that
the supervisory physician or
nonphysician practitioner could not be
immediately available while, for
example, performing another procedure
or service that he or she could not
interrupt. It also would be neither
appropriate nor ‘‘immediate’’ for the
supervisory physician or nonphysician
practitioner to be so physically far away
on the main campus from the location
where hospital outpatient services are
being furnished that he or she could not
intervene right away.
As we stated in the CY 2010 OPPS/
ASC proposed rule (74 FR 35367), we
believe that the existing definitions of
direct supervision in §§ 410.27(f) and
410.32(b)(3)(ii) that apply to PBDs and
physicians’ office settings indicate that
the physician must be physically
present in order to provide direct
supervision of services. With regard to
services provided in PBDs of hospitals
or physicians’ offices, for at least 9 years
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60583
these regulations have specified that the
physician must be present in the PBD or
in the office suite, respectively. Thus,
we have previously established that
direct supervision requires immediate
physical presence. Medicare only covers
hospital outpatient therapeutic services
furnished incident to physicians’
services, yet a hospital service ordered
by a physician may be furnished on a
day when the beneficiary does not
receive services directly from a
physician. Therefore, we believe it is
important to retain direct supervision as
the standard.
With regard to the commenters’
recommendations that CMS redefine
direct supervision for therapeutic
services to mean that the physician may
be ‘‘on or in close proximity to the
campus’’ and ‘‘able to respond in a
timely manner’’ according to hospital’s
policies and bylaws, we believe that the
suggested new definition of direct
supervision for on-campus hospital
outpatient therapeutic services would
be wholly inconsistent with the
definition of the term as previously
codified in at least two Medicare
sections of the Code of Federal
Regulations. We disagree with the
commenters that describing immediate
availability as without lapse of time
would be read so narrowly as to require
that the supervising physician or
nonphysician practitioner must be
standing in the room next to the
nonphysician personnel furnishing the
service. A similar argument could be
made that the phrase ‘‘able to respond
in a timely manner’’ is so vague that a
supervising physician or nonphysician
practitioner could interpret it to mean
that arriving within an hour or hours
would be reasonable. In addition, we
note that the definition proposed by
commenters is virtually identical in
interpretation to the current existing
definition of general supervision.
Section 410.32(b)(3)(i) of the regulations
defines general supervision to mean that
‘‘the procedure is furnished under the
physician’s overall direction and
control, but the physician’s presence is
not required during the performance of
the procedure.’’ We have historically
interpreted this to mean that the
physician may be available by telephone
or other electronic device to supervise
and direct the nonphysician personnel
furnishing the service. This lower
standard of general supervision would
not ensure the immediate presence of a
qualified practitioner in the hospital to
furnish assistance and direction to
hospital personnel providing a wide
array of complex therapeutic services to
hospital outpatients. Several of the
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commenters requesting this relaxed
definition of direct supervision also
asked that certain services be designated
as requiring only general supervision.
We are unclear about the commenters’
understanding of the definition of
general supervision if their suggested
definition of direct supervision requires
no physical presence and only specifies
availability in a reasonable period of
time by telephone, radio, robotics, or
telemedicine.
We have set direct supervision as a
minimum standard for supervision of all
Medicare hospital outpatient
therapeutic services. We do not believe
that this standard or the definition, as
codified, precludes a hospital from
developing bylaws, credentialing
procedures, and policies that it believes
are appropriate to ensure that all
hospital patients receive high quality
services in a safe and effective manner.
We believe that hospitals take quality of
care and patient safety very seriously,
and we understand that hospitals are
subject to accreditation requirements.
Considering that hospitals provide a
wide array of very complex services and
procedures, including surgeries, we
would expect that hospitals already
have the leadership, credentialing
procedures, bylaws, and other policies
in place to ensure that services
furnished to Medicare beneficiaries are
being provided only by qualified
practitioners in accordance with all
applicable laws, regulations, and coding
guidance. For services not furnished
directly by a physician, we would
expect that these bylaws and policies
would ensure that the services are being
supervised in a manner commensurate
with the complexity of the service,
including personal supervision where
appropriate.
Comment: Many commenters
disagreed with statements in the
proposed rule that the supervising
physician should have, within his or her
scope of practice and hospital-granted
privileges, the knowledge, ability, and
hospital privileges to perform the
services being supervised. Some
commenters stated that the supervisor
should be required to provide only
medical consultation and attend to
medical emergencies, but should not be
expected to intervene or change the
course of treatment because this usurps
the responsibility of treating physician.
Other commenters stated that the
supervisor should be ‘‘clinically
appropriate’’ to supervise the outpatient
therapeutic services.
Response: As we explained in the CY
2010 OPPS/ASC proposed rule (74 FR
35367), we believe the supervising
physician or nonphysician practitioner
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must be prepared to step in and perform
the service, not just to respond to an
emergency. This includes the ability to
take over performance of a procedure
and, as appropriate to both the
supervisory physician or nonphysician
practitioner and the patient, to change a
procedure or the course of treatment
being provided to a particular patient.
We originally stated in the April 2000
OPPS final rule (65 FR 18525) that the
physician does not ‘‘necessarily need to
be of the same specialty as the
procedure or service that is being
performed.’’ We also have stated in
manual guidance that hospital medical
staff that supervises the services ‘‘need
not be in the same department as the
ordering physician’’ (Section 20.5.1 of
Chapter 6 of the Medicare Benefits
Policy Manual). We understand
hospitals’ concerns, and note that we
would not expect that a supervising
physician would operate in a vacuum,
making all decisions without informing
or consulting the patient’s treating
physician or nonphysician practitioner.
This would be illogical and
inappropriate for good medical practice.
However, in order to furnish
appropriate assistance and direction for
any given service or procedure, we
continue to believe the supervisory
physician or nonphysician practitioner
must have, within his or her State scope
of practice and hospital-granted
privileges, the ability to perform the
service or procedure. We believe that
our interpretation of the requirement
means that the supervisor must be a
person who is ‘‘clinically appropriate’’
to supervise the service or procedure.
We believe it is inappropriate for a
supervisory physician or nonphysician
practitioner to be responsible for
patients, hospital staff, and services that
are outside the scope of their
knowledge, skills, licensure, or hospitalgranted privileges.
This interpretation of the previously
codified language is consistent with our
longstanding application of direct
supervision across settings in terms of
the physical presence of the physician
and what it means to ‘‘furnish assistance
and direction throughout the
performance of the procedure.’’ We do
not believe that allowing a supervisor to
be responsible for emergencies only
would satisfy the standard to ‘‘furnish
assistance and direction throughout the
performance of the procedure’’ as the
language has historically been
interpreted for physicians’ offices and
PBDs. We disagree with commenters
who stated that the historical intent of
direct supervision has been for a
supervising physician to provide
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guidance and direction without
expecting that professional to be able to
perform the service or procedure and
that performance of the procedure
applies only to personal supervision. It
would be unreasonable to think that a
physician or nonphysician practitioner
could competently assist and direct a
procedure for which they do not have
sufficient knowledge and skills to
perform or redirect the procedure or
service.
Comment: Several commenters
requested additional guidance as to
what CMS considers hospital outpatient
‘‘incident to’’ services. One commenter
requested clarification on the
applicability of ‘‘incident to’’ to
emergency department services. The
commenter believed that the ‘‘incident
to’’ provision for hospital outpatient
services may not be applicable to
emergency department services because
the emergency department physician
would be immediately available in the
area to care for patients, but would not
have previously seen and established a
relationship with the patient, as this
commenter believed is required. Other
commenters believed that the
requirements for supervision of hospital
outpatient therapeutic services should
be specific to each clinical service and
should be designated as either general
or direct, as for diagnostics. Some
commenters asked for clarification of
how to report services in a Condition
Code 44 situation when the patient
received care as an inpatient, with no
direct supervision, and the hospital then
changed the patient’s status to
outpatient.
Response: As previously stated in this
discussion, § 410.27(a)(1)(ii) of the
regulations states that Medicare Part B
pays for hospital services and supplies
furnished incident to a physician
service to outpatients if they are
provided ‘‘as an integral though
incidental part of a physician’s
services.’’ In addition, we have stated in
Section 20 of Chapter 6 of the Medicare
Benefit Policy Manual that hospitals
provide two distinct types of services to
outpatients: services that are diagnostic
in nature and other services that aid the
physician in the treatment of the
patient. We further defined these
therapeutic services and supplies in
Section 20.5.1 of Chapter 6 of the
Medicare Benefit Policy Manual, stating
‘‘therapeutic services and supplies
which hospitals provide on an
outpatient basis are those services and
supplies (including the use of hospital
facilities) which are incident to the
services of physicians in the treatment
of patients.’’ In essence, all hospital
outpatient services that are not
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diagnostic are services that aid the
physician in the treatment of the
patient, and are called therapeutic
services. These are the services for
which Medicare makes a hospital
facility payment only when they are
provided ‘‘incident to’’ the services of a
physician.
We also provide in Section 20.5.1 that
services and supplies must be furnished
on a physician’s order and delivered
under physician supervision. However,
the manual indicates further that each
occasion of a service by a nonphysician
does not need to also be the occasion of
the actual rendition of a personal
professional service by the physician
responsible for the care of the patient.
Nevertheless, as stipulated in that same
section of the manual ‘‘during any
course of treatment rendered by
auxiliary personnel, the physician must
personally see the patient periodically
and sufficiently often enough to assess
the course of treatment and the patient’s
progress and, where necessary, to
change the treatment regimen.’’ Section
20.5.1 also explicitly includes clinic and
emergency room services as examples of
hospital outpatient services that are
provided incident to the services of a
physician. We note in this section that
the policies for hospital services
incident to physicians’ services
rendered to outpatients differ in some
respects from policies that pertain to
‘‘incident to’’ services furnished in
office and physician-directed clinic
settings. Those requirements are
discussed in Section 60 of Chapter 15 of
the Medicare Benefit Policy Manual.
The commenter incorrectly believed
that for hospital services to be ‘‘incident
to’’ a physician’s services, the physician
must have previously seen and
established a relationship with the
patient. When a patient presents to an
emergency department or a hospital
clinic and a physician examines the
patient and orders services to be
provided, the provision of those services
is incident to the services of that
physician.
We recognize the potential benefit to
hospitals of specifically designating
supervision requirements for individual
therapeutic services based on clinical
complexity, especially for less complex
services that we might deem to require
general supervision. We note that the
commenters requesting individual
designations mentioned only defining
services as requiring general or direct
supervision. However, as we discussed
earlier in this section, direct supervision
represents a minimum standard
currently applicable to all outpatient
therapeutic services. If we were to
designate individual supervision levels
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for hospital outpatient therapeutic
services just as we do for diagnostic
services, it would be most consistent
and appropriate for CMS to make
specific determinations for services that
we believe may only be safely provided
under the personal supervision of a
physician or that must be performed
only by a physician. We stated above
that we expect that hospitals already
have credentialing procedures, bylaws,
and other policies established to ensure
that services furnished to Medicare
beneficiaries are being provided only by
qualified practitioners in accordance
with all applicable laws, regulations and
coding guidance. For services not
furnished directly by a physician, we
would expect that these bylaws and
policies would ensure that the services
are being supervised in a manner
commensurate with the complexity of
the service, including personal
supervision where appropriate.
The use of Condition Code 44 pertains
to the entire patient encounter, the
patient’s status, and the hospital bill
type submitted. Reporting of individual
HCPCS codes on an outpatient claim
must be consistent with all instructions
and CMS guidance, including the
requirements of § 410.27 of the
regulations, which specify that direct
supervision is required for hospital
outpatient therapeutic services.
Comment: One commenter requested
clarification of the meaning of the
phrase ‘‘performance of the procedure’’
in the definition of direct supervision.
The commenter was unclear whether
this phrase specifically applied only to
surgical procedures or whether it was a
general term for services and
procedures. The commenter also asked
if the direct supervision requirement
would apply to recovery room services
following a surgical procedure
performed by the physician.
Response: The use of the term
‘‘procedure’’ is intended to encompass
all services and procedures and
includes all components of a service or
procedure furnished by a hospital to an
outpatient, including recovery room
services, and covered and paid by
Medicare, regardless of whether
separate payment is made for those
component services. This is how we
have applied the term within the
codified definitions of the levels of
supervision (general, direct, and
personal) in §§ 410.27 and 410.32.
While each supervision definition uses
the phrase ‘‘performance of the
procedure,’’ the term ‘‘service’’ may be
substituted for the word ‘‘procedure’’
each time ‘‘procedure’’ appears in the
regulations.
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60585
Comment: Several commenters raised
questions about the proposed definition
of the phrase ‘‘in the hospital.’’ Some
requested clarification of the meaning of
‘‘on the same campus.’’ Several
commenters suggested that the word
‘‘ownership’’ in the definition seems to
unintentionally exclude areas that are
operated and controlled by the hospital
under a lease agreement or a written
operations agreement. These
commenters suggested either removing
this term from the definition of ‘‘in the
hospital’’ or clarifying in this final rule
with comment period where CMS is
referring to the business operation
aspect of ownership rather than the
physical building.
Response: ‘‘On the same campus’’ was
used to denote that the supervising
physician or nonphysician practitioner
must be physically located on the same
campus as the services being furnished
by the hospital because it is possible for
some hospitals to have more than one
main campus, as well as off-campus
PBDs.
We appreciate the public comments
that raised the questions about the term
‘‘ownership.’’ We agree with the
commenters that a narrow interpretation
of the word ‘‘ownership’’ would exclude
spaces that the hospital leases or
operates under another type of
operations agreement. This was not our
intention. The commenters correctly
pointed out that the word ‘‘ownership’’
in this context applies to the actual
business operation, not solely a physical
building. However, we also believe that
the rest of the definition includes these
aspects. If the definition is read as a
whole, instead of parsing individual
clauses out of context, then the spirit of
the regulation is understood. Because
the phrase ‘‘in the hospital or CAH’’
applies broadly to ‘‘incident to’’
requirements such as the site of service
requirement for therapeutic services
provided by the hospital directly and
under arrangement, we are finalizing the
proposed definition of ‘‘in the hospital’’
in new paragraph (g) of § 410.27 as
meaning areas in the main building(s) of
a hospital that are under the ownership,
financial, and administrative control of
the hospital; that are operated as part of
the hospital; and for which the hospital
bills the services furnished under the
hospital’s CCN.
Comment: One commenter requested
that CMS reiterate that the ‘‘incident to’’
and physician supervision requirements
of § 410.27 do not apply to physical
therapy, occupational therapy, and
speech-language pathology services
furnished under a therapy plan of care.
Response: Section 1833(t) of the Act
excludes physical therapy, occupational
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therapy, and speech-language pathology
from hospital outpatient services paid
under the OPPS. In addition, in the
April 2000 OPPS final rule (65 FR
18525), we stated in response to a
comment about physical therapy
services that the coverage provision in
section 1861(s)(2)(D) of the Act does not
require that physical therapy services be
provided incident to the services of a
physician. Finally, in Section 20
(Hospital Outpatient Services) of
Chapter 6 of the Medicare Benefit Policy
Manual, we state, ‘‘[t]he following rules
pertaining to the coverage of outpatient
hospital services are not applicable to
physical therapy, speech-language
pathology, occupational therapy, or end
stage renal disease (ESRD) services
furnished by hospitals to outpatients.’’
This section instructs readers to consult
sections 220 and 230 of Chapter 15 of
the Medicare Benefit Policy Manual for
rules on the coverage of outpatient
physical therapy, occupational therapy,
and speech-language pathology
furnished by a hospital.
Comment: Several commenters from
CMHCs and hospital-based PHPs
questioned whether the direct physician
supervision clarifications and the
‘‘incident to’’ requirements of § 410.27
apply to those programs. Several
hospital-based PHP stakeholders noted
the discrepancy in the physician
supervision requirements for PHP
services furnished by CMHCs and
hospitals.
Response: Medicare makes payment
for hospital outpatient therapeutic
services only when provided ‘‘incident
to’’ the services of a physician.
Outpatient psychiatric and hospitalbased PHP services are outpatient
hospital services paid under the OPPS
and, therefore, must meet all conditions
of § 410.27, including the requirement
for direct supervision by a physician or
qualified nonphysician practitioner.
Because CMHCs are paid under the
OPPS for PHP services, the ‘‘incident
to’’ requirements of § 410.27 also apply
to CMHCs, with the exception of direct
supervision for outpatient PHP services.
Currently, CMHCs have a different
physician supervision standard to meet.
On February 11, 1994, CMS issued the
Partial Hospitalization Services in
Community Mental Health Centers
(CMHCs) interim final rule with
comment period (59 FR 6570),
developing and implementing the
coverage criteria and payment
methodology for CMHCs under
Medicare. At the time when the CY
1994 CMHC rule was published, the
decision was made to permit general
supervision in CMHCs. As implemented
in § 410.110(a), services provided in a
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CMHC PHP must be prescribed by a
physician and furnished under the
general supervision of a physician.
General supervision means that a
physician must be at least available by
telephone, but is not required to be on
the premises of the CMHC at all times
(59 FR 6573). We recognized that a
direct supervision requirement could
cause hardship to CMHCs because some
of these entities were unable to employ
physicians on a full-time basis due to
the expense involved. In the CY 1994
interim final rule with comment, we
explained that because we believed that
less than direct supervision by a fulltime physician in a CMHC would not
jeopardize a patient’s health or
treatment program, in combination with
our belief that there would be a number
of professionals involved in the care of
the patient who are authorized to
furnish services that would otherwise be
furnished by a physician, we required
general physician supervision.
On August 1, 2000 (65 FR 18434), the
OPPS was implemented and provided
payment for PHP services provided in
two settings: hospital outpatient
departments to their outpatients and
CMHCs. Although PHP is one benefit
and both provider types receive the
same payment for services rendered,
CMHCs have been permitted to furnish
PHP services under general supervision;
and the OPPS has, since 2000, held a
standard of direct supervision for
hospital outpatient therapeutic services,
including PHP services (42 CFR 410.110
(a)). While the policy was clearly
codified for PBDs of hospitals in the CY
2009 OPPS/ASC proposed rule and final
rule with comment period, CMS
restated and clarified that the policy
also applies to hospital outpatient
services not provided in PBDs due to
questions referencing the assumption of
physician supervision in the April 2000
OPPS final rule (73 FR 68702 through
68704 referencing 65 FR 18525). Even
though there are different physician
supervision standards for CMHCs and
hospital-based PHPs, the certification,
recertification, and plan of treatment
requirements at § 424.24(e) and section
1835(2)(F) of the Act continue to apply
to both provider types. The physician
would certify and recertify (where
services are furnished over a period of
time) that the individual would require
inpatient psychiatric care in the absence
of such services; an individualized,
written plan for furnishing such services
has been established by a physician and
is reviewed periodically by a physician;
and such services are or were furnished
while the individual is or was under the
care of a physician. The physician
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recertification must be signed by a
physician who is treating the patient
and has knowledge of the patient’s
response to treatment.
In order to unify the benefit and
create more equity and consistency, we
are exploring the possibility of
extending the same physician
supervision requirements to both
provider types. Specifically, we are
concerned whether the current policy of
requiring only general physician
supervision in CMHCs continues to be
appropriate, taking into account the
differences among provider settings. We
also plan to analyze PHP claims data
from the past several years and assess
whether our current policies and
payment structures are working.
Therefore, we will evaluate the policies
and the possibility of extending the
same physician supervision requirement
to PHP services furnished in both
CMHCs and HOPDs in future
rulemaking.
With that in mind, we are requesting
comments on this final rule with
comment period that address: (1) What
types of practitioners currently provide
the supervision of PHP services in
CMHCs; (2) what is the expertise of
supervising practitioners in CMHCs and
what is the expectation for their
availability; (3) based on the final CY
2010 supervision requirements for
hospital outpatient therapeutic services
(including PHP services furnished in
HOPDs), under what circumstances
would direct supervision of PHP
services furnished in CMHCs not be
occurring, according to the applicable
definitions for direct supervision of oncampus and off-campus therapeutic
services; and (4) what would be the
rationale for maintaining different
supervision requirements for PHP
services furnished in CMHCs and
HOPDs, given that all PHP services are
paid under the OPPS.
Comment: A few commenters stated
that the provisions for off-campus PBDs
should not require the supervising
practitioner to be in the department
because the existing policy is
burdensome and costly, especially for
rural providers. The commenters
requested that a supervising physician
or nonphysician practitioner be able to
supervise services being furnished in
more than one off-campus PBD at a
time. Some commenters stated that they
know of off-campus PBDs in current
operation that operate with a supervisor
nearby, for example, in a physician’s
office, but not in the PBD.
Response: We first note that the
requirement for direct supervision of
hospital outpatient therapeutic services
furnished in PBDs of the hospital was
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codified in § 410.27(f) of the regulations
in the April 2000 OPPS final rule. In
that rule, we explicitly stated that ‘‘on
the premises of the location’’ means that
the supervisor must be on the premises
of the PBD (65 FR 18525). We also
responded to public commenters who
asserted that requiring a physician to be
onsite at a PBD throughout the
performance of all ‘‘incident to’’
therapeutic services would be
burdensome and costly for hospitals
where there are a limited number of
physicians available to provide
coverage, particularly in rural settings.
We disagreed then that the supervision
requirement was unnecessary and
burdensome because hospitals, prior to
2000, were already required to ‘‘meet a
direct supervision of ‘incident to’
services requirement that is unrelated to
the provider-based rules.’’ We continue
to believe that it would be inappropriate
to allow one physician or nonphysician
practitioner to supervise all services
being provided in all PBDs at a
particular off-campus outpatient
location. Since first allowing off-campus
sites to be considered PBDs of hospitals,
we have placed particular emphasis on
ensuring the quality and safety of the
services provided in these locations,
which can be many miles from the main
hospital campus, through both
additional provider-based requirements
in § 413.65(e) and our emphasis on
direct physician supervision under
§ 410.27(f). In addition, because the
physician or nonphysician practitioner
must be immediately available and
have, within his or her State scope of
practice and hospital-granted privileges,
the ability to perform the services being
supervised, we believe it would be
highly unlikely that one physician or
nonphysician practitioner would be
both immediately available at all times
that therapeutic services are being
provided and would have the
knowledge and ability to adequately
supervise all services being performed
at once in multiple off-campus PBDs.
Comment: Many commenters
maintained that the CY 2009 OPPS/ASC
final rule with comment period
statements on supervision were not a
‘‘restatement or clarification’’ but a
significant change in policy. They
argued that any enforcement should be
prospective beginning in CY 2010 only,
with no enforcement regarding prior
years’ hospital outpatient therapeutic
services. The commenters believed that
the policy prior to CY 2009 at best was
unclear, and that the regulations were
not comprehensive, and therefore, they
concluded that hospitals should not be
held accountable to the policy stated in
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the CY 2009 OPPS/ASC final rule with
comment period for hospital outpatient
therapeutic services furnished in 2000
through CY 2008. The commenters
stated that CMS should also not enforce
the policy as clarified in the CY 2009
OPPS/ASC final rule with comment
period for CY 2009 hospital outpatient
therapeutic services because sufficient
opportunity for public notice and
comment was not provided. Many
hospitals were unaware that the policy
had been discussed in the CY 2000
OPPS rulemaking process, and the
commenters argued that hospitals may
not have had enough time to meet these
requirements for CY 2009. Furthermore,
hospitals expressed concern about their
potential liability due to qui tam
litigation.
Response: We provided a restatement
and clarification of existing policy in
the CY 2009 OPPS/ASC proposed rule
(73 FR 41518 through 41519), citing
numerous existing statutory, regulatory,
manual, and prior rule preamble
statements in section XII.A. of that rule,
specifically titled, ‘‘Physician
Supervision of HOPD Services.’’ The CY
2009 OPPS/ASC proposed rule provided
for a 60-day comment period. We
continue to believe that the CY 2009
restatement and clarification made no
change to longstanding hospital
outpatient physician direct supervision
policies as incorporated in prior
statements of policy, including the
regulations. In addition, we provided for
public notice and comment regarding
these physician supervision policies
through the CY 2009 OPPS/ASC
proposed rule in which, as noted above,
we discussed physician supervision
explicitly in a distinct section of the
proposed rule, and we responded in the
final rule to the few public comments
we received on the supervision
discussion. Therefore, we believe that
the usual enforcement practices of
Medicare contractors are appropriate for
services furnished in CY 2009.
Likewise, the final supervision policies
described in this CY 2010 final rule
with comment period for hospital
outpatient therapeutic services are
effective and, therefore, subject to
enforcement beginning January 1, 2010.
In regard to hospital outpatient
therapeutic services provided in CY
2000 through CY 2008, in CY 2009 we
recognized the need for clarification of
the direct supervision policy. CMS was
relatively silent on this topic between
2000 and 2008. Furthermore, the
existing regulations at § 410.27(f) only
specify the supervision requirements for
hospital outpatient therapeutic services
furnished in PBDs but do not address
services furnished in areas of the
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60587
hospital that may not be PBDs.
However, we note that the details of the
direct supervision policy for hospital
outpatient therapeutic services
furnished in off-campus PBDs were
clearly and consistently stated in the
April 2000 OPPS final rule discussion
and the regulations, including the
requirement that the supervising
practitioner be physically present in an
off-campus PBD when such services
were being furnished. As stated earlier
in this section, we have placed and will
continue to place particular emphasis
on ensuring the quality and safety of the
services provided in these locations and
will continue to do so through our
enforcement and other efforts. However,
in the case of hospital outpatient
therapeutic services furnished on the
hospital’s campus in 2000 through 2008,
we plan to exercise our discretion and
decline to enforce in situations
involving claims where the hospital’s
noncompliance with the direct
physician supervision policy resulted
from error or mistake.
After consideration of the public
comments we received, we are
finalizing our proposal to allow, in
addition to clinical psychologists,
certain other nonphysician practitioners
to directly supervise services that they
may perform themselves under their
State license and scope of practice and
hospital-granted or CAH-granted
privileges, with one modification. In
addition to physician assistants, nurse
practitioners, clinical nurse specialists,
and certified nurse-midwives, in this
final rule with comment period, we are
allowing licensed clinical social
workers to provide direct supervision.
Specifically, we are modifying the final
text of revised § 410.27(f) to include
licensed clinical social workers among
the listing of nonphysician practitioners
who may directly supervise the
provision of hospital outpatient
therapeutic services. These
nonphysician practitioners may directly
supervise services that they may
personally furnish in accordance with
State law and all additional
requirements, including those specified
in §§ 410.71, 410.73, 410.74, 410.75,
410.76, and 410.77, respectively.
Accordingly, we also are adding the
cross-reference to § 410.73 (Clinical
social worker services) in the final
revision of paragraph (a)(1)(iv) of
§ 410.27 (which indicates that services
must be furnished under the direct
supervision of a physician or a
nonphysician practitioner as specified
in paragraph (f)).
We are finalizing the proposed direct
physician supervision requirements for
PR, CR, and ICR services furnished in
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the HOPD that would require the direct
supervision to be provided by a doctor
of medicine or osteopathy. Accordingly,
we are finalizing the relevant language
in proposed §§ 410.27(a)(1)(iv)(A) and
(B) which indicates that, for PR, CR, and
ICR services, direct supervision must be
furnished by a doctor of medicine or
osteopathy, as specified in §§ 410.47
and 410.49, respectively.
For services furnished on a hospital’s
main campus, we are finalizing a
modification of our proposed definition
of ‘‘direct supervision’’ in new
paragraph (a)(1)(iv)(A) of § 410.27 that
allows for the supervisory physician or
nonphysician practitioner to be
anywhere on the hospital campus,
including a physician’s office, an oncampus SNF, RHC, or other nonhospital
space. Therefore, direct supervision
means that the supervisory physician or
nonphysician practitioner must be
present on the same campus and
immediately available to furnish
assistance and direction throughout the
performance of the procedure.
Because the term ‘‘in the hospital or
CAH’’ applies broadly to ‘‘incident to’’
requirements such as the site of service
requirement for therapeutic services
provided by the hospital directly and
under arrangement, we also are
finalizing the definition of ‘‘in the
hospital’’ in new paragraph § 410.27(g)
as meaning areas in the main building(s)
of a hospital or CAH that are under the
ownership, financial, and
administrative control of the hospital or
CAH; that are operated as part of the
hospital; and for which the hospital
bills the services furnished under the
hospital’s or CAH’s CCN.
We are finalizing, without
modification, the addition of new
paragraph (a)(1)(iv)(B) to § 410.27 to
reflect that, for off-campus PBDs of
hospitals, the physician or
nonphysician practitioner must be
present in the off-campus PBD, as
defined in § 413.65, and immediately
available to furnish assistance and
direction throughout the performance of
the procedure. It does not mean that the
physician or nonphysician practitioner
must be in the room when the
procedure is performed. As we stated
previously, the language of paragraph
(a)(1)(iv)(B) is similar to existing
§ 410.27(f) that we are revising and
relocating. Furthermore, we are
finalizing the proposed technical change
to clarify the language in this paragraph
by removing the phrase ‘‘present and on
the premises of the location’’ and
replacing it with the phrase ‘‘present in
the off-campus provider-based
department.’’
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Additionally, we are finalizing the
proposal to make a technical correction
to the title of § 410.27 to read,
‘‘Outpatient hospital or CAH services
and supplies incident to a physician
service: Conditions’’ to clarify in the
title that the requirements for payment
of hospital outpatient therapeutic
services incident to a physician or
nonphysician practitioner service in
that section apply to both hospitals and
CAHs. Similarly, we are including the
phrase ‘‘hospital or CAH’’ throughout
the text of § 410.27 wherever the text
currently refers just to ‘‘hospital.’’
4. Policies for Direct Supervision of
Hospital and CAH Outpatient
Diagnostic Services
As we discussed in detail in the CY
2010 OPPS/ASC proposed rule (74 FR
35368), with respect to the physician
supervision requirements for individual
diagnostic tests, we have continued
since the April 2000 OPPS final rule
discussion (65 FR 18526) to instruct
hospitals that, for diagnostic services
furnished in PBDs of hospitals,
hospitals should follow the supervision
requirements for individual diagnostic
tests as listed in the MPFS Relative
Value File. For diagnostic services not
listed in the MPFS file, Medicare
contractors, in consultation with their
medical directors, define appropriate
supervision levels in order to determine
whether claims for these services are
reasonable and necessary. To further
specify the supervision policy across
service settings and to provide
consistency for all hospital outpatient
diagnostic services, for CY 2010 we
proposed to require that all hospital
outpatient diagnostic services that are
provided directly or under arrangement,
whether provided in the main buildings
of the hospital, in a PBD of a hospital,
or at a nonhospital location, follow the
physician supervision requirements for
individual tests as listed in the MPFS
Relative Value File. We also proposed
that the definitions of general, direct,
and personal supervision as defined in
§§ 410.32(b)(3)(i) through (b)(3)(iii)
would also apply. In the case of direct
supervision of diagnostic services
furnished directly by the hospital or
under arrangement in the main hospital
buildings or on-campus in a PBD, we
proposed that the definition of direct
supervision would be the same as the
definition we proposed for therapeutic
services provided on-campus as
discussed in the CY 2010 OPPS/ASC
proposed rule (74 FR 35369), meaning
that the physician would be present on
the same campus, in the hospital or the
on-campus PBD of the hospital, as
defined in § 413.65, and immediately
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available to furnish assistance and
direction throughout the performance of
the procedure. In addition, the
definition of ‘‘in the hospital or CAH’’
as defined in proposed § 410.27(g),
discussed above, would apply. In the
CY 2010 OPPS/ASC proposed rule, we
explained that this means that the
supervisory physician may not be
located in any entity such as a
physician’s office, co-located hospital,
IDTF, or hospital-operated provider or
supplier such as a SNF, ESRD facility,
or HHA, or any other nonhospital space
that may be co-located on the hospital’s
campus, as campus is defined in
§ 413.65(a)(2).
Similarly, in the case of direct
physician supervision of diagnostic
services furnished directly or under
arrangement in an off-campus PBD, we
proposed that the definition of direct
supervision would be the same as the
current definition for therapeutic
services provided in an off-campus PBD
as discussed in the CY 2010 OPPS/ASC
proposed rule (74 FR 35369), meaning
the physician must be present in the offcampus PBD, as defined in § 413.65 and
immediately available to furnish
assistance and direction throughout the
performance of the procedure. As we
discussed in the April 2000 OPPS final
rule (65 FR 18524 through 18525) and
the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68702 through
68704), we have long made the analogy
of the PBD to the physician’s office
suite, as described in the definition of
direct supervision in § 410.32(b)(3)(ii).
In addition to providing diagnostic
services directly or under arrangement
in the hospital, including PBDs of the
hospital, a hospital may also send its
outpatients to another entity, such as an
IDTF, to furnish these services under
arrangement for the hospital. For
example, in the April 2000 OPPS final
rule (65 FR 185440 through 185441), in
a discussion of the hospital bundling
rules, we discussed that an entity, like
an IDTF, may be located in the main
buildings of a hospital or on the hospital
campus but operated independently of
the hospital. In addition, these
suppliers, providers, or other entities
may be located elsewhere, not on a
hospital’s main campus or other
hospital property. These entities, like
IDTFs and physicians’ offices, may
provide services to their own patients
(not hospital outpatients) and to
hospital outpatients under arrangements
with the hospital. They follow the
physician supervision requirements of
the MPFS and § 410.32 when providing
services to Medicare beneficiaries who
are not hospital outpatients. For
consistency, we proposed for CY 2010
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that all diagnostic services provided to
hospital outpatients under arrangement
in nonhospital entities, whether those
entities are located on the main campus
of the hospital or elsewhere, would also
follow the requirements as described in
§ 410.32(b)(3)(i) through (iii). When
hospitals contract with other entities to
provide services under arrangement, the
hospital must exercise professional
responsibility over the arrangement for
services, in accordance with the
guidance provided in Section 10.3
(Under Arrangements) of Chapter 5 of
the Medicare General Information,
Eligibility and Entitlement Manual. This
means that for the hospital to receive
payment, it is responsible for ensuring
that all applicable requirements in
§§ 410.28 and 410.32 are met. In the
case of hospital outpatient diagnostic
services provided under arrangement at
nonhospital locations, such as IDTFs,
we believe that the term ‘‘office suite’’
used in § 410.32(b)(3)(ii) is directly
applicable because these facilities
usually also provide diagnostic services
to their own patients and, therefore,
would be able to apply the direct
supervision requirement in
§ 410.32(b)(3)(ii) without further
definition.
We stated in the CY 2010 OPPS/ASC
proposed rule (74 FR 35369) that
physician assistants, nurse practitioners,
clinical nurse specialists, and certified
nurse-midwives who operate within the
scope of practice under State law may
order and perform diagnostic tests, as
discussed under § 410.32(a)(3) and in
the corresponding manual guidance in
section 80 (Requirements for Diagnostic
X–Ray, Diagnostic Laboratory, and
Other Diagnostic Tests) of Chapter 15 of
the Medicare Benefit Policy Manual.
However, this manual guidance and the
regulations at § 410.32(b)(1) also state
that diagnostic x-ray and other
diagnostic tests must be furnished under
the appropriate level of supervision by
a physician as defined in section 1861(r)
of the Act. Thus, physician assistants,
nurse practitioners, clinical nurse
specialists, and certified nursemidwives may not function as
supervisory physicians for the purposes
of diagnostic tests. In accordance with
these existing requirements, we did not
propose to allow physician assistants,
nurse practitioners, clinical nurse
specialists, and certified nursemidwives to provide the supervision of
diagnostic tests provided to hospital
outpatients. Clinical psychologists may
supervise only diagnostic psychological
and neuropsychological testing services
as described in an exception to the basic
rule at § 410.32(b)(2)(iii) for diagnostic
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psychological and neuropsychological
testing services, when these services are
personally furnished by a clinical
psychologist or an independently
practicing psychologist or when they are
furnished under the general supervision
of a physician or clinical psychologist.
To reflect these proposed changes for
the provision of direct supervision of
diagnostic services provided to hospital
outpatients in the regulations, we
proposed to revise existing § 410.28(e).
First, we proposed to specify that the
provisions of proposed revised
paragraph (e) apply to diagnostic
services furnished by the hospital,
directly or under arrangement,
consistent with our proposal to apply
the existing diagnostic services
supervision requirement for PBDs to
diagnostic services provided directly by
the hospital or under arrangement. We
would continue to specify that the
definitions of general and personal
physician supervision included in
§ 410.32(b)(3)(i) and (b)(3)(iii) apply to
these levels of supervision of hospital
outpatient diagnostic services.
Furthermore, we proposed to add new
paragraph (e)(1) to § 410.28 to indicate
that, for services furnished directly or
under arrangement, in the hospital or in
an on-campus department of a provider,
as defined in § 413.65, direct
supervision means that the physician
must be present on the same campus, in
the hospital or PBD of the hospital as
defined in § 413.65, and immediately
available to furnish assistance and
direction throughout the performance of
the procedure. We also would continue
to provide that direct supervision does
not mean that the physician must be in
the room when the procedure is
performed. As discussed above, we
would apply the definition of ‘‘in the
hospital’’ as proposed in § 410.27(g) of
the regulations. In addition, we
proposed to add new paragraph (e)(2) to
§ 410.28 to reflect that, for the direct
physician supervision of diagnostic
services furnished directly or under
arrangement in off-campus PBDs of
hospitals, the physician must present in
the off-campus PBD, as defined in
§ 413.65, and immediately available to
furnish assistance and direction
throughout the performance of the
procedure. We would continue to
provide that direct supervision does not
mean that the physician must be in the
room when the procedure is performed.
Finally, we proposed to add new
paragraph (e)(3) to specify that for the
direct supervision of hospital outpatient
services provided under arrangement in
physicians’ offices and other
nonhospital locations, the definition of
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60589
direct supervision in § 410.32(b)(3)(ii)
applies.
Comment: Some commenters fully
supported the proposal for hospital
outpatient diagnostic services, agreeing
with CMS that it is appropriate to apply
the requirements for physician
supervision consistently across all sites
of service. Other commenters, including
major hospitals associations and
commenters representing rural
hospitals, believed the proposal is
unnecessary, unrealistic, costly, and
would reduce access to diagnostic
services. Several commenters stated that
CMS’ interpretation of ‘‘furnish
assistance and direction throughout the
performance of the procedure’’ would
mean that the physician would have to
be able to operate sophisticated
equipment, replacing the technicians
who are trained to operate the
equipment. Some commenters indicated
that rural hospitals would not be able to
meet the proposed requirements. Other
commenters requested that CMS add a
column to Addendum B specifying the
required level of supervision for
diagnostic tests to make it easier for
hospitals to comply with the
requirements.
Response: We disagree with the
commenters that requiring hospitals to
follow the MPFS levels of supervision
for individual diagnostic tests would
create additional hospital burden for
many services because CMS has already
applied the lowest level of supervision
(general supervision) to numerous
diagnostic services. Additionally, in the
April 2000 OPPS final rule (65 FR
18536), we codified § 410.28(e) of the
regulations to apply this requirement to
all on and off campus PBDs of hospitals.
It is appropriate to apply the same
requirements to diagnostic services that
are provided ‘‘in the hospital’’ as those
that have been long established for oncampus and off-campus PBDs of the
hospital, including rural hospitals. We
also believe that, in the interest of safe
and high quality care for beneficiaries,
it is appropriate for hospitals to follow
the same requirements for supervision
as physicians and IDTFs when
furnishing more complex diagnostic
tests that we have specifically identified
as requiring direct or personal
supervision, or should be performed
only by the physician. In addition, since
hospitals may contract with other
entities to have diagnostic services
provided under arrangement, it is also
appropriate to ensure that those entities
are consistently following the
supervision levels that we have
identified for both their own patients as
well as hospital outpatients. We
recognize that specially trained
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ancillary staff and technicians are the
primary operators of some specialized
diagnostic testing equipment. However,
we also believe it is reasonable for the
physician that supervises the provision
of the services to be knowledgeable
about those tests.
Therefore, we are finalizing our CY
2010 proposal that all hospital
outpatient diagnostic services that are
provided directly or under arrangement,
whether provided in the main buildings
of the hospital, in a PBD of the hospital,
or at a nonhospital location, follow the
physician supervision requirements for
individual tests as listed in the MPFS
Relative Value File. The definitions of
general, direct, and personal
supervision as defined in
§§ 410.32(b)(3)(i) through (b)(3)(iii) also
apply. In the case of direct supervision
of diagnostic services furnished directly
by the hospital or under arrangement in
the main hospital buildings or oncampus in a PBD, the definition of
direct supervision is the same as the
modified definition that we are
finalizing for therapeutic services
provided on-campus, as discussed in
section XII.D.3. of this final rule with
comment period, meaning that the
physician would be present on the same
campus and immediately available to
furnish assistance and direction
throughout the performance of the
procedure. We would continue to
specify that direct supervision does not
mean that the physician must be in the
room when the procedure is performed.
As discussed above, we are applying the
definition of ‘‘in the hospital’’ as
proposed and finalized in § 410.27(g) of
the regulations. While the definition of
‘‘in the hospital’’ is no longer a
component of the definition of direct
supervision, it remains applicable to
describe areas operated as part of the
hospital that are not PBDs for other
purposes, such as services provided
under arrangement. It is also
appropriate to apply the definition of
that term consistently for both
diagnostic and therapeutic hospital
outpatient services. In addition, we are
finalizing our proposal to add new
paragraph (e)(2) to § 410.28 to reflect
that, for the direct physician
supervision of diagnostic services
furnished directly or under arrangement
in off-campus PBDs of hospitals, the
physician must be present in the offcampus PBD of the hospital, as defined
in § 413.65, and immediately available
to furnish assistance and direction
throughout the performance of the
procedure. We would continue to
specify that direct supervision does not
mean that the physician must be in the
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room when the procedure is performed.
Also, we are finalizing our proposal to
add new paragraph (e)(3) to specify that
for the direct supervision of hospital
outpatient services provided under
arrangement in physicians’ offices and
other nonhospital locations, the
definition of direct supervision in
§ 410.32(b)(3)(ii) applies.
We acknowledge the commenters’
request to publish the diagnostic
supervision levels in Addendum B.
Addendum B currently specifies
information related directly to the
payment for services described by
HCPCS codes, including relative
weights, payment rates, and
copayments. We do not believe it is
necessary to include the supervision
levels for diagnostic services in
Addendum B that are not directly
relevant to the payment rates for those
services. These supervision levels are
readily available on the CMS Web site
in the MPFS RVU File, and, because we
make both the MPFS RVU File and
Addendum B available in spreadsheet
format, an interested hospital can easily
modify Addendum B to add whatever
code-specific information the hospital
believes would be most useful to
incorporate in a single electronic file for
reference purposes.
Comment: Several commenters
asserted that nonphysician practitioners
should be able to supervise diagnostic
tests because they may order and
perform diagnostic tests that are within
their scope of practice under State law.
Response: We acknowledged in the
CY 2010 OPPS/ASC proposed rule (74
FR 35369) that physician assistants,
nurse practitioners, clinical nurse
specialists, and certified nursemidwives who operate within the scope
practice under State law may order and
perform diagnostic tests, as discussed in
§ 410.32(a)(3) and corresponding
manual guidance in Section 80 of
Chapter 15 of the Medicare Benefit
Policy Manual. However, we noted that
this manual guidance and the long
established regulation at § 410.32(b)(1)
also state that diagnostic x-ray and other
diagnostic tests must be furnished under
the appropriate level of supervision by
a physician as defined in section 1861(r)
of the Act. Thus, CMS historically has
not permitted physician assistants,
nurse practitioners, clinical nurse
specialists, and certified nursemidwives to function as supervisory
‘‘physicians’’ for the purposes of
diagnostic tests. In accordance with
these existing requirements, we did not
propose to allow physician assistants,
nurse practitioners, clinical nurse
specialists, and certified nursemidwives to provide the supervision of
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diagnostic tests provided to hospital
outpatients. Because we establish the
physician supervision levels in the
MPFS Relative Value File based on the
policy that only a physician may
provide the supervision, we believe it
continues to be most appropriate to
allow only physicians to provide the
supervision of hospital outpatient
diagnostic services.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to require that all
hospital outpatient diagnostic services
that are provided directly or under
arrangement, whether provided in the
main buildings of the hospital, in a PBD
of a hospital, or at a nonhospital
location, follow the physician
supervision requirements for individual
tests as listed in the MPFS RVU File.
The definitions of general, direct, and
personal supervision as defined in
§§ 410.32(b)(3)(i) through (b)(3)(iii) also
apply. In the case of direct supervision
of diagnostic services furnished directly
by the hospital or under arrangement in
the main hospital buildings or oncampus in a PBD of a hospital, the
definition of direct supervision is the
same as the modified definition that we
are finalizing for therapeutic services
provided on-campus as discussed in
section XII.D.3. of this final rule with
comment period, meaning that the
physician must be present on the same
campus and immediately available to
furnish assistance and direction
throughout the performance of the
procedure. We continue to provide that
direct supervision does not mean that
the physician must be in the room when
the procedure is performed. As
discussed above, we are applying the
definition of ‘‘in the hospital’’ as
specified in new § 410.27(g) of the
regulations. While the definition of in
the hospital is no longer a component of
the definition of direct supervision, it
remains applicable to describe areas
operated as part of the hospital that are
not PBDs for other purposes, such as
services provided under arrangement. It
is also appropriate to apply the
definition of that term consistently for
both diagnostic and therapeutic hospital
outpatient services. In addition, we are
finalizing our CY 2010 proposal,
without modification, to add new
paragraph (e)(2) to § 410.28 to reflect
that, for the direct physician
supervision of diagnostic services
furnished directly or under arrangement
in off-campus PBDs of hospitals, the
physician must present in the offcampus PBD, as defined in § 413.65, and
immediately available to furnish
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assistance and direction throughout the
performance of the procedure. We
continue to provide that direct
supervision does not mean that the
physician must be in the room when the
procedure is performed. Also, we are
finalizing the CY 2010 proposal,
without modification, to add new
paragraph (e)(3) to specify that, for the
direct supervision of hospital outpatient
services provided under arrangement in
physicians’ offices and other
nonhospital locations, the definition of
direct supervision in § 410.32(b)(3)(ii)
applies. We did not propose to allow
physician assistants, nurse practitioners,
clinical nurse specialists, and certified
nurse-midwives to provide the
supervision of diagnostic tests provided
to hospital outpatients and we are
finalizing this policy.
5. Summary of CY 2010 Physician
Supervision Final Policy
In summary, for CY 2010,
nonphysician practitioners who are
specified under § 410.27 of the final
regulations as clinical psychologists,
licensed clinical social workers,
physician assistants, nurse practitioners,
clinical nurse specialists, and certified
nurse-midwives, may directly supervise
all hospital outpatient therapeutic
services that they may perform
themselves within their State scope of
practice and hospital-granted privileges,
provided that they meet all additional
requirements, including any
collaboration or supervision
requirements as specified in §§ 410.71,
410.73, 410.74, 410.75, 410.76, and
410.77. We are finalizing the proposed
direct physician supervision
requirements for PR, CR, and ICR
services furnished in the HOPD that
would require the supervision to be
provided by a doctor of medicine or
osteopathy. Accordingly, we are
finalizing proposed
§§ 410.27(a)(1)(iv)(A) and (B) which
indicate that, for PR, CR, and ICR
services, direct supervision must be
furnished by a doctor of medicine or
osteopathy, as specified in §§ 410.47
and 410.49, respectively.
We also are refining the definition of
the direct supervision of hospital
outpatient therapeutic services for those
services provided in the hospital or oncampus PBD of the hospital. For
services provided in the hospital or oncampus PBD of the hospital, direct
supervision would mean that the
physician or nonphysician practitioner
must be present on the same campus
and immediately available to furnish
assistance and direction throughout the
performance of the procedure. In
addition, we are finalizing the definition
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of ‘‘in the hospital’’ in new paragraph
§ 410.27(g) to mean areas in the main
building(s) of a hospital or CAH that are
under the ownership, financial, and
administrative control of the hospital or
CAH; that are operated as part of the
hospital or CAH; and for which the
hospital or CAH bills the services
furnished under the hospital’s or CAH’s
CCN.
We are not making any significant
changes to the definition or
requirements for direct supervision of
hospital outpatient therapeutic services
provided in off-campus PBDs of a
hospital or CAH, other than to allow
nonphysician practitioners to provide
direct supervision for the services that
they may perform themselves in those
locations. Therefore, we are finalizing,
without modification, the addition of
new paragraph (a)(1)(iv)(B) to § 410.27
to reflect that, for off-campus PBDs of
hospitals or CAHs, the physician or
nonphysician practitioner must be
present in the off-campus PBD, as
defined in § 413.65, and immediately
available to furnish assistance and
direction throughout the performance of
the procedure. We state that this
requirement does not mean that the
physician or nonphysician practitioner
must be in the room when the
procedure is performed.
Additionally, we are finalizing the
proposal to make a technical correction
to the title of § 410.27 and the text of
§ 410.27 to clarify throughout that the
requirements for payment of hospital
outpatient therapeutic services incident
to a physician or nonphysician
practitioner service in that section apply
to both hospitals and CAHs.
For CY 2010, we are finalizing the
proposal to require that all hospital
outpatient diagnostic services provided
directly or under arrangement, whether
provided in the hospital, in a PBD of a
hospital, or at a nonhospital location,
follow the physician supervision
requirements for individual tests as
listed in the MPFS Relative Value File.
The existing definitions of general and
personal supervision as defined in
§§ 410.32(b)(3)(i) and (b)(3)(iii) also
apply. For services furnished directly or
under arrangement in the hospital or oncampus PBD, direct supervision means
that the physician must be present on
the same campus and immediately
available to furnish assistance and
direction throughout the performance of
the procedure. For the purposes of
§ 410.28, as for the general purposes of
§ 410.27, the definition of ‘‘in the
hospital,’’ as defined in § 410.27(g),
applies. For diagnostic services
furnished directly or under arrangement
off-campus in a PBD of the hospital,
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60591
direct supervision continues to mean
that the physician must be present in
the off-campus PBD and immediately
available to furnish assistance and
direction throughout the performance of
the procedures. For all hospital
outpatient diagnostic services provided
under arrangement in nonhospital
locations, such as IDTFs and physicians’
offices, the existing definition of direct
supervision under § 410.32(b)(3)(ii)
applies. We are revising § 410.28 of the
regulations to reflect these changes.
E. Direct Referral for Observation
Services
Since CY 2003, hospitals have
reported a Level II HCPCS code for
Medicare billing purposes for a ‘‘direct
admission’’ to a hospital for outpatient
observation services. In section 290 of
Chapter 4 of the Medicare Claims
Processing Manual (Pub. 100–4), we
define a ‘‘direct admission’’ as the direct
referral of a patient by a community
physician to a hospital for observation
services without an associated
emergency room visit, hospital
outpatient clinic visit, critical care
service, or hospital outpatient surgical
procedure (that is, a status indicator ‘‘T’’
procedure) on the day of the initiation
of observation services. Since CY 2006,
we have instructed hospitals to report a
‘‘direct admission’’ referred for
observation services using HCPCS code
G0379 (Direct admission of patient for
hospital observation care) (70 FR 68688
through 68691).
Observation care is a hospital
outpatient service that is reported using
HCPCS code G0378 (Hospital
observation services, per hour).
Hospitals report outpatient observation
services, which are commonly provided
in association with a hospital clinic
visit, emergency department visit, or
other major service, on hospital
outpatient claims, just like other
outpatient services. Physicians order
observation care, defined as clinically
appropriate services, including ongoing
short-term treatment, assessment, and
reassessment furnished in order for the
physician to determine whether the
beneficiary will require further
treatment as an inpatient or whether the
beneficiary may be safely discharged
from the hospital.
We have become aware that, because
the word ‘‘admission’’ is generally used
in reference to inpatient hospital care,
our historical use of the phrase ‘‘direct
admission’’ in the code descriptor for
HCPCS code G0379 and the use of the
phrase ‘‘observation status’’ in the
Medicare Claims Processing Manual
(Chapter 4, Section 290) and the
Medicare Benefit Policy Manual
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(Chapter 6, Section 20) may be
contributing to confusion for hospitals
and beneficiaries related to a
beneficiary’s status as an inpatient or an
outpatient when he or she is receiving
observation services. For Medicare
payment purposes, there is no patient
status termed ‘‘observation status.’’
Hospitals may only bill for items and
services furnished to inpatients,
outpatients, or nonpatients. We believe
that using terminology such as
‘‘observation status’’ or ‘‘admission to
observation’’ may be confusing for
physicians, hospitals, and beneficiaries.
Therefore, in the CY 2010 OPPS/ASC
proposed rule (74 FR 35370 through
35371), we proposed to modify the code
descriptor for HCPCS code G0379 to
remove the reference to the word
‘‘admission’’ and to replace it with
‘‘referral.’’ The proposed long code
descriptor for HCPCS code G0379
would be ‘‘Direct referral for hospital
observation care.’’ We proposed this
change to more accurately reflect that
the physician in the community has
referred the beneficiary to the hospital
for observation services as a hospital
outpatient. In addition to the proposed
CY 2010 change to the code descriptor
for HCPCS code G0379, we modified the
Medicare Claims Processing Manual and
the Medicare Benefit Policy Manual to
remove most references related to
‘‘admission’’ for observation services or
‘‘observation status.’’ We refer readers to
Transmittal 1760 dated June 23, 2009
(which rescinded and replaced
Transmittal 1745, dated May 22, 2009)
and Transmittal 107 dated May 22, 2009
(both issued under Change Request
6492), for more information regarding
the specific changes incorporated in the
manuals.
We did not propose to change the
status indicator or payment
methodology for HCPCS code G0379 for
CY 2010. Instead, we proposed to
continue the payment policy that was
finalized for the CY 2009 OPPS (73 FR
68554). In the CY 2010 OPPS/ASC
proposed rule (74 FR 35370 through
35371), we proposed to continue to
assign HCPCS code G0379 status
indicator ‘‘Q3,’’ indicating that it would
be eligible for payment through APC
8002 (Level I Extended Assessment &
Management Composite) when certain
criteria are met or through APC 0604
(Level I Hospital Clinic Visits) when
other criteria are met; otherwise, its
payment would be packaged into
payment for other separately payable
services in the same encounter. The
established 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
that we would continue for CY 2010 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 related to our CY 2010
proposal to revise the code descriptor
for HCPCS code G0379 to read ‘‘Direct
referral for hospital observation care,’’
or on our proposal to continue the CY
2009 status indicator assignment and
payment methodology for HCPCS code
G0379 for CY 2010. Therefore, we are
finalizing these CY 2010 proposals,
without modification.
XIII. OPPS Payment Status and
Comment Indicators
A. OPPS Payment Status Indicator
Definitions
Payment status indicators (SIs) that
we assign to HCPCS codes and APCs
play an important role in determining
payment for services under the OPPS.
They indicate whether a service
represented by a HCPCS code is payable
under the OPPS or another payment
system and also whether particular
OPPS policies apply to the code. The
final CY 2010 status indicator
assignments for APCs and HCPCS codes
are shown in Addendum A and
Addendum B, respectively, to this final
rule with comment period.
As we proposed in the CY 2010
OPPS/ASC proposed rule (74 FR 35371),
in this final rule with comment period,
we are changing the definitions of status
indicators ‘‘H’’ and ‘‘K.’’ We did not
propose to make any changes to the
other status indicators that were listed
in Addendum D1 of the CY 2009 OPPS/
ASC final rule with comment period.
The final status indicators are listed in
the tables under sections XIII.A.1., 2., 3.,
and 4. of this final rule with comment
period.
1. Payment Status Indicators to
Designate Services That Are Paid Under
the OPPS
Item/code/service
OPPS payment status
G ...................
H ...................
Pass-Through Drugs and Biologicals .........................................
Pass-Through Device Categories ...............................................
K ...................
Nonpass-Through Drugs and Nonimplantable Biologicals, including Therapeutic Radiopharmaceuticals.
Items and Services Packaged into APC Rates ..........................
Paid under OPPS; separate APC payment.
Separate cost-based pass-through payment; not subject to copayment.
Paid under OPPS; separate APC payment.
N ...................
P ...................
Q1 .................
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Indicator
Partial Hospitalization .................................................................
STVX–Packaged Codes .............................................................
Q2 .................
T–Packaged Codes ....................................................................
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Paid under OPPS; payment is packaged into payment for
other services. Therefore, there is no separate APC payment.
Paid under OPPS; per diem APC payment.
Paid under OPPS; Addendum B displays APC assignments
when services are separately payable. (1) Packaged APC
payment if billed on the same date of service as a HCPCS
code assigned status indicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X.’’ (2) In
all other circumstances, payment is made through a separate APC payment.
Paid under OPPS; Addendum B displays APC assignments
when services are separately payable. (1) Packaged APC
payment if billed on the same date of service as a HCPCS
code assigned status indicator ‘‘T.’’ (2) In all other circumstances, payment is made through a separate APC payment.
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60593
Indicator
Item/code/service
OPPS payment status
Q3 .................
Codes that may be paid through a composite APC ...................
R ...................
S ...................
T ....................
U ...................
V ...................
X ...................
Blood and Blood Products ..........................................................
Significant Procedure, Not Discounted When Multiple ...............
Significant Procedure, Multiple Reduction Applies .....................
Brachytherapy Sources ...............................................................
Clinic or Emergency Department Visit ........................................
Ancillary Services ........................................................................
Paid under OPPS; Addendum B displays APC assignments
when services are separately payable. Addendum M displays composite APC assignments when codes are paid
through a composite APC. (1) Composite APC payment
based on OPPS composite-specific payment criteria. Payment is packaged into a single payment for specific combinations of service. (2) In all other circumstances, payment
is made through a separate APC payment or packaged into
payment for other services.
Paid under OPPS; separate APC payment.
Paid under OPPS; separate APC payment.
Paid under OPPS; separate APC payment.
Paid under OPPS; separate APC payment.
Paid under OPPS; separate APC payment.
Paid under OPPS; separate APC payment.
Section 142 of Public Law 110–275
(MIPPA) required CMS to pay for
therapeutic radiopharmaceuticals for
the period of July 1, 2008, through
December 31, 2009, at hospitals’ charges
adjusted to the costs. The status
indicator ‘‘H’’ was assigned to
therapeutic radiopharmaceuticals to
indicate that an item was paid at
charges adjusted to cost during CY 2009.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35373), we proposed to pay
prospectively and separately for
therapeutic radiopharmaceuticals with
average per day costs greater than the
proposed CY 2010 drug packaging
threshold of $65 under the OPPS.
Therefore, we proposed to change the
status indicator for HCPCS codes used
to report separately payable therapeutic
radiopharmaceuticals from ‘‘H’’ to ‘‘K,’’
which indicates that an item is
separately paid under the OPPS at the
APC payment rate established for the
item. We refer readers to section V.B.5.
of the proposed rule (74 FR 35333
through 36336) and this final rule with
comment period for discussion of the
proposed and final CY 2010 changes to
our payment policy for therapeutic
radiopharmaceuticals.
We received many comments on our
proposal to establish prospective
payment rates for therapeutic
radiopharmaceuticals. We respond to
these comments and discuss our final
policy in section V. B. 5. of this final
rule with comment period. However, we
did not receive any public comments
related to our proposal to change the
definitions of status indicators ‘‘H’’ and
‘‘K,’’ to reflect this change in policy.
Therefore, we are changing the
definitions of status indicators ‘‘H’’ and
‘‘K’’ as proposed, without modification,
to reflect our final therapeutic
radiopharmaceutical payment policy,
and we are finalizing assignment of
status indicator ‘‘K’’ to therapeutic
radiopharmaceuticals with average per
day costs greater than the final CY 2010
drug packaging threshold of $65 under
the OPPS.
As we discussed in detail in section
V.A.4. of the CY 2010 OPPS/ASC
proposed rule (74 FR 35311 through
35314), we proposed to consider
implantable biologicals that are not on
pass-through status as a biological
before January 1, 2010, as devices for
pass-through evaluation and payment
beginning in CY 2010. Therefore, as
devices, pass-through implantable
biologicals would be assigned a status
indicator of ‘‘H,’’ while nonpass-through
implantable biologicals would be
assigned a status indicator of ‘‘N’’
beginning in CY 2010. Those
implantable biologicals that have been
granted pass-through status under the
drug and biological criteria prior to
January 1, 2010, would continue to be
assigned a status indicator of ‘‘G’’ until
they are proposed for expiration from
pass-through status during our annual
rulemaking cycle. In the proposed rule
(74 FR 35373), we proposed to assign
status indicator ‘‘K’’ to nonimplantable
biologicals and to adjust the definition
of status indicator ‘‘K’’ accordingly.
We received numerous comments on
our proposal to treat implantable
biologicals as devices and we respond to
them in section V.A.4. of this final rule
with comment period. We did not
receive any public comments with
regard to the proposed changes to status
indicator ‘‘K’’ to reflect the implantable
biological pass-through payment policy.
Therefore, we are finalizing our
proposal, without modification, to
assign status indicator ‘‘K’’ to
nonimplantable biologicals and to
adjust the definition of status indicator
‘‘K’’ accordingly.
The final CY 2010 status indicators
are displayed in the table above, as well
as in Addendum D1 to this final rule
with comment period.
2. Payment Status Indicators to
Designate Services That Are Paid Under
a Payment System Other Than the OPPS
We did not propose any changes to
the status indicators listed below for the
CY 2010 OPPS.
Item/code/service
OPPS payment status
A ...................
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Indicator
Services furnished to a hospital outpatient that are paid under
a fee schedule or payment system other than OPPS, for example:
• Ambulance Services ...............................................................
• Clinical Diagnostic Laboratory Services ..................................
• Non-Implantable Prosthetic and Orthotic Devices ..................
• EPO for ESRD Patients ..........................................................
• Physical, Occupational, and Speech Therapy ........................
• Routine Dialysis Services for ESRD Patients Provided in a
Certified Dialysis Unit of a Hospital.
• Diagnostic Mammography .......................................................
• Screening Mammography .......................................................
Inpatient Procedures ...................................................................
Not paid under OPPS. Paid by fiscal intermediaries/MACs
under a fee schedule or payment system other than OPPS.
C ...................
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Not subject to deductible or coinsurance.
Not subject to deductible.
Not paid under OPPS. Admit patient. Bill as inpatient.
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Indicator
Item/code/service
F ....................
L ....................
Corneal Tissue Acquisition; Certain CRNA Services; and Hepatitis B Vaccines.
Influenza Vaccine; Pneumococcal Pneumonia Vaccine ............
M ...................
Y ...................
Items and Services Not Billable to the Fiscal Intermediary/MAC
Non-Implantable Durable Medical Equipment ............................
We did not receive any public
comments regarding the status
indicators that designate services that
are paid under a payment system other
than the OPPS. Therefore, we are
finalizing our CY 2010 proposal,
without modification. The final CY 2010
status indicators are displayed in the
OPPS payment status
Not paid under OPPS. Paid at reasonable cost.
Not paid under OPPS. Paid at reasonable cost; not subject to
deductible or coinsurance.
Not paid under OPPS.
Not paid under OPPS. All institutional providers other than
home health agencies bill to DMERC.
table above, as well as in Addendum D1
to this final rule with comment period.
3. Payment Status Indicators To
Designate Services That are Not
Recognized Under the OPPS but That
May Be Recognized by Other
Institutional Providers
We did not propose any changes to
the status indicators listed below for the
CY 2010 OPPS.
Indicator
Item/code/service
OPPS payment status
B ...................
Codes that are not recognized by OPPS when submitted on
an outpatient hospital Part B bill type (12x and13x).
Not paid under OPPS.
• May be paid by fiscal intermediaries/MACs when submitted
on a different bill type, for example, 75x (CORF), but not
paid under OPPS.
• An alternate code that is recognized by OPPS when submitted on an outpatient hospital Part B bill type (12x and
13x) may be available.
We did not receive any public
comments regarding the status
indicators that designate services that
are not recognized under the OPPS but
that may be recognized for payment to
other institutional providers. Therefore,
Indicator
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D ...................
E ...................
Item/code/service
4. Payment Status Indicators To
Designate Services That Are Not Payable
by Medicare on Outpatient Claims
We did not propose any changes to
the payment status indicators listed
below for the CY 2010 OPPS.
OPPS payment status
Discontinued Codes .................................................................... Not paid under OPPS or any other Medicare payment system.
Items, Codes, and Services: ....................................................... Not paid by Medicare when submitted on outpatient claims
• That are not covered by any Medicare outpatient benefit
(any outpatient bill type).
based on statutory exclusion.
• That are not covered by any Medicare outpatient benefit for
reasons other than statutory exclusion.
• That are not recognized by Medicare for outpatient claims;
alternate code for the same item or service may be available.
• For which separate payment is not provided on outpatient
claims.
We did not receive any public
comments related to payment status
indicators that designate services that
are not payable by Medicare on
outpatient claims and, therefore, we are
finalizing our CY 2010 proposal,
without modification. The final status
indicators are displayed in the table
above, as well as in Addendum D1 to
this final rule with comment period.
Addendum B, with a complete listing
of HCPCS codes that includes their
payment status indicators and APC
assignments for CY 2010 is available
electronically on the CMS Web site
under supporting documentation for
this final rule with comment period at:
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we are finalizing our CY 2010 proposal,
without modification. The final status
indicators are displayed in the table
above, as well as in Addendum D1 to
this final rule with comment period.
14:52 Nov 19, 2009
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https://www.cms.hhs.gov/
HospitalOutpatientPPS/HORD/
list.asp#TopOfPage.
B. Comment Indicator Definitions
In the CY 2010 OPPS/ASC proposed
rule (74 FR35374), we proposed to use
the same two comment indicators that
are in effect for the CY 2009 OPPS.
• ‘‘CH’’—Active HCPCS codes in
current and next calendar year; status
indicator and/or APC assignment have
changed or active HCPCS code that will
be discontinued at the end of the
current calendar year.
• ‘‘NI’’—New code for the next
calendar year or existing code with
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substantial revision to its code
descriptor in the next calendar year as
compared to current calendar year,
interim APC assignment; comments will
be accepted on the interim APC
assignment for the new code.
We proposed to use the ‘‘CH’’
comment indicator in this CY 2010
OPPS/ASC final rule with comment
period to indicate HCPCS codes for
which the status indicator or APC
assignment, or both, would change in
CY 2010 compared to their assignment
as of December 31, 2009.
We believe that using the ‘‘CH’’
indicator in this CY 2010 OPPS/ASC
final rule with comment period will
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help facilitate the public’s review of the
changes that we are finalizing for CY
2010. The use of the comment indicator
‘‘CH’’ in association with a composite
APC indicates that the configuration of
the composite APC is changed in this
CY 2010 OPPS/ASC final rule with
comment period.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35374 through 35375), we
did not propose any changes to the
definitions of the OPPS comment
indicators for CY 2010 and we did not
receive any public comments on the
comment indicators. However, we want
to clarify our policy regarding the use of
comment indicator ‘‘NI’’ in this CY 2010
OPPS/ASC final rule with comment
period to describe a new code. There are
numerous instances in which the
descriptor of an existing Category I CPT
code is substantially revised for CY
2010 so that it describes a new service
or procedure that could have been
assigned a new code number by the CPT
Editorial Panel and that new code
number would then have been assigned
the ‘‘NI’’ comment indicator. Because,
for CY 2010, not all new services or
procedures will be assigned a new CPT
code number, but instead will be
described by an existing CPT code
number with a substantially revised
code descriptor, we are assigning the
comment indicator ‘‘NI’’ to these codes
in order to allow for comment on these
substantially revised codes. Therefore,
for this final rule with comment period,
we have expanded the definition of
comment indicator ‘‘NI’’ to include an
existing code with a substantial revision
to its code descriptor in the next
calendar year as compared to the
current calendar year to indicate that
the code’s CY 2010 OPPS treatment is
open to public comment on this final
rule with comment period. Like all
codes labeled with comment indicator
‘‘NI,’’ we will respond to public
comments and finalize their OPPS
treatment in the CY 2011 OPPS/ASC
final rule with comment period. In
accordance with our usual practice, CPT
and Level II HCPCS code numbers that
are new for CY 2010 are also labeled
with comment indicator ‘‘NI’’ in
Addendum B to this final rule with
comment period.
Only HCPCS codes with comment
indicator ‘‘NI’’ in this CY 2010 OPPS/
ASC final rule with comment period are
subject to comment. HCPCS codes that
do not appear with comment indicator
‘‘NI’’ in this CY 2010 OPPS/ASC final
rule with comment period are not open
to public comment, unless we
specifically have requested additional
comments elsewhere in this final rule
with comment period. The CY 2010
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treatment of HCPCS codes that appears
in this CY 2010 OPPS/ASC final rule
with comment period to which
comment indicator ‘‘NI’’ is not
appended was open to public comment
during the comment period for the CY
2010 OPPS/ASC proposed rule, and we
are responding to those comments in
this final rule with comment period.
We did not receive any public
comments regarding comment
indicators. Therefore, we are finalizing
our proposal, without modification, and
we are continuing to use the two
comment indicators, ‘‘CH’’ and ‘‘NI,’’ for
CY 2010. Their definitions are listed in
Addendum D2 to this final rule with
comment period.
XIV. OPPS Policy and Payment
Recommendations
A. MedPAC Recommendations
MedPAC was established under
section 1805 of the Act to advise the
U.S. Congress on issues affecting the
Medicare program. As required under
the statute, MedPAC submits reports to
Congress not later than March and June
of each year that present its Medicare
payment policy recommendations. The
following section describes recent
recommendations relevant to the OPPS
that have been made by MedPAC.
The March 2009 MedPAC ‘‘Report to
Congress: Medicare Payment Policy’’
included the following recommendation
relating specifically to the Medicare
hospital OPPS:
Recommendation 2A–1: The Congress
should increase payment rates for the
acute inpatient and outpatient
prospective payment systems in 2010 by
the projected rate of increase in the
hospital market basket index,
concurrent with implementation of a
quality incentive payment program.
CMS Response: As proposed in the
CY 2010 OPPS/ASC proposed rule (74
FR 35375), in this final rule with
comment period, we are increasing
payment rates for the CY 2010 OPPS by
the projected rate of increase in the
hospital market basket through
adjustment of the full CY 2010
conversion factor. Simultaneously, for
CY 2010, we are continuing to reduce
the annual update factor by 2.0
percentage points for hospitals that are
defined under section 1886(d)(1)(B) of
the Act and that do not meet the
hospital outpatient quality data
reporting required by section 1833(t)(17)
of the Act. Specifically, we have
calculated two conversion factors: A full
conversion factor based on the full
hospital market basket increase and a
reduced conversion factor that reflects
the 2.0 percentage point reduction to the
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60595
hospital market basket. We discuss our
update of the conversion factor and our
adoption and implementation of the
reduced conversion factor that will
apply to hospitals that fail their quality
reporting requirements for the full CY
2010 OPPS update in section XVI of this
final rule with comment period.
The full March 2009 MedPAC report
can be downloaded from MedPAC’s
Web site at: https://www.medpac.gov/
documents/Mar09_EntireReport.pdf.
We note that MedPAC also submitted
comments on the CY 2010 OPPS/ASC
proposed rule. The specific issues that
were the subject of MedPAC’s
comments and the sections of this final
rule with comment period where they
are addressed are listed below:
• Pharmacy overhead costs and
setting payments for separately paid
drugs: Section V.B.3.
• Payment rates for brachytherapy
sources and therapeutic
radiopharmaceuticals: Sections VII. and
V.B.5.
• Collection of quality data through
clinical registries and electronic health
records (EHRs): Section XVI.I.
• Collection of quality data from
ASCs: Section XVI.H.
• Collection of cost data from ASCs:
Section XV.G.
• Payment policy for healthcareassociated conditions: Section XVII.
B. APC Panel Recommendations
Recommendations made by the APC
Panel at its February 2009 and August
2009 meetings are discussed in the
sections of this final rule with comment
period that correspond to topics
addressed by the APC Panel. The report
and recommendations from the APC
Panel’s February 18–19, 2009 and
August 5–6, 2009 meetings are available
on the CMS Web site at: https://
www.cms.hhs.gov/FACA/
05_AdvisoryPanelonAmbulatory
PaymentClassificationGroups.asp.
C. OIG Recommendations
The mission of the Office of the
Inspector General (OIG), as mandated by
Public Law 95–452, as amended, is to
protect the integrity of the U.S.
Department of Health and Human
Services (HHS) programs as well as the
health and welfare of beneficiaries
served by those programs. This statutory
mission is carried out through a
nationwide network of audits,
investigations, and inspections. In June
2007, the OIG released a report, entitled
‘‘Impact of Not Retroactively Adjusting
Outpatient Outlier Payments,’’ that
described the OIG’s research into
sources of errors in CMHC outlier
payments. The OIG report included the
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following two recommendations relating
specifically to the hospital OPPS under
which payment is made for outpatient
services provided by CMHCs.
Recommendation 1: The OIG
recommended that CMS require
adjustments of outpatient outlier
payments at final cost report settlement,
retroactive to the beginning of the cost
report period.
Recommendation 2: The OIG
recommended that CMS require
retroactive adjustments of outpatient
outlier payments when an error caused
by the fiscal intermediary or provider is
identified after a cost report is settled.
We addressed both of these
recommendations in the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68594). We noted in that final rule
that the OIG’s findings were based
largely on information from the OPPS’
early implementation period, between
CY 2000 and CY 2003, and that we
believed we had taken several steps
since that time in order to improve the
accuracy and frequency of the Medicare
contractors’ CCR calculations, including
updating our instructions for calculating
CCRs, increasing the frequency of CCR
calculation, and conducting an annual
review of CMHC CCRs.
However, taking into account these
OIG recommendations, we proposed
and finalized a policy to provide for
reconciliation of outlier payments under
the OPPS at final cost report settlement
as recommended by the OIG, beginning
in CY 2009. We discuss our rationale for
this policy in detail in section II.F.4. of
the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68594 through
68599).
Other than the June 2007
recommendations, there have been no
other recent OIG recommendations
pertaining to the OPPS.
XV. Updates to the Ambulatory
Surgical Center (ASC) Payment System
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A. Background
1. Legislative Authority for the ASC
Payment System
Section 1832(a)(2)(F)(i) of the Act
provides that benefits under Medicare
Part B include payment for facility
services furnished in connection with
surgical procedures specified by the
Secretary that are performed in an ASC.
To participate in the Medicare program
as an ASC, a facility must meet the
standards specified in section
1832(a)(2)(F)(i) of the Act, which are set
forth in 42 CFR part 416, subpart B and
Subpart C of our regulations. The
regulations at 42 CFR part 416, subpart
B describe the general conditions and
requirements for ASCs, and the
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regulations at subpart C explain the
specific conditions for coverage for
ASCs.
Section 141(b) of the Social Security
Act Amendments of 1994, Public Law
103–432, required establishment of a
process for reviewing the
appropriateness of the payment amount
provided under section 1833(i)(2)(A)(iii)
of the Act for intraocular lenses (IOLs)
that belong to a class of new technology
intraocular lenses (NTIOLs). That
process was the subject of a final rule
entitled ‘‘Adjustment in Payment
Amounts for New Technology
Intraocular Lenses Furnished by
Ambulatory Surgical Centers,’’
published on June 16, 1999, in the
Federal Register (64 FR 32198).
Section 626(b) of the Medicare
Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA),
Public Law 108–173, added
subparagraph (D) to section 1833(i)(2) of
the Act, which required the Secretary to
implement a revised ASC payment
system to be effective not later than
January 1, 2008. Section 626(c) of the
MMA amended section 1833(a)(1) of the
Act by adding new subparagraph (G),
which requires that, beginning with
implementation of the revised ASC
payment system, payment for surgical
procedures furnished in ASCs shall be
80 percent of the lesser of the actual
charge for the services or the amount
determined by the Secretary under the
revised payment system.
Section 5103 of the Deficit Reduction
Act of 2005 (DRA), Public Law 109–171,
amended section 1833(i)(2) of the Act by
adding a new subparagraph (E) to place
a limitation on payment amounts for
surgical procedures furnished in ASCs
on or after January 1, 2007, but before
the effective date of the revised ASC
payment system (that is, January 1,
2008). Section 1833(i)(2)(E) of the Act
provides that if the standard overhead
amount under section 1833(i)(2)(A) of
the Act for an ASC facility service for
such surgical procedures, without
application of any geographic
adjustment, exceeds the Medicare
payment amount under the hospital
OPPS for the service for that year,
without application of any geographic
adjustment, the Secretary shall
substitute the OPPS payment amount
for the ASC standard overhead amount.
Section 109(b) of the Medicare
Improvements and Extension Act of
2006 of the Tax Relief and Health Care
Act of 2006 (MIEA–TRHCA), Public
Law 109–432, amended section 1833(i)
of the Act, in part, by redesignating
clause (iv) as clause (v) and adding a
new clause (iv) to paragraph (2)(D) and
adding paragraph (7)(A), which provide
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the Secretary the authority to require
ASCs to submit data on quality
measures and to reduce the annual
update by 2 percentage points for an
ASC that fails to submit data as required
by the Secretary on selected quality
measures. Section 109(b) of the MIEA–
TRHCA also amended section 1833(i) of
the Act by adding new paragraph (7)(B),
which requires that, to the extent the
Secretary establishes such an ASC
quality reporting program, certain
quality of care reporting requirements
mandated for hospitals paid under the
OPPS, under section 109(a) of the
MIEA–TRHCA, be applied in a similar
manner to ASCs unless otherwise
specified by the Secretary.
For a detailed discussion of the
legislative history related to ASCs, we
refer readers to the June 12, 1998
proposed rule (63 FR 32291 through
32292).
2. Prior Rulemaking
On August 2, 2007, we published in
the Federal Register (72 FR 42470) the
final rule for the revised ASC payment
system, effective January 1, 2008 (the
‘‘August 2, 2007 final rule’’). We revised
our criteria for identifying surgical
procedures that are eligible for Medicare
payment when furnished in ASCs and
adopted the method we would use to set
payment rates for ASC covered surgical
procedures and covered ancillary
services furnished in association with
those covered surgical procedures
beginning in CY 2008. In that final rule,
we also established a policy for
updating on an annual calendar year
basis the ASC conversion factor, the
relative payment weights, the ASC
payment rates, and the list of
procedures for which Medicare would
not make an ASC payment. We also
established a policy for treating new and
revised HCPCS and CPT codes under
the ASC payment system. This policy is
consistent with the OPPS to the extent
possible (72 FR 42533).
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66827), we
updated and finalized the CY 2008 ASC
rates and lists of covered surgical
procedures and covered ancillary
services. We also made regulatory
changes to 42 CFR parts 411, 414, and
416 related to our final policies to
provide payments to physicians who
perform noncovered ASC procedures in
ASCs based on the facility practice
expense (PE) relative value units
(RVUs), to exclude covered ancillary
radiology services and covered ancillary
drugs and biologicals from the
categories of designated health services
(DHS) that are subject to the physician
self-referral prohibition, and to reduce
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ASC payments for surgical procedures
when the ASC receives full or partial
credit toward the cost of the implantable
device. In the CY 2009 OPPS/ASC final
rule with comment period (73 FR
68722), we updated and finalized the
CY 2009 ASC rates and lists of covered
surgical procedures and covered
ancillary services.
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3. Policies Governing Changes to the
Lists of Codes and Payment Rates for
ASC Covered Surgical Procedures and
Covered Ancillary Services
The August 2, 2007 final rule
established our policies for determining
which procedures are ASC covered
surgical procedures and covered
ancillary services. Under §§ 416.2 and
416.166 of the regulations, subject to
certain exclusions, covered surgical
procedures are surgical procedures that
are separately paid under the OPPS, that
would not be expected to pose a
significant risk to beneficiary safety
when performed in an ASC, and that
would not be expected to require active
medical monitoring and care at
midnight following the procedure
(‘‘overnight stay’’). We adopted this
standard for defining which surgical
procedures are covered surgical
procedures under the ASC payment
system as an indicator of the complexity
of the procedure and its appropriateness
for Medicare payment in ASCs. We use
this standard only for purposes of
evaluating procedures to determine
whether or not they are appropriate for
Medicare beneficiaries in ASCs. We
define surgical procedures as those
described by Category I CPT codes in
the surgical range from 10000 through
69999, as well as those Category III CPT
codes and Level II HCPCS codes that
crosswalk or are clinically similar to
ASC covered surgical procedures (72 FR
42478). We note that we added over 800
surgical procedures to the list of covered
surgical procedures for ASC payment in
CY 2008, the first year of the revised
ASC payment system, based on the
criteria for payment that we adopted in
the August 2, 2007 final rule as
described above in this section. Patient
safety and health outcomes continue to
be important to us as more health care
moves to the ambulatory care setting.
Therefore, as we gain additional
experience with the ASC payment
system, we are interested in any
information the public may have
regarding the comparative patient
outcomes of surgical care provided in
ambulatory settings, including HOPDs,
ASCs, and physicians’ offices,
particularly with regard to the Medicare
population.
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In the August 2, 2007 final rule, we
also established our policy to make
separate ASC payments for the
following ancillary items and services
when they are provided integral to ASC
covered surgical procedures:
Brachytherapy sources; certain
implantable items that have passthrough status under the OPPS; certain
items and services that we designate as
contractor-priced, including, but not
limited to, procurement of corneal
tissue; certain drugs and biologicals for
which separate payment is allowed
under the OPPS; and certain radiology
services for which separate payment is
allowed under the OPPS. These covered
ancillary services are specified in
§ 416.164(b) and, as stated previously,
are eligible for separate ASC payment
(72 FR 42495). Payment for ancillary
items and services that are not paid
separately under the ASC payment
system is packaged into the ASC
payment for the covered surgical
procedure.
The full CY 2009 lists of ASC covered
surgical procedures and covered
ancillary services are included in
Addenda AA and BB, respectively, to
the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68840 through
68933 and 69270 through 69308).
We update the lists of, and payment
rates for, covered surgical procedures
and covered ancillary services, in
conjunction with the annual proposed
and final rulemaking process to update
the OPPS and ASC payment systems
(§ 416.173; 72 FR 42535). In addition,
because we base ASC payment policies
for covered surgical procedures, drugs,
biologicals, and certain other covered
ancillary services on the OPPS payment
policies, we also provide quarterly
updates for ASC services throughout the
year (January, April, July, and October),
just as we do for the OPPS. The updates
are to implement newly created Level II
HCPCS codes and Category III CPT
codes for ASC payment and to update
the payment rates for separately paid
drugs and biologicals based on the most
recently submitted ASP data. New
Category I CPT codes, except vaccine
codes, are released only once a year and,
therefore, are implemented through the
January quarterly update. New Category
I CPT vaccine codes are released twice
a year and thus are implemented
through the January and July quarterly
updates.
In our annual updates to the ASC list
of, and payment rates for, covered
surgical procedures and covered
ancillary services, we undertake a
review of excluded surgical procedures
(including all procedures newly
proposed for removal from the OPPS
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60597
inpatient list), new procedures, and
procedures for which there is revised
coding, to identify any that we believe
meet the criteria for designation as ASC
covered surgical procedures or covered
ancillary services. Updating the lists of
covered surgical procedures and
covered ancillary services, as well as
their payment rates, in association with
the annual OPPS rulemaking cycle is
particularly important because the
OPPS relative payment weights and, in
some cases, payment rates, are used as
the basis for the payment of covered
surgical procedures and covered
ancillary services under the revised ASC
payment system. This joint update
process ensures that the ASC updates
occur in a regular, predictable, and
timely manner.
Comment: Several commenters
provided a number of general
suggestions related to the ASC list of
covered surgical procedures. They
contended that CMS should not restrict
which procedures are payable in ASCs
any more than CMS restricts which
procedures are payable in HOPDs. The
commenters added that if the policy to
exclude procedures from the list is
maintained, CMS should at least
provide the exclusionary criteria for all
of the payable OPPS procedures that are
excluded from the ASC list so that the
public can provide meaningful
comments about CMS’ decisions. They
suggested that CMS publish an
addendum to the proposed and final
OPPS/ASC rules that would identify
which of the criteria at § 416.166(c)
triggered CMS’ decision to exclude each
procedure.
Some commenters urged CMS to
eliminate unlisted codes from the
exclusionary criteria at § 416.166(c), and
other commenters requested that ASCs
be allowed to use unlisted codes to bill
for procedures that are from anatomic
sites that could not possibly pose a
potential risk to beneficiary safety. The
commenters reported that unlisted
codes enable surgeons to utilize
innovative techniques or new
technologies and are paid under the
OPPS and by commercial insurers. They
suggested that ASCs could provide
documentation to the contractor that
explains and justifies the procedure
reported by an unlisted code; thus
ensuring that Medicare does not make
payment for a service that would
otherwise be excluded from payment.
Response: We appreciate the
commenters’ suggestions regarding the
consistency of CMS’ decisions about
which procedures are excluded from the
ASC list. However, as we explained in
the August 2, 2007 final rule (72 FR
42479), we do not believe that all
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procedures that are appropriate for
performance in HOPDs are appropriate
in ASCs. HOPDs are able to provide
much higher acuity care than ASCs.
ASCs have neither patient safety
standards consistent with those in place
for hospitals, nor are they required to
have the trained staff and equipment
needed to provide the breadth and
intensity of care that hospitals are
required to maintain. Therefore, we are
not modifying our policy and will
continue to exclude from the ASC list of
covered surgical procedures certain
procedures for which payment is made
in HOPDs.
We do not agree with the commenters’
request that we provide specific reasons
for our decisions to exclude each
procedure from the ASC list other than
that we believe a procedure is expected
to pose a significant risk to beneficiary
safety or to require an overnight stay.
We believe that these reasons are
sufficiently specific to enable the public
to provide meaningful comments on our
decisions to exclude procedures from
the list of covered surgical procedures.
Our decisions to exclude procedures
from the ASC list are based on a number
of the criteria listed at § 416.166 of the
regulations, and we believe that it
would be unnecessary and overly
burdensome to list each and every
reason for those decisions.
We also do not agree with the
commenters’ recommendation that we
include certain unlisted codes on the
list of covered procedures. Even though
it may be highly unlikely that any
procedures that would be expected to
pose a risk to beneficiary safety or to
require an overnight stay would be
reported by an unlisted code from
certain anatomic sites, we cannot know
what surgical procedure is being
reported by an unlisted code. Therefore,
because we cannot evaluate any such
procedure, we believe that we must
exclude unlisted codes as a group from
the list of covered surgical procedures.
We do not believe it is reasonable, or
within the scope of our contractors’
work, to accept the commenters’
suggestion that ASCs could provide
documentation to our Medicare
contractors, upon request, in order for
the contractors to make a retrospective
determination about whether or not a
procedure that was billed using an
unlisted code represented a significant
risk to beneficiary safety or would be
expected to require an overnight stay.
Comment: One commenter noted that,
although CMS specified in the CY 2009
OPPS/ASC final rule with comment
period (73 FR 68714) that patients may
remain in ASCs up to 24 hours in order
to allow adequate time for recovery
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following some surgical procedures,
CMS did not specify the requirements
for physician supervision during the
recovery period. The commenter argued
that CMS also failed to specify the time
period during which the required postanesthesia assessment is to be
performed by requiring only that it be
performed prior to discharge from the
ASC. The commenter’s concern was that
patients in ASCs may have no physician
supervision for extended periods, a
policy in contrast to CMS’ policy
regarding the direct physician
supervision required for hospital
outpatient services. The commenter
requested that CMS clarify why the
same supervision requirements are not
applied equally to hospitals and ASCs.
Response: Historically, Medicare has
covered surgical procedures performed
in ASCs that have relatively short
recovery periods and, therefore, we have
believed that physicians were always
immediately available to furnish
assistance and direction in the ASC
while ASC services were being
furnished, including during the
postoperative recovery period. However,
as the commenter points out, not only
have we recently revised the Conditions
for Coverage to allow longer stays in
ASCs, we have greatly expanded the list
of covered surgical procedures under
the revised ASC payment system,
including covering some surgical
procedures that may require a prolonged
recovery period. Given these two
revisions, both of which enable ASCs to
provide more clinically complex
surgical procedures, and taking into
consideration patient safety and quality
of care, we believe it could be
appropriate to consider establishing
requirements for physician or
nonphysician practitioner supervision
in ASCs, similar to the requirements for
the direct supervision of hospital
outpatient therapeutic services that we
are finalizing for HOPDs in this CY 2010
OPPS/ASC final rule with comment
period. We note that, for therapeutic
services furnished incident to a
physician’s professional service in an
office setting, there also is a requirement
for direct physician supervision,
meaning that the physician must be in
the office suite and immediately
available to furnish assistance and
direction throughout the procedure
(§ 410.26(a)(2) and (b)(5)). In addition,
we note that payment for covered
ancillary services may be made to ASCs,
including payment for some of the
diagnostic tests that would be subject to
the physician supervision requirements
for hospital outpatient diagnostic
services if provided in the HOPD. The
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final CY 2010 physician supervision
requirements for hospital outpatient
diagnostic and therapeutic services are
discussed in detail in section XII.E. of
this final rule with comment period. For
diagnostic services furnished in
physicians’ offices, IDTFs and other Part
B settings, the requirements of § 410.32
of the regulations apply, including
supervision of diagnostic services.
We did not propose to adopt
supervision requirements for
therapeutic and diagnostic services
furnished in ASCs similar to the
requirements for HOPDs for CY 2010.
However, given the overlap in surgical
procedures that may be performed in
HOPDs and ASCs and the increased
breadth and complexity of ASC covered
procedures, we are requesting
comments on this final rule with
comment period that address: (1) What
types of practitioners currently provide
the diagnostic and therapeutic services
in ASCs, particularly during the
extended postoperative recovery period;
(2) what types of practitioners currently
provide the supervision for the
diagnostic and therapeutic services in
ASCs, particularly during the extended
postoperative period; (3) what is the
expertise of supervising practitioners in
ASCs and what is the expectation for
their availability; (4) based on the final
CY 2010 supervision requirements for
hospital outpatient therapeutic services,
under what circumstances would direct
supervision of ASC services (including
during the postoperative recovery
period) not be occurring, according to
the applicable definitions for direct
supervision for HOPD services; and (5)
what would be the rationale for not
establishing supervision requirements
for ASC services that parallel the
supervision requirements in other
settings, including HOPDs and
physicians’ offices.
After consideration of the public
comments we received, we are not
accepting the commenters’
recommendations to not exclude all
procedures reported by unlisted codes
or all procedures for which Medicare
payment is made to HOPDs. We will
continue to exclude all procedures that
we determine would be expected to
pose a significant risk to beneficiary
safety or require an overnight stay.
Further, we are not accepting the
commenters’ recommendation that CMS
provide more specific reasons for its
decisions regarding exclusion of specific
procedures from the ASC list of covered
surgical procedures. In this final rule
with comment period, we are soliciting
public comments on the issue of
physician supervision of ASC services,
especially as related to extended
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postoperative stays. In summary, we are
making no changes to the final criteria
for determining which procedures are
excluded from the ASC list of covered
surgical procedures.
B. Treatment of New Codes
1. Treatment of New Category I and
Category III CPT Codes and Level II
HCPCS Codes
We finalized a policy in the August 2,
2007 final rule to evaluate each year all
new Category I and Category III CPT
codes and Level II HCPCS codes that
describe surgical procedures, and to
make preliminary determinations in the
annual OPPS/ASC final rule with
comment period regarding whether or
not they meet the criteria for payment
in the ASC setting and, if so, whether
they are office-based procedures (72 FR
42533). In addition, we identify new
codes as ASC covered ancillary services
based upon the final payment policies
of the revised ASC payment system.
New HCPCS codes that are released in
the summer through the fall of each
year, to be effective January 1, are
included in the final rule with comment
period updating the ASC payment
system for the following calendar year.
These new codes are flagged with
comment indicator ‘‘NI’’ in Addenda
AA and BB to the OPPS/ASC final rule
with comment period to indicate that
we are assigning a payment indicator to
the codes on an interim basis. The
interim payment indicators assigned to
the new codes under the revised ASC
payment system are subject to public
comment in that final rule with
comment period. These interim
determinations must be made in the
OPPS/ASC final rule with comment
period because, in general, the new
HCPCS codes and their descriptors for
the upcoming calendar year are not
available at the time of development of
the OPPS/ASC proposed rule. We will
respond to those comments in the
OPPS/ASC final rule with comment
period for the following calendar year.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35377), we proposed to
continue this identification and
recognition process for CY 2010.
We did not receive any public
comments regarding this proposal. For
CY 2010, we are continuing our
established policy for recognizing new
Category I and Category III CPT codes
and Level II HCPCS codes.
In addition, we proposed to continue
our policy of implementing through the
ASC quarterly update process new midyear CPT codes, generally Category III
CPT codes, that the AMA releases in
January to become effective the
following July, and released in July to
become effective the following January.
We proposed to include in Addenda AA
or BB, as appropriate, to this CY 2010
OPPS/ASC final rule with comment
period the new Category III CPT codes
released in January 2009 for
implementation on July 1, 2009
(through the ASC quarterly update
process), that we identify as ASC
covered services. Similarly, we
proposed to include in Addenda AA
and BB to this final rule with comment
period any new Category III CPT codes
that the AMA released in July 2009 to
be effective on January 1, 2010, that we
identify as ASC covered services.
However, only those new Category III
CPT codes implemented effective
January 1, 2010, are designated by
60599
comment indicator ‘‘NI’’ in the Addenda
to this CY 2010 OPPS/ASC final rule
with comment period to indicate that
we have assigned them an interim
payment indicator that is subject to
public comment. The two Category III
CPT codes implemented in July 2009 for
ASC payment, which appeared in Table
38 of the CY 2010 OPPS/ASC proposed
rule (74 FR 35378), were subject to
comment through that proposed rule,
and we proposed to finalize their
payment indicators in this CY 2010
OPPS/ASC final rule with comment
period.
We proposed to assign payment
indicator ‘‘G2’’ (Non office-based
surgical procedure added in CY 2008 or
later; payment based on OPPS relative
payment weight) to both of these two
new codes. Because new Category III
CPT codes that become effective for July
are not available to CMS in time for
incorporation into the Addenda to the
OPPS/ASC proposed rule, our policy is
to include the codes, their proposed
payment indicators, and proposed
payment rates in the preamble to the
proposed rule but not in the Addenda
to the proposed rule. These codes and
their final payment indicators and rates
are included in the Addenda to this CY
2010 OPPS/ASC final rule with
comment period.
We did not receive any public
comments regarding this proposal. For
CY 2010, we are continuing our
established policy for recognizing new
mid-year CPT codes, and the new midyear codes implemented in July 2009
are displayed in Table 57 below, as well
as in Addendum AA to this final rule
with comment period.
TABLE 57—NEW CATEGORY III CPT CODES IMPLEMENTED IN JULY 2009 FOR ASC PAYMENT
Final CY 2010
ASC payment
indicator
CY 2010 HCPCS code
CY 2010 long descriptor
0200T ...............................
Percutaneous sacral augmentation (sacroplasty), unilateral injection(s), including the use of a balloon or mechanical device (if utilized), one or more needles.
Percutaneous sacral augmentation (sacroplasty), bilateral injections, including the use of a balloon
or mechanical device (if utilized), two or more needles.
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0201T ...............................
For CY 2010, there are numerous
instances in which the descriptor of an
existing Category I CPT code is
substantially revised so that it describes
a new service or procedure. In each
such instance, revision of the code’s
descriptor created a more specific
description of some of the services or
procedures that were reported by the
existing CPT code and required that at
least one other code be created to
describe the other services that were
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described by the existing code
descriptor. Thus, the services or
procedures that were described by the
existing CPT code descriptor will be
described by two new codes for CY
2010: one newly created code number
and descriptor and one code with the
same code number for which the code
descriptor has been substantially
revised. For example, CPT code 21556
(Excision tumor, soft tissue of neck or
thorax; deep, subfascial, intramuscular)
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G2
G2
was revised to create two new
procedures, one of which will be
reported by the same CPT code number
with a different description. Thus, for
CY 2010, two new procedures are
reported by revised CPT code 21556
(Excision, tumor, soft tissue of neck or
anterior thorax, subfascial (e.g.
intramuscular); less than 5 cm) and new
CPT code 21554 (Excision, tumor, soft
tissue of neck or anterior thorax,
subfascial (e.g. intramuscular); 5 cm or
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greater). In the past, the more common
practice has been to delete an existing
code number which was used to report
a general description of a procedure and
assign a new code number to each new,
more specifically-described procedure.
Due to the practice of maintaining an
existing CPT code number for a
substantially revised descriptor, we
have had to make changes to the
payment indicators for existing code
numbers that now describe different
procedures. Specifically, thirty-one of
the existing CPT code numbers that are
used to represent new procedures in CY
2010 are currently used to report
procedures that were on the ASC list of
covered surgical procedures in CY 2007
and, therefore, in CY 2009 are assigned
payment indicator ‘‘A2’’ (Surgical
procedure on ASC list in CY 2007;
payment based on OPPS relative
payment weight based on their old
descriptions). All of the newly created
procedures, including the 31 procedures
that will be reported by an existing CPT
code number, were evaluated for
appropriateness for inclusion on the
ASC list of covered surgical procedures.
For the procedures that we included on
the ASC list, we also made an interim
determination regarding whether the
procedure should be designated as
office-based for CY 2010. Therefore, in
Addendum AA to this final rule with
comment period, the same CPT code
number that was assigned payment
indicator ‘‘A2’’ for CY 2009 may be
assigned payment indicators ‘‘G2’’ (Non
office-based surgical procedure added in
CY 2008 or later; payment based on
OPPS relative payment weight); ‘‘P2’’
(Office-based surgical procedure added
to ASC list in CY 2008 or later with
MPFS nonfacility PE RVUs; payment
based on OPPS relative payment
weight); ‘‘P3’’ (Office-based surgical
procedure added to ASC list in CY 2008
or later with MPFS nonfacility PE RVUs;
payment based on MPFS nonfacility PE
RVUs); or ‘‘R2’’ (Office-based surgical
procedure added to ASC list in CY 2008
or later without MPFS nonfacility PE
RVUs; payment based on OPPS relative
payment weight) due to the change in
the procedure assigned to the numeric
code.
Any existing CPT codes with
substantial revisions to their code
descriptors for CY 2010 such that we
consider them to describe new
procedures and for which their ASC
payment indicator may change are
labeled with comment indicator ‘‘NI’’ in
Addendum AA to this final rule with
comment period, to indicate that we
have assigned them an interim final
payment status which is subject to
public comment. Like all codes labeled
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with comment indicator ‘‘NI,’’ we will
respond to public comments and
finalize their ASC treatment in the CY
2011 OPPS/ASC final rule with
comment period. In addition to
assigning the ‘‘NI’’ indicator to these
new CPT codes, in accordance with our
standard practice, all new CPT and
Level II HCPCS code numbers for CY
2010 are labeled with comment
indicator ‘‘NI’’ in Addendum AA and
BB to this final rule with comment
period.
2. Treatment of New Level II HCPCS
Codes Implemented in April and July
2009
New Level II HCPCS codes may
describe covered surgical procedures or
covered ancillary services. All new
Level II HCPCS codes implemented in
April and July 2009 for ASCs describe
covered ancillary services. During the
second quarter of CY 2009, we added to
the list of covered ancillary services two
new Level II HCPCS codes because they
are drugs or biologicals for which
separate payment was newly allowed
under the OPPS in the same calendar
quarter. The two Level II HCPCS codes
added, effective April 1, 2009, were
HCPCS code C9247 (Iobenguane, I–123,
diagnostic, per study dose, up to 10
millicuries) and HCPCS code C9249
(Injection, certolizumab pegol, 1 mg).
Although HCPCS code C9247 was
created for use beginning on January 1,
2009, initially it was not paid separately
under the hospital OPPS, and therefore
its payment also was packaged under
the ASC payment system, until April 1,
2009.
After publication of the CY 2010
OPPS/ASC proposed rule, the CMS
HCPCS Workgroup created permanent
HCPCS codes to replace these two
HCPCS C-codes that were implemented
in April 2009. We will be recognizing
these HCPCS codes for payment of these
drugs and biologicals under the CY 2010
ASC payment system, consistent with
our general policy to use permanent
HCPCS codes, if appropriate, for the
reporting of drugs and biologicals. Table
58 shows the new permanent HCPCS
codes that replace the HCPCS C-codes
that will be deleted effective
December 31, 2009.
Specifically, HCPCS code C9247 was
replaced with HCPCS code A9582
(Iodine I–123 iobenguane, diagnostic,
per study dose, up to 15 millicuries) and
HCPCS code C9249 was replaced with
HCPCS code J0718 (Injection,
certolizumab pegol, 1 mg). The new
HCPCS codes, effective January 1, 2010,
describe the same drugs. Although
HCPCS code A9582 indicates ‘‘per study
dose, up to 15 millicuries’’ and the
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descriptor of its predecessor C-code
designates ‘‘per study dose, up to 10
millicuries,’’ we believe that the
reporting of one study dose would be
the same in most cases under either the
new permanent code or the predecessor
code. The recommended dose of I–123
iobenguane is 10 millicuries for adult
patients, so we expect that hospitals
would report 1 unit of new HCPCS code
A9582 for the typical dose in CY 2010,
just as they would have reported one
unit of HCPCS code C9247 previously
for the typical dose and, therefore, there
would be no effect on the payment
indicator.
For the third quarter of CY 2009, we
added 11 new Level II drug and
biological HCPCS codes to the list of
ASC covered ancillary services because
they were newly eligible for separate
payment under the OPPS effective
July 1, 2009. These HCPCS codes are:
C9250 (Human plasma fibrin sealant,
vapor-heated, solvent-detergent (Artiss),
2 ml); C9251 (Injection, C1 esterase
inhibitor (human) 10 units); C9252
(Injection, plerixafor, 1 mg); C9253
(Injection, temozolomide, 1 mg); C9360
(Dermal substitute, native, nondenatured collagen, neonatal bovine
origin (SurgiMend Collagen Matrix), per
0.5 square centimeters); C9361 (Collagen
matrix nerve wrap (NeuroMend
Collagen Nerve Wrap), per 0.5
centimeter length); C9362 (Porous
purified collagen matrix bone void filler
(Integra Mozaik Osteoconductive
Scaffold Strip), per 0.5 cc); C9363 (Skin
substitute, Integra Meshed Bilayer
Wound Matrix, per square centimeter);
C9364 (Porcine implant, Permacol, per
square centimeter); Q2023 (Injection,
factor viii (antihemophilic factor,
recombinant) (Xyntha), per i.u.); and
Q4116 (Skin substitute, Alloderm, per
square centimeter).
We assigned payment indicator ‘‘K2’’
(Drugs and biologicals paid separately
when provided integral to a surgical
procedure on ASC list; payment based
on OPPS rate) to all of these new Level
II HCPCS codes and added the codes to
the list of covered ancillary services
through either the April 2009 update
(Transmittal 1698, Change Request
6424, dated March 13, 2009) or the July
2009 update (Transmittal 1740, Change
Request 6496, dated May 22, 2009) to
the CY 2009 ASC payment system.
Initially, we assigned payment indicator
‘‘K2’’ to new HCPCS code Q4115 (Skin
substitute, Alloskin, per square
centimeter) for July 2009, but then
changed that assignment retroactive to
July 2009 to signify that this HCPCS
code was not a covered ancillary service
because it was not recognized for
payment under the OPPS during that
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same time period. Subsequently, in the
October 2009 quarterly update CR
(Transmittal 1806, Change Request
6629, dated August 28, 2009), HCPCS
code Q4115 was added as payable
(assigned payment indicator ‘‘K2’’),
effective October 1, 2009.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35378), we solicited public
comment on the proposed CY 2010 ASC
payment indicators and payment rates
for the drugs and biologicals, as listed
in Tables 39 and 40 of the proposed rule
(74 FR 35378 through 35379). Those
HCPCS codes became payable in ASCs
beginning in April 2009 or July 2009,
respectively, based on the ASC rates
posted for the appropriate calendar
quarter on the CMS Web site at:
https://www.cms.hhs.gov/ASCPayment/.
The HCPCS codes that were listed in
Table 39 of the proposed rule became
effective in April 2009 and were
included in Addendum BB to the
proposed rule. However, because
HCPCS codes that become effective for
July are not available to CMS in time for
incorporation into the Addenda to the
OPPS/ASC proposed rule, our policy is
to include these HCPCS codes and their
proposed payment indicators and
payment rates in the preamble to the
proposed rule but not in the Addenda
to the proposed rule. These codes and
their final payment indicators and rates
are included in the appropriate
Addendum to this CY 2010 OPPS/ASC
final rule with comment period. Thus,
the codes implemented by the July 2009
ASC quarterly update and their
proposed CY 2010 payment rates (based
on July 2009 ASP data) that were
displayed in Table 40 of the CY 2010
OPPS/ASC proposed rule were not
included in Addendum BB to the CY
2010 OPPS/ASC proposed rule. We
proposed to include the services
reported using the new HCPCS codes
that were displayed in Tables 39 and 40
as covered ancillary services and to
incorporate all of them into Addendum
BB to this CY 2010 OPPS/ASC final rule
with comment period, consistent with
our annual update policy.
After publication of the CY 2010
OPPS/ASC proposed rule, the HCPCS
Workgroup created permanent HCPCS Jcodes for 4 of the 11 separately payable
covered ancillary services that were
displayed in Table 40 of the proposed
rule. Consistent with our general policy
of using permanent HCPCS codes, if
appropriate, rather than HCPCS C-codes
in order to streamline coding, effective
for CY 2010, we are adopting the 4
60601
permanent HCPCS J-codes to replace the
HCPCS C-codes. As displayed in Table
59 below, HCPCS code C9251 is
replaced with J0598 (Injection, C1
esterase inhibitor (human), 10 units);
C9252 with J2562 (Injection, plerixafor,
1 mg); C9253 with J9328 (Injection,
temozolomide, 1 mg); and Q2023 with
J7185 (Injection, factor viii
(antihemophilic factor, recombinant)
(Xyntha), per i.u.). The HCPCS J-codes,
effective January 1, 2010, describe the
same drugs and the same dosages as the
HCPCS C-codes that will be deleted
December 31, 2009. Therefore, there is
no effect on the services’ payment
indicators.
We did not receive any public
comments regarding our proposals. We
are adopting as final the ASC payment
indicators for the new Level II HCPCS
codes implemented in April and July
2009 as shown in Tables 58 and 59,
respectively. Moreover, we are adopting
as final the replacement HCPCS codes,
specifically, A9582 and J0718, as shown
in Table 58 and HCPCS codes J0598,
J2562, J7185, and J9328 as displayed in
Table 59 below. All of the new HCPCS
codes and payment indicators also are
included in Addendum BB to this final
rule with comment period.
TABLE 58—NEW LEVEL II HCPCS CODES FOR COVERED ANCILLARY SERVICES IMPLEMENTED IN APRIL 2009
CY 2010 HCPCS
Code
CY 2010 Long descriptor
Final CY 2010
payment
indicator
Iodine I–123 iobenguane, diagnostic, per study dose, up to 15 millicuries ....................
Injection, certolizumab pegol, 1 mg .................................................................................
K2
K2
CY 2009
HCPCS Code
A9582 ........................
J0718 .........................
C9247
C9249
TABLE 59—NEW LEVEL II HCPCS CODES FOR COVERED ANCILLARY SERVICES IMPLEMENTED IN JULY 2009
CY 2010 HCPCS
Code
CY 2009
HCPCS Code
C9250
C9251
C9252
C9253
C9360
C9361 ........................
C9361
C9362 ........................
C9362
C9363 ........................
C9364 ........................
J7185 .........................
Q4116 ........................
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C9250 ........................
J0598 .........................
J2562 .........................
J9328 .........................
C9360 ........................
C9363
C9364
Q2023
Q4116
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Final CY 2010
ASC payment
indicator
CY 2010 Long descriptor
Human plasma fibrin sealant, vapor-heated, solvent-detergent (Artiss), 2 ml ................
Injection, C1 esterase inhibitor (human), 10 units ..........................................................
Injection, plerixafor, 1 mg ................................................................................................
Injection, temozolomide, 1 mg .........................................................................................
Dermal substitute, native, non-denatured collagen, neonatal bovine origin (SurgiMend
Collagen Matrix), per 0.5 square centimeters.
Collagen matrix nerve wrap (NeuroMend Collagen Nerve Wrap), per 0.5 centimeter
length.
Porous purified collagen matrix bone void filler (Integra Mozaik Osteoconductive Scaffold Strip), per 0.5 cc.
Skin substitute, Integra Meshed Bilayer Wound Matrix, per square centimeter .............
Porcine implant, Permacol, per square centimeter .........................................................
Injection, factor viii (antihemophilic factor, recombinant) (Xyntha), per i.u. ....................
Skin substitute, Alloderm, per square centimeter ...........................................................
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K2
K2
K2
K2
K2
K2
K2
K2
K2
K2
K2
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C. Update to the Lists of ASC Covered
Surgical Procedures and Covered
Ancillary Services
dcolon on DSK2BSOYB1PROD with RULES2
1. Covered Surgical Procedures
a. Additions to the List of ASC Covered
Surgical Procedures
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35379), we proposed to
update the ASC list of covered surgical
procedures by adding 28 procedures to
the list. Twenty-six of these procedures
were among those excluded from the
ASC list for CY 2009 because we
believed they did not meet the
definition of a covered surgical
procedure based on our expectation that
they would pose a significant safety risk
to Medicare beneficiaries or would
require an overnight stay if performed in
ASCs. The other two procedures,
specifically those described by CPT
code 0200T (Percutaneous sacral
augmentation (sacroplasty), unilateral
injection(s), including the use of a
balloon or mechanical device (if
utilized), one or more needles) and CPT
code 0201T (Percutaneous sacral
augmentation (sacroplasty), bilateral
injections, including the use of a
balloon or mechanical device (if
utilized), two or more needles), are new
Category III CPT codes that became
effective July 1, 2009, and were
implemented in the July 2009 ASC
update (Table 57 above). As a result of
our clinical evaluation of the procedures
described by the new Category III codes,
we determined that these two new
procedures may be appropriately
provided to Medicare beneficiaries in
ASCs.
In response to comments on the CY
2009 proposed rule, we stated in the CY
2009 OPPS/ASC final rule with
comment period (73 FR 68724) that, as
we developed the CY 2010 proposed
rule, we would perform a
comprehensive review of the APCs in
order to identify potentially inconsistent
ASC treatment of procedures assigned to
a single APC under the OPPS. Thus, we
examined surgical procedures that are
excluded from the current ASC list of
covered surgical procedures and the
APCs to which they are assigned under
the OPPS. We identified for review 223
excluded surgical procedures that were
assigned to the same APCs in CY 2009
as one or more ASC covered surgical
procedures. Based upon our clinical
review of those procedures, we
determined that 26 surgical procedures
may be appropriate for performance in
ASCs and proposed to add them to the
CY 2010 ASC list of covered surgical
procedures and to assign payment
indicator ‘‘G2’’ (Non office-based
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14:52 Nov 19, 2009
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surgical procedure added in CY 2008 or
later; payment based on OPPS relative
payment weight) to each of them. We
found that the remaining 197 excluded
procedures would pose significant
safety risks to beneficiaries or would be
expected to require an overnight stay if
provided in ASCs. Therefore, we did not
propose to add those 197 procedures to
the CY 2010 ASC list of covered surgical
procedures.
The 28 procedures that we proposed
to add to the ASC list of covered
surgical procedures, including their
HCPCS code short descriptors and
proposed CY 2010 payment indicators,
were displayed in Table 41 in the CY
2010 OPPS/ASC proposed rule (74 FR
35379 through 35380).
Among the procedures we identified
as meeting the criteria for designation as
a covered surgical procedure was CPT
code 35475 (Transluminal balloon
angioplasty, percutaneous;
brachiocephalic trunk or branches, each
vessel). The volume and utilization data
for this procedure indicate that it is
most frequently performed in outpatient
settings. After review, our CMS medical
advisors found that it would be
appropriate to propose designation of
CPT code 35475 as an ASC covered
surgical procedure for CY 2010. Related
to our proposal to add CPT code 35475
to the list of covered surgical procedures
is our concurrent proposal to delete two
Level II HCPCS codes we created
effective for CY 2007, HCPCS codes
G0392 (Transluminal balloon
angioplasty, percutaneous; for
maintenance of hemodialysis access,
arteriovenous fistula or graft; arterial)
and G0393 (Transluminal balloon
angioplasty, percutaneous; for
maintenance of hemodialysis access,
arteriovenous fistula or graft; venous) to
enable ASCs to receive Medicare
payment for providing the angioplasty
services required to maintain the
arteriovenous fistulae that are important
to individuals who undergo routine
dialysis. We proposed to delete HCPCS
codes G0392 and G0393 concurrently
with the designation of CPT code 35475
as a covered surgical procedure because
there no longer would be a need for the
two Level II HCPCS G-codes. ASCs
would be able to use CPT 35475 and
CPT code 35476 (Transluminal balloon
angioplasty, percutaneous; venous),
which was included on the list of ASC
covered surgical procedures beginning
in CY 2008, to report the same
procedures currently reported by
HCPCS codes G0392 and G0393.
Thus, we proposed to add the 28
surgical procedures listed in Table 41 of
the OPPS/ASC proposed rule to the list
of covered ASC surgical procedures and
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to delete the HCPCS codes displayed in
Table 42 of the proposed rule (74 FR
35380).
Comment: One commenter requested
that CMS not finalize several of its
proposed additions to the ASC list for
CY 2010. The commenter believed that
the procedure described by CPT code
26037 (Decompressive fasciotomy,
hand) is inappropriate for the ASC
setting. The commenter stated that the
typical patient that requires this
procedure has had a severe crush injury
to the hand and/or an infection and
would require at least 23 hours of
medical monitoring following the
surgery. The commenter also objected to
adding procedures described by CPT
codes 42225 (Palatoplasty for cleft
palate; attachment pharyngeal flap) and
42227 (Lengthening of palate, with
island flap) because those procedures
are overwhelmingly performed on
infants and very young children who
would require at least an overnight stay
to observe for postoperative swelling,
airway compromise, and bleeding. The
commenter believed that CMS’
inclusion of these procedures on the
ASC list would be inappropriate
because Medicare claims data are
inadequate for CMS’ use in making its
determination and that inclusion of the
procedures on the Medicare ASC list
leads to interpretation by commercial
insurers that the ASC setting is
appropriate for all patient populations
and would result in very young patients
not being able to receive care in more
appropriate settings.
The commenter also reiterated a
previous request (73 FR 68729) that
CMS remove other cleft lip and palate
reconstruction procedures from the ASC
list of covered surgical procedures.
Those procedures and their CPT codes
are: 21215 (Graft, bone; mandible
(includes obtaining graft)); 40700
(Plastic repair of cleft lip/nasal
deformity; primary, partial or complete,
unilateral); 40701 (Plastic repair of cleft
lip/nasal deformity, primary bilateral,
one stage procedure); 42200
(Palatoplasty for cleft palate, soft and/or
hard palate only); 42205 (Palatoplasty
for cleft palate, with closure of alveolar
ridge; soft tissue only); 42210
(Palatoplasty for cleft palate, with
closure of alveolar ridge; with bone graft
to alveolar ridge includes obtaining
graft)), 42215 (Palatoplasty for cleft
palate; major revision); and 42220
(Palatoplasty for cleft palate; secondary
lengthening procedure). The commenter
stated that all of these procedures
require general anesthesia and close
postoperative monitoring and are often
performed in the inpatient setting.
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Response: Our medical advisors
reviewed the three procedures described
by CPT codes 26037, 42225, and 42227
that we proposed to add to the ASC list
for CY 2010. As a result of that review,
we continue to believe that all three of
the procedures may be appropriately
provided to a Medicare beneficiary in an
ASC. We do not see a basis for removing
the eight procedures from the ASC list
as requested by the commenter. All of
these procedures were on the list of
covered surgical procedures even before
CY 2007 and, to our knowledge, have
been safely performed in ASCs for many
years. We continue to believe that these
11 procedures would not pose a
significant safety risk to Medicare
beneficiaries and would not require an
overnight stay if performed in ASCs.
As established at § 416.166(b),
decisions regarding whether a surgical
procedure should be excluded from the
Medicare ASC list of covered surgical
procedures are based on assessments of
the needs of Medicare beneficiaries and
not all patient populations. We include
on the ASC list all procedures we
believe are appropriate for some
Medicare beneficiaries in order to
provide physicians and patients with
the greatest possible choice for sites-ofservice. We expect that physicians will
consider for each individual patient
which site-of-service is most
appropriate. We understand that the
procedures on the ASC list are
sometimes more appropriately
performed on an inpatient basis due to
the individual’s age or other clinical
considerations.
Comment: Several commenters
supported the proposal to add 28
procedures to the list of covered surgical
procedures and requested that CMS add
24 additional surgical procedures. A few
commenters on the CY 2010 OPPS/ASC
proposed rule and on the CY 2009
OPPS/ASC final rule with comment
period requested that a total of 18
specific unlisted codes be added to the
ASC list. Some commenters provided
specific reasons for their requests for
addition of particular procedures, but
for most of the requested additions, no
specific information was submitted.
The commenters who requested that
the procedure reported by CPT code
50593 (Ablation, renal tumor(s)
unilateral, percutaneous, cryotherapy)
be added to the ASC list stated that the
procedure is similar to the procedure
reported by CPT code 50592 (Ablation,
1 or more renal tumor(s), percutaneous,
unilateral, radiofrequency), which is
already on the ASC list, and that CPT
code 50593 is compatible with CMS’
safety criteria. The commenters also
reported that a significant number of the
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laminectomy procedures listed in Table
60 below already are being performed in
ASCs for commercially insured patients.
They stated that the most common of
these laminectomy procedures are
performed on the cervical and lumbar
regions of the spine, take only 60 to 90
minutes to perform, and typically
require only about 4 hours of recovery
time. They also stated that patients are
carefully screened before the ASC is
selected as the appropriate site for their
surgical procedures, a practice they
would expect to see applied to the
Medicare population as well.
The commenters who requested the
addition of the procedure reported by
CPT code 52649 (Laser enucleation of
the prostate with morcellation,
including control of postoperative
bleeding, complete (vasectomy,
meatotomy, cystourethroscopy, urethral
calibration and/or dilation, internal
urethrotomy and transurethral resection
of prostate are included if performed))
requested that the procedure be added
to the ASC list because it does not
require an overnight stay and it is
similar to benign prostatic hypertrophy
treatment procedures, which are already
included on the ASC list. The
commenters who requested addition of
the procedure described by CPT code
57310 (Closure of urethrovaginal fistula)
reported that it should be added to the
list because a substantially similar and
more complex procedure, described by
CPT code 57320 (Closure of
vesicovaginal fistula; vaginal approach),
is already on the ASC list.
The commenters who requested the
addition of the unlisted procedure
described by CPT code 19499 (Unlisted
procedure, breast) stated that it should
be added to the list because it is used
for setting breast ductoscopy prior to
some surgeries in lieu of a ductogram
and because it may be used to report
services described by CPT codes 0046T
(Catheter lavage of a mammary duct(s)
for collection of cytology specimen(s),
in high risk individuals (GAIL risk
scoring or prior personal history of
breast cancer), each breast; single duct)
and 0047T (Catheter lavage of a
mammary duct(s) for collection of
cytology specimen(s), in high risk
individuals (GAIL risk scoring or prior
personal history of breast cancer), each
breast; each additional duct) that were
payable in ASCs in CY 2008 but were
deleted effective for CY 2009. Some
commenters requested the addition of
unlisted CPT codes 55899 (Unlisted
procedure, male genital system); 58999
(Unlisted procedure, female genital
system (nonobstetrical)); and 64999
(Unlisted procedure, nervous system)
because these codes may be used to
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60603
report the procedures that were
described by CPT codes 0027T
(Endoscopic lysis of epidural adhesions
with direct visualization using
mechanical means (eg, spinal
endoscopic catheter system) or solution
injection (eg, normal saline) including
radiologic localization and
epidurography); 0031T (Speculoscopy);
0032T (Speculoscopy; with directed
sampling); and 53853 (Transurethral
destruction of prostate tissue; by waterinduced thermotherapy) that were
payable in ASCs in CY 2008 but were
deleted effective for CY 2009.
Finally, the commenter who
requested the addition of intravascular
stent placement procedures, CPT codes
37205 (Transcatheter placement of an
intravascular stent(s)(except coronary,
carotid, and vertebral vessel),
percutaneous; initial vessel) and 37206
(Transcatheter placement of an
intravascular stent(s) (except coronary,
carotid, and vertebral vessel),
percutaneous; each additional vessel),
claimed that the addition of these
procedures to the ASC list of covered
surgical procedures would improve
access to care for patients with vascular
access dysfunction, decrease costs to
Medicare, and result in a higher quality
of care for these patients. The
commenters requested that if CMS is
reluctant to add these procedures to the
ASC list because CPT codes 37205 and
37206 are not restricted to the treatment
of hemodialysis vascular access sites,
CMS could allow reporting of the codes
for ASC payment with a new and
distinct modifier that would apply to
hemodialysis vascular access
procedures.
All of the procedures requested by
commenters for addition to the ASC list
of covered surgical procedures are
displayed in Tables 60 and 61 below.
TABLE 60—SURGICAL PROCEDURES
REQUESTED FOR ADDITION TO THE
CY 2010 ASC LIST OF COVERED
SURGICAL PROCEDURES
CY 2010
CPT code
27485
29867
29868
35470
35474
35493
35495
37205
37206
50593
52649
57310
60210
60220
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
20NOR2
CY 2010 short descriptor
Surgery to stop leg growth.
Allgrft implnt, knee w/scope.
Meniscal trnspl, knee w/scope.
Repair arterial blockage.
Repair arterial blockage.
Atherectomy, percutaneous.
Atherectomy, percutaneous.
Transcath iv stent, percut.
Transcath iv stent/perc addl.
Perc cryo ablate renal tum.
Prostate laser enucleation.
Repair urethrovaginal lesion.
Partial thyroid excision.
Partial removal of thyroid.
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Federal Register / Vol. 74, No. 223 / Friday, November 20, 2009 / Rules and Regulations
TABLE 60—SURGICAL PROCEDURES
REQUESTED FOR ADDITION TO THE
CY 2010 ASC LIST OF COVERED
PROCEDURES—ContinSURGICAL
ued
CY 2010
CPT code
63001
63005
63020
63030
63035
63040
63042
63045
63047
63048
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
CY 2010 short descriptor
Removal spinal lamina.
Removal spinal lamina.
Neck spine disk surgery.
Low back disk surgery.
Spinal disk surgery add-on.
Laminotomy, single cervical.
Laminotomy, single lumbar.
Removal of spinal lamina.
Removal of spinal lamina.
Remove spinal lamina add-on.
TABLE 61—SPECIFIC CPT UNLISTED
CODES REQUESTED FOR ADDITION
TO ASC LIST OF COVERED SURGICAL PROCEDURES
CY 2010
CPT code
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17999
19499
23929
27599
27899
28899
29999
31299
55899
58999
64999
66999
67299
67399
67999
68399
68899
92499
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
.......
CY 2010 short descriptor
Skin tissue procedure.
Breast surgery procedure.
Shoulder surgery procedure.
Leg surgery procedure.
Leg/ankle surgery procedure.
Foot/toes surgery procedure.
Arthroscopy of joint.
Sinus surgery procedure.
Genital surgery procedure.
Genital surgery procedure.
Nervous system surgery.
Eye surgery procedure.
Eye surgery procedure.
Eye muscle surgery procedure.
Revision of eyelid.
Eyelid lining surgery.
Tear duct system surgery.
Eye service or procedure.
Response: We reviewed all of the
surgical procedures that commenters
requested be added to the ASC list of
covered surgical procedures. We did not
review any of the procedures that may
be reported by the CPT unlisted codes
listed in Table 61 because those codes
are not eligible for addition to the ASC
list, consistent with our final policy
which is discussed in detail in the
August 2, 2007 final rule (72 FR 42484
through 42486). We do not agree that
any of the procedures recommended by
the commenters are appropriate for
provision to Medicare beneficiaries in
ASCs. Although the commenters
asserted that some of the procedures
they were requesting for addition to the
list are less complex than procedures
already on the list and that all of the
requested procedures are as safe as
procedures on the list, our review did
not support those assertions.
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We exclude from ASC payment any
procedure for which standard medical
practice dictates that the beneficiary
who undergoes the procedure would
typically be expected to require active
medical monitoring and care at
midnight following the procedure
(overnight stay) as well as all surgical
procedures that our medical advisors
determine may be expected to pose a
significant safety risk to Medicare
beneficiaries. The criteria used under
the revised ASC payment system to
identify procedures that would be
expected to pose a significant safety risk
when performed in an ASC include, but
are not limited to, those procedures that:
generally result in extensive blood loss;
require major or prolonged invasion of
body cavities; directly involve major
blood vessels; are emergent or lifethreatening in nature; or commonly
require systemic thrombolytic therapy
(see § 416.166).
In our review of the procedures listed
in Table 60, we found that all of the
procedures either may be expected to
pose a threat to beneficiary safety or
require active medical monitoring at
midnight following the procedure.
Specifically, we found that prevailing
medical practice called for inpatient
hospital stays for beneficiaries
undergoing many of the procedures and
that some of the procedures directly
involve major blood vessels and/or may
result in extensive blood loss.
After consideration of the public
comments we received, we are not
adding any of the procedures requested
by the commenters to the list of ASC
covered surgical procedures. We also
are not removing any of the procedures
from the list as requested by
commenters. We are finalizing, without
modification, our proposal to add 28
procedures to the CY 2010 ASC list and
to delete two Level II HCPCS codes. The
procedures, their short descriptors, and
payment indicators are displayed in
Tables 62 and 63 below.
TABLE 62—NEW ASC COVERED
SURGICAL PROCEDURES FOR CY 2010
CY 2010 CPT
Code
CY 2010 short
descriptor
26037 ...........
Decompress
fingers/hand.
Surgery to stop
leg growth.
Surgery to stop
leg growth.
Repair of tibia
Repair venous
blockage.
27475 ...........
27479 ...........
27720 ...........
35460 ...........
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TABLE 62—NEW ASC COVERED SURGICAL
PROCEDURES
FOR
CY
2010—Continued
CY 2010 CPT
Code
CY 2010 short
descriptor
35475 ...........
Repair arterial
blockage.
Tongue suspension.
Reconstruct
cleft palate.
Lengthening of
palate.
Removal of
esophagus
pouch.
Nasal/
orogastric w/
stent.
Correct rectal
prolapsed.
Insert subq
exten to ip
cath.
Embedded ip
cath exit-site.
Place
cecostomy
tube perc.
Removal of
kidney stone.
Removal of
kidney stone.
Revise ureter ..
Repair of ureter lesion.
Revise vag
graft via vagina.
Partial thyroid
excision.
Partial thyroid
excision.
Partial removal
of thyroid.
Partial removal
of thyroid.
Incise skull for
treatment.
Rf bladder
neck microremodel.
Perq sacral
augmt unilat
inj.
Perq sacral
augmt bilat
inj.
41512 ...........
42225 ...........
42227 ...........
43130 ...........
43752 ...........
45541 ...........
49435 ...........
49436 ...........
49442 ...........
50080 ...........
50081 ...........
50727 ...........
51535 ...........
57295 ...........
60210 ...........
60212 ...........
60220 ...........
60225 ...........
61770 ...........
0193T ...........
0200T * .........
0201T * .........
Final CY
2010 ASC
payment
indicator
G2
G2
G2
G2
G2
G2
G2
G2
G2
G2
G2
G2
G2
G2
G2
G2
G2
G2
G2
G2
G2
G2
G2
Final CY
2010 ASC
payment
indicator
* Indicates codes are new, effective July
2009.
G2
TABLE 63—HCPCS CODES DELETED
EFFECTIVE CY 2010
G2
G2
CY 2009
HCPCS Code
CY 2009 short
descriptor
CY 2009
ASC payment indicator
G2
G2
G0392 ..........
AV fistula or
graft arterial.
A2
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TABLE 63—HCPCS CODES DELETED
EFFECTIVE CY 2010—Continued
CY 2009
HCPCS Code
CY 2009 short
descriptor
CY 2009
ASC payment indicator
G0393 ..........
AV fistula or
graft venous.
A2
b. Covered Surgical Procedures
Designated as Office-Based
dcolon on DSK2BSOYB1PROD with RULES2
(1) Background
In the August 2, 2007 final rule, we
finalized our policy to designate as
‘‘office-based’’ those procedures that are
added to the ASC list of covered
surgical procedures in CY 2008 or later
years that we determine are performed
predominantly (more than 50 percent of
the time) in physicians’ offices based on
consideration of the most recent
available volume and utilization data for
each individual procedure code and/or,
if appropriate, the clinical
characteristics, utilization, and volume
of related codes. In that rule, we also
finalized our policy to exempt all
procedures on the CY 2007 ASC list
from application of the office-based
classification (72 FR 42512). The
procedures that were added to the ASC
list of covered surgical procedures
beginning in CY 2008 that we
determined were office-based were
identified in Addendum AA to that rule
by payment indicator ‘‘P2’’ (Officebased surgical procedure added to ASC
list in CY 2008 or later with MPFS
nonfacility PE RVUs; payment based on
OPPS relative payment weight); ‘‘P3’’
(Office-based surgical procedure added
to ASC list in CY 2008 or later with
MPFS nonfacility PE RVUs; payment
based on MPFS nonfacility PE RVUs); or
‘‘R2’’ (Office-based surgical procedure
added to ASC list in CY 2008 or later
without MPFS nonfacility PE RVUs;
payment based on OPPS relative
payment weight), depending on whether
we estimated it would be paid according
to the standard ASC payment
methodology based on its OPPS relative
payment weight or at the MPFS
nonfacility PE RVU amount.
Consistent with our final policy to
annually review and update the list of
surgical procedures eligible for payment
in ASCs, each year we identify surgical
procedures as either temporarily or
permanently office-based after taking
into account updated volume and
utilization data.
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(2) Changes to Covered Surgical
Procedures Designated as Office-Based
for CY 2010
In developing the CY 2010 OPPS/ASC
proposed rule (74 FR 35381), we
followed our policy to annually review
and update the surgical procedures for
which ASC payment is made and to
identify new procedures that may be
appropriate for ASC payment, including
their potential designation as officebased. We reviewed CY 2008 volume
and utilization data and the clinical
characteristics for all surgical
procedures that are assigned payment
indicator ‘‘G2’’ in CY 2009, as well as
for those procedures assigned one of the
temporary office-based payment
indicators, specifically ‘‘P2*,’’ ‘‘P3*,’’ or
‘‘R2*’’ in the CY 2009 OPPS/ASC final
rule with comment period (73 FR 68730
through 68733). As a result of that
review, we proposed to newly designate
6 procedures as office-based for CY 2010
(74 FR 35381). We also proposed to
make permanent the office-based
designations of 4 surgical procedures
that have temporary office-based
designations in CY 2009.
The 6 procedures we proposed to
permanently designate as office-based
are: CPT code 15852 (Dressing change
(for other than burns) under anesthesia
(other than local)); CPT code 19105
(Ablation, cryosurgical, of
fibroadenoma, including ultrasound
guidance, each fibroadenoma); CPT
code 20555 (Placement of needles or
catheters into muscle and/or soft tissue
for subsequent interstitial radioelement
application (at the time of or subsequent
to the procedure)); CPT code 36420
(Venipuncture, cutdown; younger than
age 1 year); CPT code 50386 (Removal
(via snare/capture) of internally
dwelling ureteral stent via transurethral
approach, without use of cystoscopy,
including radiological supervision and
interpretation); and CPT code 57022
(Incision and drainage of vaginal
hematoma; obstetrical/postpartum).
These procedures and their HCPCS code
short descriptors and proposed CY 2010
payment indicators were displayed in
Table 43 of the CY 2010 OPPS/ASC
proposed rule (74 FR 35381).
Comment: Many commenters
expressed their continued disagreement
with the policy to make payment at the
lower of the ASC rate or MPFS
nonfacility PE RVU payment amount for
procedures we identify as office-based
and requested that CMS not finalize any
of the proposed office-based
designations. They believed that, due to
the payment limits required by CMS’
payment policy for providing these
procedures in ASCs, beneficiaries who
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60605
require the level of care provided in
ASCs instead have to receive treatment
in the more costly HOPD setting and
that the policy makes the ASC payment
rates subject to the fluctuations of the
MPFS nonfacility PE RVUs and other
problems of the MPFS.
The commenters recommended that
CMS revise its policies in at least three
ways. First, they recommended that
CMS establish a minimum volume
threshold before designating a
procedure office-based. They asserted
that it is unnecessary and inappropriate
to designate as office-based procedures
with extremely low volume because the
utilization data for those procedures are
variable and, thus, not reliable. Second,
they recommended that CMS raise the
utilization threshold above 50 percent
for designating a procedure office-based
and use multiple years of data for
making the designation because of the
variability in the utilization data across
years. Third, the commenters
recommended that CMS recognize the
OPPS median costs for procedures as
the best proxy for relative ASC costs and
limit the reduction in payment to ASCs
for the office-based procedures. The
commenters reasoned that, because the
ASC payment system was to be based on
the relative payment weights under the
OPPS, which are updated annually
based on hospital claims and cost
reports, OPPS median costs are a better
source of relative payment weights than
the MPFS, which is not based on facility
costs estimated from claims and cost
reports like the OPPS. In addition, they
expressed concern that as more
procedures are designated as officebased for ASC payment, the linkage
between the OPPS and ASC ratesetting
methodologies would be eroded and the
ASC payment system would be
increasingly affected by the
unpredictable inflation updates under
the MPFS.
Response: We continue to believe that
our policy of identifying low complexity
procedures that are usually provided in
physicians’ offices and limiting their
payment in ASCs to the physician’s
office payment amount is necessary and
valid. We believe this is the most
appropriate approach to preventing the
creation of payment incentives for
services to move from physicians’
offices to ASCs for the many newlycovered low complexity procedures on
the ASC list. Moreover, we are confident
that the CY 2008 claims data, the most
recent full year of volume and
utilization data, are an appropriate
source to inform our decisions regarding
the site-of-service for procedures. In our
review process, when we believe that
the available data are inadequate bases
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upon which to make a determination
that a procedure should be office-based,
we either make no change to the
procedure’s payment status or make the
change temporary and reevaluate our
decision using data that become
available for our next evaluation. We
believe that it is appropriate to continue
using our judgment regarding whether
the volume of cases and the proportion
of cases that are provided in the
physicians’ office setting indicate that
the procedure is an office-based
procedure in addition to our medical
advisors’ clinical judgments, utilization
data for procedures that are closely
related to the procedures being
evaluated, and any other information
that is available to us. Thus, we will not
alter our review and decision processes
with respect to establishing or changing
volume or utilization thresholds as
recommended by the commenters.
We continue to believe that it is
appropriate that ASCs be paid no more
for performing office-based procedures
than those procedures would be paid
when performed in physicians’ offices,
in order to deter inappropriate
migration of these surgical procedures
to ASCs based on financial
considerations rather than clinical
needs. Although our policy to pay for
some services at the MPFS non-facility
PE RVU amount does introduce
payment for a number of procedures at
rates not based on the ASC relative
payment weights and, as such, may be
viewed as an erosion of the linkage
between the OPPS and ASC payment
system, we do not believe that the
alternative of making payments at the
higher ASC rate is preferable. None of
the office-based procedures was eligible
for ASC payment prior to
implementation of the revised payment
system and we see no inherent
unfairness in limiting ASC payment to
the rate for the lower-intensity site of
service (physician’s office) that our data
indicate is the care setting for most
Medicare cases. In fact, the lower than
expected CY 2008 ASC utilization for
office-based procedures reported by
commenters (discussed in section
XV.I.2.of this final rule with comment
period) may be an indication that our
policy does not encourage inappropriate
migration of these services to ASCs, as
was our intention. While we
acknowledge the potential volatility of
the office-based payments under the
MPFS, we continue to believe it is
appropriate to treat office-based
procedures similarly in the office and
ASC settings for purposes of Medicare
payment. Therefore, we also will not
adopt the commenters’ recommendation
that ASC payment rates should be based
only on OPPS median costs and will
continue to update the office-based list
of ASC covered surgical procedures
annually, to account for changes in
medical practice and new surgical
procedures that may result in additional
surgical procedures that are
predominantly performed in physicians’
offices.
The utilization data for the
procedures listed in Table 43 of the
proposed rule and restated in Table 64,
below, did not change between the
proposed rule and this final rule with
comment period. We did not receive
any public comments that specifically
addressed our proposals to designate the
6 procedures listed in Table 64 as officebased for CY 2010. Therefore, we are
finalizing our CY 2010 proposals,
without modification, to designate the
procedures displayed in Table 64 below
as office-based for CY 2010.
TABLE 64—CY 2010 FINAL DESIGNATIONS OF ASC COVERED SURGICAL PROCEDURES NEWLY DESIGNATED AS OFFICEBASED
CY 2010
HCPCS code
15852
19105
20555
36420
50386
57022
...........
...........
...........
...........
...........
...........
CY 2009
ASC payment indicator
CY 2010 short descriptor
Dressing change not for burn ...................................................................................
Cryosurg ablate fa, each ..........................................................................................
Place ndl musc/tis for rt ............................................................................................
Vein access cutdown < 1 yr .....................................................................................
Remove stent via transureth ....................................................................................
I & d vaginal hematoma, pp .....................................................................................
G2
G2
G2
G2
G2
G2
...............
...............
...............
...............
...............
...............
Proposed
CY 2010
ASC payment indicator
R2
P3
R2
R2
P2
R2
................
................
................
................
................
...............
Final
CY 2010
ASC payment indicator *
R2
P2
R2
R2
P2
R2
dcolon on DSK2BSOYB1PROD with RULES2
* Payment indicators are based on a comparison of the rates according to the ASC standard ratesetting methodology and the MPFS final CY
2010 rates. Under current law, the MPFS payment rates have a negative update for CY 2010. For a discussion of those rates, we refer readers
to the CY 2010 MPFS final rule with comment period.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35381), we also reviewed CY
2008 volume and utilization data and
other information for the 10 procedures
with temporary office-based
designations for CY 2009. Among these
10 procedures, there were no claims
data for the 3 procedures with CPT
codes that were new in CY 2009. Those
3 new procedure codes are: CPT code
46930 (Destruction of internal
hemorrhoid(s) by thermal energy (eg,
infrared coagulation, cautery,
radiofrequency)); CPT code 64455
(Injection(s), anesthetic agent and/or
steroid, plantar common digital nerve(s)
(eg, Morton’s neuroma)); and CPT code
64632 (Destruction by neurolytic agent;
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plantar common digital nerve).
Consequently, in the CY 2010 OPPS/
ASC proposed rule (74 FR 35381), we
proposed to maintain their temporary
office-based designations for CY 2010.
As a result of our review of the
remaining 7 procedures that have
temporary office-based designations for
CY 2009, we proposed to make
permanent the office-based designations
for 4 procedures for CY 2010. The 4
surgical procedure codes are: CPT code
0084T (Insertion of a temporary
prostatic urethral stent); CPT code
21073 (Manipulation of
temporomandibular joint(s) (TMJ),
therapeutic, requiring an anesthesia
service (ie, general or monitored
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anesthesia care)); CPT code 55876
(Placement of interstitial device(s) for
radiation therapy guidance (eg, fiducial
markers, dosimeter), prostate (via
needle, any approach), single or
multiple); and HCPCS code C9728
(Placement of interstitial device(s) for
radiation therapy/surgery guidance (eg,
fiducial markers, dosimeter), other than
prostate (any approach), single or
multiple). Although we have no
Medicare volume and utilization data in
physicians’ offices for HCPCS code
C9728 because this code is not
recognized for payment under the
MPFS, we noted in the CY 2009 OPPS/
ASC proposed rule (73 FR 41528) that
because HCPCS code C9728 is
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analogous to CPT code 55876, we
believe they should be paid according to
the same ASC payment methodology
under the ASC payment system. In the
CY 2010 OPPS/ASC proposed rule, we
indicated our belief that the volume and
utilization data for CPT codes 0084T,
21073, and 55876 are sufficient to
support our determination that these
procedures are most commonly
provided in physicians’ offices.
Therefore, we proposed to make
permanent the office-based designations
for the four procedures (including
HCPCS code C9728) for CY 2010.
We did not propose to make
permanent the office-based designations
for the 3 other procedures for which the
CY 2009 office-based designations are
temporary because we did not believe
that the currently available volume and
utilization data provided an adequate
basis for proposing permanent officebased designations. Rather, available
data supported our determination that
maintaining the temporary office-based
designation was appropriate for CY
2010 for CPT code 0099T (Implantation
of intrastromal corneal ring segments);
CPT code 0124T (Conjunctival incision
with posterior extrascleral placement of
pharmacological agent (does not include
supply of medication)); and CPT code
67229 (Treatment of extensive or
progressive retinopathy, 1 or more
sessions; preterm infant (less than 37
weeks gestation at birth), performed
from birth up to 1 year of age (eg,
retinopathy of prematurity),
photocoagulation or cryotherapy). Thus,
we proposed to maintain the temporary
office-based designation for those
procedures for CY 2010.
The procedures that we proposed to
permanently designate as office-based
for CY 2010 that were temporarily
designated as office-based procedures in
CY 2009 were displayed in Table 44 in
the CY 2010 OPPS/ASC proposed rule
(74 FR 35382). The procedures that we
proposed to continue to temporarily
designate as office-based for CY 2010
were displayed in Table 45 in the CY
2010 OPPS/ASC proposed rule (74 FR
35382). The procedures for which the
proposed office-based designation for
CY 2010 is temporary also were
indicated by an asterisk in Addendum
AA to the proposed rule.
We did not receive any public
comments that specifically addressed
our proposals to designate the 4
procedures listed in Table 44 of the
proposed rule and restated in Table 65,
below, as permanently office-based for
CY 2010. Therefore, we are adopting as
final for CY 2010 permanent officebased payment indicators as proposed
for the procedures reported by HCPCS
codes 0084T, 21073, 55876, and C9728
that were designated temporarily officebased for CY 2009.
TABLE 65—CY 2009 TEMPORARILY DESIGNATED OFFICE-BASED ASC COVERED SURGICAL PROCEDURES THAT ARE
DESIGNATED AS PERMANENTLY OFFICE-BASED FOR CY 2010
CY 2009 HCPCS
code
0084T
21073
55876
C9728
....................
....................
....................
....................
CY 2010
HCPCS code
53855
21073
55876
C9728
CY 2009
ASC
payment
indicator
CY 2010 short descriptor
Temp prostate urethral stent ........................................................................
Mnpj of tmj w/anesth .....................................................................................
Place rt device/marker, pros .........................................................................
Place device/marker, non pro .......................................................................
R2 *
P3 *
P3 *
R2 *
.............
..............
..............
.............
Final
CY 2010
ASC
payment
indicator **
P2
P3
P3
R2
* If designation is temporary.
** Payment indicators are based on a comparison of the rates according to the ASC standard ratesetting methodology and the MPFS final CY
2010 rates. Under current law, the MPFS payment rates have a negative update for CY 2010. For a discussion of those rates, we refer readers
to the CY 2010 MPFS final rule with comment period.
dcolon on DSK2BSOYB1PROD with RULES2
Comment: One commenter supported
the proposal to maintain CPT codes
64455 and 64632 as temporarily officebased pending the availability of actual
claims data.
Response: We appreciate the
commenter’s support.
After consideration of the public
comment we received, we are finalizing
our CY 2010 proposal, without
modification, to maintain the temporary
office-based payment indicators as
displayed in Table 66 for the 6
procedures reported by CPT codes
0099T, 0124T, 46930, 64455, 64632, and
67229 that were designated temporarily
office-based for CY 2009.
TABLE 66—CY 2009 TEMPORARILY
OFFICE-BASED PROCEDURES THAT
ARE DESIGNATED AS TEMPORARILY
OFFICE-BASED FOR CY 2010 *
CY 2010
HCPCS
Code
CY 2010 short
descriptor
0099T ....
Final
CY 2010 ASC
payment indicator **
Implant corneal
ring.
Conjunctival drug
placement.
Destroy internal
hemorrhoids.
N block inj, plantar digit.
N block inj, common digit.
Tr retinal les
preterm inf.
0124T ....
46930 ....
64455 ....
64632 ....
67229 ....
R2 *
R2 *
P3 *
P3 *
P3 *
R2*
* If designation is temporary.
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** Payment indicators are based on a comparison of the rates according to the ASC
standard ratesetting methodology and the
MPFS final CY 2010 rates. Under current law,
the MPFS payment rates have a negative update for CY 2010. For a discussion of those
rates, we refer readers to the CY 2010 MPFS
final rule with comment period.
Displayed in Table 67 below are new
(or substantially revised) CY 2010
HCPCS codes to which we have
assigned temporary office-based
payment indicators. As explained in
section XV.B.1. of this final rule with
comment period, we reviewed all of the
newly created HCPCS codes that
became available after the issuance of
the CY 2009 OPPS/ASC proposed rule
that will be used to report surgical
procedures in CY 2010 to evaluate their
appropriateness for the ASC list of
covered surgical procedures. Of the
procedures reported by new or
substantially revised CY 2010 HCPCS
codes that we determined should not be
excluded from the ASC list based on our
clinical review, including assessment of
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available utilization and volume data for
any closely related procedures and
consideration of other available
information, we determined that 16 of
the procedures would predominantly be
performed in physicians’ offices.
However, because we had no utilization
data for the procedures specifically
described by these new HCPCS codes,
we made the office-based designations
temporary rather than permanent and
will reevaluate the procedures when
data become available. The temporary
payment indicators for the 16 officebased procedures displayed in Table 67
are interim designations and are open to
public comment during the 60-day
comment period for this final rule with
comment period. HCPCS codes that are
new (or substantially revised) for CY
2010 are designated with an ‘‘NI’’
comment indicator in Addendum AA.
We will respond to public comments on
the interim designations in the CY 2011
OPPS/ASC final rule with comment
period.
TABLE 67—FINAL CY 2010 PAYMENT
INDICATORS FOR NEW CY 2010
HCPCS CODES FOR ASC COVERED
SURGICAL
PROCEDURES
DESIGNATED AS TEMPORARILY OFFICEBASED ON AN INTERIM BASIS
CY 2010
HCPCS
Code
CY 2010 short
descriptor
21015 ....
Resection of facial tumor.
Remove lesion,
neck/chest.
Remove lesion,
back or flank.
Removal of
shoulder lesion.
Remove arm/
elbow lesion.
Removal forearm
lesion subcu.
Removal hand
lesion, subcut.
Remove hip/pelvis lesion.
Removal of thigh
lesion.
Remove lower
leg lesion.
Exc foot/toe tum
sc > 1.5 cm.
Exc foot/toe tum
deep > 1.5 cm.
Excision of foot
lesion.
Excision of foot
lesion.
Resection of
tumor, foot.
21555 ....
21930 ....
23075 ....
24075 ....
25075 ....
26115 ....
27047 ....
27327 ....
27618 ....
dcolon on DSK2BSOYB1PROD with RULES2
28039 ....
28041 ....
28043 ....
28045 ....
28046 ....
VerDate Nov<24>2008
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Final
CY 2010 ASC
payment
indicator **
R2 *
P3 *
P3 *
P3 *
P3 *
P3 *
P3 *
P3 *
P3 *
P3 *
P3 *
R2 *
P3 *
P3 *
TABLE 67—FINAL CY 2010 PAYMENT
INDICATORS FOR NEW CY 2010
HCPCS CODES FOR ASC COVERED
PROCEDURES
DESSURGICAL
IGNATED AS TEMPORARILY OFFICEBASED ON AN INTERIM BASIS—Continued
CY 2010
HCPCS
Code
CY 2010 short
descriptor
37761 ....
Final
CY 2010 ASC
payment
indicator **
Ligate leg veins
open.
R2 *
* If designation is temporary.
** Payment indicators are based on a comparison of the rates according to the ASC
standard ratesetting methodology and the
MPFS final CY 2010 rates. Under current law,
the MPFS payment rates have a negative update for CY 2010. For a discussion of those
rates, we refer readers to the CY 2010 MPFS
final rule with comment period.
c. ASC Covered Surgical Procedures
Designated as Device-Intensive
(1) Background
As discussed in the August 2, 2007
final rule (72 FR 42503 through 42508),
we adopted a modified payment
methodology for calculating the ASC
payment rates for covered surgical
procedures that are assigned to the
subset of OPPS device-dependent APCs
with a device offset percentage greater
than 50 percent of the APC cost under
the OPPS, in order to ensure that
payment for the procedure is adequate
to provide packaged payment for the
high-cost implantable devices used in
those procedures. We assigned payment
indicators ‘‘H8’’ (Device-intensive
procedure on ASC list in CY 2007; paid
at adjusted rate) and ‘‘J8’’ (Deviceintensive procedure added to ASC list
in CY 2008 or later; paid at adjusted
rate) to identify the procedures that
were eligible for ASC payment
calculated according to the modified
methodology, depending on whether the
procedure was included on the ASC list
of covered surgical procedures prior to
CY 2008 and, therefore, subject to
transitional payment as discussed in the
CY 2009 OPPS/ASC final rule with
comment period (73 FR 68739 through
68742). The 52 device-intensive
procedures for which the modified rate
calculation methodology applies in CY
2009 were displayed in Table 47 and in
Addendum AA to the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68736 through 68738 and 68840
through 68933).
R2 *
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(2) Changes to List of Covered Surgical
Procedures Designated as DeviceIntensive for CY 2010
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35382), we proposed to
update the ASC list of covered surgical
procedures that are eligible for payment
according to the device-intensive
procedure payment methodology for CY
2010, consistent with the proposed
OPPS device-dependent APC update,
reflecting the proposed APC
assignments of procedures, designation
of APCs as device-dependent, and APC
device offset percentages based on the
CY 2008 OPPS claims and cost report
data available for the proposed rule. The
ASC covered surgical procedures that
we proposed to designate as deviceintensive and that would be subject to
the device-intensive procedure payment
methodology for CY 2010 were listed in
Table 46 in the CY 2010 OPPS/ASC
proposed rule (74 FR 35383 through
35384).
Comment: Some commenters
expressed general concerns regarding
the sufficiency of ASC payment for
device-related services and
recommended modifications to the ASC
device-intensive payment methodology.
First, the commenters argued that CMS
should not apply the ASC conversion
factor to the device-related portion of
the payment for all procedures for
which CMS can establish a median
device cost, regardless of whether they
are designated as device-intensive under
the established methodology. The
commenters stated that, unlike ASCs’
general abilities to achieve greater
operational efficiencies than HOPDs,
ASCs are unable to extract greater
discounts on devices and expensive
operative supplies than their hospital
counterparts. Second, the commenters
argued that CMS should not adjust the
device portion of the ASC payment for
device-intensive procedures by the wage
index. According to the commenters,
the acquisition of devices occurs on a
national market, and ASCs in rural areas
pay approximately the same for medical
devices and equipment as facilities in
more expensive labor markets. The
commenters stated that CMS is
underpaying device costs in markets
where the wage index is low, and
overpaying in markets where the wage
index is high.
One commenter specifically remarked
that the procedures described by CPT
code 19296 (Placement of radiotherapy
afterloading balloon catheter into the
breast for interstitial radioelement
application following partial
mastectomy, includes imaging guidance;
on date separate from partial
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mastectomy) and CPT code 19297
(Placement of radiotherapy afterloading
balloon catheter into the breast for
interstitial radioelement application
following partial mastectomy, includes
imaging guidance; concurrent with
partial mastectomy), which map to
OPPS device-dependent APC 0648
(Level IV Breast Surgery), require the
use of a device that has a list price that
exceeds 50 percent of the median costs
calculated for those CPT codes and,
therefore, concluded that these
procedures should be added to the ASC
list of device-intensive procedures.
Another commenter requested that CMS
add the procedure described by CPT
code 66180 (Aqueous shunt to
extraocular reservoir (eg, Molteno,
Schocket, Denver-Krupin)) to the ASC
list of device-intensive procedures,
arguing that the list prices of devices
involved in performing this procedure
are greater than 50 percent of the
proposed ASC payment rate for this
procedure for CY 2010.
Response: In the August 2, 2007 final
rule (72 FR 42508), we established that
the modified payment methodology for
calculating ASC payment rates for
device-intensive procedures shall apply
to ASC covered surgical procedures that
are assigned to device-dependent APCs
under the OPPS for the same calendar
year, where those APCs have a device
cost of greater than 50 percent of the
APC cost (that is, the device offset
percentage is greater than 50). We
continue to believe these criteria ensure
that ASC payment rates are adequate to
provide packaged payment for high cost
implantable devices and ensure
Medicare beneficiaries have access to
these procedures in all appropriate
settings of care. We do not agree that we
should change our criteria and treat as
device-intensive ASC services that are
assigned to APCs for which the device
offset percentage is less than 50 percent
(such as the procedures described by
CPT codes 19296 and 19297) or ASC
services that are not assigned to OPPS
device-dependent APCs (such as the
procedure described by CPT code
66180). Under the modified payment
methodology for ASC covered surgical
procedures designated as deviceintensive, we separately determine both
the device payment and service
payment portions of the ASC payment
rate, and apply the ASC conversion
factor only to the specifically calculated
OPPS relative payment weight for the
service portion, while providing the
same packaged payment for the device
portion as would be made under the
OPPS. The 50-percent device offset
threshold is established to ensure that
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the ASC conversion factor is not applied
to the costs of high cost implantable
devices, which likely do not vary
between ASCs and HOPDs in the same
manner service costs have been shown
to vary. As we have stated in the past
(73 FR 68734), we believe that when
device costs comprise less than 50
percent of total procedure costs, those
costs are less likely to be as predictable
across sites-of-service. Accordingly, we
believe that it is possible for ASCs to
achieve efficiencies relative to HOPDs
when providing those procedures, and
that the application of the ASC
conversion factor to the entire ASC
payment weight is appropriate.
We also do not believe it is
appropriate to vary the percentage of the
national payment that is wage adjusted
for different services. Under the revised
ASC payment system, we utilize 50
percent as the labor-related share to
adjust national ASC payment rates for
geographic wage differences. We apply
to ASC payments the IPPS pre-floor,
pre-reclassification wage index values
associated with the June 2003 OMB
geographic localities, as recognized
under the IPPS and OPPS, in order to
adjust the labor-related portion of the
national ASC payment rates for
geographic wage differences. Consistent
with the OPPS, we apply the ASC
geographic wage adjustment to the
entire ASC payment rate for deviceintensive procedures. As we have noted
in the past (73 FR 68735), MedPAC has
indicated its intent to evaluate CMS’
method for adjusting payments for
variations in labor costs in light of
differences in labor-related costs for
device-implantation services. We look
forward to reviewing the results of its
evaluation, as well as any
recommendations it may provide,
regarding the OPPS or ASC wage
adjustment policy.
Comment: Some commenters argued
that CMS should not subject procedures
that were on the ASC list of covered
surgical procedures in CY 2007 but were
rarely performed in ASCs prior to CY
2008 to the transitional adjustment. One
commenter provided a data analysis
demonstrating that CPT code 55873
(Cryosurgical ablation of the prostate
(includes ultrasonic guidance and
monitoring)) was present on three ASC
claims in CY 2007, on one claim in CY
2006, and was not billed at all by ASCs
in CY 2005. According to the
commenter, the transitional payment for
CPT code 55873 is inadequate to cover
ASCs’ costs of providing the procedure
and will prevent Medicare beneficiaries
from accessing this procedure in the
ASC setting.
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60609
Response: As established in
regulation at § 416.171(c), the
transitional adjustment applies to all
services on the CY 2007 ASC list of
covered services. We cannot make an
exception for procedures, such as the
one described by CPT code 55873, that
were on the CY 2007 list of covered
services but were rarely performed in
ASCs according to the commenter.
Furthermore, as we stated in the August
2, 2007 final rule (72 FR 42520), the
transition to the fully implemented
revised ASC system payment system
should not be asymmetrical, meaning
that procedures with decreasing
payments under the revised payment
system should not be transitioned
differently from those with increasing
payments.
Comment: One commenter requested
that CMS adjust the OPPS device offset
percentages for ASC device-intensive
payment purposes to account for the
effects of charge compression. The
commenter suggested that CMS
‘‘decompress’’ the supply median costs
to minimize any artificial reductions
that charge compression causes in the
estimate of the OPPS device offset
percentages.
Response: Charge compression 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 of charge
compression, the cost-based OPPS
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
center. As discussed in the CY 2009
OPPS/ASC final rule with comment
period (73 FR 68524), we did not adopt
any short-term statistical regressionbased adjustments under the OPPS that
would serve to ‘‘decompress’’ the
median costs for procedures involving
devices, or for any other procedures.
Rather, we chose to focus on long-term
changes to Medicare cost reporting to
address the effects of charge
compression, including the creation of
two new cost centers, ‘‘Medical
Supplies Charged to Patients’’ and
‘‘Implantable Devices Charged to
Patients,’’ as discussed in more detail in
section II.A.1.c.(2) of this final rule with
comment period. We believe that this
change to how hospitals report costs for
devices and supplies will improve our
future estimates of costs related to high
cost implantable devices, including the
device offset percentages upon which
we base the device portions of ASC
payment rates for device-intensive
procedures.
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Comment: Several commenters
remarked on the adequacy of the
proposed payment rates calculated
according to the ASC device-intensive
payment methodology for procedures
involving cochlear implants, described
by CPT code 69930 (Cochlear device
implantation, with or without
mastoidectomy). According to the
commenters, the proposed increase to
the ASC payment rate for CPT code
69930 is a necessary improvement to
ensure beneficiary access to cochlear
implants. Several commenters also
supported the proposed payment rate
increases for procedures involving
auditory osseointegrated devices,
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
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). Other
commenters encouraged CMS to finalize
a somewhat higher payment rate for
these procedures.
Response: We appreciate the
commenters’ support of the proposed
payment rates for procedures involving
cochlear implants and auditory
osseointegrated devices. We believe that
the final CY 2010 ASC payment rates for
these procedures, calculated according
to the ASC device-intensive ratesetting
methodology, are appropriate and
adequate to ensure beneficiaries have
access to these procedures in the ASC
setting.
After consideration of the public
comments we received, we are
designating the ASC covered surgical
procedures displayed in Table 68 below
as device-intensive for CY 2010. The
HCPCS code, the HCPCS code short
descriptor, the CY 2010 ASC payment
indicator, the CY 2010 OPPS APC
assignment, the OPPS APC Title, and
the CY 2010 OPPS APC device offset
percentage are listed in Table 68. Each
device-intensive procedure is assigned
payment indicator ‘‘H8’’ or ‘‘J8,’’
depending on whether it is subject to
transitional payment. All of these
procedures are included in Addendum
AA to this final rule with comment
period. The OPPS device-dependent
APCs are discussed further in section
II.A.2.d.(1) of this final rule with
comment period.
TABLE 68.—ASC COVERED SURGICAL PROCEDURES DESIGNATED AS DEVICE-INTENSIVE FOR CY 2010
CY 2010 CPT
code
24361
24363
24366
25441
25442
25446
27446
33206
............
............
............
............
............
............
............
............
33207 ............
33208 ............
33212 ............
33213 ............
33214 ............
33224 ............
33225 ............
33240 ............
33249 ............
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33282
53440
53444
53445
53447
............
............
............
............
............
54400 ............
54401 ............
54405 ............
54410 ............
54416 ............
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Final
CY 2010
ASC
payment
indicator
CY 2010 short descriptor
Final
CY 2010
OPPS APC
Reconstruct elbow joint .....
Replace elbow joint ...........
Reconstruct head of radius
Reconstruct wrist joint .......
Reconstruct wrist joint .......
Wrist replacement ..............
Revision of knee joint ........
Insertion of heart pacemaker.
Insertion of heart pacemaker.
Insertion of heart pacemaker.
Insertion of pulse generator
Insertion of pulse generator
H8 ............
H8 ............
H8 ............
H8 ............
H8 ............
H8 ............
J8 .............
J8 .............
0425
0425
0425
0425
0425
0425
0425
0089
J8 .............
0089
J8 .............
0655
H8 ............
H8 ............
0090
0654
Upgrade of pacemaker
system.
Insert pacing lead & connect.
Lventric pacing lead addon.
Insert pulse generator ........
Eltrd/insert pace-defib ........
J8 .............
0655
J8 .............
Implant pat-active ht record
Male sling procedure .........
Insert tandem cuff ..............
Insert uro/ves nck sphincter
Remove/replace ur sphincter.
Insert semi-rigid prosthesis
Insert self-contd prosthesis
Insert multi-comp penis
pros.
Remove/replace penis
prosth.
Remv/repl penis contain
pros.
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OPPS APC title
Final
CY 2010
devicedependent
APC offset
percentage
58
58
58
58
58
58
58
72
0418
Level II Arthroplasty or Implantation with Prosthesis .....
Level II Arthroplasty or Implantation with Prosthesis .....
Level II Arthroplasty or Implantation with Prosthesis .....
Level II Arthroplasty or Implantation with Prosthesis .....
Level II Arthroplasty or Implantation with Prosthesis .....
Level II Arthroplasty or Implantation with Prosthesis .....
Level II Arthroplasty or Implantation with Prosthesis .....
Insertion/Replacement of Permanent Pacemaker and
Electrodes.
Insertion/Replacement of Permanent Pacemaker and
Electrodes.
Insertion/Replacement/Conversion of a permanent dual
chamber pacemaker.
Insertion/Replacement of Pacemaker Pulse Generator
Insertion/Replacement of a permanent dual chamber
pacemaker.
Insertion/Replacement/Conversion of a permanent dual
chamber pacemaker.
Insertion of Left Ventricular Pacing Elect. ......................
J8 .............
0418
Insertion of Left Ventricular Pacing Elect. ......................
81
J8 .............
J8 .............
0107
0108
89
88
J8 .............
H8 ............
H8 ............
H8 ............
H8 ............
0680
0385
0385
0386
0386
Insertion of Cardioverter-Defibrillator .............................
Insertion/Replacement/Repair
of
CardioverterDefibrillator Leads.
Insertion of Patient Activated Event Recorders .............
Level I Prosthetic Urological Procedures .......................
Level I Prosthetic Urological Procedures .......................
Level II Prosthetic Urological Procedures ......................
Level II Prosthetic Urological Procedures ......................
H8 ............
H8 ............
H8 ............
0385
0386
0386
Level I Prosthetic Urological Procedures .......................
Level II Prosthetic Urological Procedures ......................
Level II Prosthetic Urological Procedures ......................
59
71
71
H8 ............
0386
Level II Prosthetic Urological Procedures ......................
71
H8 ............
0386
Level II Prosthetic Urological Procedures ......................
71
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75
74
75
75
81
73
59
59
71
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60611
TABLE 68.—ASC COVERED SURGICAL PROCEDURES DESIGNATED AS DEVICE-INTENSIVE FOR CY 2010—Continued
Final
CY 2010
ASC
payment
indicator
Final
CY 2010
OPPS APC
Final
CY 2010
devicedependent
APC offset
percentage
CY 2010 CPT
code
CY 2010 short descriptor
55873 ............
61885 ............
H8 ............
H8 ............
0674
0039
Prostate Cryoablation .....................................................
Level I Implantation of Neurostimulator Generator ........
56
85
H8 ............
H8 ............
0315
0227
Level II Implantation of Neurostimulator Generator .......
Implantation of Drug Infusion Device .............................
88
83
H8 ............
0227
Implantation of Drug Infusion Device .............................
83
63650 ............
Cryoablate prostate ...........
Insrt/redo neurostim 1
array.
Implant neurostim arrays ...
Implant spine infusion
pump.
Implant spine infusion
pump.
Implant neuroelectrodes ....
H8 ............
0040
58
63655 ............
Implant neuroelectrodes ....
J8 .............
0061
63685 ............
H8 ............
0039
64553 ............
Insrt/redo spine n generator.
Implant neuroelectrodes ....
Percutaneous Implantation of Neurostimulator Electrodes.
Laminectomy, Laparoscopy, or Incision for Implantation
of Neurostimulator Electr.
Level I Implantation of Neurostimulator Generator ........
H8 ............
0040
58
64555 ............
Implant neuroelectrodes ....
J8 .............
0040
64560 ............
Implant neuroelectrodes ....
J8 .............
0040
64561 ............
Implant neuroelectrodes ....
H8 ............
0040
64565 ............
Implant neuroelectrodes ....
J8 .............
0040
64573 ............
Implant neuroelectrodes ....
H8 ............
0225
64575 ............
Implant neuroelectrodes ....
H8 ............
0061
64577 ............
Implant neuroelectrodes ....
H8 ............
0061
64580 ............
Implant neuroelectrodes ....
H8 ............
0061
64581 ............
Implant neuroelectrodes ....
H8 ............
0061
64590 ............
65770 ............
69714 ............
Insrt/redo pn/gastr stimul ...
Revise cornea with implant
Implant temple bone w/
stimul.
Temple bne implnt w/
stimulat.
Temple bone implant revision.
Revise temple bone implant.
Implant cochlear device .....
H8 ............
H8 ............
H8 ............
0039
0293
0425
Percutaneous Implantation of Neurostimulator Electrodes.
Percutaneous Implantation of Neurostimulator Electrodes.
Percutaneous Implantation of Neurostimulator Electrodes.
Percutaneous Implantation of Neurostimulator Electrodes.
Percutaneous Implantation of Neurostimulator Electrodes.
Implantation of Neurostimulator Electrodes, Cranial
Nerve.
Laminectomy, Laparoscopy, or Incision for Implantation
of Neurostimulator Electr.
Laminectomy, Laparoscopy, or Incision for Implantation
of Neurostimulator Electr.
Laminectomy, Laparoscopy, or Incision for Implantation
of Neurostimulator Electr.
Laminectomy, Laparoscopy, or Incision for Implantation
of Neurostimulator Electr.
Level I Implantation of Neurostimulator Generator ........
Level V Anterior Segment Eye Procedures ...................
Level II Arthroplasty or Implantation with Prosthesis .....
H8 ............
0425
Level II Arthroplasty or Implantation with Prosthesis .....
58
H8 ............
0425
Level II Arthroplasty or Implantation with Prosthesis .....
58
H8 ............
0425
Level II Arthroplasty or Implantation with Prosthesis .....
58
H8 ............
0259
Level VII ENT Procedures .............................................
85
61886 ............
62361 ............
62362 ............
69715 ............
69717 ............
69718 ............
69930 ............
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d. ASC Treatment of Surgical
Procedures Removed From the OPPS
Inpatient List for CY 2010
As we discussed in the CY 2009
OPPS/ASC final rule with comment
period (73 FR 68724), we adopted a
policy to include in our annual
evaluation procedures proposed for
removal from the OPPS inpatient list for
possible inclusion on the ASC list of
covered surgical procedures. The final
list of procedures removed from the
inpatient list for CY 2009 may be found
in section XI.B. of that final rule with
comment period.
We evaluated each of the 3
procedures we proposed to remove from
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OPPS APC title
the OPPS inpatient list for CY 2010
according to the criteria for exclusion
from the list of covered ASC surgical
procedures. As we stated in the CY 2010
OPPS/ASC proposed rule (74 FR 35384),
we believe that all of these procedures
should continue to be excluded from the
ASC list of covered surgical procedures
for CY 2010 because they would be
expected to pose a significant risk to
beneficiary safety or to require an
overnight stay in ASCs. A full
discussion about the APC Panel’s
recommendations regarding the
procedures we proposed to remove from
the OPPS inpatient list for CY 2010 may
be found in section XI.B. of this final
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64
85
58
58
58
58
73
64
64
64
64
85
62
58
rule with comment period. The HCPCS
codes for these 3 procedures and their
long descriptors were listed in Table 47
in the CY 2010 OPPS/ASC proposed
rule (74 FR 35384).
We did not receive any public
comments specifically about our
proposal to continue to exclude from
the ASC list the 3 procedures reported
by CPT codes 21256 (Reconstruction of
orbit with osteotomies (extracranial) and
with bone grafts (includes obtaining
autografts) (eg, micro-ophthalmia);
27179 (Open treatment of slipped
femoral epiphysis; osteoplasty of
femoral neck (Heyman type procedure);
and 51060 (Transvesical
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ureterolithotomy). However, we did
receive public comments requesting that
we remove additional procedures from
the OPPS inpatient list. In response to
those comments, we removed 5
additional procedures from the OPPS
inpatient list for CY 2010. The
comments requesting that we remove
additional procedures from the
inpatient list and our responses may be
found in section XI.B. of this final rule
with comment period. Our review of the
5 procedures removed from the OPPS
inpatient list in response to comments
convinced us that none of them was
appropriate for performance in the ASC
setting. Our medical advisors
determined that the procedures were
expected to pose significant risks to
beneficiary safety or to require an
overnight stay when provided in ASCs.
The final list of procedures that have
been removed from the CY 2010 OPPS
inpatient list but that continue to be
excluded from the ASC list of covered
surgical procedures is displayed in
Table 69 below.
TABLE 69—PROCEDURES EXCLUDED FROM THE ASC LIST OF COVERED SURGICAL PROCEDURES FOR CY 2010 THAT
WERE REMOVED FROM THE CY 2010 OPPS INPATIENT LIST
CY 2010
HCPCS code
CY 2010 long descriptor
21256 ................
Reconstruction of orbit with osteotomies (extracranial) and with bone grafts (includes obtaining autografts) (eg, micro-ophthalmia).
Open treatment of slipped femoral epiphysis; osteoplasty of femoral neck (Heyman type procedure).
Amputation, foot; transmetatarsal.
Transcatheter placement of intravascular stent(s), cervical carotid artery, percutaneous; with distal embolic protection.
Appendectomy.
Appendectomy; when done for indicated purpose at time of other major procedure (not as separate procedure) (List separately in addition to code for primary procedure).
Transvesical ureterolithotomy.
Discectomy, anterior, with decompression of spinal cord and/or nerve root(s), including osteophytectomy; cervical, each additional interspace (List separately in addition to code for primary procedure).
27179
28805
37215
44950
44955
................
................
................
................
................
51060 ................
63076 ................
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2. Covered Ancillary Services
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35384), consistent with the
established ASC payment system policy,
we proposed to update the ASC list of
covered ancillary services to reflect the
proposed payment status for the
services under the CY 2010 OPPS.
Maintaining consistency with the OPPS
resulted in proposed changes to ASC
payment indicators for some covered
ancillary items and services because of
changes that were proposed under the
OPPS for CY 2010. Comment indicator
‘‘CH,’’ discussed in section XV.F. of the
CY 2010 OPPS/ASC proposed rule (74
FR 35390), was used in Addendum BB
to that proposed rule to indicate covered
ancillary services for which we
proposed a change in the ASC payment
indicator to maintain consistency with a
proposed change in the OPPS treatment
of the service for CY 2010.
Except for the Level II HCPCS codes
listed in Table 40 of the proposed rule
(74 FR 35379), all ASC covered ancillary
services and their proposed payment
indicators for CY 2010 were included in
Addendum BB to the proposed rule.
We did not receive any public
comments on our proposal to update the
ASC list of covered ancillary services to
reflect the payment status for the
services under the OPPS. Therefore, we
are finalizing, without modification, our
proposed updates to the ASC list of
covered ancillary services as proposed.
All CY 2010 ASC covered ancillary
services and their final payment
indicators are included in Addendum
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14:52 Nov 19, 2009
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BB to this final rule with comment
period.
D. ASC Payment for Covered Surgical
Procedures and Covered Ancillary
Services
1. Payment for Covered Surgical
Procedures
a. Background
Our ASC payment policies for
covered surgical procedures under the
revised ASC payment system are fully
described in the CY 2008 OPPS/ASC
final rule with comment period (72 FR
66828 through 66831). Under our
established policy for the revised ASC
payment system, the ASC standard
ratesetting methodology of multiplying
the ASC relative payment weight for the
procedure by the ASC conversion factor
for that same year is used to calculate
the national unadjusted payment rates
for procedures with payment indicator
‘‘G2.’’ For procedures assigned payment
indicator ‘‘A2,’’ our final policy
established blended rates to be used
during the transitional period and,
beginning in CY 2011, ASC rates
calculated according to the ASC
standard ratesetting methodology. The
rate calculation established for deviceintensive procedures (payment
indicators ‘‘H8’’ and ‘‘J8’’) is structured
so that the packaged device payment
amount is the same as under the OPPS,
and only the service portion of the rate
is subject to the ASC standard
ratesetting methodology. In the CY 2009
OPPS/ASC final rule with comment
period (73 FR 68722 through 68759), we
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updated the CY 2008 ASC payment
rates for ASC covered surgical
procedures with payment indicators of
‘‘A2,’’ ‘‘G2,’’ ‘‘H8,’’and ‘‘J8’’ using CY
2007 data, consistent with the CY 2009
OPPS update. Payment rates for deviceintensive procedures also were updated
to incorporate the CY 2009 OPPS device
offset percentages.
Payment rates for office-based
procedures (payment indicators ‘‘P2,’’
‘‘P3,’’ and ‘‘R2’’) are the lower of the
MPFS nonfacility PE RVU amount (we
refer readers to the CY 2010 MPFS final
rule with comment period) or the
amount calculated using the ASC
standard ratesetting methodology for the
procedure. In the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68722 through 68759), we updated the
payment amounts for office-based
procedures (payment indicators ‘‘P2,’’
‘‘P3,’’ and ‘‘R2’’) using the most recent
available MPFS and OPPS data. We
compared the estimated CY 2009 rate
for each of the office-based procedures,
calculated according to the ASC
standard ratesetting methodology, to the
MPFS nonfacility PE RVU amount to
determine which was lower and,
therefore, would be the CY 2009
payment rate for the procedure
according to the final policy of the
revised ASC payment system (see
§ 416.171(d)).
b. Update to ASC Covered Surgical
Procedure Payment Rates for CY 2010
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35385), we proposed to
update ASC payment rates for CY 2010
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using the established rate calculation
methodologies under § 416.171. Thus,
we proposed to calculate CY 2010
payments for procedures subject to the
transitional payment methodology
(payment indicators ‘‘A2’’ and ‘‘H8’’)
using a blend of 75 percent of the
proposed CY 2010 ASC rate calculated
according to the ASC standard
ratesetting methodology and 25 percent
of the CY 2007 ASC payment rate,
incorporating the device-intensive
procedure methodology, as appropriate,
for procedures assigned ASC payment
indicator ‘‘H8.’’ We proposed to use the
amount calculated under the ASC
standard ratesetting methodology for
procedures assigned payment indicator
‘‘G2’’ because these procedures are not
subject to the transitional payment
methodology.
We proposed payment rates for officebased procedures (payment indicators
‘‘P2,’’ ‘‘P3,’’ and ‘‘R2’’) and deviceintensive procedures not subject to
transitional payment (payment indicator
‘‘J8’’) calculated according to our
established policies. Thus, we proposed
to update the payment amounts for
device-intensive procedures based on
the CY 2010 OPPS proposal that reflects
updated OPPS device offset percentages,
and to make payment for office-based
procedures at the lesser of the CY 2010
proposed MPFS nonfacility PE RVU
amount or the proposed CY 2010 ASC
payment amount calculated according
to the ASC standard ratesetting
methodology.
Comment: Many commenters
requested that CMS modify its
packaging policy to provide separate
payment for procedures that were
eligible for separate ASC payment prior
to becoming packaged into separately
payable services under the OPPS that
are not reported by any of the codes
within the CPT surgical code range. The
commenters stated that these HCPCS
codes into which minor procedure
payments are packaged are not on the
list of ASC covered surgical procedures.
The commenters believed that, as an
unintended result of CMS’ OPPS
packaging policies, procedural services
that meet the criteria for performance in
ASCs are being excluded from coverage.
They recommended that CMS adopt a
policy under which packaging policy
changes under the OPPS would not
result in surgical procedures that were
on the ASC list of covered surgical
procedures in CY 2007 or CY 2008
becoming nonpayable.
Response: We did not propose to
make any change in our policy to adopt
the packaging decisions made under the
OPPS for the ASC payment system.
Further, we do not know which
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procedures the commenters were
referring to in their comments and,
therefore, are unable to fully address
their other concerns.
Comment: One commenter requested
that CMS correct the ASC payment rates
for the procedures reported by CPT
codes 64626 (Destruction by neurolytic
agent, paravertebral facet joint nerve;
cervical or thoracic, single level); 64627
(Destruction by neurolytic agent,
paravertebral facet joint nerve; cervical
or thoracic, each additional level); and
64680 (Destruction by neurolytic agent,
with or without radiologic monitoring;
celiac plexus). The commenter stated
that the rates in Addendum AA to the
proposed rule for these procedures were
incorrectly listed as $299.12, $158.13,
and $312.90. respectively.
Response: We reviewed the proposed
payment rates for these three procedures
and found that they are all correct. We
believe that the commenter failed to
notice that we proposed to assign two of
the procedures, CPT codes 64626 and
64680, to different APCs under the
OPPS for CY 2010. The proposed
changes in their OPPS APC assignments
resulted in lower OPPS relative
payment weights and, therefore, lower
proposed ASC payment rates for CY
2010. The proposed payment rate for the
third procedure, CPT code 64627, is
correct as displayed in Addendum AA
to the CY 2010 OPPS/ASC proposed
rule. There was no proposed change to
the APC assignment for that procedure
under the OPPS for CY 2010. Therefore,
the proposed ASC payment rate change
for CY 2010 is due to the recalibration
of the OPPS APC relative payment
weight, which was subsequently
incorporated into the ASC payment
system, and also due to the progression
to the third year of the transition to ASC
rates calculated entirely based on the
standard ratesetting methodology.
After consideration of the public
comments we received, we are
finalizing our CY 2010 proposal,
without modification, to calculate the
CY 2010 final ASC payment rates
according to our established
methodologies.
c. Adjustment to ASC Payments for No
Cost/Full Credit and Partial Credit
Devices
Our ASC policy with regard to
payment for costly devices implanted in
ASCs at no cost or with full or partial
credit as set forth in § 416.179 is
consistent with the OPPS policy. The
CY 2010 OPPS APCs and devices
subject to the adjustment policy are
discussed in section IV.B.2. of this final
rule with comment period. The
established ASC policy includes
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adoption of the OPPS policy for reduced
payment to providers when a specified
device is furnished without cost or with
full or partial credit for the cost of the
device for those ASC covered surgical
procedures that are assigned to APCs
under the OPPS to which this policy
applies. We refer readers to the CY 2009
OPPS/ASC final rule with comment
period for a full discussion of the ASC
payment adjustment policy for no cost/
full credit and partial credit devices (73
FR 68742 through 68745).
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35385), consistent with the
OPPS, we proposed to update the list of
ASC covered device-intensive
procedures and devices that would be
subject to the no cost/full credit and
partial credit device adjustment policy
for CY 2010. Table 48 in the CY 2010
OPPS/ASC proposed rule (74 FR 35386
through 35387) displayed the ASC
covered device-intensive procedures
that we proposed would be subject to
the no cost/full credit and partial credit
device adjustment policy for CY 2010.
Specifically, when a procedure that is
listed in Table 48 is performed to
implant a device that is listed in Table
49 of the proposed rule (74 FR 35387),
where that device is furnished at no cost
or with full credit from the
manufacturer, the ASC would append
the HCPCS ‘‘FB’’ modifier on the line
with the procedure to implant the
device. The contractor would reduce
payment to the ASC by the device offset
amount that we estimate represents the
cost of the device when the necessary
device is furnished without cost to the
ASC or with full credit. We would
provide the same amount of payment
reduction based on the device offset
amount in ASCs that would apply under
the OPPS under the same
circumstances. We stated in the CY
2010 OPPS/ASC proposed rule (74 FR
35385) that we continue to believe that
the reduction of ASC payment in these
circumstances is necessary to pay
appropriately for the covered surgical
procedure being furnished by the ASC.
We also proposed to reduce the
payment for implantation procedures
listed in Table 48 of the proposed rule
by one-half of the device offset amount
that would be applied if a device was
provided at no cost or with full credit,
if the credit to the ASC is 50 percent or
more of the cost of the new device. The
ASC would append the HCPCS ‘‘FC’’
modifier to the HCPCS code for a
surgical procedure listed in Table 48 in
the proposed rule when the facility
receives a partial credit of 50 percent or
more of the cost of a device listed in
Table 49. In order to report that they
received a partial credit of 50 percent or
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more of the cost of a new device, ASCs
would have the option of either: (1)
Submitting the claim for the device
replacement procedure to their
Medicare contractor after the
procedure’s performance but prior to
manufacturer acknowledgment of credit
for the device, and subsequently
contacting the contractor regarding a
claim adjustment once the credit
determination is made; or (2) holding
the claim for the device implantation
procedure until a determination is made
by the manufacturer on the partial credit
and submitting the claim with the ‘‘FC’’
modifier appended to the implantation
procedure HCPCS code if the partial
credit is 50 percent or more of the cost
of the replacement device. Beneficiary
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coinsurance would continue to be based
on the reduced payment amount.
We did not receive any comments on
our CY 2010 proposal to continue the no
cost/full credit and partial credit device
adjustment policy for ASCs. For CY
2010, as we proposed, we will reduce
the payment for the device implantation
procedures listed in Table 70, below, by
the full device offset amount for no cost/
full credit cases. ASCs must append the
modifier ‘‘FB’’ to the HCPCS procedure
code when the device furnished without
cost or with full credit is listed in Table
71, below, and the associated
implantation procedure code is listed in
Table 70. In addition, for CY 2010, we
will reduce the payment for
implantation procedures listed in Table
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70 by one half of the device offset
amount that would be applied if a
device were provided at no cost or with
full credit, if the credit to the ASC is 50
percent or more of the device cost. If the
ASC receives a partial credit of 50
percent or more of the cost of a device
listed in Table 71, the ASC must append
the modifier ‘‘FC’’ to the associated
implantation procedure code if the
procedure is listed in Table 70. We are
adding device HCPCS code L8680
(Implantable neurostimulator electrode,
each) to the list of devices in Table 71
because we are recognizing this code as
packaged under the OPPS for CY 2010,
as described in section IV.B.2. of this
final rule with comment period.
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TABLE 71—DEVICES FOR WHICH THE
‘‘FB’’ OR ‘‘FC’’ MODIFIER MUST BE
REPORTED WITH THE PROCEDURE
CODE IN CY 2010 WHEN FURNISHED
AT NO COST OR WITH FULL OR PARTIAL CREDIT
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CY 2010 device
HCPCS code
C1721
C1722
C1764
C1767
.................
.................
.................
.................
C1771 .................
C1772 .................
C1776 .................
C1778 .................
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TABLE 71—DEVICES FOR WHICH THE
‘‘FB’’ OR ‘‘FC’’ MODIFIER MUST BE
TABLE 71—DEVICES FOR WHICH THE
‘‘FB’’ OR ‘‘FC’’ MODIFIER MUST BE
REPORTED WITH THE PROCEDURE
CODE IN CY 2010 WHEN FURNISHED
AT NO COST OR WITH FULL OR PARTIAL CREDIT—Continued
REPORTED WITH THE PROCEDURE
CODE IN CY 2010 WHEN FURNISHED
AT NO COST OR WITH FULL OR PARTIAL CREDIT—Continued
CY 2010 device
HCPCS code
CY 2010 short descriptor
C1779 .................
AICD, dual chamber.
AICD, single chamber.
Event recorder, cardiac.
Generator, neurostim,
imp.
Rep dev, urinary, w/sling.
Infusion pump, programmable.
Joint device (implantable).
Lead, neurostimulator.
C1785 .................
C1786 .................
C1813 .................
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C1815 .................
C1820 .................
C1881 .................
C1882 .................
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CY 2010 short descriptor
Lead, pmkr, transvenous
VDD.
Pmkr, dual, rate-resp.
Pmkr, single, rate-resp.
Prosthesis, penile,
inflatab.
Pros, urinary sph, imp.
Generator, neuro rechg
bat sys.
Dialysis access system.
AICD, other than sing/
dual.
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CY 2010 device
HCPCS code
CY 2010 short descriptor
C1891 .................
Infusion pump, non-prog,
perm.
Lead, neurostim, test kit.
Lead, pmkr, other than
trans.
Lead coronary venous.
Pmkr, dual, non rate-resp.
Pmkr, single, non rateresp.
Pmkr, other than sing/
dual.
C1897 .................
C1898 .................
C1900 .................
C2619 .................
C2620 .................
C2621 .................
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TABLE 71—DEVICES FOR WHICH THE finalized our policy in the CY 2008
‘‘FB’’ OR ‘‘FC’’ MODIFIER MUST BE OPPS/ASC final rule with comment
REPORTED WITH THE PROCEDURE
CODE IN CY 2010 WHEN FURNISHED
AT NO COST OR WITH FULL OR PARTIAL CREDIT—Continued
CY 2010 device
HCPCS code
CY 2010 short descriptor
C2622 .................
Prosthesis, penile, noninf.
Infusion pump, non-prog,
temp.
Rep dev, urinary, w/o
sling.
Cochlear device/system.
Implt neurostim elctr
each.
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.
C2626 .................
C2631 .................
L8614 .................
L8680 .................
L8685 .................
L8686 .................
L8687 .................
L8688 .................
L8690 .................
2. Payment for Covered Ancillary
Services
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a. Background
Our final payment policies under the
revised ASC payment system for
covered ancillary services vary
according to the particular type of
service and its payment policy under
the OPPS. Our overall policy provides
separate ASC payment for certain
ancillary items and services integrally
related to the provision of ASC covered
surgical procedures that are paid
separately under the OPPS and provides
packaged ASC payment for other
ancillary items and services that are
packaged under the OPPS. Thus, we
established a final policy to align ASC
payment bundles with those under the
OPPS (72 FR 42495).
Our ASC payment policies provide
separate payment for drugs and
biologicals that are separately paid
under the OPPS at the OPPS rates, while
we pay for separately payable radiology
services at the lower of the MPFS
nonfacility PE RVU (or technical
component) amount or the rate
calculated according to the ASC
standard ratesetting methodology (72 FR
42497). In all cases, ancillary items and
services must be provided integral to the
performance of ASC covered surgical
procedures for which the ASC bills
Medicare, in order for those ancillary
services also to be paid.
ASC payment policy for
brachytherapy sources generally mirrors
the payment policy under the OPPS. We
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period (72 FR 42499) to pay for
brachytherapy sources applied in ASCs
at the same prospective rates that were
adopted under the OPPS or, if OPPS
rates were unavailable, at contractorpriced rates. Subsequent to publication
of that rule, section 106 of the Medicare,
Medicaid, and SCHIP Extension Act of
2007 (Pub. L. 110–173) mandated that,
for the period January 1, 2008 through
June 30, 2008, brachytherapy sources be
paid under the OPPS at charges adjusted
to cost. Therefore, consistent with our
final overall ASC payment policy, we
paid ASCs at contractor-priced rates for
brachytherapy sources provided in
ASCs during that period of time.
Beginning July 1, 2008, brachytherapy
sources applied in ASCs were to be paid
at the same prospectively set rates that
were finalized in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 67165 through 67188). Immediately
prior to the publication of the CY 2009
OPPS/ASC proposed rule, section 142 of
the Medicare Improvements for Patients
and Providers Act of 2008 (Pub. L. 110–
275) amended section 1833(t)(16)(C) of
the Act (as amended by section 106 of
the Medicare, Medicaid, and SCHIP
Extension Act of 2007) to extend the
requirement that brachytherapy sources
be paid under the OPPS at charges
adjusted to cost through December 31,
2009. Therefore, consistent with final
ASC payment policy, ASCs continued to
be paid at contractor-priced rates for
brachytherapy sources provided integral
to ASC covered surgical procedures
during that period of time.
Other separately paid covered
ancillary services in ASCs, specifically
corneal tissue acquisition and device
categories with OPPS pass-through
status, do not have prospectively
established ASC payment rates
according to the final policies of the
revised ASC payment system (72 FR
42502 and 42509). Under the revised
ASC payment system, corneal tissue
acquisition is paid based on the
invoiced costs for acquiring the corneal
tissue for transplantation. As discussed
in section IV.A.1. of this final rule with
comment period, new pass-through
device categories may be established on
a quarterly basis, but currently there are
no OPPS device pass-through categories
that would continue for OPPS passthrough payment (and, correspondingly,
separate ASC payment) in CY 2010.
b. Payment for Covered Ancillary
Services for CY 2010
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35388), we proposed to
update the ASC payment rates and make
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changes to ASC payment indicators as
necessary to maintain consistency
between the OPPS and ASC payment
system regarding the packaged or
separately payable status of services and
the proposed CY 2010 OPPS and ASC
payment rates. The proposed CY 2010
OPPS payment methodologies for
separately payable drugs and biologicals
and brachytherapy sources were
discussed in sections V. and VII. of the
CY 2010 OPPS/ASC proposed rule (74
FR 35324 through 35333 and 74 FR
35340 through 35343), respectively, and
we proposed to set the CY 2010 ASC
payment rates for those services equal to
the proposed CY 2010 OPPS rates.
Consistent with established ASC
payment policy (72 FR 42497), the
proposed CY 2010 payment for
separately payable covered radiology
services was based on a comparison of
the CY 2010 proposed MPFS nonfacility
PE RVU amounts (74 FR 33687 through
33800) and the proposed CY 2010 ASC
payment rates calculated according to
the ASC standard ratesetting
methodology and then set at the lower
of the two amounts. Alternatively,
payment for a radiology service may be
packaged into the payment for the ASC
covered surgical procedure if the
radiology service is packaged under the
OPPS. The payment indicators in
Addendum BB to the CY 2010 OPPS/
ASC proposed rule indicated whether
the proposed payment rates for
radiology services are based on the
MPFS nonfacility PE RVU amount or
the ASC standard ratesetting
methodology, or whether payment for a
radiology service is packaged into the
payment for the covered surgical
procedure (payment indicator ‘‘N1’’).
Radiology services that we proposed to
pay based on the ASC standard
ratesetting methodology are assigned
payment indicator ‘‘Z2’’ (Radiology
service paid separately when provided
integral to a surgical procedure on ASC
list; payment based on OPPS relative
payment weight) and those for which
the proposed payment is based on the
MPFS nonfacility PE RVU amount are
assigned payment indicator ‘‘Z3’’
(Radiology service paid separately when
provided integral to a surgical
procedure on ASC list; payment based
on MPFS nonfacility PE RVUs).
All covered ancillary services and
their proposed payment indicators were
listed in Addendum BB to the CY 2010
OPPS/ASC proposed rule.
Comment: One commenter expressed
continued disagreement with the ASC
packaging policy related to discography
services. According to the policy, the
injection procedures reported by CPT
codes 62290 (Injection procedure for
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discography, each level; lumbar) and
62291 (Injection procedure for
discography, each level; cervical or
thoracic) are packaged into the services
reported by CPT codes 72285
(Discography, cervical or thoracic,
radiological supervision and
interpretation) and 72295 (Discography,
lumbar, radiological supervision and
interpretation) and, therefore, separate
payment is made to an ASC only when
the radiology service is provided
integral to a covered surgical procedure.
The commenter asserted that the
injection procedures reported by CPT
codes 62290 and 62291 are the major
procedures of the discography because
they require more time and resources
than the radiological services and, as
such, should not be packaged into the
lesser radiological services.
The commenter believed that
discography has many similarities to
vertebroplasty, for which separate
payment is made under the ASC
payment system. The commenter stated
that both procedures require sedation,
insertion of a needle into the spine (one
into the disc and the other into the
bone), and image guidance, and that
material (contrast agent or bone cement,
respectively) is injected into the spine
in both procedures. Based on
discography’s similarities to the
separately payable vertebroplasty
procedures, the commenter requested
that CMS implement separate payments
for discography and radiological
supervision and interpretation,
recognizing that the injection
procedures are the major procedures in
discography.
Response: As we explained fully in
the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68747), we
continue to believe that our packaging
policy for discography services is
appropriate and we do not agree that
packaging policies under the ASC
payment system should vary from those
under the OPPS. Also, we continue to
believe that discography is a radiology
service, even though a component of it
may be defined as surgical, and that
radiology services are not appropriate
for performance and separate payment
in ASCs unless they are integral to
covered surgical procedures.
Comment: Several commenters
requested that CMS pay for low dose
rate (LDR) prostate brachytherapy
services under the ASC payment system
based on the composite APC
methodology used under the OPPS
rather than making two separate
payments for the services reported by
CPT codes 55875 (Transperineal
placement of needles or catheters into
prostate for interstitial radioelement
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application, with or without cystoscopy)
and 77778 (Interstitial radiation source
application; complex). The composite
APCs were developed for procedures
like LDR prostate brachytherapy in
which two procedures are frequently
performed in a single hospital visit. The
commenters asserted that basing ASC
payments for the services on the
composite APC methodology in which
one payment is made for the
combination of the two services, would
result in a more accurate payment than
is currently being made to ASCs because
ASC payment is based on the median
costs from single-service claims that
CMS has acknowledged are mostly
incorrectly coded claims.
Response: Although we have tried to
align the ASC and OPPS packaging
polices to the fullest extent, in the case
of the LDR prostate brachytherapy
composite APC and other composite
APCs, the differences in the payment
policies across the two payment systems
pose some obstacles to making payment
to ASCs using the composite packages
of services. In the case of the two
services included in the LDR
brachytherapy composite APC, the
surgical procedure was on the ASC list
in CY 2007 and, therefore, is subject to
the transitional payment methodology
in CY 2010. The other service in the
LDR brachytherapy composite APC is a
covered ancillary service for which the
ASC payment is made at the lesser of
the ASC rate calculated according to the
ASC standard ratesetting methodology
or the MPFS nonfacility PE RVU
amount for that year. We do not see a
method by which to calculate an ASC
rate for the package of the two
procedures that is consistent with the
established ASC payment policies.
Further, we did not propose to
implement composite payment policies
under the ASC payment system.
After consideration of the public
comments we received, we are
providing CY 2010 payment for covered
ancillary services in accordance with
the final policies of the revised ASC
payment system as described in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 42493 through
42501). Covered ancillary services and
their final CY 2010 payment indicators
are listed in Addendum BB to this final
rule with comment period.
E. New Technology Intraocular Lenses
(NTIOLs)
1. Background
In the CY 2007 OPPS/ASC final rule
with comment period (71 FR 68176), we
finalized our current process for
reviewing applications to establish new
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60619
active classes of new technology
intraocular lenses (NTIOLs) and for
recognizing new candidate intraocular
lenses (IOLs) inserted during or
subsequent to cataract extraction as
belonging to a NTIOL class that is
qualified for a payment adjustment.
Specifically, we established the
following process:
• We announce annually in the
Federal Register a document that
proposes the update of ASC payment
rates for the following calendar year, a
list of all requests to establish new
NTIOL classes accepted for review
during the calendar year in which the
proposal is published and the deadline
for submission of public comments
regarding those requests. Pursuant to
Section 141(b)(3) of Public Law 103–432
and our regulations at § 416.185(b), the
deadline for receipt of public comments
is 30 days following publication of the
list of requests.
• In the Federal Register document
that finalizes the update of ASC
payment rates for the following calendar
year, we—
Æ Provide a list of determinations
made as a result of our review of all new
class requests and public comments;
and
Æ Announce the deadline for
submitting requests for review of an
application for a new NTIOL class for
the following calendar year.
In determining whether a lens belongs
to a new class of NTIOLs and whether
the ASC payment amount for insertion
of that lens in conjunction with cataract
surgery is appropriate, we expect that
the insertion of the candidate IOL
would result in significantly improved
clinical outcomes compared to currently
available IOLs. In addition, to establish
a new NTIOL class, the candidate lens
must be distinguishable from lenses
already approved as members of active
or expired classes of NTIOLs that share
a predominant characteristic associated
with improved clinical outcomes that
was identified for each class.
Furthermore, in the CY 2007 OPPS/ASC
final rule with comment period (71 FR
68227), we finalized our proposal to
base our determinations on
consideration of the following factors
set out at § 416.195:
• The IOL must have been approved
by the FDA and claims of specific
clinical benefits and/or lens
characteristics with established clinical
relevance in comparison with currently
available IOLs must have been approved
by the FDA for use in labeling and
advertising;
• The IOL is not described by an
active or expired NTIOL class; that is, it
does not share the predominant, class-
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defining characteristic associated with
improved clinical outcomes with
designated members of an active or
expired NTIOL class; and
• Evidence demonstrates that use of
the IOL results in measurable, clinically
meaningful, improved outcomes in
comparison with use of currently
available IOLs. According to the statute,
and consistent with previous examples
provided by CMS, superior outcomes
that we consider include the following:
Æ Reduced risk of intraoperative or
postoperative complication or trauma;
Æ Accelerated postoperative recovery;
Æ Reduced induced astigmatism;
Æ Improved postoperative visual
acuity;
Æ More stable postoperative vision;
and/or
Æ Other comparable clinical
advantages, such as—
› Reduced dependence on other
eyewear (for example, spectacles,
contact lenses, and reading glasses);
› Decreased rate of subsequent
diagnostic or therapeutic interventions,
such as the need for YAG laser
treatment;
› Decreased incidence of subsequent
IOL exchange; and
› Decreased blurred vision, glare,
other quantifiable symptom or vision
deficiency.
For a request to be considered
complete, we require submission of the
information that is found in the
guidance document entitled
‘‘Application Process and Information
Requirements for Requests for a New
Class of New Technology Intraocular
Lens (NTIOL)’’ posted on the CMS Web
site at: https://www.cms.hhs.gov/
ASCPayment/08_NTIOLs.asp
#TopOfPage.
As we stated in the CY 2007 OPPS/
ASC final rule with comment period (71
FR 68180), there are three possible
outcomes from our review of a request
for establishment of a new NTIOL class.
As appropriate, for each completed
request for consideration of a candidate
IOL into a new class that is received by
the established deadline, one of the
following determinations is announced
HCPCS
code
1 ............................
Q1001
2 ............................
dcolon on DSK2BSOYB1PROD with RULES2
NTIOL class
Q1002
VerDate Nov<24>2008
14:52 Nov 19, 2009
annually in the final rule updating the
ASC payment rates for the next calendar
year:
• The request for a payment
adjustment is approved for the
candidate IOL for 5 full years as a
member of a new NTIOL class described
by a new HCPCS code;
• The request for a payment
adjustment is approved for the
candidate IOL for the balance of time
remaining as a member of an active
NTIOL class; or
• The request for a payment
adjustment is not approved.
We also discussed our plan to
summarize briefly in the final rule with
comment period the evidence that we
reviewed, the public comments, and the
basis for our determinations in
consideration of applications for
establishment of a new NTIOL class. We
established that when a new NTIOL
class is created, we identify the
predominant characteristic of NTIOLs in
that class that sets them apart from other
IOLs (including those previously
approved as members of other expired
or active NTIOL classes) and that is
associated with improved clinical
outcomes. The date of implementation
of a payment adjustment in the case of
approval of an IOL as a member of a
new NTIOL class would be set
prospectively as of 30 days after
publication of the ASC payment update
final rule, consistent with the statutory
requirement.
2. NTIOL Application Process for
Payment Adjustment
In CY 2007, we posted an updated
guidance document to the CMS Web site
to provide process and information
requirements for applications requesting
a review of the appropriateness of the
payment amount for insertion of an IOL
to ensure that the ASC payment for
covered surgical procedures includes
payment that is reasonable and related
to the cost of acquiring a lens that is
approved as belonging to a new class of
NTIOLs. This guidance document can
be accessed on the CMS Web site at:
$50 approved for services
furnished on or after
May 18, 2000, through May
18, 2005.
May 18, 2000, through May
18, 2005.
Jkt 220001
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Frm 00306
https://www.cms.hhs.gov/ASCPayment/
downloads/NTIOLprocess.pdf.
We note that we have also issued a
guidance document entitled ‘‘Revised
Process for Recognizing Intraocular
Lenses Furnished by Ambulatory
Surgery Centers (ASCs) as Belonging to
an Active Subset of New Technology
Intraocular Lenses (NTIOLs).’’ This
guidance document can be accessed on
the CMS Web site at: https://www.cms.
hhs.gov/ASCPayment/Downloads/
Request_for_inclusion_in_current_
NTIOL_subset.pdf.
This second guidance document
provides specific details regarding
requests for recognition of IOLs as
belonging to an existing, active NTIOL
class, the review process, and
information required for a request to
review. Currently, there is one active
NTIOL class whose defining
characteristic is the reduction of
spherical aberration. CMS accepts
requests throughout the year to review
the appropriateness of recognizing an
IOL as a member of an active class of
NTIOLs. That is, review of candidate
lenses for membership in an existing,
active NTIOL class is ongoing and not
limited to the annual review process
that applies to the establishment of new
NTIOL classes. We ordinarily complete
the review of such a request within 90
days of receipt of all information that
we consider pertinent to our review,
and upon completion of our review, we
notify the requestor of our
determination and post on the CMS
Web site notification of a lens newly
approved for a payment adjustment as
an NTIOL belonging to an active NTIOL
class when furnished in an ASC.
3. Classes of NTIOLs Approved and
New Requests for Payment Adjustment
a. Background
Since implementation of the process
for adjustment of payment amounts for
NTIOLs that was established in the June
16, 1999 Federal Register, we have
approved three classes of NTIOLs, as
shown in the following table, with the
associated qualifying IOLs to date:
NTIOL characteristic
IOLs eligible for adjustment
Multifocal .................................
Allergan AMO Array Multifocal lens, model
SA40N.
STAAR Surgical Elastic Ultraviolet-Absorbing
Silicone Posterior Chamber IOL with Toric
Optic, models AA4203T, AA4203TF, and
AA4203TL.
Reduction in Preexisting Astigmatism.
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NTIOL class
HCPCS
code
3 ............................
Q1003
$50 approved for services
furnished on or after
As explained in the guidance
document on the CMS Web site, the
deadline for each year’s requests for
review of the appropriateness of the
ASC payment amount for insertion of a
candidate IOL as a member of a new
class of NTIOLs is announced in the
final rule updating the ASC and OPPS
payment rates for that calendar year.
Therefore, a request for review for a new
class of NTIOLs for CY 2010 must have
been submitted to CMS by March 2,
2009, the due date published in the CY
2009 OPPS/ASC final rule with
comment period (73 FR 68752). We did
not receive any requests for review to
establish a new NTIOL class for CY
2010 by the March 2, 2009 due date.
4. Payment Adjustment
dcolon on DSK2BSOYB1PROD with RULES2
The current payment adjustment for a
5-year period from the implementation
date of a new NTIOL class is $50. In the
CY 2007 OPPS/ASC final rule with
comment period, we revised
§ 416.200(a) through (c) to clarify how
the IOL payment adjustment is made
and how an NTIOL is paid after
expiration of the payment adjustment,
and made minor editorial changes to
§ 416.200(d). For CY 2008 and CY 2009,
we did not revise the payment
adjustment amount, and, in the CY 2010
OPPS/ASC proposed rule (74 FR 35390),
we did not propose to revise the
payment adjustment amount for CY
2010 in light of our limited experience
with the revised ASC payment system,
implemented initially on January 1,
2008. Therefore, the final ASC payment
adjustment amount for NTIOLS in CY
2010 is $50.
5. ASC Payment for Insertion of IOLs
14:52 Nov 19, 2009
IOLs eligible for adjustment
Reduced Spherical Aberration
Advanced Medical Optics (AMO) Tecnis® IOL
models Z9000, Z9001, Z9002, ZA9003, and
AR40xEM and Tecnis® 1–Piece model
ZCB00; Alcon Acrysof® IQ Model SN60WF,
Acrysert Delivery System model SN60WS
and Acrysof ® IQ Toric model SN6ATT;
Bausch & Lomb Sofport AO models LI61AO
and LI61AOV and Akreos AO models AO60
and MI60; STAAR Affinity Collamer model
CQ2015A and CC4204A and Elastimide
model AQ2015A; Hoya model FY–60AD,
FC–60AD, PY–60AD, and PC–60AD.
the revised payment system, which
multiplies the ASC conversion factor by
the ASC payment weight for the surgical
procedure to implant the IOL. CY 2010
ASC payment for the cost of a
conventional lens is packaged into the
payment for the associated covered
surgical procedures performed by the
ASC. The HCPCS codes for IOL
insertion procedures were included in
Table 50 in the CY 2010 OPPS/ASC
proposed rule (74 FR 35390), and their
proposed CY 2010 payment rates were
included in Addendum AA to that
proposed rule.
We did not receive any public
comments concerning the proposed CY
2010 payment rates for the insertion of
IOL procedures. Therefore, we are
finalizing the payment rates for the
insertion of IOL procedures, calculated
according to the standard methodology
of the revised ASC payment system. The
HCPCS codes for IOL insertion
procedures are displayed in Table 72
below, and their final CY 2010 payment
rates may be found in Addendum AA to
this final rule with comment period.
6. Announcement of CY 2010 Deadline
for Submitting Requests for CMS
Review of Appropriateness of ASC
Payment for Insertion of an NTIOL
Following Cataract Surgery
In accordance with § 416.185(a) of our
regulations as revised by the CY 2007
OPPS/ASC final rule with comment
period, CMS announces that in order to
be considered for payment effective
January 1, 2011, requests for review of
applications for a new class of new
technology IOLs must be received at
CMS by 5 p.m. EST, on March 8, 2010.
Send requests to ASC/NTIOL, Division
of Outpatient Care, Mailstop C4–05–17,
Centers for Medicare and Medicaid,
7500 Security Boulevard, Baltimore, MD
21244–1850.
To be considered, requests for NTIOL
reviews must include the information
on the CMS Web site at: https://
www.cms.hhs.gov/ASCPayment/
downloads/NTIOLprocess.pdf.
Jkt 220001
TABLE 72—INSERTION OF IOL
PROCEDURES
CY 2009
HCPCS code
CY 2009 long descriptor
66983 .............
Intracapsular cataract extraction with insertion of intraocular lens prosthesis
(one stage procedure).
Extracapsular cataract removal with insertion of
intraocular lens prosthesis
(one stage procedure),
manual or mechanical
technique (eg, irrigation
and aspiration or
phacoemulsification).
Insertion of intraocular lens
prosthesis (secondary implant), not associated with
concurrent cataract removal.
Exchange of intraocular lens.
66984 .............
66985 .............
In accordance with the final policies
of the revised ASC payment system, for
CY 2010, payment for IOL insertion
procedures is established according to
the standard payment methodology of
VerDate Nov<24>2008
NTIOL characteristic
February 27, 2006, through
February 26, 2011.
b. Request To Establish New NTIOL
Class for CY 2010 and Deadline for
Public Comment
60621
66986 .............
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F. ASC Payment and Comment
Indicators
1. Background
In addition to the payment indicators
that we introduced in the August 2,
2007 final rule, we also created final
comment indicators for the ASC
payment system in the CY 2008 OPPS/
ASC final rule with comment period (72
FR 66855). We created Addendum DD1
to define ASC payment indicators that
we use in Addenda AA and BB to
provide payment information regarding
covered surgical procedures and
covered ancillary services, respectively,
under the revised ASC payment system.
The ASC payment indicators in
Addendum DD1 are intended to capture
policy-relevant characteristics of HCPCS
codes that may receive packaged or
separate payment in ASCs, including:
their ASC payment status prior to CY
2008; their designation as deviceintensive or office-based and the
corresponding ASC payment
methodology; and their classification as
separately payable radiology services,
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brachytherapy sources, OPPS passthrough devices, corneal tissue
acquisition services, drugs or
biologicals, or NTIOLs.
We also created Addendum DD2 that
lists the ASC comment indicators. The
ASC comment indicators used in
Addenda AA and BB to the proposed
rules and final rules with comment
period serve to identify, for the revised
ASC payment system, the status of a
specific HCPCS code and its payment
indicator with respect to the timeframe
when comments will be accepted. The
comment indicator ‘‘NI’’ is used in the
OPPS/ASC final rule with comment
period to indicate new HCPCS codes for
the next calendar year or existing codes
with substantial revisions to their
descriptors such that we consider them
to be describing new services or
procedures for which their ASC
payment indicators may change. All
HCPCS codes to which the interim
payment indicator is assigned are
subject to comment.
The ‘‘CH’’ comment indicator was
used in Addenda AA and BB to the CY
2010 OPPS/ASC proposed rule to
indicate that a new payment indicator
(in comparison with the indicator for
the CY 2009 ASC April quarterly
update) was proposed for assignment to
an active HCPCS code for the next
calendar year; an active HCPCS code
was proposed for addition to the list of
procedures or services payable in ASCs;
or an active HCPCS code was proposed
for deletion at the end of the current
calendar year. The ‘‘CH’’ comment
indicators that are published in the final
rule with comment period are provided
to alert readers that a change has been
made from one calendar year to the
next, but do not indicate that the change
is subject to comment. The full
definitions of the payment indicators
and comment indicators are provided in
Addenda DD1 and DD2 to this final rule
with comment period.
2. ASC Payment and Comment
Indicators
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35390 through 35391), we
did not propose any changes to the
definitions of the ASC payment and
comment indicators for CY 2010 and we
did not receive any public comments on
the payment and comment indicators.
Therefore, we are finalizing our
proposed CY 2010 payment and
comment indicators in Addenda DD1
and DD2 to this final rule with comment
period, with modification to the
meaning of comment indicator ‘‘NI’’ as
follows. We want to clarify our policy
regarding the use of comment indicator
‘‘NI’’ in this CY 2010 OPPS/ASC final
VerDate Nov<24>2008
14:52 Nov 19, 2009
Jkt 220001
rule with comment period to describe a
new code. There are numerous
instances in which the descriptor of an
existing Category I CPT code is
substantially revised for CY 2010 so that
it describes a new service or procedure
that could have been assigned a new
code number by the CPT Editorial Panel
and that new code number would then
have been assigned the ‘‘NI’’ comment
indicator. Because, for CY 2010, not all
new services or procedures will be
assigned a new CPT code number, but
instead will be described by an existing
CPT code number with a substantially
revised code descriptor, we are
assigning the comment indicator ‘‘NI’’ to
these codes in order to allow for
comment on these substantially revised
codes. Like all codes labeled with
comment indicator ‘‘NI,’’ we will
respond to public comments and
finalize their ASC treatment in the CY
2011 OPPS/ASC final rule with
comment period. In accordance with
our usual practice, CPT and Level II
HCPCS code numbers that are new for
CY 2010 and are ASC covered surgical
procedures or covered ancillary items
and services are also labeled with
comment indicator ‘‘NI’’ in Addenda
AA and BB to this final rule with
comment period.
G. ASC Policy and Payment
Recommendations
MedPAC was established under
section 1805 of the Act to advise the
U.S. Congress on issues affecting the
Medicare program. Sections
1805(b)(1)(B) and 1805(b)(1)(C) of the
Act require MedPAC to submit reports
to Congress not later than March 1 and
June 15 of each year that present its
Medicare payment policy reviews and
recommendations. The following
section describes a recent MedPAC
recommendation that is relevant to the
ASC payment system.
The March 2009 MedPAC ‘‘Report to
the Congress: Medicare Payment Policy’’
included the following recommendation
relating specifically to the ASC payment
system for CY 2010:
Recommendation 2B–4: The Congress
should increase payments for
ambulatory surgery center (ASC)
services in calendar year 2010 by 0.6
percent. In addition, the Congress
should require ASCs to submit to the
Secretary cost data and quality data that
will allow for an effective evaluation of
the adequacy of ASC payment rates.
CMS Response: As we proposed in the
CY 2010 proposed rule (74 FR 35391),
in this final rule with comment period
we are increasing the payment amounts
for the ASC payment system according
to our established policy as stated in the
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August 2, 2007 final rule (72 FR 42518
through 42519). Section 1833(i)(2)(C) of
the Act requires that, if the Secretary
has not updated the ASC payment
amounts in a calendar year, the payment
amounts shall be increased by the
percentage increase in the Consumer
Price Index for All Urban Consumers
(CPI–U) as estimated by the Secretary
for the 12-month period ending with the
midpoint of the year involved. We
indicated that we planned to implement
the annual updates through an
adjustment to the conversion factor
under the ASC payment system
beginning in CY 2010 when the
statutory requirement for a zero update
no longer applies. Further, we noted
that we were proposing to update the
conversion factor for the CY 2010 ASC
payment system by the percentage
increase in the CPI–U, consistent with
our policy as codified under
§ 416.171(a)(2).
We also did not propose to require
ASCs to submit cost data to the
Secretary for CY 2010 and, therefore,
will not require cost reporting in this
final rule with comment period. We
explained that the 2006 GAO report,
‘‘Medicare: Payment for Ambulatory
Surgical Centers Should Be Based on
the Hospital Outpatient Payment
System’’ (GAO–07–86), concluded that
the APC groups in the OPPS reflect the
relative costs of surgical procedures
performed in ASCs in the same way
they reflect the relative costs of the same
procedures when they are performed in
HOPDs. Consistent with the GAO
findings, CMS is using the OPPS as the
basis for the ASC payment system,
which provides for an annual revision
of the ASC payment rates under the
budget neutral ASC payment system. In
addition, we noted that under the
methodology of the revised ASC
payment system, we do not utilize ASC
cost information to set and revise the
payment rates for ASCs but, instead,
rely on the relativity of hospital
outpatient costs developed for the
OPPS, consistent with the
recommendation of the GAO.
Furthermore, we explained that we have
never required ASCs to routinely submit
cost data and expressed our concern
that a new Medicare requirement for
ASCs to do so could be administratively
burdensome for ASCs. However, in light
of the MedPAC recommendation, in the
CY 2010 OPPS/ASC proposed rule (74
FR 35391), we solicited public comment
on the feasibility of ASCs submitting
cost information to CMS, including
whether costs should be collected from
a sample or the universe of ASCs, the
administrative burden associated with
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such an activity, the form that such a
submission could take considering
existing Medicare requirements for
other types of facilities and the scope of
ASC services, the expected accuracy of
such cost information, and any other
issues or concerns of interest to the
public on this topic.
Finally, we noted that section 109(b)
of the MIEA–TRHCA (Pub. L. 109–432)
gives the Secretary the authority to
implement ASC quality measure
reporting and to reduce the payment
update for ASCs that fail to report those
required measures. We restated our
belief that promoting high quality care
in the ASC setting through quality
reporting is highly desirable and fully in
line with our efforts under other
payment systems. For the reasons
discussed in section XVI.G. of this final
rule with comment period, we did not
require ASC quality data reporting for
CY 2010, but our intention is to
implement ASC quality reporting in a
future rulemaking.
Comment: Commenters’ expressed
varied opinions regarding the feasibility
of requiring ASCs to submit cost data to
the Secretary. MedPAC’s comments on
CMS’ solicitation in the CY 2010 OPPS/
ASC proposed rule (74 FR 35391) stated
that, although ASCs are generally small
facilities that may have limited
resources for collecting cost data, other
small providers submit cost reports to
CMS and, therefore, MedPAC did not
believe that the resources involved in
submitting cost data would be an
insurmountable obstacle for ASCs.
Further, MedPAC suggested that the
scale of cost reporting for ASCs would
be limited to the information that
analysts would need to assess the
adequacy of Medicare payments and
evaluate the ASC update and may be
satisfied by implementing either a
streamlined cost report or a random
survey. If a survey method is used,
MedPAC recommended that CMS
require ASCs to respond in order to
ensure adequate data.
Other commenters, mostly those
representing hospitals, believed that in
light of the MedPAC recommendation
that ASCs be required to submit cost
data, ASCs should be required to do so
even though ASC cost data are not used
to set or revise the payment rates. They
suggested that collection of ASC cost
data could be accomplished through
implementing an ASC cost reporting
system or through the periodic
collection of ASC cost data at the
procedure level. On the other hand,
some commenters (predominantly
commenters who represented ASCs)
opposed a requirement that ASCs
submit cost data to CMS. The
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14:52 Nov 19, 2009
Jkt 220001
commenters believed that a requirement
to submit cost data would be both
unnecessary and administratively
burdensome for ASCs. Further, some
commenters stated that requiring ASCs
to submit cost data that would not be
used to update or set payment rates
would very likely result in submissions
of data that would not be reliable.
In its comment on the statement in
the proposed rule (74 FR 35391) that
CMS has the authority under section
109(b) of the MIEA–TRHCA (Pub. L.
109–432) to implement ASC quality
measure reporting, MedPAC noted that
CMS was not required to implement
that reporting as MedPAC
recommended in its March 2009 Report
to Congress. MedPAC expressed
concern about CMS’ proposal to delay
implementation of ASC quality
measurement reporting and argued it
should be technically feasible for ASCs
to report in CY 2010 on at least the five
quality measures that were developed
by the ASC industry-sponsored ASC
Quality Collaboration and endorsed by
the National Quality Forum. Briefly,
these five facility-level measures are:
patient being burned; patient fall in the
ASC; errors related to wrong surgery,
wrong patient, wrong side, wrong site or
wrong implant; timing of prophylactic
intravenous antibiotic; and hospital
transfer/admission upon discharge from
the ASC. MedPAC believed that ASCs
could report these five measures
without undue administrative burden
and that CMS should require ASCs to
report these measures without further
delay.
Many other commenters also urged
CMS to implement ASC quality
reporting as soon as possible and
reported that ASCs are anxious to begin
the process. The commenters believed
that CMS should ensure the availability
of fair and accurate quality data from
ASCs in order to promote transparency
and allow beneficiaries to make
meaningful comparisons across
outpatient surgical settings. Some
commenters believed that ASCs should
be required to report quality data
because ASCs should be held to the
same accountability standards as
hospitals with respect to the quality of
care they deliver and that the ASC
quality measures should be consistent,
and where possible, identical to the
measures reported by HOPDs.
Response: We thank all of the
commenters for their thoughts regarding
the feasibility and value of requiring
ASCs to submit cost data that could be
used to evaluate the adequacy of the
Medicare ASC payment rates. We will
keep the commenters’ perspectives
about collecting cost information from
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60623
ASCs in mind as we further consider the
adequacy of the Medicare ASC payment
rates.
We also appreciate the commenters’
thoughtful remarks and suggestions
regarding ASC quality reporting. We
will be mindful of the opinions and
information shared in the public
comments as we move toward
implementation of ASC quality
reporting.
H. Revision to Terms of Agreements for
Hospital-Operated ASCs
1. Background
The August 5, 1982 ASC final rule (47
FR 34082) established the initial
Medicare ASC payment system and
implementing Federal regulations under
42 CFR part 416. Under § 416.26 of our
regulations, ASCs operated by hospitals,
like other ASCs, must meet the
applicable conditions for coverage and
enter into an agreement with CMS in
which CMS accepts the ASC as
qualified to furnish ambulatory surgical
services. Sections 416.30(a) through (g)
of our regulations specify terms of
agreement for ASCs. Section 416.30(f)
specifies the following additional terms
of agreement for an ASC operated by a
hospital—
• The agreement is made effective on
the first day of the next Medicare cost
reporting period of the hospital that
operates the ASC;
• The ASC participates and is paid
only as an ASC, without the option of
converting to or being paid as a hospital
outpatient department, unless CMS
determines there is good cause to do
otherwise; and
• Costs incurred by the ASC are
treated as a nonreimbursable cost center
on the hospital’s Medicare cost report.
In addition, § 416.35 provides
guidance regarding the termination of
ASC agreements with CMS. Voluntary
terminations are those initiated by an
ASC and as specified in § 416.35, an
ASC may terminate its agreement either
by sending written notice to CMS or by
ceasing to furnish services to the
community.
Although some sections of part 416 of
the regulations governing ASCs have
been revised since they were established
in 1982, most recently for CY 2008 with
the adoption of the revised ASC
payment system, §§ 416.30(a) through
416.30(g) have not been changed or
updated. At the time §§ 416.30 and
416.35 were promulgated, Medicare
paid for hospital outpatient services on
a reasonable cost basis. In contrast,
Medicare initially paid ASCs for a small
number of surgical procedures at one of
only four prospective rates that were
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developed for the ASC payment system
using cost data obtained from surveys of
ASCs. Since then, Medicare has adopted
a prospective payment system for
HOPDs (the OPPS), the ASC list of
covered surgical procedures and
payment rates have been updated a
number of times, and, beginning in CY
2008, the revised ASC payment system
was introduced.
Under the revised ASC payment
system, Medicare greatly increased the
number and types of surgical
procedures that are eligible for payment
in ASCs. As a result, many more of the
same surgical procedures may be paid
under the OPPS and ASC payment
system, with the specific payment
determined by whether the service is
provided by a hospital or an ASC.
Further, under the current, revised
payment methodology, ASC payment
rates have a direct relationship to the
relative payment weights under the
OPPS for the same services. Today,
hospital outpatient and ASC surgical
procedures are paid based on the
relative weights adopted for the OPPS,
and the difference between payments
under the two systems is largely a
reflection of the differences in capital
and operating costs attributable to being
an ASC or being an HOPD.
Another change that has taken place
since the establishment of the Medicare
ASC payment system and the
implementing regulations at § 416.30
has been our effort to simplify the
Medicare regulations to reduce the
burden on providers and suppliers. As
discussed in the August 1, 2002 IPPS
final rule (67 FR 50084 through 50090),
as part of that effort, we revised the
provider-based status regulations at
§ 413.65 that outline the requirements
for a determination that a facility or an
organization has provider-based status
as a department or entity of a hospital
(main provider). The provider-based
status rules generally apply to situations
where there is a financial incentive for
a facility or organization to claim
affiliation with a main provider. The
provider-based status rules establish
criteria for a facility or organization to
demonstrate that it is integrated with
the main provider for payment
purposes. We do not make providerbased status determinations for certain
facilities, listed under § 413.65(a)(1)(ii)
of the regulations, because the outcome
of the determination (that is, whether a
facility, unit, or department is found to
be freestanding or provider-based)
would not affect the methodology used
to make Medicare or Medicaid payment,
the scope of benefits available to a
Medicare beneficiary in or at the
facility, or the deductible or coinsurance
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liability of a Medicare beneficiary in or
at the facility. According to
§ 413.65(a)(1)(ii), we do not make
provider-based determinations for ASCs
or other suppliers that have active
supplier agreements with Medicare
because services provided in such
entities are paid under other fee
schedules, specifically in the case of
ASCs regardless of whether the ASC is
operated by a hospital.
In the August 1, 2002 IPPS final rule
(67 FR 50084 through 50090), we
revised the provider-based status rules
where the main providers were no
longer required to submit an attestation
to CMS to demonstrate that their
provider-based departments or entities
met the provider-based status rules.
However, the provider-based
department or entity of a main provider
must still meet the provider-based status
rules in § 413.65 in order for the main
provider to bill for services performed
in the provider-based department or
entity.
2. Change to the Terms of Agreements
for ASCs Operated by Hospitals
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35392), in order to further
streamline our regulations to reduce the
administrative burden on providers and
suppliers, we proposed to revise
existing § 416.30(f)(2) to remove the
language requiring a hospital-operated
ASC to satisfy CMS that there is good
cause for its request to become a
provider-based department of a hospital
prior to being recognized as such.
Specifically, we proposed to remove the
language, ‘‘without the option of
converting to or being paid as a hospital
outpatient department, unless CMS
determines there is good cause to do
otherwise.’’ We believe that this
proposed revision to the requirements
that apply to hospital-operated ASCs is
consistent with our earlier regulation
simplification activities related to the
provider-based status rules under
§ 413.65. We believe that we would
reduce the administrative burden on
hospitals and ASCs that terminate their
supplier agreements with Medicare and
bring the requirements into closer
alignment with the provider-based
status rules for other facilities or
organizations that wish to be integrated
with the main provider for payment
purposes. While an ASC participating in
Medicare would continue to be paid
only as an ASC, an ASC would also
continue to be able to voluntarily
terminate its agreements in accordance
with § 416.35. Thus, if an ASC chooses
to voluntarily terminate its agreement as
an ASC and a main provider wants to
consider the surgical facility a provider-
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based department of that main provider,
the facility must meet the providerbased status rules under § 413.65.
We did not receive any public
comments on our proposal to revise
§ 416.30(f)(2) to remove the language,
‘‘without the option of converting to or
being paid as a hospital outpatient
department, unless CMS determines
there is good cause to do otherwise.’’
Therefore, we are adopting as final our
proposed revision of § 416.30(f)(2),
without modification.
I. Calculation of the ASC Conversion
Factor and ASC Payment Rates
1. Background
In the August 2, 2007 final rule (72 FR
42493), we established our policy to
base ASC relative payment weights and
payment rates under the revised ASC
payment system on APC groups and
relative payment weights. Consistent
with that policy and the requirement at
section 1833(i)(2)(D)(ii) of the Act that
the revised payment system be
implemented so that it would be budget
neutral, the initial ASC conversion
factor (CY 2008) was calculated so that
estimated total Medicare payments
under the revised ASC payment system
in the first year would be budget neutral
to estimated total Medicare payments
under the prior (CY 2007) ASC payment
system. That is, application of the ASC
conversion factor was designed to result
in aggregate Medicare expenditures
under the revised ASC payment system
in CY 2008 equal to aggregate Medicare
expenditures that would have occurred
in CY 2008 in the absence of the revised
system, taking into consideration the
cap on ASC payments in CY 2007 as
required under section 1833(i)(2)(E) of
the Act (72 FR 42521 through 42522).
We note that we consider the term
‘‘expenditures’’ in the context of the
budget neutrality requirement under
section 1833(i)(2)(D)(ii) of the Act to
mean expenditures from the Medicare
Part B Trust Fund. We do not consider
expenditures to include beneficiary
coinsurance and copayments. This
distinction was important for the CY
2008 ASC budget neutrality model that
considered payments across hospital
outpatient, ASC, and MPFS payment
systems. However, because coinsurance
is almost always 20 percent for ASC
services, this interpretation of
expenditures has minimal impact for
subsequent budget neutrality
adjustments calculated within the
revised ASC payment system.
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66857
through 66858), we set out a step-bystep illustration of the final budget
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neutrality adjustment calculation based
on the methodology finalized in the
August 2, 2007 final rule (72 FR 42521
through 42531) and as applied to
updated data available for the CY 2008
OPPS/ASC final rule with comment
period. The application of that
methodology to the data available for
the CY 2008 OPPS/ASC final rule with
comment period resulted in a budget
neutrality adjustment of 0.65.
For CY 2008, we adopted the OPPS
relative payment weights as the ASC
relative payment weights for most
services and, consistent with the final
policy, we calculated the CY 2008 ASC
payment rates by multiplying the ASC
relative payment weights by the final
CY 2008 ASC conversion factor of
$41.401. For covered office-based
surgical procedures and covered
ancillary radiology services, the
established policy is to set the relative
payment weights so that the national
unadjusted ASC payment rate does not
exceed the MPFS unadjusted nonfacility
PE RVU amount. Further, as discussed
in the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66841
through 66847), we also adopted
alternative ratesetting methodologies for
specific types of services (for example,
device-intensive procedures).
As discussed in the August 2, 2007
final rule (72 FR 42518) and as codified
under § 416.172(c) of the regulations,
the revised ASC payment system
accounts for geographic wage variation
when calculating individual ASC
payments by applying the pre-floor and
pre-reclassified hospital wage indices to
the labor-related share, which is 50
percent of the ASC payment amount.
Beginning in CY 2008, CMS accounted
for geographic wage variation in labor
cost when calculating individual ASC
payments by applying the pre-floor and
pre-reclassified hospital wage index
values that CMS calculates for payment,
using updated Core Based Statistical
Areas (CBSAs) issued by the Office of
Management and Budget in June 2003.
The reclassification provision provided
at section 1886(d)(10) of the Act is
specific to hospitals. We believe the use
of the most recent available raw prefloor and pre-reclassified hospital wage
indices results in the most appropriate
adjustment to the labor portion of ASC
costs. In addition, use of the unadjusted
hospital wage data avoids further
reductions in certain rural statewide
wage index values that result from
reclassification. We continue to believe
that the unadjusted hospital wage
indices, which are updated yearly and
are used by many other Medicare
payment systems, appropriately account
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for geographic variation in labor costs
for ASCs.
Comment: Several commenters
recommended that CMS adopt for the
ASC payment system the same wage
index values used for hospital payment
under the OPPS. They believed that
applying different wage indices in the
ASC payment system than are used in
the OPPS is inequitable because, in
many market areas, ASCs compete
directly with hospitals for employees
with skills and functions that are
applicable in both settings. The
commenters believed that, in all but a
few instances, the adjusted wage index
values used in the OPPS would be
higher than the current wage index
values used in the ASC payment system.
Specifically, the commenters believed
the adjustments that are applied to the
wage indices used in the OPPS system
also should be applied to the ASC wage
indices. The adjustments that
commenters requested be applied to the
wage index values used in the ASC
payment system are: an imputed
statewide rural wage index for States
with no counties outside of an urban
area; a mechanism to prevent urban
areas from having indices below the
statewide rural wage index; a
mechanism to prevent the wage index of
urban areas that cross state lines from
falling below the State-specific rural
floor; and an adjustment for counties
where a significant proportion of
residents commute to other counties for
work.
Response: We continue to believe that
the unadjusted hospital wage indices,
which are updated yearly and are used
by almost all Medicare payment
systems, appropriately account for
geographic variance in labor costs for
ASCs. The post-reclassification wage
indices for 1886(d) hospitals include
many statutory adjustments specific to
1886(d) hospitals and some regulatory
adjustments for 1886(d) hospitals
including, but not limited to, the areas
requested by commenters: an imputed
statewide rural wage index for States
with no counties outside of an urban
area; a ‘‘rural floor’’ mechanism to
prevent urban areas from having indices
below the statewide rural wage index; a
mechanism to prevent the wage index of
urban areas that cross state lines from
falling below the State-specific rural
floor; and an adjustment for counties
where a significant proportion of
residents commute to other counties.
Because many of these adjustments are
specified in statute for 1886(d)
hospitals, we believe it is appropriate to
apply these adjustments to 1886(d)
hospitals. The OPPS adopts the postreclassification wage indices (adjusted
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60625
hospital wage indices) because the
majority of participating hospitals are
section 1886(d) hospitals and, in these
hospitals, the exact same personnel staff
the ancillary departments of the hospital
that simultaneously treat both inpatients
and outpatients. For payments systems
for other providers and suppliers for
which there is no specific statutory
provision for adjustments to the wage
index values, CMS calculates and
employs unadjusted hospital wage
indices that reflect the reported cost of
hospital labor in each area. Specifically,
CMS uses some form of the unadjusted
hospital wage indices to pay long-term
care, psychiatric, and inpatient
rehabilitation hospitals for inpatient
care, as well as skilled nursing facilities,
hospice programs, home health
agencies, and ESRD facilities. CMS
historically has only applied the
adjusted, post-reclassification hospital
wage indices to pay section 1886(d)
hospitals for both inpatient and
outpatient services for the reasons noted
above. It is our policy to treat ASCs as
we do all other providers and suppliers
using hospital wage index values.
Further, adopting the postreclassification hospital wage indices
with rural floor and associated
statewide budget neutrality adjustment
would not increase overall ASC
payment because we apply a budget
neutrality adjustment for changes in the
wage indices to the conversion factor.
Therefore, any anticipated increases in
aggregate ASC payment created by
adopting the post-reclassification wage
indices would lead to a comparable
downward adjustment to the conversion
factor to ensure that the only increase in
payments to ASCs are those allowed by
the update factor. We discuss our
budget neutrality adjustment for
changes to the wage indices below in
section XV.I.2.b. of this final rule with
comment period.
2. Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment
Weights for CY 2010 and Future Years
We update the ASC relative payment
weights each year using the national
OPPS relative payment weights (and
MPFS nonfacility PE RVU amounts, as
applicable) for that same calendar year
and uniformly scale the ASC relative
payment weights for each update year to
make them budget neutral (72 FR 42531
through 42532). In the CY 2010 OPPS/
ASC proposed rule (74 FR 35393),
consistent with our established policy,
we proposed to scale the CY 2010
relative payment weights for ASCs
according to the following method.
Holding ASC utilization and the mix of
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services constant from CY 2008, for CY
2010, we proposed to compare the total
payment weight using the CY 2009 ASC
relative payment weights under the 50/
50 blend (of the CY 2007 payment rate
and the ASC payment rate calculated
under the ASC standard ratesetting
methodology) with the total payment
weight using the CY 2010 ASC relative
payment weights under the 25/75 blend
(of the CY 2007 ASC payment rate and
the ASC payment rate calculated under
the ASC standard ratesetting
methodology) to take into account the
changes in the OPPS relative payment
weights between CY 2009 and CY 2010.
We proposed to use the ratio of CY 2009
to CY 2010 total payment weight (the
weight scaler) to scale the ASC relative
payment weights for CY 2010. The
proposed CY 2010 ASC scaler was
0.9514 and scaling would apply to the
ASC relative payment weights of the
covered surgical procedures and
covered ancillary radiology services for
which the ASC payment rates are based
on OPPS relative payment weights.
Scaling would not apply in the case
of ASC payment for separately payable
covered ancillary services that have a
predetermined national payment
amount (that is, their national ASC
payment amounts are not based on
OPPS relative payment weights), such
as drugs and biologicals that are
separately paid or services that are
contractor-priced or paid at reasonable
cost in ASCs. Any service with a
predetermined national payment
amount would be included in the ASC
budget neutrality comparison, but
scaling of the ASC relative payment
weights would not apply to those
services. The ASC payment weights for
those services without predetermined
national payment amounts (that is,
those services with national payment
amounts that would be based on OPPS
relative payment weights if a payment
limitation did not apply) would be
scaled to eliminate any difference in the
total payment weight between the
current year and the update year.
The proposed weight scaler used to
model CY 2010 ASC fully implemented
payment rates in order to reflect our
estimated of rates if there was no
transition was equal to 0.9329. We
applied this scaler to the payment
weights subject to scaling, in order to
estimate the ASC payment rates for CY
2010 without the transition, for
purposes of the ASC impact analysis
discussed in section XXI.C. of the CY
2010 OPPS/ASC proposed rule (74 FR
35418).
For any given year’s ratesetting, we
typically use the most recent full
calendar year of claims data to model
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budget neutrality adjustments. When we
developed the CY 2010 OPPS/ASC
proposed rule, we had available 98
percent of CY 2008 ASC claims data. In
the CY 2010 OPPS/ASC proposed rule
(74 FR 35393), we reported that we had
95 percent of the CY 2008 ASC claims
data available to model proposed
revisions to the CY 2010 ASC payment
system, but we have since confirmed
that we had a slightly higher percentage
available at that time. For this final rule
with comment period, we have close to
100 percent of all claims for CY 2008.
CY 2010 is the first year that the claims
data used for ratesetting include new
covered surgical procedures and
covered ancillary services under the
revised ASC payment system. Because
we had almost all of the CY 2008 claims
data available when we calculated the
conversion factor and budget neutrality
adjustments for our proposed rule, for
the final CY 2010 budget neutrality
adjustments, we did not expect there
would be significant changes in our
calculated budget neutrality
adjustments (the weight scaler or wage
adjustment) that could be attributable to
more utilization available from
additional claims data for this CY 2010
OPPS/ASC final rule with comment
period.
To create an analytic file to support
calculation of the weight scaler and
budget neutrality adjustment for the
wage index (discussed below), we
summarized available CY 2008 ASC
claims by provider and by HCPCS code.
We created a unique supplier identifier
solely for the purpose of identifying
unique ASCs within the CY 2008 claims
data. We used the supplier zip code
reported on the claim to associate State,
county, and CBSA with each ASC. This
file, available to the public as a
supporting data file for the CY 2010
OPPS/ASC proposed rule, is posted on
the CMS Web site at: https://www.cms.
hhs.gov/ASCPayment/01_Overview.
asp#TopOfPage.
Comment: Many commenters again
expressed their opposition to scaling the
ASC relative payment weights. Many of
the commenters on the CY 2010
proposed rule offered the same views as
the public commenters on the CY 2009
OPPS/ASC final rule with comment
period, the year when CMS first applied
the scaling policy that was finalized in
the August 2, 2007 final rule. The
commenters expressed many concerns,
including that scaling is contrary to the
intent of using the cost-based OPPS
relative payment weights as the bases
for determining the relative payments
for the same services in ASCs and that
scaling would continue to erode the
payment relationship between the OPPS
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and ASC payment system. Further, the
commenters stated that increasing the
difference between ASC and OPPS
payments is in direct conflict with the
goal of ensuring that patients have
continued access to surgical care in the
lowest priced setting appropriate to
their clinical needs. They asserted that,
although scaling is intended to maintain
budget neutrality within the ASC
payment system, it is instead creating
increasingly large payment differentials
between the ASC and OPPS payments
for the same services, without evidence
of growing differences in capital and
operating costs between the two
settings.
The commenters argued that CMS is
not required to scale the ASC relative
weights and that it should use its
authority to suspend the application of
scaling the ASC relative weights for CY
2010. They noted that CMS established
at § 416.171(e)(2) of the regulations a
process by which it may (emphasis
added) make annual adjustment to the
relative payment weights, as needed
(emphasis added).
The commenters also expressed their
continuing disagreement with aspects of
the budget neutrality adjustment
methodology used by CMS to establish
the conversion factor. They provided
the results of their comparison of actual
volume and payment for services that
were new to the ASC list in CY 2008.
Based upon the results of their analyses
of CY 2008 claims data, the commenters
concluded that the migration estimates
used by CMS to establish budget
neutrality in CY 2008 were several times
higher than the actual ASC spending for
newly covered procedures and,
therefore, that the resulting CY 2008
conversion factor was too low. They
believed that these findings provide a
further basis for CMS not to scale the
ASC relative payment weights for CY
2010 after the weights are scaled under
the OPPS.
In addition, many of the commenters
reasoned that because the ASC payment
system is based on the OPPS relative
weights, the weights should be equal in
both settings and because the weights
are scaled to ensure budget neutrality
under the OPPS, the weights should not
be scaled again to ensure budget
neutrality under the ASC system. The
commenters believed that the CY 2010
OPPS relative payment weights
reflected real growth in the relative
costs of surgical services provided in
HOPDs and that the ASC scaler should
not reclaim dollars from the ASC
payment system because there also has
been real cost growth for the surgical
services provided in ASCs. However,
they acknowledge that suspending
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application of the scaler for CY 2010
would result in an aggregate increase in
ASC spending in that year.
The commenters expressed concern
that other payment adjustments are
depressing the ASC payments for many
procedures, including the freeze on the
ASC payment update through CY 2009
and the transition policy and that
scaling further reduces rates to
inappropriately low levels. Further, the
commenters argued that scaling is
forcing procedures for which the OPPS
median cost increased from CY 2009 to
CY 2010 to finance the transitional
payment policies, and that the
procedures the transition was intended
to aid are the procedures financing the
bulk of the scaler.
Response: Many of these comments
are similar to public comments on the
proposal for the revised ASC payment
system that we responded to in the
August 2, 2007 final rule (72 FR 42531
through 42533). For example, with
regard to scaling, we addressed these
same concerns raised by commenters
‘‘that annual rescaling would cause
divergence of the relative weights
between the OPPS and the revised ASC
payment system for individual
procedures’’ in the August 2, 2007 final
rule (72 FR 42532). We refer the
commenters to that discussion for our
detailed response in promulgating the
scaling policy that was initially applied
in CY 2009 (72 FR 42531 through
42533). Below, we address new issues
raised by the commenters and provide
a general summary of some of the
relevant responses from the August 2,
2007 final rule and the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68754 through 68755).
The ASC weight scaling methodology
is entirely consistent with the OPPS
methodology for scaling the relative
payment weights and, for the most part,
the increasing payment differentials
between the ASC and OPPS payments
for the same services are not attributable
to scaling ASC relative payment
weights. Considerations of differences
between the capital and operating costs
of ASCs and HOPDs are not part of the
ASC standard ratesetting methodology,
which relies only on maintaining the
same relativity of payments for services
under the two payment systems, as well
as budget neutrality within each
payment system. Furthermore, unlike
HOPDs, we do not have information
about the costs of ASC services in order
to assess differences in capital and
operating costs over time between the
two settings. In order to maintain budget
neutrality of the ASC payment system,
we need to adjust for the effects of
changes in relative weights. The ASC
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payment system adopts the OPPS
relative weights as the mechanism for
apportioning total payments, after
application of the update factor, among
all of the services covered by the ASC
payment system. The OPPS relative
weights serve the same purpose in the
OPPS. The OPPS relative weights do not
represent an estimate of absolute cost of
any given procedure; rather, they reflect
our estimate of the cost of the procedure
within the context of our cost estimation
methodology for the OPPS. With the
exception of services with a
predetermined national payment
amount, the use of a uniform scaling
factor for changes in total weight
between years in the ASC payment
system does not alter the relativity of
the OPPS payment weights as used in
the ASC payment system. Differences in
the relativity between the ASC relative
payment weights and the OPPS relative
payment weights are not driven by the
application of the uniform scaling
factor. The ASC weight scaling
methodology is entirely consistent with
the OPPS weight scaling methodology
and the weights serve the same purpose
in both systems, to apportion total
budget neutral payment allowed under
the update.
We do not believe that the application
of the scaler will lead to beneficiary
access problems. We believe that the
fully implemented relative weights will
be representative of relative costs across
all ASC services and that payments will
support the continued provision of high
quality surgical procedures to Medicare
beneficiaries in the most appropriate
settings. We also expect that, over time,
ASCs will provide an increased breadth
of services. Appropriate beneficiary
access to services in appropriate care
settings is always an important concern
and we will continue to monitor access
under the revised ASC payment system.
As stated in the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68754), with respect to the use of ‘‘as
needed’’ in the text of § 416.171(e)(2)
that commenters have interpreted to
mean that CMS has the authority to
suspend scaling the relative payment
weights if it determines there is not a
need to do so, the phrase does not mean
that CMS will determine whether or not
to adjust for budget neutrality. Rather, it
means that CMS adjusts the relative
payment weights as needed to ensure
budget neutrality and, as acknowledged
by the commenters on the CY 2010
OPPS/ASC proposed rule, if we were
not to scale the ASC relative payment
weights, we estimate that the CY 2010
revisions would not be budget neutral.
We agree that there are differences
between the service volume estimates
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60627
CMS used to establish budget neutrality
based on CY 2006 claims data and those
reflected in the CY 2008 claims data. In
the final regulations implementing the
revised ASC payment system, we made
our best actuarial estimate to ensure
budget neutrality. We did not intend to
revisit the actuarial budget neutrality
regardless of whether or not it could be
determined that there was a difference
between actual experience and our
underlying data assumptions and
regardless of whether or not any
difference that could be determined
resulted in increased or decreased
expenditures under the revised ASC
payment system.
Establishing budget neutrality under
the OPPS does not result in budget
neutrality under the revised ASC
payment system; it is only to maintain
budget neutrality under the OPPS.
Scaling the ASC relative payment
weights is an integral and separate
process for maintaining budget
neutrality under the ASC prospective
payment system. Scaling is the budget
neutrality adjustment that ensures that
changes in the relative weights do not,
in and of themselves, change aggregate
payment to ASCs. It ensures a specific
amount of payment for ASCs in any
given year. Without scaling, total ASC
payment could increase or decrease
relative to changes in hospital
outpatient payment.
Although the commenters believed
that scaling prevents increases in ASC
spending that may be appropriate
because ASC costs have increased over
time, increases in cost in a prospective
payment system are handled by the
update factor. In a budget neutral
system, we remove the independent
effects of increases or decreases in
payments as a result of changes in the
relative payment weights or the wage
indices and constrain increases to the
allowed update factor. Therefore,
changes in aggregate ASC expenditures
related to payment rates should be
determined by the update to the ASC
conversion factor, the CPI–U.
Regarding commenters’ concern that
other payment adjustments, including
the freeze on ASC payment updates and
the transitional payment policy, are
depressing the ASC payments for many
procedures and that scaling has a
disproportionate effect on some covered
surgical procedures, we note that the
statute set a zero percent update for CY
2008 and CY 2009. We implemented the
4-year transitional payment policy in
response to public comments that
persuaded us that ASCs would benefit
from more gradual implementation of
the revised ASC payment rates,
especially for historically high volume
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procedures because the prior rates for
those procedures were
disproportionately high compared to the
prior rates for other ASC procedures. As
explained in the August 2, 2007 final
rule (72 FR 42542), a major effect of the
revised ASC payment system is
redistribution of payments across all
ASC procedures. Historically, the
highest volume ASC procedures had
payment rates that were close to the
payments in HOPDs and, as such,
accounted for most of the total Medicare
payments to ASCs. As a result,
payments for many of those high
volume services are the most adversely
affected under the revised payment
system as the relative weights across all
ASC procedures become more closely
aligned with those of the OPPS. We
appreciate the commenters’ concern that
scaling is forcing procedures for which
the OPPS median cost increased from
CY 2009 to CY 2010 to finance the
transitional payment policies, and that
the procedures the transition was
intended to aid are the procedures
financing the bulk of the scaler.
However, as already noted, the ASC
payment system adopts the relativity of
the OPPS weights, not the actual
median costs or payments for OPPS
services. It is fully consistent that a
budget neutrality adjustment for
differences in aggregate payment
weight, specifically scaling, would
change the amount of payment under
the ASC payment system relative to the
OPPS median cost and to the previous
year’s payment under the ASC payment
system for the same service. It is critical
that the amount of payment allowed
under the ASC payment system, after
application of the update factor,
distributes the appropriate proportional
payment amount to each service. The
same statement is true for commenters’
concerns that scaling is reducing
payment for services explicitly
designated as receiving a transition
payment. Scaling ensures that the
changes in the relative weights do not,
in and of themselves, change aggregate
payment to ASCs. The calculation of the
transition weight over a fully
implemented weight for any procedures
paid in CY 2007 under the previous
ASC payment system changes the
relativity of the weight of those services
relative to other services newly covered
by the revised ASC payment system.
This clearly changes the proportional
resources distributed to services subject
to the transition compared to what
would be distributed under a fully
implemented system. However,
entitlement to a transition weight under
a budget neutral system does not
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guarantee a specific amount of payment
in absolute dollar terms. A service that
experienced an increase in the OPPS
relative weight may very well
experience a decline in payment relative
to the previous year’s actual payment
rate because the scaling necessary to
maintain equal weight in the system is
greater than the proportional increase in
the OPPS relative weight portion of the
transition weight. Again, this outcome is
fully consistent with implementation of
a budget neutral prospective payment
system with a specific update factor.
For this final rule with comment
period, we used our proposed
methodology described above to
calculate the scaler adjustment using
updated ASC claims data. The final CY
2010 scaler adjustment for the third year
of the transition is 0.9567. This scaler
adjustment is necessary to budget
neutralize the difference in aggregate
ASC payments calculated using the CY
2009 ASC transitional (50/50 blend)
relative payment weights and the CY
2010 ASC transitional (75/25 blend)
relative payment weights. We calculated
the difference in aggregate payments
due to the change in relative payment
weights (including drugs and
biologicals) holding constant the ASC
conversion factor, the most recent CY
2008 ASC utilization from our claims
data, and the CY 2009 wage index
values. For this final CY 2010
calculation, we used the CY 2009 ASC
conversion factor updated by the CY
2010 CPI–U, which is 1.2 percent.
After consideration of the public
comments we received, we are
finalizing our CY 2010 ASC relative
payment weight scaling methodology,
without modification. The final CY 2010
ASC payment weight scaler is 0.9567.
b. Updating the ASC Conversion Factor
Under the OPPS, we typically apply
a budget neutrality adjustment for
provider-level changes, most notably a
change in the wage index values for the
upcoming year, to the conversion factor.
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35393), consistent with our
final ASC payment policy, for the CY
2010 ASC payment system, we
proposed to calculate and apply the prefloor and pre-reclassified hospital wage
indices that are used for ASC payment
adjustment to the ASC conversion
factor, just as the OPPS wage index
adjustment is calculated and applied to
the OPPS conversion factor (73 FR
41539). For CY 2010, we calculated this
proposed adjustment for the ASC
payment system by using the most
recent CY 2008 claims data available
and estimating the difference in total
payment that would be created by
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introducing the CY 2010 pre-floor and
pre-reclassified hospital wage indices.
Specifically, holding CY 2008 ASC
utilization and service-mix and CY 2010
national payment rates after application
of the weight scaler constant, we
calculated the total adjusted payment
using the CY 2009 pre-floor and prereclassified hospital wage indices and
the total adjusted payment using the
proposed CY 2010 pre-floor and prereclassified hospital wage indices. We
used the 50-percent labor-related share
for both total adjusted payment
calculations. We then compared the
total adjusted payment calculated with
the CY 2009 pre-floor and prereclassified hospital wage indices to the
total adjusted payment calculated with
the proposed CY 2010 pre-floor and prereclassified hospital wage indices and
applied the resulting ratio of 0.9996 (the
proposed CY 2010 ASC wage index
budget neutrality adjustment) to the CY
2009 ASC conversion factor to calculate
the proposed CY 2010 ASC conversion
factor.
Section 1833(i)(2)(C) of the Act
requires that, if the Secretary has not
updated the ASC payment amounts in a
calendar year, the payment amounts
shall be increased by the percentage
increase in the CPI–U as estimated by
the Secretary for the 12-month period
ending with the midpoint of the year
involved. However, section
1833(i)(2)(C)(iv) of the Act required that
the increase of ASC payment amounts
for CYs 2008 and 2009 equal zero
percent. As discussed in the August 2,
2007 final rule, we adopted a final
policy to update the ASC conversion
factor using the CPI–U in order to adjust
ASC payment rates for CY 2010 and
subsequent years (72 FR 42518 through
42519 and § 416.171(a)(2)). In the CY
2010 OPPS/ASC proposed rule (74 FR
35394), we proposed to implement the
annual updates through an adjustment
to the ASC conversion factor beginning
in CY 2010 when the statutory
requirement for a zero update no longer
applies.
For our proposed rule, for the 12month period ending with the midpoint
of CY 2010, the Secretary estimated that
the CPI–U is 0.6 percent. Therefore, we
proposed to apply to the ASC
conversion factor a 0.6 percent increase
for CY 2010.
Thus, for CY 2010, we proposed to
adjust the CY 2009 ASC conversion
factor ($41.393) by the wage adjustment
for budget neutrality of 0.9996 and the
update of 0.6 percent, which resulted in
a proposed CY 2010 ASC conversion
factor of $41.625.
Comment: Many commenters
requested that CMS adopt the hospital
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market basket to update the ASC
payment system. They explained that
not only is the CPI–U lower than the
hospital market basket but it is not
appropriate for updating health care
providers because, unlike the hospital
market basket which analyzes hospital
spending, the CPI–U is designed to
capture household spending. The
commenters stated that in the most
recent years, the CPI–U has been
dominated by energy and housing costs
rather than healthcare provider
spending. Further, the commenters
stated that CMS’ use of the midyear
CPI–U percent change is problematic
because other federal agencies, such as
the Bureau of Labor Statistics and the
Congressional Budget Office, use an
end-of-year timeframe. They believed
that a negative consequence of the
midyear timing for CMS’ forecasted
CPI–U percent change is that the CPI–
U used to update the ASC payment
system cannot be validated directly with
an independent source.
The commenters argued that the
difference between the ASC and OPPS
conversion factors is not due to real
differences in the growth of costs of
goods and services furnished by ASCs
and HOPDs and should not be
perpetuated. The commenters asserted
that CMS clearly has the authority to
use an alternative update mechanism,
and believed CMS should adopt a more
appropriate update for the ASC payment
system to prevent further increases in
differential between the ASC and OPPS
conversion factors.
Response: We understand the
commenters’ concerns regarding the
update to the conversion factor for CY
2010, but note that we did not propose
to change the conversion factor update
methodology. We refer readers to the
discussion in the August 2, 2007 final
rule on this issue (72 FR 42518 through
42519).
After consideration of the public
comments we received, we are applying
our established methodology for
determining the final CY 2010 ASC
conversion factor. Using more complete
CY 2008 data for this final rule with
comment period than was available for
the proposed rule, we calculated a wage
index budget neutrality adjustment of
0.9996 and the updated CPI–U projected
for the midpoint of CY 2010 is 1.2
percent. The final ASC conversion
factor of $41.873 is the product of the
CY 2009 conversion factor of $41.393
multiplied by 0.9996 and the 1.2
percent CPI–U.
3. Display of ASC Payment Rates
Addenda AA and BB to this CY 2010
OPPS/ASC final rule with comment
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period display the updated ASC
payment rates for CY 2010 for covered
surgical procedures and covered
ancillary services, respectively. These
addenda contain several types of
information related to the CY 2010
payment rates. Specifically, in
Addendum AA, a ‘‘Y’’ in the column
titled ‘‘Subject to Multiple Procedure
Discounting’’ indicates that the surgical
procedure would be subject to the
multiple procedure payment reduction
policy. As discussed in the CY 2008
OPPS/ASC final rule with comment
period (72 FR 66829 through 66830),
most covered surgical procedures are
subject to a 50-percent reduction in the
ASC payment for the lower-paying
procedure when more than one
procedure is performed in a single
operative session. Display of the
comment indicator ‘‘CH’’ in the column
titled ‘‘Comment Indicator’’ indicates a
final change in payment policy for the
item or service, including identifying
discontinued HCPCS codes, designating
items or services newly payable under
the ASC payment system, and
identifying items or services with
changes in the ASC payment indicator
for CY 2010. Display of the commenter
indicator ‘‘NI’’ in the column titled
‘‘Comment Indicator’’ indicates that the
code is new (or substantially revised)
and that the payment indicator
assignment is an interim assignment
that is open to comment on this final
rule with comment period.
The values displayed in the column
titled ‘‘CY 2010 Third Year Transition
Payment Weight’’ are the relative
payment weights for each of the listed
services for CY 2010, the third year of
the 4-year transition period. The CY
2010 ASC payment rates for the covered
surgical procedures subject to
transitional payment (payment
indicators ‘‘A2’’ and ‘‘H8’’ in
Addendum AA) are based on a blend of
25 percent of the CY 2007 ASC payment
rate for the procedure and 75 percent of
the CY 2010 ASC rate calculated under
the ASC standard ratesetting
methodology before scaling for budget
neutrality. The payment weights for all
covered surgical procedures and
covered ancillary services whose ASC
payment rates are based on OPPS
relative payment weights are scaled for
budget neutrality. Thus, scaling was not
applied to the device portion of the
device-intensive procedures, services
that are paid at the MPFS nonfacility PE
RVU amount, separately payable
covered ancillary services that have a
predetermined national payment
amount, such as drugs and biologicals
that are separately paid under the OPPS,
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60629
or services that are contractor-priced or
paid at reasonable cost in ASCs.
To derive the CY 2010 national
unadjusted payment rate displayed in
the ‘‘CY 2010 Third Year Transition
Payment’’ column, each ASC payment
weight in the ‘‘CY 2010 Third Year
Transition Payment Weight’’ column is
multiplied by the final CY 2010 ASC
conversion factor of $41.873. The
conversion factor includes a budget
neutrality adjustment for changes in the
wage index values and the CPI–U
percentage increase.
In Addendum BB, there are no
relative payment weights displayed in
the ‘‘CY 2010 Third Year Transition
Payment Weight’’ column for items and
services with predetermined national
payment amounts, such as separately
payable drugs and biologicals. The ‘‘CY
2010 Third Year Transition Payment’’
column displays the final CY 2010
national unadjusted ASC payment rates
for all items and services. The CY 2010
ASC payment rates listed in the
Addendum AA for separately payable
drugs and biologicals are based on ASP
data used for payment in physicians’
offices in October 2009.
For informational purposes only, we
also have posted on the CMS Web site
the fully transitioned ASC payment
rates for CY 2010. These rates do not
represent what the payment rates would
be once the transition is over, only what
the CY 2010 rates would be if there were
no transition. The Web site address is:
https://www.cms.hhs.gov/
ASCPayment/.
We did not receive any public
comments regarding the continuation of
our policy to provide CY 2010 ASC
payment information as detailed in
Addenda AA and BB. Therefore,
Addenda AA and BB to this final rule
with comment period display the
updated ASC payment rates for CY 2010
for covered surgical procedures and
covered ancillary services, respectively,
and provide additional information
related to the CY 2010 rates.
XVI. Reporting Quality Data for Annual
Payment Rate Updates
A. Background
1. Overview
CMS has implemented quality
measure reporting programs for multiple
settings of care. These programs
promote higher quality, more efficient
health care for Medicare beneficiaries.
The quality data reporting program for
hospital outpatient care, known as the
Hospital Outpatient Quality Data
Reporting Program (HOP QDRP), has
been generally modeled after the
program for hospital inpatient services,
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the Reporting Hospital Quality Data for
Annual Payment Update (RHQDAPU)
program. Both of these quality reporting
programs for hospital services, as well
as the program for physicians and other
eligible professionals, known as the
Physician Quality Reporting Initiative
(PQRI), have financial incentives for
reporting of quality data to CMS. CMS
has also implemented quality reporting
programs for home health agencies and
skilled nursing facilities that are based
on conditions of participation, and an
end-stage renal disease quality reporting
program that is based on conditions for
coverage.
2. Hospital Outpatient Quality Data
Reporting Under Section 109(a) of Pub.
L. 109–432
Section 109(a) of the MIEA–TRHCA
(Pub. L. 109–432) amended section
1833(t) of the Act by adding a new
subsection (17) that affects the payment
rate update applicable to OPPS
payments for services furnished by
hospitals in outpatient settings on or
after January 1, 2009. Section
1833(t)(17)(A) of the Act, which applies
to hospitals as defined under section
1886(d)(1)(B) of the Act, states that
subsection (d) hospitals that fail to
report data required for the quality
measures selected by the Secretary in
the form and manner required by the
Secretary under section 1833(t)(17)(B) of
the Act will receive a 2.0 percentage
point reduction to their annual payment
update factor. Section 1833(t)(17)(B) of
the Act requires that hospitals submit
quality data in a form and manner, and
at a time, that the Secretary specifies.
Section 1833(t)(17)(C)(i) of the Act
requires the Secretary to develop
measures appropriate for the
measurement of the quality of care
(including medication errors) furnished
by hospitals in outpatient settings, that
these measures reflect consensus among
affected parties and, to the extent
feasible and practicable, that these
measures include measures set forth by
one or more national consensus
building entities.
The National Quality Forum (NQF) is
a voluntary consensus standard-setting
organization that is composed of a
diverse representation of consumer,
purchaser, provider, academic, clinical,
and other health care stakeholder
organizations. NQF was established to
standardize health care quality
measurement and reporting through its
consensus development process. We
generally prefer to adopt NQF-endorsed
measures for CMS quality reporting
programs. However, we believe that
consensus among affected parties also
can be reflected by other means,
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including: consensus achieved during
the measure development process;
consensus shown through broad
acceptance and use of measures; and
consensus through public comment. We
also note that section 1833(t)(17) of the
Act does not require that each measure
we adopt for the HOP QDRP be
endorsed by a national consensus
building entity, or by the NQF
specifically.
Section 1833(t)(17)(C)(ii) of the Act
authorizes the Secretary to select
measures for the HOP QDRP that are the
same as (or a subset of) the measures for
which data are required to be submitted
under section 1886(b)(3)(B)(viii) of the
Act (the RHQDAPU program). Section
1833(t)(17)(D) of the Act gives the
Secretary the authority to replace
measures or indicators as appropriate,
such as when all hospitals are
effectively in compliance or when the
measures or indicators have been
subsequently shown not to represent the
best clinical practice. Section
1833(t)(17)(E) of the Act requires the
Secretary to establish procedures for
making data submitted under the HOP
QDRP available to the public. Such
procedures must include giving
hospitals the opportunity to review their
data before these data are released to the
public.
As we stated in the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68758 through 68759), we continue
to believe that it is most appropriate and
desirable to adopt measures that
specifically apply to the hospital
outpatient setting for the HOP QDRP. In
other words, we do not believe that we
should simply, without further analysis,
adopt the RHQDAPU program measures
as the measures for the HOP QDRP.
Nonetheless, we note that section
1833(t)(17)(C)(ii) of the Act allows the
Secretary to ‘‘[select] measures that are
the same as (or a subset of) the measures
for which data are required to be
submitted’’ under the RHQDAPU
program.
3. Reporting ASC Quality Data for
Annual Payment Update
Section 109(b) of the MIEA–TRHCA
amended section 1833(i) of the Act by
redesignating clause (iv) as clause (v)
and adding new clause (iv) to paragraph
(2)(D) and adding paragraph (7). These
amendments may affect ASC payments
for services furnished in ASC settings
on or after January 1, 2009. Section
1833(i)(2)(D)(iv) of the Act authorizes
the Secretary to implement the revised
payment system for services furnished
in ASCs (established under section
1833(i)(2)(D) of the Act), ‘‘so as to
provide for a reduction in any annual
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update for failure to report on quality
measures.’’
Section 1833(i)(7)(A) of the Act states
that the Secretary may provide that any
ASC that fails to report data required for
the quality measures selected by the
Secretary in the form and manner
required by the Secretary under section
1833(i)(7) of the Act will incur a
reduction in any annual payment
update of 2.0 percentage points. Section
1833(i)(7)(A) of the Act also specifies
that a reduction for one year cannot be
taken into account in computing the
ASC update for a subsequent calendar
year.
Section 1833(i)(7)(B) of the Act
provides that, ‘‘[e]xcept as the Secretary
may otherwise provide,’’ the hospital
outpatient quality data provisions of
sections 1833(t)(17)(B) through (E) of the
Act, summarized above, shall apply to
ASCs. We did not implement an ASC
quality reporting program for CY 2008
(72 FR 66875) or for CY 2009 (73 FR
68779).
We refer readers to section XVI.H. of
this final rule with comment period for
a discussion of our decision to
implement ASC quality data reporting
in a later rulemaking.
4. HOP QDRP Quality Measures for the
CY 2009 Payment Determination
For the CY 2009 annual payment
update, we required HOP QDRP
reporting using seven quality
measures—five Emergency Department
(ED) AMI measures and two
Perioperative Care measures. These
measures address care provided to a
large number of adult patients in
hospital outpatient settings, across a
diverse set of conditions, and were
selected for the initial set of HOP QDRP
measures based on their relevance as a
set to all HOPDs.
Specifically, in order for hospitals to
receive the full OPPS payment update
for services furnished in CY 2009, in the
CY 2008 OPPS/ASC final rule with
comment period (72 FR 66860), we
required that subsection (d) hospitals
paid under the OPPS submit data on the
following seven measures for hospital
outpatient services furnished on or after
April 1, 2008: (1) ED–AMI–1: Aspirin at
Arrival; (2) ED–AMI–2: Median Time to
Fibrinolysis; (3) ED–AMI–3: Fibrinolytic
Therapy Received within 30 Minutes of
Arrival; (4) ED–AMI–4: Median Time to
Electrocardiogram (ECG); (5) ED–AMI–
5: Median Time to Transfer for Primary
PCI; (6) PQRI #20: Perioperative Care—
Timing of Antibiotic Prophylaxis; and
(7) PQRI #21: Perioperative Care—
Selection of Perioperative Antibiotic.
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5. HOP QDRP Quality Measures for the
CY 2010 Payment Determination
a. Background
In the CY 2009 OPPS/ASC final rule
with comment period, for the CY 2010
payment update, we required continued
submission of data on the existing seven
measures discussed above (73 FR
68761), and adopted four imaging
measures (73 FR 68766). For CY 2010,
we changed the measure designations
for the existing seven measures,
including a change to an ‘‘OP–X’’ format
in order to maintain a consistent
sequential designation system that we
could expand as we add additional
measures.
The four imaging measures that we
adopted beginning with the CY 2010
payment determination (OP–8: MRI
Lumbar Spine for Low Back Pain, OP–
9: Mammography Follow-up Rates, OP–
10: Abdomen CT—Use of Contrast
Material, and OP–11: Thorax CT—Use
of Contrast Material) are claims-based
measures that CMS will calculate using
Medicare Part B claims data without
imposing upon hospitals the burden of
additional chart abstraction. For
purposes of the CY 2010 payment
determination, we will calculate these
measures using CY 2008 Medicare
administrative claims data.
In the CY 2009 OPPS/ASC proposed
rule, OP–10 had two submeasures
listed: OP–10a: CT Abdomen—Use of
contrast material excluding calculi of
the kidneys, ureter, and/or urinary tract,
and OP–10b: CT Abdomen—Use of
contrast material for diagnosis of calculi
in the kidneys, ureter, and or urinary
tract. In the CY 2009 OPPS/ASC final
rule with comment period (73 FR
68766), we finalized OP–10: Abdomen
CT—Use of Contrast Material. To
clarify, we are calculating OP–10
excluding patients with renal disease.
This exclusion is described in greater
detail in the Specifications Manual for
Hospital Outpatient Department Quality
Measures (HOPD Specifications
Manual) located at the QualityNet Web
site (https://www.QualityNet.org).
The complete set of measures to be
used for the CY 2010 payment
determination is set out below, and is
shown with the CY 2010 measure
designations as well as their ED–AMI
and PQRI designations:
HOP QDRP measurement set to be used for CY 2010 payment determination
CY 2009 designation
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OP–1: Median Time to Fibrinolysis ...............................................................................................................................
OP–2: Fibrinolytic Therapy Received Within 30 Minutes ..............................................................................................
OP–3: Median Time to Transfer to Another Facility for Acute Coronary Intervention ..................................................
OP–4: Aspirin at Arrival .................................................................................................................................................
OP–5: Median Time to ECG .........................................................................................................................................
OP–6: Timing of Antibiotic Prophylaxis .........................................................................................................................
OP–7: Prophylactic Antibiotic Selection for Surgical Patients ......................................................................................
OP–8: MRI Lumbar Spine for Low Back Pain ..............................................................................................................
OP–9: Mammography Follow-up Rates ........................................................................................................................
OP–10: Abdomen CT—Use of Contrast Material .........................................................................................................
OP–11: Thorax CT—Use of Contrast Material .............................................................................................................
b. Maintenance of Technical
Specifications for Quality Measures
Technical specifications for each HOP
QDRP measure are listed in the HOPD
Specifications Manual, which is posted
on the CMS QualityNet Web site at
https://www.QualityNet.org. We
maintain the technical specifications for
the measures by updating this HOPD
Specifications Manual and include
detailed instructions and calculation
algorithms for hospitals to use when
collecting and submitting data on
required measures.
In the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68766), we
established a subregulatory process for
updates to the technical specifications
that we use to calculate HOP QDRP
measures. This process is used when
changes to the measure specifications
are necessary due to changes in
scientific evidence or in the measure as
endorsed by the consensus entity.
Changes of this nature may not coincide
with the timing of our regulatory
actions, but nevertheless require
inclusion in the measure specifications
so that the HOP QDRP measures are
calculated based on the most up-to-date
scientific and consensus standards. We
indicated that notification of changes to
the measure specifications on the
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QualityNet Web site, https://www.
QualityNet.org, and in the HOPD
Specifications Manual that occurred as
a result of changes in scientific evidence
or national consensus would occur no
less than 3 months before any changes
become effective for purposes of
reporting under the HOP QDRP.
The HOPD Specifications Manual is
released every 6 months and addenda
are released as necessary, providing at
least 3 months of advance notice for
nonsubstantive changes such as changes
to ICD–9, CPT, NUBC, and HCPCS
codes, and at least 6 months notice for
substantive changes to data elements
that would require significant systems
changes.
Comment: A few commenters
indicated that they agreed with the
maintenance of the outpatient measure
technical specifications in a manner
consistent with the inpatient measure
technical specifications. They agreed
that providing a 3-month notification
period for code updates is sufficient.
One commenter also agreed the OP–X
designations along with short measure
names are appropriate. Commenters
indicated that CMS should ensure that
the subregulatory process that it uses to
update the technical specifications for
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60631
ED–AMI–2.
ED–AMI–3.
ED–AMI–5.
ED–AMI–1.
ED–AMI–4.
PQRI #20.
PQRI #21.
NA.
NA.
NA.
NA.
HOP QDRP measures is regular and
transparent.
Response: We thank the commenters
for their support of the subregulatory
manual update process and timeframes.
We will continue to make such updates
on a regular semi-annual basis with
addenda as necessary, and to issue
notifications of updates via the
QualityNet Web site, https://www.
QualityNet.org, in order to maintain the
transparency of the process. The HOPD
Specifications Manual will continue to
be released regularly and addenda will
continue to be issued as necessary,
providing at least 3 months of advance
notice for nonsubstantive changes such
as changes to ICD–9, CPT, NUBC, and
HCPCS codes, and at least 6 months
notice for substantive changes to data
elements that would require significant
systems changes.
c. Publication of HOP QDRP Data
Section 1833(t)(17)(E) of the Act
requires that the Secretary establish
procedures to make data collected under
the HOP QDRP program available to the
public. CMS also requires hospitals to
complete and submit a registration form
(‘‘participation form’’) in order to
participate in the HOP QDRP. With
submission of this form, participating
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hospitals agree that they will allow CMS
to publicly report the quality measures,
including those that CMS calculates
using Medicare claims, as required by
the Act and the HOP QDRP.
In the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68778), we
established that for CY 2010, hospitals
sharing the same CMS Certification
Number (CCN, previously known as the
Medicare Provider Number (MPN)) must
combine data collection and submission
across their multiple campuses for the
clinical measures for public reporting
purposes. We finalized the policy that,
under the HOP QDRP, we will publish
quality data by the corresponding CCN.
This approach is consistent with the
approach taken under the RHQDAPU
program. In that final rule with
comment period, we also stated that we
intend to indicate instances where data
from two or more hospitals are
combined to form the publicly reported
measures on the Web site.
We discuss our CY 2010 policy
regarding publication of HOP QDRP
data in section XVI.F. of this final rule
with comment period.
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B. Quality Measures for the CY 2011
Payment Determination
1. Considerations in Expanding and
Updating Quality Measures Under the
HOP QDRP
In general, when selecting measures
for the HOP QDRP program, we take
into account several considerations and
goals. These include: (a) Expanding the
types of measures beyond process of
care measures to include an increased
number of outcome measures, efficiency
measures, and patients’ experience-ofcare measures; (b) expanding the scope
of hospital services to which the
measures apply; (c) considering the
burden on hospitals in collecting chartabstracted data; (d) harmonizing the
measures used in the HOP QDRP
program with other CMS quality
programs to align incentives and
promote coordinated efforts to improve
quality; (e) seeking to use measures
based on alternative sources of data that
do not require chart abstraction or that
utilize data already being reported by
many hospitals, such as data that
hospitals report to clinical data
registries, or all-payer claims data bases;
and (f) weighing the relevance and
utility of the measures compared to the
burden on hospitals in submitting data
under the HOP QDRP program.
Specifically, we give priority to quality
measures that assess performance on:
(a) Conditions that result in the greatest
mortality and morbidity in the Medicare
population; (b) conditions that are high
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volume and high cost for the Medicare
program; and (c) conditions for which
wide cost and treatment variations have
been reported, despite established
clinical guidelines. We have used and
continue to use these criteria to guide
our decisions regarding what measures
to add to the HOP QDRP measure set.
Comment: Many commenters
indicated that, although CMS is not
required to adopt only measures that are
endorsed by NQF, CMS should continue
to rely on NQF evaluations to guide
selection of measures, and to seek NQF
approval for measures considered and
adopted for the HOP QDRP in order to
maintain consistency in the selection
processes for quality measures across
physician and hospital services. Many
commenters indicated that they prefer
that measures adopted for HOP QDRP
first go through the rigorous, consensusbased assessment processes of both the
NQF and HQA, and that given the
number of NQF-endorsed and HQAadopted measures currently available
for use, it is both feasible and
practicable for CMS to choose only
NQF-endorsed and HQA-adopted
measures. Other commenters indicated
that although a consensus-based process
may have been employed by CMS or
CMS contractors to develop measures, it
does not equal the rigor or broad
stakeholder input of NQF endorsement
and HQA adoption.
Response: Section 1833(t)(17)(C)(i) of
the Act requires the Secretary to
‘‘develop measures that the Secretary
determines to be appropriate for the
measurement of the quality of care
(including medication errors) furnished
by hospitals in outpatient settings and
that reflect consensus among affected
parties and, to the extent feasible and
practicable, shall include measures set
forth by one or more national consensus
building entities.’’ This provision does
not require that the measures we adopt
for the HOP QDRP be endorsed by any
particular entity, and we believe that
consensus among affected parties can be
reflected by means other than
endorsement by a national consensus
building entity, including consensus
achieved during the measure
development process, consensus shown
through broad acceptance and use of
measures, and consensus through public
comment. Nevertheless, we have stated
on numerous occasions that we prefer to
adopt quality measures that have been
endorsed by the NQF because the NQF
uses a formal consensus development
process and has been recognized as a
voluntary consensus standards-setting
organization as defined by the National
Technology Transfer and Advancement
Act of 1995 (NTTAA) and Office of
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Management and Budget Circular A 119
(see https://www.qualityforum.org/
Measuring_Performance/Consensus_
Development_Process.aspx). We are
unaware of any other organizations that
qualify as an NTTAA consensus
organization for the endorsement of
quality measures. However, when we
propose and adopt quality measures, we
take into consideration the measures
adopted by the HQA as well as an array
of input from the public. We appreciate
HQA’s integral efforts to improve
hospital quality of care by supporting
CMS’ public reporting programs.
Comment: Some commenters
expressed concern regarding the
accuracy of measures that rely solely on
administrative (that is, claims) data and
requested that CMS not consider these
types of measures in the future. Several
commenters questioned the value of
measures based solely on claims data/
administrative data for public reporting
and pay-for-performance in terms of
their capacity to improve care delivered
to Medicare beneficiaries.
Response: We do not agree with these
commenters’ statements. We believe
that claims data/administrative data are
an appropriate data source upon which
quality measures selected by the
Secretary may be based. We note that
many NQF-endorsed evidence-based
quality measures that have been found
appropriate for public reporting and
quality improvement rely upon claims
and administrative data as a data source.
Furthermore, the use of claims-based
measures reduces reliance upon chart
abstraction and its associated burden for
quality measurement.
Comment: Commenters submitted the
following suggested measure selection
criteria for the HOP QDRP:
• Potential for quality improvement;
• Processes measured are related to
improved patient outcomes;
• Processes measured occur closer in
time to patient outcomes of interest;
• Outcome measures are related to
modifiable processes that affect patient
outcomes;
• Minimal unintended adverse
consequences;
• Alignment with national priorities
as described in the NQF NPP project;
• Amenable to collection via
alternative mechanisms such as
electronic health records (EHRs),
registries, and claims;
• Harmonizes with measures used for
reporting programs in similar settings;
• Attributable to the facility rather
than a prescribing physician;
• Data collection should not increase
hospital operational burden; and
• Fully tested in a variety of
outpatient settings.
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Response: We thank the commenters
for these suggestions, and we note that
these suggestions were not submitted in
reference to specific measures. In
section XVI.B.1. of this final rule with
comment period, we have set out the
criteria that we use to guide our
decisions regarding what measures to
add to the HOP QDRP measure set. We
determine the suitability of potential
measures using consensus development
processes, including, when appropriate,
relying upon the NQF’s voluntary
consensus standards in addition to our
rulemaking in determining the
suitability of quality measures.
In the CY 2009 OPPS/ASC final rule
with comment period, we adopted four
claims-based quality measures that do
not require a hospital to submit chartabstracted clinical data. This supports
our goal of expanding the measures for
the HOP QDRP while minimizing the
burden upon hospitals and, in
particular, without significantly
increasing the chart abstraction burden.
In addition to claims-based measures,
we are considering registries 1 and EHRs
as alternative ways to collect data from
hospitals. Many hospitals submit data to
and participate in existing registries. In
addition, registries often capture
outcome information and provide
ongoing quality improvement feedback
to registry participants. Instead of
requiring hospitals to submit the same
data to CMS that they are already
submitting to registries, we could collect
the data directly from the registries with
the permission of the hospital, thereby
enabling us to expand the HOP QDRP
measure set without increasing the
burden of data collection for those
hospitals participating in the registries.
The data that we would receive from
registries would be used to calculate
quality measures required under the
HOP QDRP, and would be publicly
reported like other HOP QDRP quality
measures, encouraging improvements in
the quality of care. In the CY 2010
OPPS/ASC proposed rule (74 FR 35397),
we invited public comment on such an
approach.
Comment: Many commenters
expressed concern about the potential
use of registries as a source of data for
the HOP QDRP. Many commenters
indicated that the fees imposed by
registries would be prohibitive for
smaller hospitals and rural hospitals.
Regarding registry-based data
submission for the HOP QDRP, CMS
was urged to do the following:
1 A registry is a collection of clinical data for
purposes of assessing clinical performance, quality
of care, and opportunities for quality improvement.
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• Develop and test alternatives for
hospitals choosing to submit data
directly to CMS in lieu of participating
in a registry (that is, chart abstraction,
CART tool);
• Determine and articulate a process
for validating data submitted through
registries for completeness and
accuracy;
• Determine and articulate a process
to transmit registry-based data to the
national data warehouse in a secure
fashion and without violating HIPAA or
other rules;
• Explore and determine the
willingness and ability of the ORYX
vendors to submit data for those
hospitals not participating in a registry;
and
• Require standardized, externally
verifiable sampling for the measures.
Response: We are interested in
minimizing the burden associated with
quality measurement. If hospitals are
participating in registries and submit
the same data to those registries that
they would otherwise have to submit for
measures that are part of the HOP
QDRP, we believe that the registry-based
data would be an efficient alternative
source from which to collect the data,
and that this would prevent the hospital
from having to report the same data
twice. Many hospitals are currently
participating in a number of registries
that collect data on quality measures
that are topics of interest to us.
However, we acknowledge the
commenters’ concerns regarding the
cost associated with participation in
certain registries that may make this
alternative mechanism for data
submission less feasible for some
hospitals, and the need for standardized
validation strategies for registry-based
data. We will take these considerations
into account when considering registrybased measure submission options for
this and other reporting programs in the
future.
Comment: Some commenters strongly
supported the use of registries as an
alternative source of data for the HOP
QRDP. These commenters stated that
registries provide a substantial
advantage over chart-abstracted data
because registries provide regular
feedback reports to participating
hospitals on their performance, further
minimize the reporting burden for
physicians and facilities because
registry-based data could be used for
more than one reporting program, and
aggregate clinical data from a provider’s
entire patient population and enable
these data to be analyzed and tracked
over time for adherence to evidencebased medicine and health outcomes.
Commenters encouraged CMS to
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continue to explore this mechanism and
to develop the infrastructure standards
needed to accurately capture such data
as soon as practicable.
Response: We thank these
commenters for their encouragement
and will continue to investigate the
feasibility of such an approach to the
HOP QDRP and other quality data
reporting programs.
Comment: One commenter
recommended that CMS request
legislative authority to base payments
on pay-for-performance so that a portion
of payments will depend on providers’
performance on the selected quality
measures, not simply on whether they
report the specified data to CMS. This
commenter also expressed support for
CMS’ efforts to collect data on measures
of hospital quality as a valuable step
toward pay-for-performance.
Response: We thank the commenter
for sharing this suggestion for future
program direction and for supporting
current program operations.
In the CY 2009 OPPS/ASC final rule
with comment period, we also stated
our intention to explore mechanisms for
data submission using EHRs (73 FR
68769). Establishing such a system will
require interoperability between EHRs
and CMS data collection systems,
additional infrastructure development
on the part of hospitals and CMS, and
the adoption of standards for the
capturing, formatting, and transmission
of data elements that make up the
measures. However, once these
activities are accomplished, the
adoption of measures that rely on data
obtained directly from EHRs will enable
us to expand the HOP QDRP measure
set with less cost and burden to
hospitals.
Comment: Some commenters strongly
supported the use of EHRs and other
health information technology (IT).
These commenters believed that such
technology has the ability to capture,
store, and readily report the types of
clinical data not available from medical
claims data, such as diagnostic
laboratory test results and prescription
drug dispensing data. Commenters
commended CMS for encouraging the
development and adoption of uniform
data content and information
technology standards across the health
care industry that will support
automated data collection and reporting
of clinical data from EHR systems.
These commenters believed that such
efforts would streamline hospital data
submission procedures and enable
providers to view real-time
measurement results to initiate their
own improvement interventions in a
more timely and efficient manner.
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Response: We appreciate these
supportive comments regarding EHRbased data collection as an alternative
data source for quality measures. We
agree that EHR-based data submission
may provide an alternative means of
submitting quality data that would
benefit hospitals by reducing their chart
abstraction burden. We also agree that
such systems may enable providers to
implement more timely improvement
efforts. Although we encourage
adoption of EHRs, we also acknowledge
the challenges that must be met both by
hospitals and CMS to establish the
infrastructure and interoperability
necessary to collect data on quality
measures via EHRs. We will continue to
work collaboratively with health IT
standard-setting and consensus
development organizations to ensure
that quality measures can be collected
in a standardized manner.
Comment: Many commenters were
concerned about the ability of EHRs to
accurately capture the data required for
meaningful and accurate quality
measures for the HOP QDRP.
Commenters indicated that, currently,
all of the necessary information for
measuring performance against essential
metrics of quality (such as exclusion
and inclusion criteria and
contraindications) is not codified within
EHRs, and that the need for such
information will still require medical
record review because the information
cannot be adequately found in EHRs.
Other commenters indicated that
current products feature inconsistent
communication standards and may pose
privacy concerns. Several commenters
indicated that small rural hospitals may
not be able to enhance their health IT
infrastructure to support EHR-based
reporting. Several commenters
supported one-way transmission of
specific data elements from EHRs, but
would not support providing access to
the whole EHR to abstract clinical
information for quality measures.
Commenters encouraged CMS to
consider postponing new measure
implementation for CY 2012 until new
measures can be verified to be
structured for EHR data collection,
especially given impending challenges
of ICD–10 implementation.
Response: We do not agree with the
commenters’ belief that quality data
produced from EHRs is not likely to
accurately capture data elements needed
for quality measurement. The data
collected from the EHR would
essentially be the same data that
hospitals would otherwise have to
manually abstract from a medical chart.
These data are what we currently use for
quality measure reporting. We
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acknowledge that additional
programming work may be needed in
order to enable current EHR systems to
collect and submit quality measure data.
We are currently working with the
Healthcare Information Technology
Standards Panel (HITSP), a publicprivate partnership working to establish
health IT interoperability standards
under contract to the HHS Office of the
National Coordinator on Health IT
(ONC), to standardize the specifications
of data elements used in several
measure sets so that they may be
collected and reported via EHRs.
Standardization of the specifications
allows software to convert clinical data
of different types into a form that can be
analyzed for quality measurement. We
encourage collaboration among
standard-setting organizations and
measure developers on the creation of
standards for electronic collection of
data elements for other quality measures
as well, particularly those used in our
quality data reporting programs.
With regard to the commenters’
concern about having to provide access
to the entire EHR, we would only
require that the hospital provide access
to those data elements in the EHRs that
are needed to calculate the measures.
We also acknowledge the burden faced
by hospitals in implementing multiple
technological changes, including the
ICD–10 coding system. We will
carefully consider any additional
burden that may be imposed by
adopting additional measures for the
HOP QDRP and will continue to
consider other feasible alternatives to
data collection such as registries.
Comment: Several commenters
encouraged the collection of all-payer or
multiple-payer claims information in
order to calculate measures for the HOP
QDRP as it would provide a more
complete picture of care to consumers.
Commenters also encouraged CMS to
ensure the validity of any third party
data used in the development or
calculation of measures for public
reporting.
Response: We thank the commenters
for their encouragement of the
collection of all-payer claims data, and
we agree that all-payer claims data
would enable us to provide consumers
with more comprehensive claims-based
quality measures that provide a
comprehensive picture of the quality of
care provided by a hospital. We
currently collect other all-payer data
where feasible for the hospital quality
data reporting programs, and currently
this is feasible for chart-abstracted data
elements. It has been our policy to
collect all-payer chart-abstracted data
since the inception of both inpatient
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(RHQDAPU program) and outpatient
(HOP QDRP) quality data reporting.
While we currently do not have the
infrastructure in place to accept allpayer claims data, we intend to work
with stakeholders to identify options,
processes, and opportunities to collect
all-payer claims data to supplement the
Medicare claims data we currently use
in many of our reporting programs.
Comment: Several commenters
indicated that CMS should only concern
itself with obtaining information and
outcomes for Medicare beneficiaries,
and should not collect information
regarding patients for whom other
payers are responsible.
Response: For the HOP QDRP, section
1833(t)(17)(C)(i) of the Act requires the
Secretary to develop measures
appropriate for the measurement of the
quality of care (including medication
errors) furnished by hospitals in
outpatient settings. The collection and
publication of quality measures based
on all-payer data captures variations in
the care delivered by a hospital to
different populations and payers, and
therefore allows us to obtain
comprehensive information regarding
the quality of care provided to its
beneficiaries. Therefore, we are
collecting all-payer data elements to
calculate the chart-abstracted measures
adopted into the HOP QDRP. We wish
to eventually provide a similarly
comprehensive picture of the quality of
care provided by HOPDs with respect to
the claims-based measures adopted into
the HOP QDRP.
2. Retirement of HOP QDRP Quality
Measures
In the FY 2010 IPPS/RY 2010 LTCH
PPS proposed rule, we proposed a
process for immediate retirement of
RHQDAPU program measures based on
evidence that the continued use of the
measure as specified raises patient
safety concerns (74 FR 24168). As we
explained in that proposed rule, in
situations such as the one prompting
immediate retirement of the AMI–6
measure from the RHQDAPU program
in December 2008, we do not believe
that it would be appropriate to wait for
the annual rulemaking cycle to retire a
measure. This proposal was later
finalized for the RHQDAPU program in
the FY 2010 IPPS/RY 2010 LTCH PPS
final rule (74 FR 43863). We proposed
to adopt this same immediate retirement
policy for the HOP QDRP (74 FR 35397).
Specifically, in the CY 2010 OPPS/ASC
proposed rule, we proposed that if we
receive evidence that continued
collection of a measure that has been
adopted for the HOP QDRP raises
patient safety concerns, we would
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promptly retire the measure and notify
hospitals and the public of the
retirement of the measure and the
reasons for its retirement through the
usual means by which we communicate
with hospitals, including but not
limited to hospital e-mail blasts and the
QualityNet Web site. We also proposed
to confirm the retirement of the measure
in the next OPPS rulemaking. In other
circumstances, where we do not believe
that continued use of a measure raises
specific patient safety concerns, we
stated that we intend to use the regular
rulemaking process to retire a measure.
We invited public comment on this
proposal allowing for immediate
retirement of a HOP QDRP measure
following evidence of a patient safety
concern followed by confirmation in the
next rulemaking cycle.
Comment: Several commenters
applauded the proposal to immediately
retire a HOP QDRP measure if CMS
receives evidence that the continued
collection of a measure raises patient
safety concerns. They encouraged CMS
to establish consistent and transparent
processes that address changes in
evidence-based guidelines more quickly
and to establish channels to exchange
this type of information between the
agency and measure developers. The
commenters also encouraged CMS to
retire measures under the following
conditions:
• A measure is no longer consistent
with current clinical guidelines;
• Another indicator exists that better,
or more accurately, assesses good
quality care;
• Redundancy of measurement on a
given topic or process; and
• The burden associated with data
collection and reporting a measure
outweighs the benefit of public
reporting;
Response: We thank the commenters
for their support for the proposed policy
of prompt retirement when potential
patient harm could result from the
continued collection of a measure, and
are finalizing our policy in this final
rule with comment period. With respect
to the suggestions we received, these
criteria reflect examples of conditions
that may warrant retirement via notice
and comment rulemaking as opposed to
prompt retirement because continued
collection of the measure does not raise
patient safety concerns. Another
example of a nonurgent circumstance
where we would use the rulemaking
process to retire a measure would be
when a measure is ‘‘topped out.’’ While
we did not solicit public comments on
criteria for retirement under
circumstances other than potential
patient harm, we will consider these
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suggestions as we consider whether to
propose to retire measures in nonurgent
circumstances.
After consideration of the public
comments we received, we are
finalizing our proposal to promptly
retire measures under circumstances in
which we receive evidence that
continued collection of a measure that
has been adopted for the HOP QDRP
raises patient safety concerns, to notify
hospitals and the public of the
retirement of the measure and the
reasons for its retirement through the
usual means by which we communicate
with hospitals, including, but not
limited to, hospital e-mail blasts and the
QualityNet Web site, and to confirm the
retirement of measures retired in this
manner in the next rulemaking cycle.
3. HOP QDRP Quality Measures for the
CY 2011 Payment Determination
For the CY 2011 payment
determination, in the CY 2010 OPPS/
ASC proposed rule (74 FR 35397), we
proposed to continue requiring that
hospitals submit data on the existing 11
HOP QDRP measures. These measures
continue to address areas of topical
importance regarding the quality of care
provided in HOPDs, and reflect
consensus among affected parties. Seven
of these 11 measures are chartabstracted measures in two areas of
importance that are also measured for
the inpatient setting: AMI care and
surgical care. The remaining four
measures address imaging efficiency in
HOPDs.
For the CY 2011 payment
determination, we proposed not to add
any new HOP QDRP measures.
Although we considered adding a
number of chart-abstracted measures,
we are sensitive to the burden upon
HOPDs associated with chart abstraction
and believe that adopting such measures
at this time would not be consistent
with our stated goal to minimize the
collection burden associated with
quality measurement. We will continue
to assess whether we can collect data on
additional quality measures through
mechanisms other than chart
abstraction, such as from Medicare
administrative claims data and EHRs.
We invited public comment on our
proposal to retain the existing 11 HOP
QDRP measures and to not adopt
additional measures for the CY 2011
payment determination.
Comment: Most commenters were
pleased that CMS recognizes the burden
that data collection and reporting places
on facilities and did not propose to add
new measures to the HOP QDRP
measurement set for the CY 2011
payment determination. In particular,
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some hospitals indicated that they have
only one staff member performing chart
abstraction for both the inpatient and
outpatient quality data reporting
programs, and that the burden of adding
measures has a great impact under such
circumstances.
Response: We thank the commenters
for expressing their support for this
proposal. We will continue to carefully
weigh the burden associated with
adding chart-abstracted measures to
quality reporting programs such as the
HOP QDRP against the benefit of adding
such measures in the future.
We also received specific comments,
discussed below, on some of the
measures we proposed to retain.
• OP–3: Median Time To Transfer to
Another Facility for Acute Coronary
Intervention
Comment: One commenter
recommended that CMS consider
measuring the overall median time to
percutaneous coronary intervention
(PCI) in transferred patients because this
captures the entire process of care and
will encourage collaboration between
transferring and receiving ST-segment
elevation myocardial infarction (STEMI)
centers.
Response: We thank the commenter
for this suggestion. The current measure
is meant to be one of accountability for
the initial (transferring) facility rather
than for both the transferring and
receiving facility. Therefore, the
outpatient measure that is currently in
place (OP–3) focuses on the measurable
time of arrival to time of physical
departure from the first hospital, which
is an important component of the total
time to reperfusion. A modification to
the measure as suggested would not
currently be feasible to implement as it
would require capturing information
from medical records at two separate
facilities.
• OP–4: Aspirin at Arrival & OP–5:
Median Time to ECG
Comment: One commenter
recommended that CMS consider
excluding ‘‘Chest Pain NEC’’ from the
list of eligible cases for these two
measures because many of these cases
are not ‘‘probable cardiac chest pain’’ as
is the intent of the measures. This
commenter also recommended only
using the working diagnosis in the
‘‘final impression,’’ rather than working
diagnoses used throughout the ED
documentation forms, and
recommended excluding patients in
observation status, as patients believed
to have ‘‘probable cardiac chest pain’’ or
AMI will likely not be kept under
observation status. The commenter
believed implementing these
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recommendations will eliminate many
cases that these measures did not intend
to capture. Another commenter noted
that OP–4 has the potential to become
‘‘topped out’’ as the program matures.
Response: We will consider these
suggestions as part of maintenance of
the technical specifications for the
measure. We also will evaluate the
performance of OP–4 over time as we do
with other measures that have been
adopted for public reporting programs.
• Imaging Efficiency Measures
Generally
Comment: Several commenters
objected to CMS continuing to include
the four imaging efficiency measures in
the HOP QDRP. Many of these
commenters objected because none of
the four measures have been adopted by
the HQA. Other commenters
acknowledged that OP–8 and OP–11 are
NQF-endorsed, and also acknowledged
that NQF endorsement is not required,
but recommended that CMS obtain
endorsement for OP–9 and OP–10 in
order to establish their credibility. Some
commenters opined that the two nonNQF endorsed Imaging Efficiency
measures, OP–9 and OP–10, are
inappropriate for the HOP QDRP and
could cause patient harm. One
commenter cautioned that, because the
protocols for reporting contrast media
on claims have varied over the years,
CMS should be aware that the use of
contrast media may not be reliably
documented in claims.
Response: Many of the concerns
raised by the commenters about the
imaging efficiency measures were also
raised at the time the imaging measures
were proposed. We responded to these
concerns when we adopted the
measures (74 FR 68762 through 68766).
We stated that the measures meet the
statutory definition of reflecting
consensus among affected parties
through their consensus-based
development, and that the measures
address important patient safety
concerns related to exposure to
unnecessary radiation and contrast
materials. We also stated that the
Secretary is not required to limit
measures considered for selection to
only those adopted by the HQA or to
those that have been NQF-endorsed. We
anticipate submitting OP–9 and OP–10
for NQF endorsement, along with
national performance information and
other supporting information, when an
appropriate call for measures occurs.
We note the cautionary advice regarding
the varying requirements for reporting
contrast media on claims. However, the
OP–10 and OP–11 measures rely on
procedure codes rather than on specific
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material codes to determine whether a
with-contrast procedure or withoutcontrast procedure was performed. In
other words, these measures only
consider whether contrast media was
appropriately used during diagnostic
imaging procedures, regardless of type.
• OP–8: MRI Lumbar Spine for Low
Back Pain
Comment: Some commenters
indicated that complete details of a
patient treatment plan and history such
as conservative therapy for the previous
60 days would often be unavailable to
an imaging provider or outpatient
center. Other commenters indicated that
this measure would be appropriate for
the PQRI program.
Response: While a HOPD may not
have complete information about a
patient’s treatment plan and history,
such as conservative therapy, HOPDs
are in a position to consult and directly
communicate with ordering physicians
and the radiologists employed by the
HOPD. HOPDs can also educate hospital
medical staff and community physicians
on the appropriate use of MRI for low
back pain. We thank the commenters for
suggesting that OP–8 may be
appropriate for the PQRI program, and
will consider this suggestion. We agree
that the basis for the measure may be
appropriately applied at the ordering
physician level. However, we note that
the measure has been endorsed by the
NQF as appropriate for facility-level
measurement.
• OP–9: Mammography Follow-up
Rates
Comment: Some commenters objected
to this measure because they believed
that there is a lack of consensus as to
what the appropriate recall rate should
be, and that there is no established link
between providers’ recall rates and
patient outcomes. Many commenters
expressed concern that the measure
implies that high follow-up rates are
undesirable, leading to decreased access
to these tests, and an increase in
undiagnosed early cases of cancer.
Other commenters supported this
measure, stating that mammography is a
life saving tool that is currently
underutilized. In addition, some
commenters suggested revisions that
they believed would improve the
current measure. These suggestions
include:
• Extending the call back period to 3
months to allow adequate time for a
patient to return;
• Counting breast MRI within 3
months of a screening examination as a
call back;
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• Revising the measure to be a
proportion of screening mammograms
interpreted as positive, or where the
radiologist has recommended further
evaluation.
Response: We do not believe that
HOPDs should refuse access to
mammograms when appropriate followup study is needed. We also do not
believe that the measure encourages
HOPDs to do so. The measure allows
identification of facilities with
abnormally high rates of ‘‘call-backs’’
from indeterminate or inadequate
screening studies. We will evaluate the
commenters’ suggestions for
improvements to the measure
specifications as part of the
maintenance process for the measure.
• OP–10: Abdomen CT—Use of
Contrast Material
Comment: Some commenters
indicated that there is a lack of evidence
in the literature to determine the
appropriate use of contrast material for
these patients, and, thus, there is no
accepted best practice. In addition,
some commenters asserted that, because
the measure contains a number of
patient exclusions, the applicable
patient population is unclear. Other
commenters approved of the decision to
exclude renal disease patients from this
measure.
Response: We have incorporated
existing clinical guidelines for
appropriate use of combined imaging
studies (with and without contrast) into
the imaging efficiency measures.
Nevertheless, imaging efficiency
measures are not intended to define
absolutes and should not be interpreted
to mean that combined studies would
never be considered appropriate. We
believe that the measures will promote
more careful consideration in individual
cases as to whether, in the particular
circumstance, a combined study is
necessary and thus enhance the efficient
use of combined studies. We also
anticipate that the variation that exists
will lessen and approaches to the use of
combined studies will become more
standardized.
By implementing the denominator
exclusions, we seek to more clearly
define the applicable patient population
for the quality measure. We thank the
commenters that supported the
exclusion of renal disease patients from
the denominator of this measure.
• OP–11: Thorax CT—Use of Contrast
Material
Comment: One commenter objected to
the inclusion of this measure, stating
that current guidelines indicate that it is
acceptable to perform a with-contrast
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study followed by a without-contrast
study as clinically indicated.
Response: We agree that, if clinically
indicated, such dual studies are
appropriate. As with the OP–10
measure, the intent of the OP–11
measure is not to reduce the use of
contrast studies or dual studies to zero,
but to identify facilities utilizing dual
study protocols in the majority of cases
when not clinically appropriate.
After consideration of the public
comments we received, we have
decided to adopt as final our proposal
60637
to retain the existing 11 HOP QDRP
measures without adding new measures
to the measure set for the CY 2011
payment determination. The measure
set that will be used for the CY 2011
payment determination is displayed
below.
HOP QDRP MEASUREMENT SET TO BE USED FOR THE CY 2011 PAYMENT DETERMINATION
OP–1: Median Time to Fibrinolysis
OP–2: Fibrinolytic Therapy Received Within 30 Minutes
OP–3: Median Time to Transfer to Another Facility for Acute Coronary Intervention
OP–4: Aspirin at Arrival
OP–5: Median Time to ECG
OP–6: Timing of Antibiotic Prophylaxis
OP–7: Prophylactic Antibiotic Selection for Surgical Patients
OP–8: MRI Lumbar Spine for Low Back Pain
OP–9: Mammography Follow-up Rates
OP–10: Abdomen CT—Use of Contrast Material
OP–11: Thorax CT—Use of Contrast Material
C. Possible Quality Measures Under
Consideration for CY 2012 and
Subsequent Years
In previous years’ rulemakings, we
have provided lists of quality measures
that are under consideration for future
adoption into the HOP QRDP
measurement set. In the CY 2010 OPPS/
ASC proposed rule (74 FR 35398), we
set out a list of measures under
consideration for the CY 2012 payment
determination and subsequent years.
That list is displayed below.
QUALITY MEASURES UNDER CONSIDERATION FOR CY 2012 AND SUBSEQUENT YEARS’ PAYMENT DETERMINATIONS
Topic
No.
Potential data sources
1
Adjuvant Chemotherapy Is Considered or Administered Within 4
Months of Surgery to Patients Under Age 80 With AJCC III Colon
Cancer.
The measure specifications are similar to PQRI # 72 found at the PQRI
manual Web site: https://www.cms.hhs.gov/apps/ama/license.asp?file=
/PQRI/downloads/2009PQRIQualityMeasureSpecificationsManualand
ReleaseNotes.zip.
Registry.
2
Adjuvant Hormonal Therapy for Patients with Breast Cancer ..................
The measure specifications are similar to PQRI # 71 found at the PQRI
manual Web site: https://www.cms.hhs.gov/apps/ama/license.asp?file=
/PQRI/downloads/2009PQRIQualityMeasureSpecificationsManualand
ReleaseNotes.zip.
Claims, Registry.
3
Needle Biopsy To Establish Diagnosis of Cancer Precedes Surgical Excision/Resection.
The measure specifications can be found at: https://www.quality
forum.org/pdf/reports/Cancer_Nonmember_Report.pdf.
Claims, Registry.
ED Throughput ..............................
4
Median Time From ED Arrival to ED Departure for Discharged ED Patients.
The measure specifications can be found at https://www.qualitynet.org/
in Appendix P of the specifications manual under Hospital—Outpatient.
Chart, EHR.
Diabetes ........................................
5
Low Density Lipoprotein Control in Type 1 or 2 Diabetes Mellitus ..........
The measure specifications are similar to PQRI # 2 found at the PQRI
manual Web site: https://www.cms.hhs.gov/apps/ama/license.asp?file=
/PQRI/downloads/2009PQRIQualityMeasureSpecificationsManualand
ReleaseNotes.zip.
Claims, EHR.
6
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Cancer ...........................................
Measure
Urine protein screening or medical attention for nephrology during at
least one office visit within last year for patient with diabetes mellitus.
The measure specifications are similar to PQRI # 119 found at the
PQRI
manual
Web
site:
https://www.cms.hhs.gov/apps/ama
/license.asp?file=/PQRI/downloads/2009PQRIQualityMeasure
SpecificationsManualandReleaseNotes.zip.
Claims, EHR.
7
Eligible diabetes patients with documentation of an eye exam or referral
for an eye exam within the last 24 months.
Claims, EHR.
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Federal Register / Vol. 74, No. 223 / Friday, November 20, 2009 / Rules and Regulations
QUALITY MEASURES UNDER CONSIDERATION FOR CY 2012 AND SUBSEQUENT YEARS’ PAYMENT DETERMINATIONS—
Continued
Topic
No.
Measure
Potential data sources
The measure specifications are similar to PQRI # 117 found at the
PQRI
manual
Web
site:
https://www.cms.hhs.gov/apps/ama/
license.asp?file=/PQRI/downloads/2009PQRIQualityMeasure
SpecificationsManualandReleaseNotes.zip.
8
Patients who received at least one complete foot exam (visual inspection, sensory examination with monofilament and pulse exam within
the last 12 months.
The measure specifications are similar to PQRI # 126 found at the
PQRI manual Web site: https://www.cms.hhs.gov/apps/ama/license.asp?file=/PQRI/downloads/2009PQRIQualityMeasure
SpecificationsManualandReleaseNotes.zip.
Claims, EHR.
Medication Reconciliation .............
9
Medication Reconciliation ..........................................................................
The measure specifications are similar to PQRI # 46 found at the PQRI
manual Web site: https://www.cms.hhs.gov/apps/ama/license.asp?file=
/PQRI/downloads/2009PQRIQualityMeasureSpecificationsManualand
ReleaseNotes.zip.
Claims, EHR.
Immunization .................................
10
Pneumococcal Vaccination Status—Overall Rate ....................................
The measure specifications are available at https://www.qualityforum.org/
pdf/reports/Immunization/4%2029%20Immunizations_
Nonmembers.pdf.
Influenza Vaccination Status—Overall Rate .............................................
The measure specifications are available at https://www.qualityforum.org/
pdf/reports/Immunization/4%2029%20Immunizations_
Nonmembers.pdf.
Chart, EHR.
12
SPECT MPI and Stress Echocardiography for Preoperative Evaluation
for Low-Risk Non-Cardiac Surgery Risk Assessment.
The
measure
specifications
can
be
found
at
https://
www.imagingmeasures.com/.
Claims.
13
Use of Stress Echocardiography or SPECT MPI Post-Revascularization
Coronary Artery Bypass Graft.
The
measure
specifications
can
be
found
at
https://
www.imagingmeasures.com/.
Claims.
14
Use of Computed Tomography in Emergency Department for Headache
The
measure
specifications
can
be
found
at
https://
www.imagingmeasures.com/.
Claims.
15
Simultaneous Use of Brain Computed Tomography and Sinus Computed Tomography.
The
measure
specifications
can
be
found
at
https://
www.imagingmeasures.com/.
Claims.
16
Appropriate surgical site hair removal ......................................................
The measure specifications are similar to Surgical Care Improvement
Project Infection (SCIP)–6 which can be found at https://
www.qualitynet.org/ under Hospital—Inpatient.
Chart, EHR.
11
Imaging Efficiency .........................
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Surgery ..........................................
We invited public comment on these
quality measures and topics that we
may consider proposing to adopt
beginning with the CY 2012 payment
determination. We also sought
suggestions and rationales to support
the adoption of measures and topics for
the HOP QDRP which do not appear in
the table above.
• Cancer (Potential Measures 1, 2, and
3)
Comment: A number of commenters
supported the cancer measures because:
(1) They align with national priorities
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and CMS priority condition areas; (2)
they provide insight into an area of care
that is very relevant to the consumer;
and (3) the measure set seems to address
health care provided across settings.
One commenter indicated that CMS
should more clearly state whether CMS
or the HOPD will collect information on
chemotherapy within the 4-month
timeframe stated in the measure, and
how this information will be collected.
Some commenters stated that, because
some of the cancer measures are
registry-based measures, the added costs
of implementing measures that require
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Chart, EHR.
paying a fee to a nongovernmental
entity would hinder small rural
hospitals from being able to report data.
Other commenters indicated that a
process for validating registry-based
data should be proposed prior to
implementing quality measures based
on registry data.
Response: We agree with the
commenters who supported the cancer
measures. We acknowledge that
receiving data from registries presents
additional issues, but believe that in
circumstances where substantial
timeframes are involved, registries may
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provide the best data collection
mechanism. We will take these
comments into consideration in
deciding whether to propose these
measures in the future for the HOP
QDRP, and would specify the form and
manner for data submission required
should we, in the future, adopt these
measures.
dcolon on DSK2BSOYB1PROD with RULES2
• Emergency Department Throughput
(Potential Measure 4)
Comment: A few commenters
expressed strong support for the ED
throughput Measure 4 (Median Time
from ED Arrival to ED Departure for
Discharged ED Patients) and
recommended its inclusion in the HOP
QDRP. Some commenters stated that a
measure assessing delays in patient care
is important as providers experience a
growth in demand for ED services.
Commenters saw the measure as making
significant contributions to reducing
overcrowding, and in turn increasing
the quality of care delivered,
particularly when public reporting
occurs.
Response: We thank these
commenters for their supportive
statements. We agree with the
commenters that this measure addresses
the issue of timely emergency
department care and delays which have
an adverse impact on quality of care due
to overcrowding.
Comment: One commenter indicated
that the ED throughput measure is
overly burdensome for hospitals to
collect as it will require an arrival time
to be noted for each patient, whether the
patient is on observation, and will
require sampling over 300 records per
quarter. Other commenters indicated
that, as currently structured, the
measure includes the time spent
receiving care in the ED in addition to
the time spent waiting in the ED. These
commenters indicated that the time
spent receiving care in the ED should
not be counted against the hospital, as
it does not represent a delay in care. The
commenters stated that, for patients
discharged back into the community,
and not admitted or transferred to
another facility, there is no wait time in
the ED after the patient has received the
appropriate care. The commenters noted
that, for these patients, any time spent
waiting in the ED occurs before they see
a provider. The commenters suggested
that CMS modify the measure so that it
reflects only the time spent waiting in
the ED to see a provider. One
commenter questioned whether the
measure actually measures quality
because fast care is not necessarily
better care. Another commenter
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indicated that it could not locate the
specifications for this measure.
Response: We do not agree that the
measure, as currently specified, would
be overly burdensome to collect,
because hospitals routinely collect the
key information needed to calculate the
median time (ED arrival date and time
and ED departure date and time) for
each emergency department patient.
The current measure is an NQFendorsed measure of quality, and
feasibility of collection was among the
considerations for its endorsement.
Revising the measure in the manner
suggested by the commenters to exclude
active treatment times would be
impractical, as it would impose a severe
burden for hospitals to accurately track
and collect the time spent in the ED not
receiving care. We do not agree with the
comment that prolonged ED throughput
is solely due to time elapsed between
arrival and first contact with a provider.
The measure specifications are currently
available in Appendix P of the HOPD
Specifications Manual (versions 2.1b
and 3.0) which is posted on the
QualityNet Web site (https://
www.qualitynet.org/).
• Diabetes (Potential Measures 5, 6, 7,
and 8)
Comment: A few commenters
indicated that they believed the three
diabetes measures would be better
suited to measure the quality of care in
physician offices or physician-based
clinics rather than in HOPDs. Other
commenters indicated that, if finalized,
CMS should consider HOPD
participation in a disease management
registry, or recognition and/or
certification in disease management, as
substitutes for the requirement of
submitting diabetes-related quality
measures to the CMS for the HOP
QDRP. One commenter indicated that,
for the LDL Control measure, CMS
should account for the fact that some
patients may not reach the goal but their
risk may be mitigated by high HDL. One
commenter indicated that the timeframe
for the eye examination should be 24
months if there is no retinopathy and 12
months if retinopathy is known to be
present.
Response: We agree on the suitability
of such measures for the physician
office setting and note that these
measures are currently part of the PQRI
program. We would anticipate that these
measures would be appropriate for
reporting by those HOPDs that function
as a primary care provider. We would
not view participation in a registry or
disease management program
certification/recognition as a substitute
for reporting quality measures for the
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60639
HOP QDRP because it would not allow
us to achieve the goal of providing
comparative quality information on
HOPDs to Medicare beneficiaries. These
measures are currently being specified
for the HOPD setting, and we will
consider the suggestions for
enhancements submitted by
commenters.
• Medication Reconciliation (Potential
Measure 9)
Comment: A few commenters
supported the medication reconciliation
measure but urged CMS to clarify its
expectation of medication reconciliation
in the ED. Some commenters indicated
that, although medication reconciliation
measures were recently NQF-endorsed,
implementing a quality measure in
multiple outpatient settings may result
in more medication errors, and
recommended that the measure be
implemented in primary care settings.
Response: We are interested in
medication reconciliation in all settings
of care because medication errors may
result in serious avoidable
complications, and receiving the
appropriate medications throughout the
continuum of care may prevent the
onset or worsening of serious medical
conditions. Thus, the reduction of
medication errors would contribute to
overall improvements in patient
outcomes and quality of life and would
reduce mortality and hospital
readmissions. We would expect that,
prior to administration of or
prescription of drugs in an ED setting,
a patient’s current medications, drug
allergies, current acute condition, and
chronic conditions would be assessed to
the extent possible in order to prevent
adverse drug-drug interactions and
drug-disease interactions. We will take
these comments into consideration in
determining whether to propose this
measure for the HOP QDRP in the
future.
• Immunization (Potential Measures 10
and 11)
Comment: One commenter stated that
the influenza and pneumococcal
vaccination measures will contribute to
ED overcrowding, and that the measures
are not appropriate for the HOPD setting
as administering influenza and
pneumococcal vaccinations are not part
of routine emergency care protocols like
administering a tetanus vaccine would
be for wound care. The commenter
believed that the measures will work
against the ED throughput measures and
would be more appropriate for
physician offices and community public
health departments.
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Response: These measures are
currently being specified for HOPDs and
are not intended for EDs. These
measures are intended to apply to the
facility under circumstances where the
HOPD serves as a primary care provider.
We will consider these comments in
deciding whether to propose this
measure for the HOP QDRP.
dcolon on DSK2BSOYB1PROD with RULES2
• Imaging Efficiency—SPECT MPI and
Stress Echocardiography (Potential
Measures 12 and 13)
Comment: Some commenters
indicated that the two measures on
SPECT MPI and Stress
Echocardiography should not be
considered for the following reasons:
• Lack of benchmarks;
• Preoperative or postoperative
period difficult for provider of test to
track;
• Lack of medical history makes it
difficult for a provider to determine if a
test is appropriate for a patient;
• Not clear how the purpose of test
(preoperative evaluation) is captured in
Medicare claims; and
• Medicare claims provide an
incomplete picture of facility
performance.
In addition, for Measure 13 (Use of
Stress Echocardiography or SPECT MPI
Post-Revascularization Coronary Artery
Bypass Graft (CABG)), the commenters
indicated that the measure’s long time
span of a 5-year period post-CABG
hinders its usability as the information
will be unavailable for a number of
years and will be irrelevant by the time
it becomes available.
Response: These measures are
currently under development, and we
will take these comments into
consideration as the measures are
developed further.
Comment: Some commenters
applauded CMS’ effort to obtain
consensus among affected parties as
evidenced by hosting of a public
comment period during the measure
development process, and supported
Measure 12 (SPECT MPI and Stress
Echocardiography for Preoperative
Evaluation of Low Risk Non-Cardiac
Surgery) and Measure 13. However,
these commenters also recommended
stratification of the measures by imaging
procedure.
Response: We appreciate the
supportive comments regarding our
consensus-based measure development
process. We will consider these
suggestions for these measures as we
continue measure development.
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• Imaging Efficiency—Computed
Tomography (Potential Measures 14 and
15)
Comment: For both measures, several
commenters indicated that the measures
target important areas where overuse of
diagnostic imaging may be detrimental
to patient care, and the measures appear
valid and usable. However, the
commenters believed that because the
measures are based on Medicare claims,
they would provide an incomplete
picture of facility performance. One
commenter suggested excluding ‘‘sign of
meningeal irritation (stiff neck)’’ from
Measure 14 (Use of Computed
Tomography in Emergency Department
for Headache).
Response: Both of these measures are
under development, and both address
overutilization of CT scans in the
outpatient setting which have
implications for patient safety due to
radiation exposure. The goal of these
measures is not to reduce outpatient
diagnostic CT imaging in these
circumstances to zero, but to encourage
its use only in circumstances where it
is clinically indicated. Though all-payer
claims are not currently included in
these measures, due to the high volume
of these services in the Medicare
population relative to other populations,
we believe that calculation of these
measures based on Medicare claims
only will target performance
improvement where it is most needed:
in the population that is at high risk for
inappropriate imaging studies. We
appreciate the supportive comments,
and will consider these suggestions in
the continuing development of these
measures.
• Surgery (Potential Measure 16)
Comment: Some commenters
indicated that Measure 16 (Appropriate
surgical site hair removal) is an
unnecessary measure, as performance
on the measure in the inpatient setting
is already in the high 90 percent range
for the Nation. One commenter also
indicated that SCIP officials may retire
the measure because it is ‘‘topped out’’
and no longer distinguishes between
high performers and low performers.
Other commenters suggested that CMS
not use this measure for quality
reporting or, at the very least, exclude
cases for which there is no supporting
evidence that the use of razors results in
lesser quality of care, and cases in
which razors would prevent wound
bandages from falling off, thus
decreasing the chance of infection.
Response: While hospitals may
perform highly on this measure in the
inpatient setting, we currently do not
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know if this is the case for the
outpatient setting. We will take these
comments into consideration in
determining whether to propose this
measure for the HOP QDRP in the
future.
• Other Suggested Measures or
Measurement Areas
Comment: Commenters suggested
several measures or measurement areas
for CMS to consider for future
development and adoption. The
suggestions include:
• Heart Failure: ACE or ARB for
LVSD (NQF #0137);
• Pneumonia: Empiric antibiotic for
CAP (NQF #0096);
• Diabetes: Hemoglobin A1c poor
control in type 1 or 2 diabetes mellitus
(NQF #0059);
• Outcome-based measures;
• Radiation therapy administered
within 1 year of diagnosis for women
under 70 receiving breast conserving
surgery for breast cancer;
• Patient centeredness;
• Total lipid treatment;
• ED throughput;
• Orthopedic procedures;
• Diagnostic Mammography Positive
Predictive Value;
• Screening Mammography Positive
Predictive Value;
• Cancer Detection Rate (CDR);
• Abnormal Interpretation Rate;
• Emergency Department AMI
mortality;
• Emergency Department-related
nonmortality outcome measures (that is,
NQF Sepsis measures);
• Overall cardiac care;
• Use and overuse of Cardiac CT;
• Percutaneous Cardiac Interventions
(‘‘PCI’’);
• Care transitions/care coordination;
• AMI–2: Aspirin prescribed at
discharge;
• AMI–5: Beta Blocker prescribed at
discharge;
• HF–1: Discharge instructions;
• PN–3b: Blood culture performed
before first antibiotic received in
hospital;
• COPD management;
• NQF-endorsed ASC quality
measures;
• Rate of surgical infections in
outpatient surgery centers; and
• Rate of infection outbreaks related
to contaminated scopes, syringes, and
other medical equipment.
Response: We thank the commenters
for these suggestions for quality
measures and measurement areas for the
HOP QDRP, and we will consider them
for the future. Some of the topics are
reflected in the current list of measures
and topics for future consideration.
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Some of the specific measures suggested
were considered in the past for the HOP
QDRP but, upon evaluation, were either
found not to be appropriate measures
for HOPD services or were found to be
overly burdensome. Other measures and
measure topics on this list are currently
under consideration as future areas of
measurement for inpatient quality
measure reporting, and we will examine
the appropriateness of these measures
for the HOP QDRP as well.
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D. Payment Reduction for Hospitals
That Fail To Meet the HOP QDRP
Requirements for the CY 2010 Payment
Update
1. Background
Section 1833(t)(17)(A) of the Act,
which applies to hospitals as defined
under section 1886(d)(1)(B) of the Act,
requires that hospitals that fail to report
data required for the quality measures
selected by the Secretary, in the form
and manner required by the Secretary
under section 1833(t)(17)(B) of the Act,
incur a 2.0 percentage point reduction
to their OPD fee schedule increase
factor, that is, the annual payment
update factor. Section 1833(t)(17)(A)(ii)
of the Act specifies that any reduction
would apply only to the payment year
involved and would not be taken into
account in computing the applicable
OPD fee schedule increase factor for a
subsequent payment year.
In the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68769
through 68772), we discussed how the
payment reduction for failure to meet
the administrative, data collection, and
data submission requirements of the
HOP QDRP affected the CY 2009
payment update applicable to OPPS
payments for HOPD services furnished
by the hospitals defined under section
1886(d)(1)(B) of the Act to which the
program applies. The application of a
reduced OPD fee schedule increase
factor results in reduced national
unadjusted payment rates that apply to
certain outpatient items and services
provided by hospitals that are required
to report outpatient quality data and
that fail to meet the HOP QDRP
requirements. All other hospitals paid
under the OPPS receive the full OPPS
payment update without the reduction.
The national unadjusted payment
rates for many services paid under the
OPPS equal the product of the OPPS
conversion factor and the scaled relative
weight for the APC to which the service
is assigned. The OPPS conversion
factor, which is updated annually by the
OPD fee schedule increase factor, is
used to calculate the OPPS payment rate
for services with the following status
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indicators (listed in Addendum B to this
final rule with comment period): ‘‘P,’’
‘‘Q1,’’ ‘‘Q2,’’ ‘‘Q3,’’ ‘‘R,’’ ‘‘S,’’ ‘‘T,’’ ‘‘V,’’
‘‘U,’’ or ‘‘X.’’ In the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68770), we adopted a policy that
payment for all services assigned these
status indicators would be subject to the
reduction of the national unadjusted
payment rates for applicable hospitals,
with the exception of services assigned
to New Technology APCs, assigned
status indicator ‘‘S’’ or ‘‘T,’’ and
brachytherapy sources, assigned status
indicator ‘‘U,’’ which were paid at
charges adjusted to cost in CY 2009. We
excluded services assigned to New
Technology APCs from the list of
services subject to the reduced national
unadjusted payment rates because the
OPD fee schedule increase factor is not
used to update the payment rates for
these APCs.
In addition, section 1833(t)(16)(C) of
the Act, as amended by section 142 of
Public Law 110–275, specifically
required that brachytherapy sources be
paid during CY 2009 on the basis of
charges adjusted to cost, rather than
under the standard OPPS methodology.
Therefore, the reduced conversion factor
also was not applicable to CY 2009
payment for brachytherapy sources
because payment would not be based on
the OPPS conversion factor and,
consequently, the payment rates for
these services were not updated by the
OPD fee schedule increase factor.
However, in accordance with section
1833(t)(16)(C) of the Act, as amended by
section 142 of Public Law 110–275,
payment for brachytherapy sources at
charges adjusted to cost is set to expire
on January 1, 2010. For CY 2010, in the
CY 2010 OPPS/ASC proposed rule (74
FR 35399), we proposed to pay
prospectively for brachytherapy sources.
Therefore, we proposed that the CY
2010 payment for brachytherapy sources
would be based on the conversion factor
and the quality reporting reduction
policy would be applicable to
brachytherapy sources, which are
assigned status indicator ‘‘U.’’
We did not receive any public
comments on our proposal to apply the
reporting reduction to payment for
brachytherapy sources, effective for
services furnished on and after
January 1, 2010. Therefore, we are
finalizing our CY 2010 proposal,
without modification, to apply the
reduction to payment for brachytherapy
sources to hospitals that fail to meet the
quality data reporting requirements of
the HOP QDRP for the CY 2010 OPD fee
schedule increase factor.
The OPD fee schedule increase factor,
or market basket update, is an input into
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60641
the OPPS conversion factor, which is
used to calculate OPPS payment rates.
To implement the requirement to reduce
the market basket update for hospitals
that fail to meet reporting requirements,
in the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68770
through 68771), we calculated two
conversion factors: a full market basket
conversion factor (that is, the full
conversion factor), and a reduced
market basket conversion factor (that is,
the reduced conversion factor). We then
calculated a reduction ratio by dividing
the reduced conversion factor by the full
conversion factor. We refer to this
reduction ratio as the ‘‘reporting ratio’’
to indicate that it applies to payment for
hospitals that fail to meet their reporting
requirements. Applying this reporting
ratio to the OPPS payment amounts
results in reduced national unadjusted
payment rates that are mathematically
equivalent to the reduced national
unadjusted payment rates that would
result if we multiplied the scaled OPPS
relative weights by the reduced
conversion factor. To determine the
reduced national unadjusted payment
rates that applied to hospitals that failed
to meet their quality reporting
requirements for the CY 2009 OPPS, we
multiplied the final full national
unadjusted payment rate in Addendum
B to the CY 2009 OPPS/ASC final rule
with comment period by the CY 2009
OPPS final reporting ratio of 0.981 (73
FR 68771).
In the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68771
through 68772), we established a policy
that the Medicare beneficiary’s
minimum unadjusted copayment and
national unadjusted copayment for a
service to which a reduced national
unadjusted payment rate applies would
each equal the product of the reporting
ratio and the national unadjusted
copayment or the minimum unadjusted
copayment, as applicable, for the
service. We applied the reporting ratio
to both the minimum unadjusted
copayment and national unadjusted
copayment for those hospitals that
received the payment reduction for
failure to meet the HOP QDRP reporting
requirements. This application of the
reporting ratio to the national
unadjusted and minimum unadjusted
copayments was calculated according to
§ 419.41 of the regulations, prior to any
adjustment for hospitals’ failure to meet
the quality reporting standards
according to § 419.43(h). Beneficiaries
and secondary payers thereby share in
the reduction of payments to these
hospitals.
In the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68772), we
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established the policy that all other
applicable adjustments to the OPPS
national unadjusted payment rates
apply in those cases when the OPD fee
schedule increase factor is reduced for
hospitals that fail to meet the
requirements of the HOP QDRP. For
example, the following standard
adjustments apply to the reduced
national unadjusted payment rates: the
wage index adjustment; the multiple
procedure adjustment; the interrupted
procedure adjustment; the rural sole
community hospital adjustment; and the
adjustment for devices furnished with
full or partial credit or without cost. We
believe that these adjustments continue
to be equally applicable to payments for
hospitals that do not meet the HOP
QDRP requirements. Similarly, outlier
payments will continue to be made
when the criteria are met. For hospitals
that fail to meet the quality data
reporting requirements, the hospitals’
costs are compared to the reduced
payments for purposes of outlier
eligibility and payment calculation.
This policy conforms to current practice
under the IPPS. For a complete
discussion of the OPPS outlier
calculation and eligibility criteria, we
refer readers to section II.F. of this CY
2010 OPPS/ASC final rule with
comment period.
2. Reporting Ratio Application and
Associated Adjustment Policy for CY
2010
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35400), we proposed to
continue our established policy of
applying the reduction of the OPD fee
schedule increase factor through the use
of a reporting ratio for those hospitals
that fail to meet the HOP QDRP
requirements for the full CY 2010
annual payment update factor. For the
CY 2010 OPPS, the proposed reporting
ratio was 0.980, calculated by dividing
the reduced conversion factor of
$66.118 by the full conversion factor of
$67.439. The final CY 2010 OPPS
reporting ratio is 0.980, calculated by
dividing the reduced conversion factor
of $66.086 by the full conversion factor
of $67.406. We proposed to continue to
apply the reporting ratio to all services
calculated using the OPPS conversion
factor. For the CY 2010 OPPS, we
proposed to apply the reporting ratio,
when applicable, to all HCPCS codes to
which we have assigned status
indicators ‘‘P,’’ ‘‘Q1,’’ ‘‘Q2,’’ ‘‘Q3,’’ ‘‘R,’’
‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X’’ and, effective for
services furnished on or after January 1,
2010, to also apply it to the HCPCS
codes for brachytherapy sources, to
which we have assigned status indicator
‘‘U.’’ Under our established policy, we
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would continue to exclude services paid
under New Technology APCs. We
proposed to continue to apply the
reporting ratio to the national
unadjusted payment rates and the
minimum unadjusted and national
unadjusted copayment rates of all
applicable services for those hospitals
that fail to meet the HOP QDRP
reporting requirements. We also
proposed to continue to apply all other
applicable standard adjustments to the
OPPS national unadjusted payment
rates for hospitals that fail to meet the
requirements of the HOP QDRP.
Similarly, we proposed to continue to
calculate OPPS outlier eligibility and
outlier payment based on the reduced
payment rates for those hospitals that
fail to meet the reporting requirements.
We did not receive any public
comments on our CY 2010 proposal to
apply the HOP QDRP reduction in the
manner described in the paragraph
above and, therefore, are finalizing our
proposal, without modification. For the
CY 2010 OPPS, we are applying a
reporting ratio of 0.980 to the national
unadjusted payments, minimum
unadjusted copayments, and national
unadjusted copayments for all
applicable services reported by those
hospitals failing to meet the HOP QDRP
reporting requirements. This reporting
ratio applies to lines with HCPCS codes
assigned status indicators ‘‘P,’’ ‘‘Q1,’’
‘‘Q2,’’ ‘‘Q3,’’ ‘‘R,’’ ‘‘S,’’ ‘‘T,’’ ‘‘U,’’ ‘‘V,’’
or ‘‘X,’’ excluding services paid under
New Technology APCs. All other
applicable standard adjustments to the
OPPS national unadjusted payment
rates will continue to apply. This
includes the OPPS outlier eligibility and
payment calculations, which are
determined using the reduced payment
rates.
E. Requirements for HOPD Quality Data
Reporting for CY 2011 and Subsequent
Years
In order to participate in the HOP
QDRP, hospitals must meet
administrative, data collection and
submission, and data validation
requirements (if applicable). Hospitals
that do not meet the requirements of the
HOP QDRP, as well as hospitals not
participating in the program and
hospitals that withdraw from the
program, will not receive the full OPPS
payment rate update. Instead, in
accordance with section 1833(t)(17)(A)
of the Act, those hospitals will receive
a reduction of 2.0 percentage points in
their updates for the applicable payment
year.
For payment determinations affecting
the CY 2011 payment update, in the CY
2010 OPPS/ASC proposed rule (74 FR
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35400), we proposed to implement the
requirements listed below. Most of these
requirements are the same as the
requirements we implemented for the
CY 2010 payment determination, with
some proposed modifications.
1. Administrative Requirements
To participate in the HOP QDRP,
several administrative steps must be
completed. These steps require the
hospital to:
• Identify a QualityNet administrator
who follows the registration process
located on the QualityNet Web site
(https://www.QualityNet.org) and
submits the information to the
appropriate CMS-designated contractor.
All CMS-designated contractors will be
identified on the QualityNet Web site.
The same person may be the QualityNet
administrator for both the RHQDAPU
program and the HOP QDRP. From our
experience, we believe that the
QualityNet administrator typically
fulfills a variety of tasks related to the
hospital’s ability to participate in the
HOP QDRP, such as: creating,
approving, editing and/or terminating
QualityNet user accounts within the
organization; monitoring QualityNet
usage to maintain proper security and
confidentiality measures; and serving as
a point of contact for information
regarding QualityNet and the HOP
QDRP.
In the past, we have required not only
that the hospital designate a QualityNet
administrator for purposes of registering
the hospital to participate in the HOP
QDRP, but also that the hospital
continually maintain a QualityNet
administrator for as long as the hospital
participates in the program. We have
become aware that the required
maintenance of the QualityNet
administrator is creating an undue
technical burden for some hospitals and
that, in some cases, is preventing the
hospital from meeting all of the HOP
QDRP requirements. Therefore, we
proposed to no longer require that a
hospital maintain current designation of
a QualityNet administrator. We invited
public comment on this proposed
change. Nevertheless, we strongly urged
hospitals to maintain current
designation of a QualityNet
administrator, regardless of whether the
hospital submits data directly to the
CMS-designated contractor or uses a
vendor for transmission of data.
Comment: Many commenters agreed
with CMS’ proposal to remove the
requirement to maintain current
designation of a QualityNet
administrator. Some of these
commenters expressed their belief that
it is in a hospital’s best interest to
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maintain a QualityNet administrator if
possible. One commenter greatly
appreciated the proposal to no longer
require hospitals to maintain a
QualityNet administrator to oversee the
collection of HOP QDRP data because of
the undue technical burden, particularly
for hospitals in rural areas. This
commenter believed that giving
hospitals the option will lead to better
quality data collection by lessening this
burden on certain rural hospitals.
Response: We thank these
commenters for their support; we agree
that removing this program requirement
will relieve a technical burden
especially for some small or rural
hospitals. However, due to information
systems security requirements, we have
now determined that we are prohibited
from removing the requirement for a
QualityNet Security Administrator at
this time. We remind hospitals that are
submitting their own data without the
use of a vendor that the hospital must
have at least one active QualityNet
account with the appropriate role
assigned in order to submit data. We
note that those hospitals with
QualityNet accounts (Security
Administrator and non-Security
Administrator) that are in danger of
lapsing receive multiple e-mail
notifications that contain reminders that
they must sign in or the account will be
deactivated.
After consideration of the public
comments we received, due to systems
requirements, we are not adopting our
proposal to no longer require that a
hospital maintain current designation of
a QualityNet Administrator. Instead,
hospitals must continue to maintain a
QualityNet Security Administrator as
part of the HOP QDRP requirements.
• Register with QualityNet, regardless
of the method used for data submission.
• Complete and submit an online
participation form if this form (or a
paper Notice of Participation form) has
not been previously completed, if a
hospital has previously withdrawn, or if
the hospital acquires a new CCN. For
HOP QDRP decisions affecting the CY
2011 payment determination, hospitals
that share the same CCN must complete
a single online participation form. In the
CY 2009 OPPS/ASC final rule with
comment period (73 FR 68772), we
implemented an online registration form
and eliminated the paper form. At this
time, the participation form for the HOP
QDRP is separate from the RHQDAPU
program and completing a form for each
program is required. Agreeing to
participate includes acknowledging that
the data submitted to the CMSdesignated contractor will be submitted
to CMS and may also be shared with
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one or more other CMS contractors that
support the implementation of the HOP
QDRP and be publicly reported.
Under our current requirements, the
deadline for submitting the
participation form is 30 days following
receipt of a CCN form from CMS (73 FR
68772). In the CY 2010 OPPS/ASC
proposed rule (74 FR 35400), we
proposed to change this requirement as
follows:
Hospitals with Medicare acceptance
dates on or after January 1, 2010: For
the CY 2011 payment update, we
proposed that any hospital that has a
Medicare acceptance date on or after
January 1, 2010 (including a new
hospital and hospitals that have merged)
must submit a completed participation
form no later than 180 days from the
date identified as its Medicare
acceptance date on the CMS Online
System Certification and Reporting
(OSCAR) system. Hospitals typically
receive a package notifying them of their
new CCN after they receive their
Medicare acceptance date. The
Medicare acceptance date is the earliest
date that a hospital can receive
Medicare payment for the services that
it furnishes. Completing the
participation form includes supplying
the name and address of each hospital
campus that shares the same CCN.
The use of the Medicare acceptance
date as beginning the timeline for HOP
QDRP participation will allow CMS to
monitor more effectively hospital
compliance with the requirement to
complete a participation form because a
hospital’s Medicare acceptance date is
readily available to CMS through its
data systems. In addition, providing an
extended time period to register for the
program will allow newly functioning
hospitals sufficient time to get their
operations up and running before
having to collect and submit quality
data. We invited public comment on
these proposed changes.
Hospitals with Medicare acceptance
dates before January 1, 2010, that want
to participate or withdraw: For the CY
2011 payment update, we proposed that
any hospital that has a Medicare
acceptance date on or before December
31, 2009 that wants to withdraw from
participation in the CY 2011 HOP QDRP
or that is not currently participating in
the HOP QDRP and wishes to
participate in the CY 2011 HOP QDRP
must submit a participation form by
March 31, 2010. We proposed a
deadline of March 31, 2010, because we
believe it will give hospitals sufficient
time to decide whether they wish to
participate in the HOP QDRP, as well as
put into place the necessary staff and
resources to timely report data for first
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60643
quarter CY 2010 services. This
requirement applies to all hospitals
whether or not the hospital has billed
for payment under the OPPS. We
invited public comment on these
proposed changes.
Comment: Several commenters agreed
with CMS’ proposal to provide
additional time for hospitals to submit
an HOP QDRP participation form. One
commenter believed that, for hospitals
with Medicare acceptance dates prior to
January 2010, a 3-month window
ending March 31, 2010, is reasonable in
which to make a decision regarding
participation.
Response: We thank the commenters
for their support.
Comment: One commenter stated that,
based on its experience with hospital
mergers, the surviving facility does not
typically receive a new CCN and asked
that the requirement that merged
facilities submit a new participation
form be confirmed.
Response: Annual payment update
decisions are made for a hospital’s CCN.
If a hospital’s CCN does not change in
a merger situation and the hospital is
currently participating in the HOP
QDRP, the hospital with that CCN
would continue to be subject to HOP
QDRP requirements, so a new
participation form would not be
required. However, the participation
form requests that hospitals submit
National Provider Identifier (NPI)
information for any facilities connected
to the hospital that bill under the
hospital’s CCN. The hospital may want
to update its participation form to
include any facilities added due to a
merger, but there is no HOP QDRP
requirement to do so at this time. If the
hospital’s CCN did not change in a
merger situation and it was not
participating in the HOP QDRP and now
wishes to do so, or was participating
and now wishes to withdraw, it must
comply with the March 31, 2010
timeframe for completing a participation
form.
After consideration of the public
comments we received, we are adopting
as final our proposed administrative
requirements with one exception. We
are not adopting our proposal to no
longer require that a hospital maintain
current designation of a QualityNet
Administrator. Instead, hospitals must
continue to maintain a QualityNet
Security Administrator as part of HOP
QDRP requirements.
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2. Data Collection and Submission
Requirements
a. General Data Collection and
Submission Requirements
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35401), we proposed that, to
be eligible for the full CY 2011 OPPS
payment update, hospitals must:
• Submit data: Hospitals that are
participating in the HOP QDRP must
submit data for each applicable quarter
by the deadline posted on the
QualityNet Web site; there must be no
lapse in data submission. For the CY
2011 annual payment update, the
applicable quarters will be as follows:
3rd quarter CY 2009, 4th quarter CY
2009, 1st quarter CY 2010, and 2nd
quarter CY 2010. Hospitals that did not
participate in the CY 2010 HOP QDRP,
but would like to participate in the CY
2011 HOP QDRP, and that have a
Medicare acceptance date on the
OSCAR system before January 1, 2010,
must begin data submission for 1st
quarter CY 2010 services using the CY
2011 measure set that we are finalizing
in this final rule with comment period.
For those hospitals with Medicare
acceptance dates on or after January 1,
2010, data submission must begin with
the first full quarter following the
submission of a completed online
participation form. For the four claimsbased measures, we will calculate the
measures using the hospital’s Medicare
claims data. For the CY 2011 payment
update, we will utilize paid Medicare
fee-for-service (FFS) claims submitted
prior to January 1, 2010, to calculate
these four measures.
Sampling and Case Thresholds: It will
not be necessary for a hospital to submit
data for all eligible cases for some
measures if sufficient eligible case
thresholds are met. Instead, for those
measures where a hospital has a
sufficiently large number of cases, it can
sample cases and submit data for these
sampled cases rather than submitting
data from all eligible cases. This
sampling scheme which includes the
minimum number of cases based upon
case volume will be set out in the HOPD
Specifications Manual at least 4 months
in advance of the required data
collection. Hospitals must meet the
sampling requirements for required
quality measures each reporting quarter.
In addition, in order to reduce the
burden on hospitals that treat a low
number of patients but otherwise meet
the submission requirements for a
particular quality measure, hospitals
that have five or fewer claims (both
Medicare and non-Medicare) for any
measure included in a measure topic in
a quarter will not be required to submit
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patient level data for the entire measure
topic for that quarter. Even if hospitals
are not required to submit patient level
data because they have five or fewer
claims (both Medicare and nonMedicare) for any measure included in
a measure topic in a quarter, they may
voluntarily do so.
Hospitals must submit all required
data according to the data submission
schedule that will be available on the
QualityNet Web site (https://
www.QualityNet.org). This Web site
meets or exceeds all current Health
Insurance Portability and
Accountability Act requirements.
Submission deadlines will, in general,
be four months after the last day of each
calendar quarter. Thus, for example, the
submission deadline for data for
services furnished during the first
quarter of CY 2010 (January–March
2010) will be on or around August 1,
2010. The actual submission deadlines
will be posted on the https://
www.QualityNet.org Web site.
Hospitals must submit data to the
OPPS Clinical Warehouse using either
the CMS Abstraction and Reporting
Tool for Outpatient Department (CART–
OPD) measures or the tool of a thirdparty vendor that meets the measure
specification requirements for data
transmission to QualityNet.
Hospitals must submit quality data
through My QualityNet, the secure
portion of the QualityNet Web site, to
the OPPS Clinical Warehouse. The
OPPS Clinical Warehouse, which is
maintained by a CMS-designated
contractor, will submit the OPPS
Clinical Warehouse data to CMS. OPPS
Clinical Warehouse data are not
currently considered to be Quality
Improvement Organization (QIO) data;
rather, we consider such data to be CMS
data. However, it is possible that the
information in the OPPS Clinical
Warehouse may at some point become
QIO information. If this occurs, these
data would also become protected under
the stringent QIO confidentiality
regulations in 42 CFR part 480.
Hospitals must collect HOP QDRP
data from outpatient episodes of care to
which the required measures apply. For
the purposes of the HOP QDRP, an
outpatient ‘‘episode of care’’ is defined
as care provided to a patient who has
not been admitted as an inpatient, but
who is registered on the hospital’s
medical records as an outpatient and
receives services (rather than supplies
alone) directly from the hospital. Every
effort will be made to ensure that data
elements common to both inpatient and
outpatient settings are defined
consistently for purposes of quality
reporting (such as ‘‘time of arrival’’).
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Hospitals are to submit required
quality data using the CCN under which
the care was furnished.
To be accepted into the OPPS Clinical
Warehouse, data submissions, at a
minimum, must be timely, complete,
and accurate. Data submissions are
considered to be ‘‘timely’’ when data are
successfully accepted into the OPPS
Clinical Warehouse on or before the
reporting deadline. A ‘‘complete’’
submission is determined based on
whether the data satisfy the sampling
criteria that are published and
maintained in the HOPD Specifications
Manual, and must correspond to both
the aggregate number of cases submitted
by a hospital and the number of
Medicare claims the hospital submits
for payment. We are aware of ‘‘data
lags’’ that occur due to when hospitals
submit claims, then cancel and correct
those claims; efforts will be made to
take such events into account that can
change the aggregate Medicare case
counts. To be considered ‘‘accurate,’’
submissions must pass validation, if
applicable.
CMS strongly recommends that
hospitals review OPPS Clinical
Warehouse feedback reports and the
HOP QDRP Provider Participation
Reports that are accessible through their
QualityNet accounts. These reports
enable hospitals to verify whether the
data they or their vendor submitted was
accepted into the OPPS Clinical
Warehouse and the date/time that such
acceptance occurred. We also note that
irrespective of whether a hospital
submits data to the OPPS Clinical
Warehouse itself or uses a vendor to
complete the submissions, the hospital
is responsible for ensuring that HOP
QDRP requirements are met.
Finally, although not required,
hospitals may submit, on a voluntary
basis, the aggregate numbers of
outpatient episodes of care which are
eligible for submission under the HOP
QDRP and sample size counts. These
aggregated numbers of outpatient
episodes represent the number of
outpatient episodes of care in the
universe of all possible cases eligible for
data reporting under the HOP QDRP.
We do not wish to require this
submission at this time because we
continue to see evidence that some
hospitals would not be able to meet this
requirement. However, as it is vital for
quality data reporting for hospitals to be
able to determine their population sizes,
we believe it is highly beneficial for
hospitals to develop systems that can
determine whether or not they have
furnished services or billed for five or
fewer cases for a particular measure
topic on a quarterly basis. CMS strongly
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recommends that all hospitals work to
develop systems that can accurately
determine their population and sample
sizes for purposes of quality reporting.
In the future, we plan to use the
aggregate population and sample size
data to assess data submission
completeness and adherence to
sampling requirements for Medicare and
non-Medicare patients.
For the reporting of aggregate
numbers of outpatient episodes of care
and sample size counts, we proposed
that the deadlines for this reporting will
be the same as they are for the reporting
of quality measures, and these deadlines
will be posted on the data submission
schedule that will be available on the
QualityNet Web site.
We invited public comment on these
proposed changes.
Comment: One commenter
appreciated CMS’ clear and concise
definition of an outpatient episode of
care. Another commenter asked for a
clear definition of what constitutes an
outpatient setting.
Response: We thank the first
commenter for its support for our
definition of an outpatient episode of
care. This definition is drawn from the
CMS Claims Processing Manual.
Chapter 1, Section 50.3.1 of the CMS
Claims Processing Manual (issued 06–
23–09; Effective Date: 07–01–09) states
‘‘Outpatient’ means a person who has
not been admitted as an inpatient but
who is registered on the hospital or
critical access hospital (CAH) records as
an outpatient and receives services
(rather than supplies alone) directly
from the hospital or CAH.’’ Thus, based
upon the definition of outpatient, an
outpatient setting would be a health
care setting where a person is registered
on the hospital or CAH records as an
outpatient and receives services from
the hospital or CAH. Under the HOP
QDRP, hospitals are defined as
including all the facilities connected to
a hospital that are operating and billing
for OPPS services under the same CCN.
We note that the above definition does
not restrict the outpatient setting to the
hospital or CAH itself.
Comment: Several commenters stated
that many of the program’s processes
were specified in detail for the first time
and that this specificity was
appreciated, as it is helpful for hospitals
to have clear direction on both the
requirements and the process of the
program.
Response: We thank the commenters
for their feedback.
Comment: One commenter supported
CMS’ proposal that all hospitals sharing
the same CCN be required to combine
data across multiple campuses for all
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clinical data submissions. The
commenter believed reporting by CCN is
appropriate to align clinical and
financial reporting. This commenter
also supported this proposal because
this approach is similar to the approach
being taken by the RHQDAPU program
and noted that consistency between
administrative aspects of the two
programs is appreciated. One
commenter stated that while in
situations where a new facility is
opened or remains under the same
ownership, the statement that hospitals
are to submit required quality data using
the CCN under which the care was
furnished is true. However, the
commenter believed that, for mergers,
there will be a tremendous resource
burden placed on the hospital and
measure vendor if abstracted data must
be separated according to the CCN that
applied to the hospital at the time the
care was furnished. This commenter
stated that because data are submitted
and published for public view on a
quarterly basis, there is tremendous
concern that the public could select a
hospital for patient care based on data
that does not represent a full quarter.
The commenter recommended that if a
merger does not occur at the very
beginning/end of a quarter, the data be
combined for both facilities under the
parent/surviving facility CCN because
the child or absorbed facility, under its
old CCN, no longer exists once the
merger occurs.
Response: We thank the commenters
that supported our proposal to have
quality measure data reported by the
CCN that applies to the hospital at the
time the care is furnished. We
understand that there could be issues
regarding burden and completeness of
data reporting in the case of mergers.
We point out that hospitals operating
under separate CCNs participating in
the HOP QDRP would be collecting
quality measure data separately prior to
a merger, and that the data could be
kept separate after the merger.
Regarding the issue of incomplete data,
we acknowledge that the surviving
hospital would have less data for the
quarter in which the merger took place
than if the absorbed hospital’s data were
included, but the surviving hospital will
have all the data for care furnished
under its CCN. Because the CCN is the
financial and certification identifier for
hospitals and is the identifier used by
the HOP QDRP to monitor completeness
of data reporting, we believe it is
important that all quality measure data
be reported under the CCN that was in
place when the care was delivered. We
urge hospitals and vendors to have data
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60645
reporting systems sufficiently robust to
be able to efficiently handle data by the
CCN under which the care was
delivered.
Comment: One commenter strongly
agreed that hospitals with five or fewer
claims (Medicare and non-Medicare) for
a specific measure should not be
required to submit patient-level data for
the entire measure topic while being
allowed to report data voluntarily, but
believed that the allowable time period
to not report data was a year. Another
commenter urged CMS to modify this
provision so that it would apply to
hospitals with five or fewer Medicare
claims, not five or fewer claims across
all payers.
Response: We thank the first
commenter for supporting our policy
not to require hospitals with five or
fewer claims for a specific measure to
submit data while allowing these
hospitals to report data voluntarily.
However, we are clarifying that
hospitals that have five or fewer claims
(both Medicare and non-Medicare) for
any measure included in a measure
topic in a quarter will not be required
to submit patient-level data for the
entire measure topic only for that
quarter.
With respect to the second
commenter’s suggestion that we modify
our policy to apply to five or fewer
Medicare claims (rather than five or
fewer Medicare and non Medicare
claims), we selected more than 5 cases
per quarter (more than 20 cases per
year) as the minimum threshold to
ensure that the vast majority of hospitals
with sufficient caseload would be
required to submit data, while easing
the burden on hospitals whose patient
counts were too small to reliably predict
hospital performance. Because we
collect quality measure data on both
Medicare and non-Medicare patients,
we believe it is appropriate to set our
case thresholds using the population for
which we are collecting data, which
includes both Medicare and nonMedicare patients.
Comment: One commenter questioned
the proposal under which hospitals that
have five or fewer claims (both
Medicare and non-Medicare) for any
measure included in a measure topic in
a quarter will not be required to submit
patient-level data for the entire measure
topic for that quarter. The commenter
stated that one of the goals of the CMS
quality improvement programs is to
improve the care given to Medicare
beneficiaries and that, by allowing
hospitals with five or fewer cases in a
quarter to not report, the very hospitals
that need improvement the most may be
missed. The commenter also believed
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that the burden of reporting is minor for
hospitals that would abstract five or
fewer charts as this would take less than
30 minutes in most cases, which would
not be much of a burden over a 3-month
period.
Response: We agree with the
commenter that abstracting five charts
over a quarter would not be overly
burdensome. In implementing the
reporting of quality measure data where
there are five or fewer cases in a quarter,
we are also addressing the reported
excessive burden associated with
determining the individual cases and
submitting the data for those hospitals
with small case numbers for a measure.
We continue to strive to collect quality
of care data while limiting burden. We
acknowledge that it is possible that
quality of care concerns may exist with
hospitals with small case numbers for a
particular quality measure. We note that
quality of care is also monitored through
other mechanisms, including, but not
limited to, the Medicare beneficiary
complaint process through QIOs and the
survey and certification process.
Comment: One commenter agreed that
data abstraction processes for outpatient
services are sufficiently different from
inpatient services as to require the
hospital to spend time creating
processes to ensure that they capture the
accurate population and abstracted data.
One commenter agreed with keeping the
submission deadline for population and
sampling counts the same as the
deadline for case-level data, and stated
that last minute updates to the
population occur because of coding
changes. The commenter also stated that
synchronizing the deadlines aided
hospitals in capturing the most accurate
information possible. One commenter
agreed with CMS’ proposal to keep the
submission of population and sampling
counts voluntary, and noted that this
can be very time consuming for
hospitals.
Response: We thank these
commenters for confirming our views
on the ability of some hospitals to meet
a requirement to submit population and
sampling data at this time. We reiterate
that it is vital, for quality data reporting,
that hospitals are able to determine their
population sizes and that all hospitals
work to develop systems that can
accurately determine their population
and sample sizes for purposes of quality
reporting.
Comment: One commenter urged
immediate adoption of an effective
mechanism that allows hospitals and
their vendors to resubmit quality
measure data if an error is discovered
and emphasized that the point of public
reporting is to put accurate and useful
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information into the hands of the public
and this is facilitated by allowing
known reporting mistakes to be
corrected.
Response: We agree with the
commenter that publicly reporting
accurate and useful information is
important and that a mechanism or
process for correcting errors should be
implemented. While a proposal
addressing this concern was not
included in this current rulemaking, we
will consider ways to address this
concern in a future rulemaking.
Comment: One commenter disagreed
with CMS’ approach that sampling
requirements should apply based on
both Medicare and non-Medicare cases
and believed that CMS should focus
only on the population of patients for
which the agency is responsible.
Response: We believe the commenter
is arguing that we should not apply
sampling criteria to non-Medicare
claims and should focus only on
Medicare claims. As we collect quality
measure data on both Medicare and
non-Medicare patients, we believe it is
appropriate to set our sampling criteria
so that they apply to the same
population, which includes both
Medicare and non-Medicare patients.
Comment: One commenter supported
the concept of sampling and the
development of eligible thresholds and
recommended that CMS distribute
sampling criteria when new measures
are implemented (that is, any measures
proposed in a calendar year should
include the sampling criteria as part of
the OPPS/ASC proposed rule).
Response: We thank the commenter
for this suggestion and will consider it
in future planning. We note that
sampling criteria are included in each
release of the HOPD Specifications
Manual.
After consideration of the public
comments we received, we are adopting
as final our proposals regarding HOP
QDRP data collection and submission
requirements for the CY 2011 payment
determination.
b. Extraordinary Circumstance
Extension or Waiver for Reporting
Quality Data
In our experience, there have been
times when hospitals have been unable
to submit required quality data due to
extraordinary circumstances that are not
within their control. It is our goal to not
penalize hospitals for such
circumstances and we do not want to
unduly increase their burden during
these times. Therefore, in the CY 2010
OPPS/ASC proposed rule (74 FR 35402),
we proposed a process for hospitals to
request and for CMS to grant extensions
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or waivers with respect to the reporting
of required quality data when there are
extraordinary circumstances beyond the
control of the hospital.
Under the proposed process, in the
event of extraordinary circumstances
not within the control of the hospital,
for the hospital to receive consideration
for an extension or waiver of the
requirement to submit quality data for
one or more quarters, a hospital must—
(1) Submit to CMS a request form that
will be made available on the
QualityNet Web site. The following
information should be noted on the
form:
• Hospital CCN;
• Hospital Name;
• CEO and any other designated
personnel contact information,
including name, e-mail address,
telephone number, and mailing address
(must include a physical address, a post
office box address is not acceptable);
• Identified reason for requesting an
extension or waiver;
• Hospital’s reason for requesting an
extension or waiver;
• Evidence of the impact of the
extraordinary circumstances, including
but not limited to photographs,
newspaper and other media articles; and
• A date when the hospital will again
be able to submit HOP QDRP data, and
a justification for the proposed date.
The request form must be signed by
the hospital’s CEO. A request form must
be submitted within 30 days of the date
that the extraordinary circumstance
occurred.
Following receipt of such a request,
CMS will—
(1) Provide a written
acknowledgement using the contact
information provided in the request, to
the CEO and any additional designated
hospital personnel, notifying them that
the hospital’s request has been received;
and
(2) Provide a formal response to the
CEO and any additional designated
hospital personnel using the contact
information provided in the request
notifying them of our decision.
We invited public comment on these
proposed procedures for requesting an
extraordinary circumstance extension or
waiver of the requirement to submit
quality data for one or more quarters.
Comment: Several commenters
expressed their appreciation for CMS’
recognition that hospitals facing certain
extraordinary circumstances should be
granted an extension or waiver. The
commenters believed that, while
decisions on granting an extension or
waiver would best be made on a caseby-case basis depending on each
hospital’s unique situation, they
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suggested that CMS adopt some general
criteria to apply when it determines
whether such extensions or waivers
would be granted. The commenters also
expressed concern that it might not be
feasible for a hospital to file a request
form for an extraordinary circumstances
waiver within 30 days of such an event
and urged a creative and flexible
approach to working with hospitals in
these situations to ensure that an undue
burden is not placed on hospitals during
a time of hardship.
Response: We will consider these
comments as we further develop
program procedures for extraordinary
circumstance extensions or waivers. We
are mindful that many hospitals
operating in these adverse situations
cannot access the Internet or mail
service. We note that we currently use
a variety of means to communicate with
hospitals in these circumstances,
including using our HOP QDRP support
contractor and both national and State
hospital associations, and will continue
to do so. Regarding the ability to file a
request form for an extraordinary
circumstances waiver within 30 days of
such an event, we believe that 30 days
is sufficient in the vast majority of
circumstances. However, we agree that
additional time may be warranted in
some extreme circumstances.
After consideration of the public
comments we received, we are adopting
our proposals regarding extraordinary
circumstance extensions or waivers for
the reporting of quality data under the
HOP QDRP, with a modification that the
request form must be submitted within
45 calendar days of the date that the
extraordinary circumstance occurred,
rather than the 30 days we proposed.
3. HOP QDRP Validation Requirements
In the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68776), we
announced a voluntary test validation
program, the results of which would not
affect the CY 2010 payment update for
any hospital. Due to resource
constraints, we were not able to
implement this test validation plan.
a. Data Validation Requirements for
CY 2011
Validation, as discussed in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66871), is
intended to provide assurance of the
accuracy of the hospital abstracted data.
For the CY 2011 payment
determination, in the CY 2010 OPPS/
ASC proposed rule (74 FR 35402), we
proposed to implement a validation
program that will require hospitals to
supply requested medical
documentation to a CMS contractor for
purposes of being validated. However,
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the results of the validation will not
affect the CY 2011 payment update for
any hospital. We believe that it is
important for hospitals to have some
experience and knowledge of the HOP
QDRP validation process before
payment determinations are made based
upon validation results. We proposed to
implement a validation program that
will both limit burden upon hospitals,
especially small hospitals, as well as
provide feedback to all hospitals on
validation performance.
Specifically, we proposed to select a
random sample of 7,300 cases from all
cases successfully submitted to the
OPPS Clinical Warehouse by all
participating hospitals for the relevant
time period described below and
validate those data. Based upon the
quality data submitted for the CY 2009
payment update and our methodology
for drawing the sample, we estimate that
the sample will include up to 20 cases
per participating hospital; the same
number of cases sampled on an annual
basis for validation under the
RHQDAPU program. A sample size of
7,300 was chosen because it will enable
us to detect a relative difference of 10
percent in the measured overall
accuracy rate with a 95 percent (twotailed) confidence interval and should
provide sufficient data to conduct posthoc stratified analyses that provide
meaningful feedback. These figures are
based upon a power analysis assuming
a population measure mismatch rate of
five percent with the outcomes being
either a match or a mismatch between
what the hospital submitted versus what
was determined by validation. We
intend to supply feedback on the
validation results to all hospitals.
We proposed to request medical
documentation from hospitals for April
1, 2009 through March 31, 2010
episodes of care, which will allow us to
gather one full year of submitted data
for validation purposes.
Once we have completed the random
selection, a designated CMS contractor
will use certified mail to request that
each selected hospital send to the CMS
contractor supporting medical record
documentation that corresponds to each
selected episode of care. Each hospital
must submit this documentation to the
designated CMS contractor within 45
calendar days of the date of the request
(as documented on the request letter). If
the hospital fails to comply within 30
days of the initial medical
documentation request, the designated
CMS contractor will send a second
certified letter to the hospital reminding
the hospital that the requested
documentation must be received within
45 calendar days following the date of
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60647
the initial request. If the hospital still
fails to comply, a ‘‘zero’’ score will be
assigned to each data element for each
selected case and the case will fail for
all measures in the same topic (for
example, OP–6 and OP–7 measures for
a surgical care case).
Once the CMS contractor receives the
requested medical documentation, the
CMS contractor will independently
reabstract the same quality measure data
elements that the hospital previously
abstracted and submitted and compare
the two sets of data to determine
whether they match. Specifically, the
CMS contractor will conduct a measures
level validation by calculating each
measure within a submitted record
using the independently reabstracted
data and then comparing this to the
measure reported by the hospital; a
percent agreement will then be
calculated.
As we stated above, the results of the
validation will not affect a hospital’s CY
2011 annual payment update because
we want to give hospitals time to gain
experience with the medical
documentation requests and the
validation process before these results
are used in payment determinations.
However, hospitals must supply the
medical documentation for each
requested case; failure to provide this
documentation may result in a 2.0
percentage point reduction in a
hospital’s CY 2011 annual payment
update.
Comment: Many commenters
expressed their support for a validation
approach where they could receive
feedback on their validation results
without having their payment affected
for the CY 2011 payment update.
Several commenters applauded the
approach, stating that hospitals will
benefit from the program as they
continue to gain experience with
outpatient quality reporting. One of
these commenters specifically agreed
with requiring hospitals to submit
charts for validation for the CY 2011
payment determination. One commenter
expressed support for a 12-month
validation period in CY 2011. One
commenter expressed support for a
different validation process than the one
in use for FY 2010 under the inpatient
RHQDAPU program.
Response: We thank these
commenters and appreciate their
support. We agree that it is important
that hospitals gain experience with
validation for HOP QDRP data
collection prior to using validation
results to make payment
determinations. We also believe that
hospitals will benefit from the results of
our proposed validation plan, both by
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reviewing results on selected individual
cases as well as the aggregate results.
Comment: One commenter stated that
hospitals must incur the additional
burden of paying to copy and ship
medical records to CMS because this
funding was not incorporated into the
outpatient project.
Response: The issue of costs for
copying and shipping medical records
to CMS was not discussed in the CY
2010 OPPS/ASC proposed rule, and we
are currently considering our policy
approach regarding this issue. We are
aware that these costs are not
insignificant.
Comment: One commenter believed
that it is unrealistic to conduct
validation and calculate reliable
measures from collected HOP QDRP
quality measure data because there have
been so many changes in the abstraction
instructions over the past year. The
commenter argued that validation
should not be part of the determination
for payment decisions until the entire
measure set is tested and proven to be
reliable and valid. Another commenter
stated that the two statements ‘‘the
results of the validation will not affect
a hospital’s CY 2011 annual payment
update’’ and ‘‘failure to provide this
documentation may result in a 2.0
percentage point reduction in the
hospital’s CY 2011 payment update’’
were inconsistent.
Response: We agree that there have
been issues with the HOP QDRP data,
including changes in abstraction
instructions over the past year.
However, we believe that the validation
approach that we have proposed
addresses these concerns. For CY 2011
payment determinations, we have
proposed to conduct validation on April
1, 2009 to March 31, 2010 episodes of
care reported to the OPPS Clinical
Warehouse; this is one year after the
initial data reported, which was for
April 1, 2008 to June 30, 2008 episodes
of care. With one exception, most of the
significant changes in abstraction
instructions during the program’s life
were incorporated by April 1, 2009. The
exception, the exclusion of cancelled
surgery cases from the Surgical
measures, went into effect with July 1,
2009 episodes of care. We intend to
determine whether a selected Surgical
Care measure case was cancelled based
upon the submitted medical
documentation rather than drop April 1,
2009 to June 30, 2009 cases from
selection in order to maintain a 12month sampling frame for validation.
We intend to either drop any selected
April to June 2009 cancelled surgery
cases or otherwise account for this
factor.
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While it would be optimal to use the
preliminary results of the validation
effort for CY 2011 in the final design of
the validation process for the CY 2012
payment determinations, due to
resource constraints, we will not obtain
the results of the CY 2011 validation
before we must put forth our proposal
for CY 2012. We do intend to conduct
further analyses of collected HOP QDRP
data and will utilize these results in
developing our CY 2012 proposals.
Regarding our statement that the
results of this validation will not affect
a hospital’s annual payment update, we
wish to clarify that when we referred to
‘‘results,’’ we meant the results of the
validation process where what is
independently abstracted from a
hospital’s submitted documentation is
compared to what the hospital selfreported. Therefore, while the
validation ‘‘results’’ will not affect a
hospital’s CY 2011 payment update
factor, to ensure that we receive an
adequate supply of records for our test
validation, a hospital must submit
required medical record documentation
for the selected cases and if it fails to do
so, that failure would affect its CY 2011
payment update factor.
Comment: Several commenters
supported CMS’ proposal to document
the validation medical record request
process. Specifically, the commenters
supported CMS’ plans to send two
certified letter requests for medical
records for data validation in case the
hospital does not respond to the first
request. The commenters suggested that
phone calls be placed to hospitals that
do not respond to the first letter to
ensure that every effort is made to
communicate the request to the
appropriate staff; and suggested that this
phone call should be placed to the
QualityNet Administrator for those
hospitals that have a person serving in
this role. One commenter suggested that
a telephone call to the hospital chief
executive officer be made before
assigning a ‘‘zero’’ score for validation,
as there may be circumstances in which
the CEO is unaware of an insufficient
response to a request for records.
Response: We thank the commenters
and agree that certified letters provide
hospitals with multiple written
documented notification and reminder
attempts; we believe that this alone is
sufficient notification. However, we
note that the planned contractor for this
work as standard practice attempts to
call hospitals at least three times about
30 calendar days after it sends the initial
medical record request. As a practice,
we intend to continue attempting to call
hospitals at least three times around the
30th calendar day following the initial
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request, in addition to sending written
certified letters. We believe that these
attempted calls at different time periods
around the 30th calendar day following
the initial request demonstrate our
commitment to notify hospitals of
medical record requests using multiple
communication modes.
Comment: One commenter expressed
concern that a random sampling of
7,300 cases is not sufficient to provide
hospitals meaningful feedback on the
accuracy of their data collection and
recommended that CMS select a larger
number of cases over a longer period of
time. The commenter also suggested
that individual feedback on validation
results be provided to those hospitals
that submit records for this initial
validation process.
Response: The major purpose of our
proposed sampling scheme for CY 2011
payment determinations is to provide
aggregate level feedback to hospitals on
data elements abstracted and to validate
the quality measure data collected while
limiting hospital burden. However, we
do intend to provide individual
feedback on validation results to those
hospitals that submit records for this
initial validation effort. Regarding the
suggestion to select cases over a longer
time period, we have selected the April
1, 2009 to March 31, 2010 timeframe
because this time period provides the
most recent 12-month period possible.
We believe that it is important to use the
most recent data possible while
maintaining at least a full year’s worth
of data. We have not included any data
from the April 1, 2008 to March 31,
2009 time period because we believe
that this will minimize the use for
validation purposes of HOP QDRP data
that may be unreliable because of
changes in data abstraction guidelines
that occurred, or because it was
collected in the early stages of the
program when hospitals were still
developing HOP QDRP data collection
systems. We believe that hospitals will
be able to gain meaningful information
from aggregate results produced under
our validation sampling scheme,
although we agree that it would be more
useful to select an increased number of
cases. Selecting an increased number of
cases is not possible with present
resource constraints and we note that
this approach would increase hospital
burden.
Comment: Several commenters
disagreed with randomly selecting only
a subset of hospitals for validation
because they believe that all hospitals
should be held to the same threshold/
expectation. One commenter believed
that ‘‘random validation’’ would not
produce accurate results, and another
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commenter expressed concern that the
proposed validation approach is not
robust enough given the ever increasing
scope of measures included in the
measure set.
Response: We appreciate the concern
that these commenters express for
treating all hospitals similarly, both in
costs and benefits of the validation
process and for maintaining hospital
performance in regard to data
validation.
Under the HOP QDRP, all hospitals
are responsible for meeting reliability
levels for submitted abstracted data.
Because hospitals will not know in
advance whether they will be selected
for validation and because selection will
be random, we believe that hospitals
will have sufficient incentive to
maintain data quality.
Comment: Several commenters
suggested that CMS build safeguards
into the sampling process to ensure that
no more than 20 patient cases are
selected from each hospital.
Response: We appreciate the
commenters’ concerns about the number
of cases selected under the proposed
sampling design. However, it is highly
unlikely, given the number of hospitals
and the cases submitted, that any
hospital will have more than 20 cases
selected. In addition, building in a
threshold for the number of cases
selected would take away the ‘‘random’’
element of the sampling process.
Comment: One commenter suggested
that rather than randomly selecting
hospitals each year, CMS adopt a
validation process that results in those
hospitals not selected in one year
having a greater likelihood of being
selected in the next/future years.
Response: While we did not propose
this approach in our validation plan for
CY 2011, in the CY 2010 OPPS/ASC
proposed rule (74 FR 35403 through
35404), we discussed additional data
validation conditions under
consideration for CY 2012 and
subsequent years, including the use of
targeting criteria. Examples of possible
targeting criteria include considering
whether a hospital had not been
previously selected for validation for 2
or more consecutive years.
Comment: One commenter urged
CMS to set strict timelines so that the
public has access to data that have
undergone the test validation process as
soon as possible by publicly reporting
validated 2nd and 3rd quarter 2009 data
no later than June 2010.
Response: We agree that it is
important to make validated data
publicly available as soon as possible
and will make every effort to do so.
However, with present resource
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14:52 Nov 19, 2009
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constraints, it is not possible to meet the
commenter’s suggested timeline.
Comment: One commenter urged that
State QIOs be supportive not only
during the validation appeals process,
but proactively during data collection
and reporting.
Response: The HOP QDRP was
implemented separately from the QIO
program and State QIOs have not been
involved with the HOP QDRP to date.
State QIOs, however, are involved in the
RHQDAPU program. We note that QIOs
are available for quality of care concerns
for individual Medicare cases and that
their purview includes the outpatient
setting.
Comment: One commenter preferred a
validation approach that would select
five cases per quarter stratified by
measure/topic for all hospitals. The
commenter argued that such an
approach provides hospitals an
opportunity to focus on mismatches by
measure set.
Response: We interpret the
commenter’s statement to mean that the
commenter prefers to have five cases
that are stratified by measure/topic be
selected each quarter for all hospitals so
that information on each hospital’s
individual abstraction accuracy can be
assessed by measure/topic. We
acknowledge the commenter’s belief
that such an approach would
continually improve data abstraction,
but we believe that the improved
reliability under the proposed
validation process coupled with the
reduction of overall hospital burden
associated with validation participation
will outweigh the potential benefits of
validating a smaller number of records
for all hospitals. Regardless of whether
a hospital was included in any
validation selection, we intend to
provide aggregate validation
information to all hospitals that submit
quality measure data.
Comment: Several commenters
preferred that CMS give continued
attention to individual data element
level analysis for validation for a variety
of reasons, including: Increasing the
denominator and minimizing the impact
of a small number of errors; and looking
at the individual data elements with a
threshold based on sample size. Some of
these commenters doubted CMS’
statement that higher accuracy rates are
possible using the proposed measure
level match approach versus a data
element level approach and believed
that the proposed approach appeared to
place hospitals at high risk for not
receiving the full CY 2012 payment
update. The commenters recommended
a period or process where any changes
in the validation process be tested
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60649
without penalty against any payment
update prior to broad implementation.
Response: We agree that there should
be continued attention to the data
element level as the individual data
elements are used to calculate quality
measures. We proposed a measure level
match approach to replace the data
element match approach because of
what we have observed in the
RHQDAPU program for inpatient
quality measure data reporting. The
intent of the measure match approach is
to minimize the impact of errors for
noncritical data elements. As we
explain in more detail below, we are not
finalizing our validation proposal for CY
2012. Instead, we will be conducting
further analyses on collected HOP
QDRP data and considering all public
comments we received on validation
before we propose a validation process
for the CY 2012 payment determination.
We agree that hospitals should be
allowed to gain some experience with
validation under the HOP QDRP before
we consider such results toward
payment determinations, and we are
doing so through our validation
approach for the CY 2011 payment
determination.
Comment: Many commenters agreed
with the adoption of a measure score
match for validation instead of a data
element matching approach. Several
commenters believed that it is
appropriate to focus on the hospital’s
measure rate, as opposed to individual
data elements, because the measure rate
captures the information that is truly
important to patient care. The
commenters observed that, for data
validation in the RHQDAPU (inpatient
reporting) program, there have been
several instances in which a mismatch
between single data elements unrelated
to the quality of care provided by a
hospital, such as the patient’s birth date,
have caused hospitals to fail validation
and that validating the hospital’s
measure rate should eliminate these
unfortunate incidents.
Response: We thank these
commenters for their support. The
proposed validation process focuses on
validating whether hospital abstracted
data results in accurate measure rates
and measure denominator counts. We
will continue to use the data elements
to calculate the measure values and,
subsequently, the validation scores.
Comment: One commenter urged
CMS to extend the turnaround time for
chart selection to 60 days and believed
that hospitals should have the option to
submit validation cases electronically
rather than printed copies because this
would avoid shipping delays and allow
faster turnaround time.
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Response: We understand the
commenter’s concern about the deadline
for hospitals to submit requested
medical records. However, extending
this time period increases the amount of
time between when services are
furnished, initial hospital data are
submitted, data are validated, and,
ultimately, when the results can be
compiled for program purposes. We will
consider accepting electronic
submission of validation cases using
compact disc and electronic health
record submission in future years. We
must consider both the cost to accept
and review these submissions and the
added benefit to the hospitals using
electronic methods to store medical
record information.
After consideration of the public
comments we received, we are adopting
as final, without modification, our
proposals for validation for the CY 2011
payment determination.
b. Data Validation Approach for CY
2012 and Subsequent Years
Similar to our proposal for the FY
2012 RHQDAPU program (74 FR 24178),
in the CY 2010 OPPS/ASC proposed
rule (74 FR 35403), we proposed to
validate data from 800 randomly
selected hospitals (approximately 20
percent of all participating HOP QDRP
hospitals) each year, beginning with the
CY 2012 payment determination. We
note that because the 800 hospitals will
be selected randomly, every HOP QDRPparticipating hospital will be eligible
each year for validation selection. For
each selected hospital, we proposed to
randomly validate per year up to 48
patient episodes of care (12 per quarter)
from the total number of cases that the
hospital successfully submitted to the
OPPS Clinical Warehouse. However, if a
selected hospital has submitted less
than 12 cases in one or more quarters,
only those cases available will be
validated. For each selected episode of
care, a designated CMS contractor will
request that the hospital submit the
supporting medical record
documentation that corresponds to the
episode. We will not be selecting cases
stratified by measure or topic; our
interest is whether the data submitted
by hospitals accurately reflect the care
delivered and documented in the
medical record, not what the accuracy is
by measure or whether there are
differences by measure or topic. We
proposed to sample data for April 1,
2010 to March 31, 2011 services because
this will provide a full year of the most
recent data possible to use for purposes
of completing the validation in time to
make the CY 2012 payment
determination.
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For the CY 2012 and subsequent
years’ payment determinations, we
proposed to use the validation
methodology proposed for the CY 2011
payment update with validation being
done for each selected hospital.
Specifically, we would conduct a
measures level validation by calculating
each measure within a submitted record
using the independently reabstracted
data and then comparing this to the
measure reported by the hospital; a
percent agreement will then be
calculated.
To receive the full OPPS payment
update, we proposed that hospitals must
attain at least a 90 percent reliability
score, based upon our validation
process, for the designated time period.
We will use the lower bound of a twotailed 95 percent confidence interval to
estimate the validation score. If the
calculated upper limit is above the
required 90 percent reliability
threshold, we will consider a hospital’s
data to be ‘‘validated’’ for payment
purposes. We believe that hospitals will
be able to attain higher accuracy rates
based on the proposed measure level
match approach versus a data element
level approach; therefore, we proposed
to implement a higher threshold for
accuracy than we currently use (and are
using) for validation purposes under the
RHQDAPU program. We believe that a
hospital will be able to achieve a higher
accuracy rate under this validation
process because we are not calculating
whether each data element matches.
Instead, we are determining whether or
not the reabstracted measure result (for
example, was aspirin given at arrival as
part of an episode of care that was
properly included in the reported data)
matches the measure result that was
submitted by the hospital. In other
words, we are more interested in
whether the measure as a whole has
been accurately reported than we are in
whether each data element that makes
up the measure has been accurately
reported. Thus, we are focusing on
whether the quality measure as a whole
that a hospital reports matches what is
in the medical record as determined by
our re-abstraction. The reason we
proposed to implement a measure level
match for the HOP QDRP, rather than a
data element match, is that in our
experience with the RHQDAPU
program, hospitals sometimes receive
low validation scores due to data
element mismatching and not because
the care furnished did not match what
was documented in the medical record.
We believe that validating a larger
number of cases per hospital, but only
for 800 randomly selected hospitals, and
validating these cases at the measure
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level (rather than at the data element
level) has several benefits. We believe
that this approach is suitable for the
HOP QDRP because it will: produce a
more reliable estimate of whether a
hospital’s submitted data have been
abstracted accurately; provide more
statistically reliable estimates of the
quality of care delivered in each
selected hospital as well as at a national
level; and reduce overall hospital
burden because most hospitals will not
be selected to undergo validation each
year.
We solicited public comments on this
proposed validation methodology. The
public comments we received and our
responses are discussed below.
Comment: Several commenters stated
that CMS’ proposed process for
validating hospitals’ quality data
beginning with CY 2012 holds promise
as a reasonable approach to ensure the
accuracy of the quality data and
improves upon the deficiencies in the
current inpatient program validation
process.
Response: We agree with the
commenters that the proposed new
validation process beginning with CY
2012 is an improved approach, and we
thank these commenters for their
support. However, we have decided that
we want to further evaluate and refine
the approach and have decided to not
finalize a validation approach for CY
2012 in this final rule with comment
period. We intend to put forth a
proposal for a CY 2012 HOP QDRP
validation process in the CY 2011
OPPS/ASC proposed rule.
Comment: One commenter supported
the proposed validation process for CY
2012 and subsequent years; however,
this commenter believed that the data
from the CY 2011 test year should be
reviewed to ensure the process is
functioning as it was intended and that
CMS should make modifications to the
process if necessary.
Response: We thank the commenter
for supporting our proposed validation
process. We agree that it would be
helpful to review the data from the CY
2011 test year to evaluate the extent to
which the process is functioning as it
was intended and to use the results to
assist us in determining whether to
propose modifications to the validation
process for CY 2012 and subsequent
years. However, due to resource
constraints, we will not receive the
results of the CY 2011 validation before
we must put forth a proposed validation
plan for CY 2012. Instead, we will be
conducting further analyses on collected
HOP QDRP data and intend to utilize
these results as well as all comments we
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received in developing our CY 2012
proposals.
Comment: Several commenters
recommended that if validation is
limited to randomly selected hospitals
each year, a hospital that is selected in
one year should be excluded from the
selection process for some period,
which could be an indeterminate
number of subsequent years, the
following year, or the next 2 years, or,
alternatively, CMS could limit the
number of times during a 5-year period
a hospital could be randomly selected.
Many of these commenters suggested
that such an exemption could apply to
all hospitals that pass validation, those
that pass with high reliability scores, or
all hospitals regardless if they pass.
Some of these commenters based their
suggestions on limiting burden to
hospitals and/or rewarding hospitals for
participation or for achieving a high
reliability or accuracy score. Some
commenters believed that exempting a
hospital from subsequent validation for
some time period for high reliability
scores would encourage hospitals to
ensure that their data are as accurate as
possible and would increase data
quality.
Response: We understand the
commenters’ desire to limit hospital
burden on a guaranteed basis and/or to
reward hospitals for performance.
However, we do not agree that
exempting hospitals from validation
because they were selected in a previous
year or achieved a high reliability score
will encourage increased data quality or
that it should be a ‘‘reward’’ for meeting
a program requirement. It is our belief
that any guaranteed exclusion from
participating in the validation process
also has the potential to undermine a
hospital’s incentive to maintain data
quality.
Comment: One commenter asserted
that random selection of hospitals for
validation will reduce the hospitals’
focus on accuracy because hospitals will
have the chance of not being chosen in
a given year.
Response: We understand and
appreciate the commenter’s concern for
data accuracy. We believe that each
hospital having a chance at selection for
validation each year will provide
incentive to hospitals to maintain data
quality.
Comment: Several commenters made
suggestions regarding the sampling
scheme for validation. One commenter
suggested a random selection of fewer
hospitals while increasing the number
of records selected and that a random
selection of hospitals be done quarterly
to reduce the demands on any one
hospital while increasing CMS’ ability
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to monitor performance throughout the
industry. One commenter supported a
random sample of 200 hospitals per
quarter with a minimum number of 20
charts reviewed with hospitals not to be
selected for validation any more
frequently than one time per year.
Another commenter agreed with having
a separate random selection process for
small and rural hospitals that have five
or less cases per condition each quarter.
Response: We chose 800 as the
number of hospitals we would select for
validation each year because this
comprises about 25 percent of the total
number of HOP QDRP participating
hospitals and will provide us with
enough data to be statistically assured
that we have obtained a representative
sample of all hospital data. Regarding
randomly sampling hospitals quarterly,
we have increased the sample size to
gain increased statistical reliability for
individual hospital data; lowering the
number of cases per hospital or
sampling different hospitals each
quarter would not enable us to achieve
the same result. We agree with the
commenters that stratifying sampling by
quarter is a possible approach and will
consider this as we develop our
proposal for a validation process for the
CY 2012 payment determination.
Regarding having a separate random
selection process for small and rural
hospitals that have five or less cases per
condition each quarter, we did not
propose to stratify by hospital size or by
a threshold number of cases per
condition. However, we will strongly
consider this approach when we
develop our CY 2012 validation
proposal.
Comment: One commenter supported
the random sampling of 800 hospitals
(which would require selected hospitals
to submit supporting medical records
for 48 randomly selected patient
episodes of care (12 per quarter)) if the
sampling methodology to select the 800
hospitals considers the proportion of
rural to urban hospitals. This
commenter also believed that this
sample must take into account the large
number of hospitals that have sample
sizes that are too small to make justified
decisions based on gathered data. One
commenter argued that random
validation on a larger number of cases
per hospital is excessive for small PPS
hospitals.
Response: We agree that hospital size
and urban/rural status are important
considerations regarding burden and
representation of hospital type in any
sampling scheme utilized for validation
and view these as possible
characteristics to stratify sampling of
hospitals for CY 2012 and subsequent
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60651
year’s validation. We intend to consider
these factors as we further evaluate any
proposed validation methodology for
CY 2012. Regarding the commenter’s
belief that this sample must take into
account the large number of hospitals
that have sample sizes that are too small
to make justified decisions based on
gathered data, we interpret this
statement to mean that the commenter
believes these hospitals would not have
a sufficient number of cases for us to
reliably determine that the hospitals
have submitted valid data. We will
further assess the numbers of cases
submitted by hospitals and, as
discussed here in this final rule with
comment period, we will be considering
whether we should refine our proposed
validation methodology to take into
account hospital size or a threshold
number of case counts in any proposed
sampling scheme.
Comment: Several commenters argued
that the 90 percent reliability proposal
is too stringent for the first year of data
validation. Many of these commenters
suggested that CMS establish a lower
reliability threshold (for example, 70
percent, 75 percent, or 80 percent).
Commenters suggesting a 75 percent
reliability threshold for the HOP QDRP
noted that a 75 percent threshold will be
used in the RHQDAPU program for FY
2012 when that program adopts a
similar validation approach. One
commenter recommended that CMS use
data and experience from the CY 2011
test year to determine what an
appropriate threshold should be, and
until that is determined, the threshold
should be the same as the 75 percent
threshold that will be required in the
inpatient setting for FY 2012. One
commenter believed that more analysis
of validation results is necessary before
establishing the threshold at 90 percent.
Response: After consideration of the
public comments regarding the 90percent threshold, we agree with these
commenters that this level is too
stringent for the first year of validation
where the results may affect a hospital’s
annual payment update. We appreciate
the suggestion that the experience from
the CY 2011 test year should be utilized
to determine an appropriate rate.
However, due to resource constraints,
we will not be able to determine any
results of the CY 2011 validation prior
to proposing and finalizing validation
requirements for the CY 2012 payment
update factor. However, we will be
analyzing collected HOP QDRP data and
will take any analyses we complete, as
well as the public comments we have
received on this proposal, into account
as we develop a new proposed
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validation process for CY 2012 and
subsequent years.
Comment: One commenter suggested
that no hospital be penalized in terms
of its payment update if it fails the
validation requirement for a single
quarter.
Response: We interpret this comment
to apply to the proposed validation
methodology for CY 2012 and
subsequent years because the results of
the proposed CY 2011 validation
methodology will not affect the CY 2011
payment determination. We did not
address whether a hospital would be
penalized in terms of its payment
update if it fails the validation
requirement for a single quarter in the
CY 2010 OPPS/ASC proposed rule with
comment period. We will take the
commenter’s suggestion regarding this
aspect of validation into consideration
as we develop our new proposal for
validation for CY 2012 and subsequent
years.
We appreciate all the public
comments we received regarding the
validation process we proposed for CY
2012 and subsequent years and will take
them into account as we develop our
validation proposals for these years.
c. Additional Data Validation
Conditions Under Consideration for CY
2012 and Subsequent Years
In the CY 2010 OPPS/ASC proposed
rule (74 FR 35403), we stated that we
are considering building upon what we
proposed as a validation approach for
CY 2012 and subsequent years. We are
considering, in addition to selecting a
random sample of hospitals for
validation purposes, selecting targeted
hospitals based on criteria designed to
measure whether the data they have
reported raises a concern regarding data
accuracy. Because little data have been
collected under the HOP QDRP at this
point, we are considering this approach
for possible use beginning with the CY
2012 payment determination. Examples
of targeting criteria could include:
• Abnormal data patterns identified
such as consistently high HOP QDRP
measure denominator exclusion rates
resulting in unexpectedly low
denominator counts;
• Whether a hospital had previously
failed validation; and/or
• Whether a hospital had not been
previously selected for validation for 2
or more consecutive years.
Another example of a possible
targeting criterion would involve some
combination of the some or all of the
criteria discussed above.
We solicited public comments on
whether these criteria, or another
approach, should be applied in future
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years. We especially solicited
suggestions for additional criteria that
could be used to target hospitals for
validation.
Comment: One commenter opposed
the targeting criteria that might
supplement random validation as the
commenter opposed random validation
and instead preferred that all hospitals
have cases selected for validation.
Response: We appreciate the
commenter’s desire for us to validate
data from all hospitals. However, we
believe that the increased reliability that
will be achieved by increasing the
number of cases that we validate per
selected hospital, coupled with the
overall reduction of burden on hospitals
that our proposed validation
methodology will achieve, outweighs
any potential benefit from requiring all
HOP QDRP participating hospitals to
undergo validation each year of a small
number of cases. We chose the sample
size of 800 hospitals because this
comprises about 25 percent of the total
number of HOP QDRP participating
hospitals and will provide us with
sufficient data to be statistically assured
that we have obtained a representative
sample of all hospital data.
Comment: One commenter
recommended that CMS use similar
statistical processes to those used by the
Joint Commission to identify outliers in
scoring, as well as low denominators
compared to population sizes, as these
are processes that many hospitals
already know.
Response: We thank the commenter
for its suggestions, and we will take
them into account for our validation
proposals for CY 2012.
We greatly appreciate all the public
comments we received regarding the
validation process proposed for CY
2012. However, as we stated above, we
are not finalizing a validation process
for CY 2012 at this time. We will take
all of the comments we received into
account when we develop our
validation proposals for CY 2012.
F. 2010 Publication of HOP QDRP Data
In the CY 2009 OPPS/ASC final rule
with comment period, we stated our
intention to make the information
collected under the HOP QDRP
available to the public in 2010 (74 FR
68778). In the CY 2008 OPPS/ASC final
rule with comment period, we stated
that ‘‘[i]nformation from non-validated
data, including the initial reporting
period (April–June 2008) will not be
posted’’ (72 FR 66874). However,
section 1833(t)(17)(E) of the Act requires
that the Secretary establish procedures
to make data collected under the HOP
QDRP available to the public, and does
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not require that such data be validated
before it is made public. Moreover,
under existing procedures for the
RHQDAPU program, data submitted by
hospitals are publicly reported
regardless of whether those data are
successfully validated for payment
determination purposes. For these
reasons, in the CY 2010 OPPS/ASC
proposed rule (74 FR 35404), we
proposed to make data collected for
quarters beginning with the third
quarter of CY 2008 (July–September
2008) under the HOP QDRP publicly
available, regardless of whether those
data have been validated for payment
determination purposes. We invited
public comment on this proposal.
Comment: Many commenters opposed
the public reporting of unvalidated HOP
QDRP data. The commenters stated that
these data would not be accurate and
may mislead the public. The
commenters also argued that because
data for the inpatient reporting program
were validated before they were
publicly posted, the outpatient data
should be as well. The commenters
stated that making these data available
on Hospital Compare and in the
downloadable public use file
accompanying a Hospital Compare
release may lead to inappropriate use of
the data in research and policy
deliberations, and may result in
inaccurate portrayals of the data on
various other Web sites that currently
utilize Hospital Compare data. The
commenters argued that public
reporting of unvalidated data may cause
confusion among consumers utilizing
these data on different Web sites. The
commenters were concerned that it is
not known now how the non-validated
data compare to the validated data. The
commenters argued that because data
for cases from quarters earlier than the
second quarter of 2009 will not have
been validated, HOP QDRP data should
not be publicly reported prior to this
time period.
Response: The validation process for
both the RHQDAPU program and the
HOP QDRP pertains only to chartabstracted measures. Validation under
these programs for the purposes of
payment determination seeks to validate
the accurate application of the
abstraction rules described in the HOPD
Specifications Manual when data are
abstracted from medical records and
submitted to CMS. Neither the HOP
QDRP nor the RHQDAPU program has
any validation process for claims data.
Thus, the context of our discussion of
the public reporting of unvalidated HOP
QDRP data in previous rulemakings, our
proposal in the CY 2010 OPPS/ASC
proposed rule, and our discussion of
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public comments we received regarding
whether to post unvalidated data and
which quarters of data would be
appropriate to post on Hospital
Compare pertain only to chartabstracted measures.
We note that the Secretary is required
under section 1833(t)(17)(E) of the Act
to establish procedures to make the data
submitted under the HOP QDRP
available to the public, and we intend
to use generally the same procedures
that we currently use for the RHQDAPU
program. In the RHQDAPU program, we
currently publicly report the data as
they have been submitted by the
hospitals, and we report these data
regardless of whether the hospital
passed validation. Also, no changes are
made to quality data that have been
submitted by hospitals that fail
validation in the inpatient RHQDAPU
program. However, for the RHQDAPU
program, we have suppressed data from
display on Hospital Compare in
circumstances where we have become
aware of inaccuracies in the calculation
of the measure rates due to systematic
issues with the data submitted. We
believe that the finalized
methodological improvements in the
validation process for the CY 2011 HOP
QDRP will allow CMS to better assess
the overall accuracy of the chartabstracted data that are submitted by
hospitals to CMS. We also believe that
our approach will encourage hospitals
to optimize their chart abstraction
processes and improve the accuracy of
their data because it is data that
hospitals are responsible for that are
ultimately posted on Hospital Compare.
Although we appreciate the concerns
raised about the public reporting of
unvalidated data, prior to public
reporting hospitals are given an
opportunity to preview the results to be
reported. Additionally, should our
consumer testing suggest a different
approach to public reporting, or should
our validation process for CY2011
reveal a low reliability of self-reported
data, we will reconsider our approach
for future public reporting.
Comment: Many commenters were
opposed to the publication of data
beginning with 3rd quarter 2008
services because, during part of that
period: (1) Some antibiotics needed to
be updated in the specifications but
these updates were not present at that
time; (2) some procedures needed to be
removed from the specifications but
these exclusions were not present at that
time; and (3) canceled procedures were
not able to be excluded from the
calculation of certain measures reported
at that time. Because these changes were
later put into effect, many commenters
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suggested suppressing earlier quarters of
data, and beginning public reporting
with the 1st quarter of 2009 data when
these changes had been made, and the
data specifications were stabilized.
Response: The issues raised by the
commenters apply only to the chartabstracted HOP QDRP surgical care
measures OP–6 and OP–7. We have
considered the issues raised by the
commenters, and because there was an
issue with surgeries that were cancelled
prior to incision that was not resolved
in the specifications until July 1, 2009,
we have decided not to report either of
the surgery-related process measures
(OP–6 & OP–7) for any quarter before
the 3rd quarter of 2009.
Comment: Some commenters
expressed concern that the 1 year to 2
year time lag in the public reporting of
administrative claims-based measures
would not be useful to the public.
Response: In the CY 2009 OPPS/ASC
final rule with comment period we
adopted the 4 claims based imaging
efficiency measures for the CY 2010
payment determination and indicated
that we would calculate the claimsbased imaging efficiency measures for
that payment determination using CY
2008 claims (73 FR 68761–68763). We
recognize that the time lag for the
claims-based measures is a concern, but
because of claims submission and
claims processing timeframes, this time
lag ensures that the most complete and
accurate paid claims are used in the
measure calculations. Part of the time
lag is also due to the time needed for
data extraction, data processing,
calculation of the measures for the
payment determination and subsequent
public reporting, quality assurance
processes, and the Hospital Compare
preview and update schedule. We
intend to publicly report the claimbased measures as soon as possible, and
the earliest we anticipate being able to
make these claims-based measures
available to the public is June 2010.
Comment: Some commenters
commended CMS for its efforts to
publicly report hospital outpatient
measures on Hospital Compare in 2010,
and encouraged CMS to continue to
engage multi-stakeholder groups in
testing and preparing the measures for
display on Hospital Compare, as is done
with inpatient measures.
Response: We appreciate the
supportive comments regarding public
reporting of hospital outpatient
measures on Hospital Compare in 2010.
We began stakeholder and consumer
focus group testing of the HOPD
measures in the Fall of 2009. We will
continue to engage in consumer testing
and obtain stakeholder input regarding
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60653
public reporting of HOP QDRP
measures.
Comment: Commenters made
numerous suggestions for enhancing the
public reporting of HOP QDRP data
including:
• Reporting comparative hospital
outpatient (OP) and ambulatory surgical
center (ASC) quality information on
surgical services.
• Providing a mechanism for
providers to raise concerns with
information to be posted prior to its
publication.
• Including a provider narrative
section allowing the providers to advise
consumers of any concerns regarding
reliability or accuracy of information
presented.
• Including information on facility
accreditation status, state licensure and
Medicare certification.
• Creating clear and explicit names
and explanations for the measures
geared toward consumers.
• Grouping like measures by
condition and distinguishing them by
care setting.
• Communicating efficiency
measures in a manner that clearly
interprets the differences among
providers, and explains how consumers
should integrate this information into
decision making.
• Conducting consumer testing and
multi-stakeholder vetting of changes in
the Hospital Compare architecture,
navigation, display and language.
• Considering how best to display
hospital outpatient data in the context
of current and anticipated future public
reporting efforts for ASCs.
• Adding an identifier to the CCN to
enable the reporting and display of data
for individual hospitals rather than
combining results from two or more
hospitals sharing the same CCN.
• Displaying measures in a way that
allows greater range and detail in
categorizations.
Response: We thank the commenters
for these suggestions and will consider
them as we further develop our
procedures for the public reporting of
HOP QDRP quality data.
After consideration of the public
comments we received, we have
decided to finalize our proposal to
publicly report HOP QDRP data on
Hospital Compare in 2010 with some
modifications in the periods of time to
be reported. For measures OP–1 through
OP–5, we will publicly report data
periods beginning with the 3rd quarter
of 2008. For measures OP–6 and OP–7,
we will publicly report data periods
beginning with the 3rd quarter of 2009.
For measures OP–8 through OP–11, we
will report CY 2010 payment
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determination calculations using CY
2008 claims.
As we noted in section XVI.A.5.c. of
this final rule with comment period, in
the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68778), we
established that, for CY 2010, hospitals
sharing the same CCN must combine
data collection and submission across
their multiple campuses for the clinical
measures for public reporting purposes
and that we will publish quality data by
CCN under the HOP QDRP. This
approach is consistent with the
approach taken under the RHQDAPU
program. In that final rule with
comment period, we also stated that we
intend to indicate instances where data
from two or more hospitals are
combined to form the publicly reported
measures on the Web site.
Comment: One commenter suggested
that combining the results from two or
more hospitals that share the same CCN
is misleading and will not allow
consumers and health care payers to
assess and use the information, reducing
the effectiveness of Hospital Compare.
This commenter stated that hospitals
should be required to report at the unit
of the hospital rather than the CCN.
Another commenter suggested that CMS
add an identifier to the CCN in order to
enable the reporting and display of data
of quality measure data for individual
hospitals rather than combining results
from two or more hospitals that share
the same CCN.
Response: We believe that we should
publicly report combined data from
hospitals with the same CCN because it
is important to align clinical reporting
with financial reporting. We proposed
to report data by CCN for several
reasons. First, the unit affected by the
OPPS annual update and that must meet
all HOP QDRP requirements is the CCN,
not an individual hospital or facility
that falls under that CCN. Second,
hospitals are obligated to comply with
applicable survey and certification
requirements by CCN, and not by any
other individual facility identifier.
Third, the additional Medicare
identifier for facilities, the National
Provider Identifier (NPI), is not a
uniform identifier. Fourth, reporting by
CCN aligns the reporting of quality of
care data with the reporting of financial
data. For these reasons, we consider the
CCN to be representative of the entire
hospital entity for purposes of public
reporting under the HOP QDRP.
However, as resources permit, we will
evaluate whether the benefits the
commenter believes would flow from its
approach outweigh the reasons outlined
above for using the current CCN and
whether this suggestion is feasible.
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After consideration of the public
comments, we have decided to finalize
our proposal to publicly report HOP
QDRP data on Hospital Compare
starting as early as 2010 with some
modifications in the periods of time to
be reported. Should our consumer
testing suggest a different approach to
public reporting, or should our
validation process for CY 2011 reveal a
low reliability of self-reported data, we
will reconsider our approach for future
public reporting. For measures OP–1
through OP–5, we will publicly report
data periods beginning with the 3rd
quarter of 2008. For measures OP–6 and
OP–7, we will publicly report data
periods beginning with the 3rd quarter
of 2009. For measures OP–8 through
OP–11, we will report 2010 payment
determination calculations using
calendar year 2008 claims.
G. HOP QDRP Reconsideration and
Appeals Procedures
When the RHQDAPU program was
initially implemented, it did not include
a reconsideration process for hospitals.
Subsequently, we received many
requests for reconsideration of those
payment decisions and, as a result,
established a process by which
participating hospitals would submit
requests for reconsideration. We
anticipated similar concerns with the
HOP QDRP and, therefore, in the CY
2008 OPPS/ASC final rule with
comment period (72 FR 66875), we
stated our intent to implement for the
HOP QDRP a reconsideration process
modeled after the reconsideration
process we implemented for the
RHQDAPU program. In the CY 2009
OPPS/ASC final rule with comment
period (73 FR 68779), we adopted a
mandatory reconsideration process that
will apply to the CY 2010 payment
decisions. In the CY 2010 OPPS/ASC
proposed rule (74 FR 35404), we
proposed to continue this process for
the CY 2011 payment update. Under
this proposed process, the hospitals
must—
(1) Submit to CMS, via QualityNet, a
Reconsideration Request form that will
be made available on the QualityNet
Web site; this form must be submitted
by February 3, 2011, and must contain
the following information:
• Hospital CCN.
• Hospital Name.
• CMS-identified reason for failure
(as provided in any CMS notification of
failure to the hospital).
• Hospital basis for requesting
reconsideration. This must identify the
hospital’s specific reason(s) for
believing it met the HOP QDRP
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requirements and should receive a full
annual payment update.
• CEO and any additional designated
hospital personnel contact information,
including name, e-mail address,
telephone number, and mailing address
(must include physical address, not just
a post office box).
• A copy of all materials that the
hospital submitted in order to receive
the full payment update for CY 2011.
Such material would include, but may
not be limited to, the applicable Notice
of Participation form or completed
online registration form, and quality
measure data that the hospital
submitted via QualityNet.
The request must be signed by the
hospital’s CEO.
(2) Following receipt of a request for
reconsideration, CMS will—
• Provide an e-mail
acknowledgement, using the contact
information provided in the
reconsideration request, to the CEO and
any additional designated hospital
personnel notifying them that the
hospital’s request has been received.
• Provide a formal response to the
hospital CEO and any additional
designated hospital personnel, using the
contact information provided in the
reconsideration request, notifying the
hospital of the outcome of the
reconsideration process.
If a hospital is dissatisfied with the
result of a HOP QDRP reconsideration
decision, the hospital may file an appeal
under 42 CFR part 405, subpart R (PRRB
appeal).
Comment: Several commenters
supported the proposed hospital
reconsideration and appeals process.
Some commenters suggested
establishing a timeline for CMS to
respond to reconsiderations and
appeals. One of these commenters
suggested a timeline for CMS to respond
so that hospitals can better plan in the
event the payment rate update is
reduced by 2 percentage points. One
commenter urged that the full payment
rate update not be reduced for hospitals
until the reconsideration and appeals
process is complete. One commenter
believed that this mandatory
reconsideration and appeals process
should be a permanent component to
the quality reporting program and,
therefore, not proposed or renewed each
calendar year.
Response: We thank these
commenters for their support of a
hospital reconsideration and appeals
process. We plan to complete any CY
2010 reconsideration reviews and
communicate the results of these
determinations within 60 to 90 days
following the date we receive the
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request for reconsideration. While we
recognize the commenter’s concern
about possibly withholding the full
payment rate update before the
reconsideration and appeals process is
complete, we need to consider that if we
waited to reduce the payment, the
agency could encounter issues with
recouping funds that were improperly
paid to a hospital that did not meet the
HOP QDRP requirements.
Regarding making the reconsideration
and appeals process a permanent
component to the quality reporting
program and, therefore, not proposing or
renewing it each calendar year, we have
customarily proposed most of the HOP
QDRP requirements and procedures,
even those we propose to continue with
only minor modifications, through the
annual rulemaking process in order to
afford the public additional
opportunities to comment on them. In
the case of the reconsideration and
appeals procedures, each year we also
propose the date by which hospitals
must requests for reconsiderations (for
the CY 2011 payment update, these
requests must be submitted by February
3, 2011).
After consideration of the public
comments we received, we are adopting
as final the proposed HOP QDRP
reconsideration and appeals procedures
for CY 2010.
H. Reporting of ASC Quality Data
As discussed above, section 109(b) of
the MIEA–TRHCA amended section
1833(i) of the Act by redesignating
clause (iv) as clause (v) and adding new
clause (iv) to paragraph (2)(D) and new
paragraph (7) to the Act. These
amendments authorize the Secretary to
require ASCs to submit data on quality
measures and to reduce the annual
payment update in a year by 2.0
percentage points for ASCs that fail to
do so. These provisions permit, but do
not require, the Secretary to require
ASCs to submit such data and to reduce
any annual increase for noncompliant
ASCs.
In the CY 2008 OPPS/ASC final rule
with comment period (72 FR 66875) and
in the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68780), we
indicated that we intended to
implement the provisions of section
109(b) of the MIEA–TRHCA in a future
rulemaking. While promoting high
quality care in the ASC setting through
quality reporting is highly desirable and
fully in line with our efforts under other
payment systems, the transition to the
revised payment system in CY 2008
posed significant challenges to ASCs,
and we determined that it would be
most appropriate to allow time for ASCs
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to gain some experience with the
revised payment system before
introducing other new requirements.
Further, by implementing quality
reporting under the OPPS prior to
establishing quality reporting for ASCs,
CMS would gain experience with
quality measurement in the ambulatory
setting in order to identify the most
appropriate measures for quality
reporting in ASCs prior to the
introduction of the requirement in
ASCs. Finally, we are sensitive to the
potential burden on ASCs associated
with chart abstraction and believe that
adopting such measures at this time is
in contrast with our desire to minimize
collection burden, particularly when
measures may be reported via EHRs in
the future.
We continue to believe that promoting
high quality care in the ASC setting
through quality reporting is highly
desirable and fully in line with our
efforts under other payment systems.
However, we continue to have the
concerns outlined above for CY 2010
and, therefore, in the CY 2010 OPPS/
ASC proposed rule (74 FR 35405), we
stated that we intend to implement the
provisions of section 109(b) of the
MIEA–TRHCA in a future rulemaking.
We invited public comment on this
deferral of quality data reporting for
ASCs and invited suggestions for quality
measures geared toward the services
provided by ASCs. We again sought
public comment on potential reporting
mechanisms for ASC quality data,
including electronic submission of these
data.
Comment: Several commenters agreed
with CMS’ proposal and reasons for
deferring quality data reporting for
ASCs. Some commenters supported the
CMS rationale for the proposed
approach, that is, enabling ASCs to gain
experience with the recently launched
payment system and permitting CMS to
gain experience in the HOPD setting
before implementing quality data
reporting requirements for ASCs.
Several commenters supported CMS’
decision to move with caution in
expanding quality data reporting to the
ASC setting and appreciated CMS’
sensitivity to administrative burdens
faced by ASCs. Commenters stated that
it would be beneficial to allow extra
time in order to assess implementation
challenges and identify appropriate
measures. These commenters also
indicated that issues such as
preventability, risk adjustment,
unintended consequences, coding
accuracy, burden, and effect on overall
health care costs need to be carefully
examined before starting a reporting
program for a new setting. Other
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60655
commenters indicated it would be better
to wait until ICD–10 implementation to
begin measurement in a new setting in
order to allow for more accurate coding
and measurement and POA coding. One
commenter agreed with the continued
delay in implementing a quality data
reporting program for ASCs based upon
CMS’ rationale set forth in the proposed
rule and suggested that CMS discuss
implementation of the requirements,
including when ASC reporting will
occur and the potential effects on ASC
staff. One commenter argued that
requiring ASCs to conduct quality data
reporting is unnecessary because quality
improvement is a key requirement for
ASCs to obtain and maintain
accreditation and such reporting would
result in additional costs to ASC
operations.
Response: We thank these
commenters for acknowledging the
many operational issues that must be
addressed prior to implementing a
quality data reporting program for ASCs
and supporting our decision to defer
ASC quality reporting to a future time.
However, with regard to the
commenter’s suggestion that an ASC
quality data reporting program is
unnecessary in light of ASC quality
improvement accreditation
requirements, we believe that quality
measure data reporting for ASCs would
provide consumers with quality of care
information for this type of health care
provider as well as support our quality
improvement efforts. Therefore,
notwithstanding the current issues that
have led to our determination to
implement an ASC quality reporting
program in a future rulemaking, we
believe it is important and necessary to
require ASCs to submit quality data.
Comment: Numerous commenters
advocated that CMS move forward with
an ASC quality data reporting program
as soon as possible. Many commenters
indicated that the collection and
reporting of quality data is a common
practice for ASC facilities, and that the
industry is eager to make quality data
available to consumers in a manner that
allows direct comparisons between
equivalent surgical care delivered in
HOPDs and ASCs, particularly as the
percentage of outpatient surgical
services being provided in ASC settings
has grown. Some commenters urged
CMS to implement a quality data
reporting system for ASCs for CY 2010.
One commenter was concerned about
the continued delay in quality
measurement for the rapidly growing
ASC setting and indicated that by now
it should be technically feasible for
ASCs to report on at least the set of five
quality measures that were developed
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by the industry-sponsored ASC Quality
Collaboration. Several commenters
argued that any quality data reporting
system implemented would not create
significant administrative burden on
ASCs. Some of these commenters
recommended the use of administrative
claims as a means for quality reporting
as both chart abstraction and Internetbased reporting would impose major
disadvantages for ASCs, most of which
are classified as small businesses. Some
commenters suggested beginning with a
set of six ASC quality measures that
have already been developed.
Commenters also suggested that CMS
consider claims-based reporting for
ASCs, which would eliminate the chart
abstraction burden, would capitalize on
existing data collection infrastructure,
and would be most feasible for the
industry at this time. Another
commenter indicated that specialtyspecific measures for ASCs should be
implemented in such a reporting
program in order to ensure broad
opportunity for participation, including
those ASCs that specialize in a few
services or procedures. One commenter
indicated that at least 35 States collect
data on ASCs.
Response: We agree that it would be
beneficial for consumers to be able to
compare the quality of surgical care
across HOPDs and ASCs. Currently, in
addition to the reasons we outlined in
the proposed rule, we do not have the
resources needed to implement a quality
data reporting program for ASCs. We are
aware of the set of five quality measures
that were developed by the ASC Quality
Collaboration as well as six NQFendorsed quality measures. While some
of the measures may be feasible to
collect using claims data, others (such
as the patient safety-related measures)
may not be meaningful to report unless
all patients treated were captured, and
hence all-payer claims were collected to
generate the measures. We will evaluate
the suggested measures for ASC quality
data reporting, as well as the feasibility
of claims-based measure reporting for
ASCs and the need for specialty-specific
measures for ASCs in the future.
Comment: One commenter
encouraged CMS to focus on electronic
submission of data for quality reporting
once it has been determined to move
forward with the ASC quality program.
One commenter recommended that any
ASC reporting program build on the
public reporting programs in place for
the inpatient and outpatient settings and
that the measures reported in the ASC
setting be consistent and, where
possible, identical to the outpatient
department program as the consistency
will minimize confusion, simplify data
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collection, and assure greater
comparability across sectors.
Response: We thank the commenters
for these suggestions. We will consider
them in the planning process for ASC
quality measure data reporting.
After consideration of the public
comments we received, we are
finalizing our proposal to implement
quality measure reporting in the ASC
setting in a future rulemaking. We
continue to believe that promoting high
quality care in the ASC setting through
quality data reporting is highly desirable
and fully in line with our efforts under
other payment systems.
I. Electronic Health Records
As stated above, CMS is actively
seeking alternatives to manual chart
abstraction for the collection of quality
measures for its quality data reporting
programs. Among these alternatives are
claims-based measure calculation,
collection of data from systematic
registries widely used by hospitals, and
electronic submission of quality
measures using EHRs. In the CY 2009
OPPS/ASC final rule with comment
period, we discussed public
commenters’ suggestions that we adopt
measures that can be collected via EHRs
(73 FR 68769). We agree with the
commenters about the importance of
actively working to move to a system of
data collection based on submission
from EHRs. We have been engaged with
health IT standard-setting organizations
to promote the adoption of the
necessary standards regarding data
capture to facilitate data collection via
EHRs, and have been collaborating with
such organizations on standards for a
number of quality measures. We
encourage hospitals to take steps toward
the adoption of EHRs that will allow for
reporting of clinical quality data from
the EHR directly to a CMS data
repository. We also encourage hospitals
that are implementing, upgrading, or
developing EHR systems to ensure that
such systems conform to standards
adopted by HHS. In the CY 2010 OPPS/
ASC proposed rule (74 FR 35405), we
invited public comment on the future
direction of EHR-based quality measure
submission with respect to the HOP
QDRP.
Comment: One commenter strongly
encouraged CMS to consider aligning
the HOP QDRP with the ONC measures
for ‘‘meaningful use,’’ and to provide
clarity on those measures that appear to
be similar to those identified as
measures for meaningful use, such as
the OPPS CY 2011 ‘‘OP–4: Aspirin at
Arrival’’ and the meaningful use matrix
measure for CY 2011, ‘‘Improve quality,
safety, efficiency, and reduce health
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disparities: Percentage patients at highrisk for cardiac events on aspirin
prophylaxis [OP].’’
Response: The measure matrix
referenced by the commenter is a list of
criteria developed by the Health IT
Policy Council, an advisory committee
to ONC, for consideration by the
Department as it develops the initial
criteria for determining whether an
eligible hospital or eligible professional
is a meaningful user of certified EHR
technology. Eligible hospitals and
eligible professionals who demonstrate
that they meaningfully use certified
EHR technology will be eligible for
payment incentives under Medicare, as
authorized under the HITECH Act. To
be considered a meaningful user of the
certified EHR technology, section
1886(n)(3)(A)(iii) of the Act, as added by
section 4102(a) of the HITECH Act,
requires that eligible hospitals submit to
CMS, using certified EHR technology,
the clinical quality measures and such
other measures selected by the
Secretary. Section 1886(n)(3)(B)(iii) of
the Act provides that in selecting these
reporting measures, the Secretary shall
seek to avoid redundant or duplicative
reporting with the reporting otherwise
required, including reporting under
RHQDAPU. CMS will establish the
initial meaningful use criteria in future
rulemaking, including the selection of
quality measures for hospital reporting
purposes under this separate incentive
program. Some of the clinical quality
measures included on the Health IT
Policy Council’s matrix are similar to
measures adopted into the HOP QDRP.
As we stated in the ‘‘considerations for
measurement’’ section of this final rule
with comment period, because we seek
to harmonize applicable measures
across settings, and many of the
measures for the HOP QDRP that apply
to HOPDs have been adapted from the
RHQDAPU program, some of the
measures that appear on the Health IT
Policy Council’s matrix are similar to
measures adopted into the RHQDAPU
program. We thank the commenters and
will take these comments into
consideration as we consider the future
direction of EHR-based quality measure
submission with respect to the HOP
QDRP.
XVII. Healthcare-Associated Conditions
A. Background
1. Preventable Medical Errors and
Hospital-Acquired Conditions (HACs)
Under the IPPS
As noted in its landmark 1999 report
‘‘To Err is Human: Building a Safer
Health System,’’ the Institute of
Medicine found that medical errors are
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a leading cause of morbidity and
mortality in the United States. Total
national costs of these errors due to lost
productivity, disability, and health care
costs were estimated at $17 billion to
$29 billion.2 As one approach to
combating healthcare-associated
conditions, in 2005, Congress
authorized CMS to adjust Medicare IPPS
hospital payments to encourage the
prevention of these conditions. Section
1886(d)(4)(D) of the Act (as added by
section 5001(c) of the Deficit Reduction
Act (DRA) of 2005, Pub. L. 109–171)
required the Secretary to select by
October 1, 2007, at least two conditions
that are: (1) High cost, high volume, or
both; (2) assigned to a higher paying
diagnosis-related group (DRG) when
present as a secondary diagnosis; and
(3) could reasonably have been
prevented through the application of
evidence-based guidelines. CMS has
titled this initiative ‘‘Hospital-Acquired
Conditions (HAC) and Present on
Admission (POA) Indicator Reporting.’’
Since October 1, 2008, Medicare no
longer assigns a hospital inpatient
discharge to a higher paying Medicare
Severity Diagnosis-Related Group (MS–
DRG) if a selected HAC is not present on
admission. That is, if there is an HAC,
the case is paid as though the secondary
diagnosis was not present. However, if
any nonselected complications or
comorbidities appear on the claim, the
claim will be paid at the higher MS–
DRG rate; to cause a lower MS–DRG
payment, all complications or
comorbidities on the claim must be
selected conditions for the HAC
payment provision. Since October 1,
2007, CMS has required hospitals to
submit information on Medicare
hospital inpatient claims specifying
whether diagnoses were POA.
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2. Expanding the Principles of the IPPS
HACs Payment Provision to the OPPS
In the CY 2009 OPPS/ASC proposed
rule and final rule with comment period
(73 FR 41547 and 68781, respectively),
we discussed whether the principle of
Medicare not paying more for
preventable HACs during inpatient stays
paid under the IPPS could be applied
more broadly to other Medicare
payment systems in other settings for
conditions that occur or result from
health care delivered in those settings.
We also acknowledged that
implementation of this concept would
be different for each setting, as each
Medicare payment system is unique. As
2 Institute
of Medicine: To Err Is Human: Building
a Safer Health System, November 1999. Available
at: https://www.iom.edu/Object.File/Master/4/117/
ToErr-8pager.pdf.
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we have used in past rulemaking and
general notices, in the following
discussion in this final rule with
comment period, we refer to conditions
that occur in the hospital inpatient
setting as ‘‘hospital-acquired conditions
(HACs),’’ to conditions that occur in
HOPDs as ‘‘hospital outpatient
healthcare-associated conditions (HOP–
HACs),’’ and to conditions that result
from care in settings other than the
hospital inpatient and HOPD settings as
‘‘healthcare-associated conditions.’’
In both the CY 2009 OPPS/ASC
proposed rule and final rule with
comment period, we specifically
presented our rationale for considering
the HOPD as a possible appropriate
setting for Medicare to extend to the
OPPS the concept of not paying more
for preventable healthcare-associated
conditions that occur as a result of care
provided during a hospital encounter.
For example, hospitals provide a broad
array of services in their HOPDs that
may overlap or precede the inpatient
activities of the hospital, including
many surgical procedures and
diagnostic tests that are commonly
performed on both hospital inpatients
and outpatients. Similarly, individuals
who are eventually admitted as hospital
inpatients often initiate their hospital
encounter in the HOPD, where they
receive care during clinic or emergency
department visits or observation care
that precede their inpatient hospital
admission. In addition, like the IPPS,
the OPPS is also subject to the ‘‘pay-forreporting’’ provision that affects the
hospital outpatient annual payment
update by the authority of section
1833(t)(17) of the Act (as amended by
section 109(a) of Pub. L. 109–432
(MIEA–TRHCA)). (We refer readers to
section XVI. of this final rule with
comment period for a discussion of the
HOP QDRP provisions for hospitals that
fail to meet the reporting requirements
established for the hospital outpatient
payment update.)
The risks of preventable medical
errors leading to the occurrence of
healthcare-associated conditions are
likely to be high in outpatient settings,
given the large number of encounters
and exposures that occur in these
settings. Approximately 530,000
preventable drug-related injuries are
estimated to occur each year among
Medicare beneficiaries in outpatient
clinics.3 These statistics clearly point to
the significant magnitude of the
problem of healthcare-associated
3 Asplen, P., Wolcott, J., Bootman, J.L.,
Cronenwett, L.R. (editors): Preventing Medication
Errors: Quality Chasm Series, The National
Academy Press, 2007. Available at: https://
www.nap.edu/catalog.php?record_id=11623.
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conditions in outpatient settings. Recent
trends have shown a shift in services
from the inpatient setting to the HOPD,
and we expect the occurrence of
healthcare-associated conditions
stemming from outpatient care to grow
directly as a result of this shift in sites
of service.
For the CY 2009 OPPS, we did not
adopt any new Medicare policy in our
discussion of healthcare-associated
conditions as they relate to the OPPS.
Instead, in the CY 2009 OPPS/ASC
proposed rule, we solicited public
comments on options and
considerations, including the statutory
authority related to expanding the IPPS
HAC provision to the OPPS. Our
discussion addressed the following
areas:
• Criteria for possible candidate
OPPS conditions;
• Collaboration process;
• Potential OPPS HOP–HACs,
including object left in during surgery;
air embolism; blood incompatibility;
and falls and trauma, including
fractures, dislocations, intracranial
injuries, crushing injuries, and burns;
and
• OPPS infrastructure and payment
for encounters resulting in healthcareassociated conditions, including the
necessity of POA reporting for hospital
outpatient services, methods for risk
stratification, and potential methods for
adjusting hospital payment.
3. Discussion in the CY 2009 OPPS/ASC
Final Rule With Comment Period
In the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68784
through 68787), we responded to the
public comments we received on
healthcare-associated conditions in the
context of the OPPS. Several
commenters fully supported expanding
the IPPS HAC policy to other settings
such as HOPDs and ASCs, but many
commenters stated that CMS should not
implement a related policy in other
settings without gaining implementation
experience with the IPPS HACs. A
number of commenters addressed
concerns regarding some of the potential
specific HOP–HACs discussed in the CY
2009 OPPS/ASC proposed rule (73 FR
41549), and some commenters suggested
other conditions that should be
considered or identified those that
should not be considered. Many
commenters stated that the attribution
of HOP–HACs in the HOPD setting is
difficult and stated that there was a
need to develop risk adjustment
techniques to account for differences in
patient severity of illness or other
patient characteristics. Many
commenters asserted that the POA
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indicators may need to be modified for
use in the HOPD or ASC setting. Some
commenters suggested that a ‘‘present
on encounter’’ indicator or another form
of incorporation of preexisting
conditions into an episode-of-care might
be more useful than a POA indicator.
Several commenters believed that,
without changes to the existing OPPS
payment structure, there would be no
straightforward methodology for
adjusting hospital payment.
While we acknowledged these
challenges in the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68787), we noted that we view
addressing the ongoing problem of
preventable healthcare-associated
conditions in outpatient settings,
including the HOPD, as a key valuebased purchasing strategy to sharpen the
focus on such improvements beyond
hospital inpatient care to those settings
where the majority of Medicare
beneficiaries receive most of their health
care services. We also noted that we
looked forward to continuing to work
with stakeholders to improve the
quality, safety, and value of health care
provided to Medicare beneficiaries,
beginning with a joint IPPS/OPPS
listening session.
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B. Public Comments and
Recommendations on Issues Regarding
Healthcare-Associated Conditions From
the Joint IPPS/OPPS Listening Session
Subsequent to the issuance of the CY
2009 OPPS/ASC final rule with
comment period, we held a joint
Hospital-Acquired Conditions and
Hospital Outpatient HealthcareAssociated Conditions Listening Session
on December 18, 2008. (The listening
session was announced in a notice
published in the Federal Register on
October 30, 2008 (73 FR 64618).) During
the listening session, we provided an
overview of the HAC program under the
IPPS and our previous discussions of
extending the underlying concepts to
the HOPD, including OPPS
infrastructure concerns such as the lack
of a POA indicator and the need to
address current ICD–9–CM POA
reporting guidelines, attribution of
conditions in the HOPD, and payment
adjustment considerations. In addition
to the initial candidate HOP–HACs that
we had previously identified based on
their adoption under the IPPS, we
discussed other potential HOP–HACs,
such as medication errors, conditions
related to complications of hospital
outpatient surgery or other procedures,
and infections related to HOPD care. A
transcript of the listening session is
available on the CMS Web site at: https://
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www.cms.hhs.gov/HospitalAcqCond/07
_EducationalResources.asp#TopOfPage.
Of the many public comments
presented orally at the listening session
or submitted in writing, approximately
one-half commented on expansion of
the IPPS HAC payment provision to
other settings. Some commenters were
in favor of an expansion to the HOPD
and other settings. Many commenters
requested that CMS delay any
expansion, citing the short duration of
experience with HACs and POA
indicator reporting for inpatient
hospitalizations and the need to
evaluate the current program prior to its
expansion to other settings.
We appreciate these commenters’
perspectives and note that now that we
have early data on the HAC program, in
the near future we plan to evaluate the
impact of the HAC payment provision
through a joint program evaluation with
CDC, AHRQ, and the Office of Public
Health and Science.
Many commenters pointed to the
need to define the boundaries of an
episode-of-care for healthcare-associated
conditions in the HOPD and other
settings in order to define when, how,
and to whom an expanded policy would
apply. These commenters also noted
that hospital outpatients have frequently
received care from numerous
practitioners and providers over an
extended period of time and the
hospitals’ or clinics’ role would be
supportive, rather than prescriptive,
with respect to that patient care. They
requested that CMS develop a
comprehensive and accurate definition
of an episode-of-care in order to
appropriately attribute responsibility
and the additional costs associated with
HOP–HACs.
We have previously acknowledged
that short-term consideration of HOP–
HACs would necessarily be limited to
conditions that occur during and result
from care provided in a single hospital
outpatient encounter because a broader
definition of an episode-of-care has not
yet been developed.
Many commenters believed that
detailed information should be gathered
and analyzed from the IPPS POA
indicator reporting experience before an
expansion of the HAC payment
provision and POA indicator reporting
to the HOPD. Other commenters pointed
out that the initial four conditions under
consideration for HOPDs based on their
adoption under the IPPS would likely
require emergency admission for
treatment of the event. Though
secondary to an initial encounter in the
HOPD, they indicated that these
conditions would be coded as POA for
the IPPS according to current reporting
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guidelines and would not be captured as
HOP–HACs. Several commenters stated
that, in the HOPD, it would be
particularly important to make an
assessment over an entire episode-ofcare; thus, POA might be better defined
in terms of ‘‘present on encounter’’ for
this purpose. Other commenters pointed
to the need for the development of new
codes and determinations of when the
codes should apply in order to capture
POA conditions under the OPPS, an
activity that would potentially
significantly increase hospitals’
administrative burden. Some
commenters suggested waiting to
expand the HAC payment provision to
other settings until implementation of
the ICD–10 classification system, which
would provide more precise coding to
identify preexisting conditions.
We have acknowledged a number of
these challenges already, and we will
continue to consider these reporting
issues as we refine our views regarding
potential HOP–HACs.
Many commenters highlighted that
patients receiving hospital outpatient
care may receive care in multiple
departments of the hospital, both during
a single outpatient encounter and
longitudinally over many outpatient
encounters of relatively short duration.
These commenters stated that, because
of these common patterns of care, the
timely identification of HOP–HACs and
their provider attribution would be
particularly challenging. In addition, the
commenters pointed out that patient
factors may play a role in the
development of potential HOP–HACs,
such as adverse drug events. Several of
these commenters suggested targeting
the HOP–HAC policy to specific APCs,
specific HCPCS codes, or specific HOPD
settings, such as the emergency
department. In the CY 2009 OPPS/ASC
proposed rule and final rule with
comment period (73 FR 41549 through
41550 and 68785 through 68787,
respectively), we discussed the
challenge of provider attribution under
the OPPS, particularly for conditions
that may develop over time and involve
multiple encounters and other care
settings. We understand the importance
of this issue and will continue to be
cognizant of it in future policy
development.
Several commenters asserted that
CMS should consider risk adjustment
models that incorporate population risk
adjustments to avoid creating barriers to
access for more complex patients or to
avoid unduly placing providers treating
more complex patients at higher risk for
payment consequences due to HOP–
HACs. A number of commenters
endorsed the use of rate-based measures
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of conditions on a provider-specific
level so that the level of preventability
of specific clinical conditions could be
determined and compared. Several
commenters stated that, under the best
of circumstances, falls may not be
‘‘reasonably preventable,’’ particularly
in the HOPD. Many commenters also
believed that adverse drug events would
require further definition in order to
appropriately address medication errors
that were not directly under the control
of the hospital providing the treatment
of the medication-related problem and
were, therefore, not ‘‘reasonably
preventable.’’ Similarly, some
commenters stated that it would be
difficult to appropriately attribute
metabolic derangements in the HOPD to
the hospital treating the resulting
clinical problem.
We appreciate these public comments
and will use our collaborative process
with CDC, AHRQ, and the Office of
Public Health and Science to help
define potential HOP–HACs that are
clinically meaningful for patient safety,
as well as attributable to care furnished
by providers.
Numerous commenters urged CMS to
generally proceed with care, to promote
the use of evidence-based guidelines
and care coordination, and to ensure
that any HOP–HAC program is aligned
with other CMS quality programs. Many
commenters believed that the challenges
involved might be better addressed
operationally within a full-scale valuebased purchasing program. We
appreciate these suggestions and will
consider them as we advance policies
that will ensure paying for the highest
quality, safest, and most effective health
care for Medicare beneficiaries.
C. CY 2010 Approach to HealthcareAssociated Conditions Under the OPPS
For CY 2010, we did not propose to
expand the principles behind the IPPS
HAC payment provision to the OPPS
through a HOP–HAC program (74 FR
35407). We stated that we continue to
believe that it may be appropriate to
expand the principles of the IPPS HAC
payment provision to the OPPS in the
future. However, we acknowledged that,
at this time, there are many operational
challenges to such an expansion that
will require further consideration and
infrastructure development. We
appreciate the input and guidance
provided by the many public
commenters to date on how to approach
these challenges. Most stakeholders
have strongly encouraged CMS to
evaluate the impact of the IPPS HAC
payment provision before further
considering any expansion to other
settings. We explained that we are
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evaluating the impact of the HAC and
POA indicator reporting initiative on
Medicare payment and that we plan to
consider any relevant findings as part of
our future decision making regarding
any expansion of the HAC payment
provision to other settings. We
welcomed additional suggestions and
comments from stakeholders on
potential HOP–HACs as additional
information becomes available and
health care delivery continues to evolve.
Comment: Several commenters
commended CMS for considering an
extension of the current IPPS HAC
policy to other care settings and
payment systems, including the OPPS.
These commenters suggested that it
would be reasonable to begin with
patient safety-related conditions such as
an object left in during surgery, air
embolism, blood incompatibility, falls
and trauma, including fractures,
dislocations, intracranial injuries,
crushing injuries, and burns.
However, the majority of commenters
supported CMS’ position in not
proposing to expand the IPPS HAC
payment provision to the OPPS at this
time. They agreed with the plan to
consider any relevant findings from the
agency’s evaluation of the impact of the
HAC and POA indicator reporting
initiatives (74 FR 35407) as part of CMS’
future decision-making regarding
expansion of the IPPS HAC policy to
other settings. Several commenters
reiterated their concerns related to
technical challenges in expanding the
IPPS HAC program to the OPPS, with
particular emphasis on the need to
develop a type of POA coding for
hospital outpatient services and the fact
that current POA guidelines designate
conditions that develop during an
outpatient encounter, such as clinic and
emergency department visits,
observation services, or outpatient
surgery, as POA for hospital inpatient
reporting. Other commenters
encouraged CMS to develop a
comprehensive definition of an episodeof-care, with the potential for inclusion
of related care settings to appropriately
attribute accountability. Some
commenters urged CMS to evaluate the
role of ICD–10 classification in the HAC
program and to consider postponing
implementation of HOP–HACs until the
adoption of ICD–10. A number of
commenters recommended that CMS
focus on areas of patient safety in a
future HOP–HACs program, including
outpatient surgery and outpatient
procedures that are correlated with the
potential for injury and medication
errors. Finally, several commenters
encouraged CMS to ensure that any
future HOP–HAC program provides an
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60659
incentive for care coordination, aligns
with other CMS quality initiatives, and
has no detrimental effect on patient
access to care.
Response: We appreciate the
thoughtful and detailed suggestions
from commenters. We will continue to
consider the concerns and suggestions
from commenters as we evaluate the
impact of the HAC and POA indicator
reporting initiative and as part of our
future decision making regarding any
expansion of the HAC payment
provision to other settings.
XVIII. Files Available to the Public Via
the Internet
A. Information in Addenda Related to
the CY 2010 Hospital OPPS
Addenda A and B to this final rule
with comment period provide various
data pertaining to the CY 2010 payment
for items and services under the OPPS.
Addendum A, which includes a list of
all APCs payable under the OPPS, and
Addendum B, which includes a list of
all active HCPCS codes with their CY
2010 OPPS payment status and
comment indicators, are available to the
public by clicking ‘‘Hospital Outpatient
Regulations and Notices’’ on the CMS
Web site at: https://www.cms.hhs.gov/
HospitalOutpatientPPS/.
For the convenience of the public, we
also are including on the CMS Web site
a table that displays the HCPCS code
data in Addendum B sorted by APC
assignment, identified as Addendum C.
Addendum D1 defines the payment
status indicators that are used in
Addenda A and B. Addendum D2
defines the comment indicators that are
used in Addendum B. Addendum E lists
the HCPCS codes that are only payable
to hospitals as inpatient procedures and
are not payable under the OPPS.
Addendum L contains the out-migration
wage adjustment for CY 2010.
Addendum M lists the HCPCS codes
that are members of a composite APC
and identifies the composite APC to
which each is assigned. This addendum
also identifies the status indicator for
the HCPCS code and a comment
indicator if there is a change in the
code’s status with regard to its
membership in the composite APC.
Each of the HCPCS codes included in
Addendum M has a single procedure
payment APC, listed in Addendum B, to
which it is assigned when the criteria
for assignment to the composite APC are
not met. When the criteria for payment
of the code through the composite APC
are met, one unit of the composite APC
payment is paid, thereby providing
packaged payment for all services that
are assigned to the composite APC
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according to the specific I/OCE logic
that applies to the APC. We refer readers
to the discussion of composite APCs in
section II.A.2.e. of this final rule with
comment period for a complete
description of the composite APCs.
These addenda and other supporting
OPPS data files are available on the
CMS Web site at: https://
www.cms.hhs.gov/
HospitalOutpatientPPS/.
B. Information in Addenda Related to
the CY 2010 ASC Payment System
Addenda AA and BB to this final rule
with comment period provide various
data pertaining to the CY 2010 payment
for the covered surgical procedures and
covered ancillary services for which
ASCs may receive separate payment.
Addendum AA lists the CY 2010 ASC
covered surgical procedures, their
payment indicators, and their payment
rates. Addendum BB displays the CY
2010 ASC covered ancillary services,
their payment indicators, and their
payment rates. All ASC relative
payment weights and payment rates for
CY 2010 are a result of applying the
revised ASC payment system
methodology established in the final
rule for the revised ASC payment
system published in the Federal
Register on August 2, 2007 (72 FR
42470 through 42548) to the CY 2010
OPPS and MPFS ratesetting
information.
Addendum DD1 defines the payment
indicators that are used in Addenda AA
and BB. Addendum DD2 defines the
comment indicators that are used in
Addenda AA and BB.
Addendum EE (available only on the
CMS Web site) lists the surgical
procedures that are excluded from
Medicare payment if furnished in ASCs.
The excluded procedures listed in
Addendum EE are surgical procedures
that are assigned to the OPPS inpatient
list, are not covered by Medicare, are
reported using a CPT unlisted code, or
have been determined to pose a
significant safety risk or are expected to
require an overnight stay when
performed in ASCs.
These addenda and other supporting
ASC data files are included on the CMS
Web site at: https://www.cms.hhs.gov/
ASCPayment/. The MPFS data files are
located at: https://www.cms.hhs.gov/
PhysicianFeeSched/.
The links to all of the FY 2010 IPPS
wage index-related tables (that are used
for the CY 2010 OPPS) that were
published in the FY 2010 IPPS/LTCH
PPS final rule (74 FR 44032 through
44125) are accessible on the CMS Web
site at: https://www.cms.hhs.gov/
AcuteInpatientPPS/WIFN.
XIX. Collection of Information
Requirements
A. Legislative Requirement for
Solicitation of Comments
Under the Paperwork Reduction Act
of 1995, we are required to provide 30day notice in the Federal Register and
solicit public comment before a
collection of information requirement is
submitted to the Office of Management
and Budget (OMB) for review and
approval. In order to fairly evaluate
whether an information collection
should be approved by OMB, section
3506(c)(2)(A) of the Paperwork
Reduction Act of 1995 requires that we
solicit comment on the following issues:
• The need for the information
collection and its usefulness in carrying
out the proper functions of our agency.
• The accuracy of our estimate of the
information collection burden.
• The quality, utility, and clarity of
the information to be collected.
• Recommendations to minimize the
information collection burden on the
affected public, including automated
collection techniques.
The CY 2010 OPPS/ASC proposed
rule and this final rule with comment
period do not specify any information
collection requirements through
regulatory text. However, in the
proposed rule and in this final rule with
comment period, we make reference to
associated information collection
requirements that are not discussed in
the regulation text contained in this
document. The following is a discussion
of those requirements, for which we
solicited public comment in the CY
2010 OPPS/ASC proposed rule (74 FR
35232).
B. Associated Information Collections
Not Specified in Regulatory Text
1. Hospital Outpatient Quality Data
Reporting Program (HOP QDRP)
As previously stated in section XVI. of
this final rule with comment period, the
quality data reporting program for
hospital outpatient care, known as the
Hospital Outpatient Quality Data
Reporting Program (HOP QDRP), has
been generally modeled after the quality
data reporting program for hospital
inpatient services, the Reporting
Hospital Quality Data for Annual
Payment Update (RHQDAPU) program.
Section 109(a) of the MIEA–TRHCA
(Pub. L. 109–432) amended section
1833(t) of the Act by adding a new
subsection (17) that affects the payment
rate update applicable to OPPS
payments for services furnished by
hospitals in outpatient settings on or
after January 1, 2009. Section
1833(t)(17)(A) of the Act, which applies
to hospitals as defined under section
1886(d)(1)(B) of the Act, states that
subsection (d) hospitals that fail to
report data required for the quality
measures selected by the Secretary in
the form and manner required by the
Secretary under section 1833(t)(17)(B) of
the Act will receive a 2.0 percentage
point reduction to their annual payment
update factor. Section 1833(t)(17)(B) of
the Act requires that hospitals submit
quality data in a form and manner, and
at a time, that the Secretary specifies.
Section 1833(t)(17)(C)(i) of the Act
requires the Secretary to develop
measures appropriate for the
measurement of the quality of care
(including medication errors) furnished
by hospitals in outpatient settings, that
these measures reflect consensus among
affected parties and, to the extent
feasible and practicable, that these
measures include measures set forth by
one or more national consensus
building entities.
2. HOP QDRP Quality Measures for the
CY 2010 and CY 2011 Payment
Determinations
In the CY 2009 final rule with
comment period (73 FR 68766), we
adopted 4 claims-based imaging
measures for use in CY 2010, bringing
the total number to 11 measures. For the
CY 2010 payment update, we are
requiring hospitals to submit data
related to the seven data abstracted
measures; we will calculate the claimsbased measures using administrative
paid claims data and do not require
additional hospital data submissions.
Similarly, as we proposed, we are using
the same 11 measures and the same data
submission requirements related to the
seven data abstracted measures for CY
2011 payment determinations.
HOP QDRP measurement set to be used for CY 2010 and CY 2011 payment determination
OP–1:
OP–2:
OP–3:
OP–4:
Median Time to Fibrinolysis
Fibrinolytic Therapy Received Within 30 Minutes
Median Time to Transfer to Another Facility for Acute Coronary Intervention
Aspirin at Arrival
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HOP QDRP measurement set to be used for CY 2010 and CY 2011 payment determination
OP–5: Median Time to ECG
OP–6: Timing of Antibiotic Prophylaxis
OP–7: Prophylactic Antibiotic Selection for Surgical Patients
OP–8: MRI Lumbar Spine for Low Back Pain
OP–9: Mammography Follow-up Rates
OP–10: Abdomen CT—Use of Contrast Material
OP–11: Thorax CT—Use of Contrast Material
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As part of the data submission process
pertaining to the 11 measures listed
above, hospitals must also complete and
submit a notice of participation in the
HOP QDRP. By submitting this
document, hospitals agree that they will
allow CMS to publicly report the quality
measures as required by the HOP QDRP.
The burden associated with this
section is the time and effort associated
with completing the notice of
participation as well as collecting and
submitting the data on the seven data
abstracted measures. We estimate that
there will be approximately 3,500
respondents per year. For hospitals to
collect and submit the information on
the required measures, we estimate it
will take 30 minutes per sampled case.
We estimate there will be a total of
1,800,000 cases per year, approximately
514 cases per respondent. The estimated
annual burden associated with the
aforementioned submission
requirements is 900,000 hours
((1,800,000 cases/year) × (0.5 hours/
case)).
We did not receive any public
comments on the burden associated
with these information collection
requirements.
3. HOP QDRP Validation Requirements
In addition to requirements for
submitting of quality data, hospitals
must also comply with the requirements
for data validation in CY 2011. As
specified in detail in section XVI.E. of
this final rule with comment period, for
the CY 2011 payment determination, as
we proposed, we are implementing a
validation program that will require
hospitals to supply requested medical
documentation to a CMS contractor for
purposes of validating those data.
However, the results of the validation
will not affect the CY 2011 payment
update for any hospital, although the
payment update may be affected if a
hospital fails to submit the requested
data. We believe that it is important for
hospitals to have some experience and
knowledge of the HOP QDRP validation
process before payment determinations
are made based upon validation results.
As we proposed, we are implementing
a validation program that will both limit
burden upon hospitals, especially small
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hospitals, as well as provide feedback to
all hospitals on validation performance.
We are requesting medical
documentation from hospitals for April
1, 2009 through March 31, 2010
episodes of care, which, with a
modification for two of the quality
measures, will allow us to gather one
full year of submitted data for validation
purposes.
The burden associated with the CY
2011 requirement is the time and effort
necessary to submit validation data to a
CMS contractor. We estimate that it will
take each hospital approximately 38
minutes to comply with these data
submission requirements. To comply
with the requirements, we estimate each
hospital must submit between 2 to 3
cases on average for review. We estimate
that 3,200 hospitals will need to comply
with these requirements in order for us
to collect a total of 7,300 charts across
all sampled hospitals. The estimated
annual burden associated with the data
validation process for CY 2011 is 2,026
hours.
Similar to our policy for the FY 2012
RHQDAPU program (74 FR 43884
through 43889), we proposed (74 FR
35403) to validate data from 800
randomly selected hospitals each year
under the HOP QDRP, beginning with
the CY 2012 payment determination.
We note that, because the 800 hospitals
will be selected randomly, every HOP
QDRP-participating hospital will be
eligible each year for validation
selection. For each selected hospital, we
will randomly validate per year up to 48
patient episodes of care (12 per quarter)
from the total number of cases that the
hospital successfully submitted to the
OPPS Clinical Warehouse during the
applicable time period. However, if a
selected hospital has submitted less
than 12 cases in one or more quarters,
only those cases available will be
validated. However, we did not adopt
that proposal in this final rule with
comment period. Instead, we indicated
that we would take into account results
of further analyses of collected data, as
well as public comments we received on
our proposal and propose a validation
process for the CY 2012 payment rate
update in next year’s rulemaking
process.
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The burden associated with the
proposed CY 2012 requirement, if we
adopt it next year is the time and effort
necessary to submit validation data to a
CMS contractor. We estimate that it will
take each of the 800 sampled hospitals
approximately 12 hours to comply with
these data submission requirements. To
comply with the requirements, we
estimate each hospital must submit 48
cases for the affected year for review.
We estimate that 800 hospitals must
comply with these requirements to
submit a total of 38,400 charts across all
sampled hospitals. The estimated
annual burden associated with the data
validation process for CY 2012 and
subsequent years is 9,600 hours.
We discuss public comments on this
information collection requirement in
section XVI.E.3.b. of this final rule with
comment period.
4. HOP QDRP Reconsideration and
Appeals Procedures
In the CY 2009 OPPS/ASC final rule
with comment period (73 FR 68779), we
adopted a mandatory reconsideration
process that will apply to the CY 2010
payment decisions. As we proposed in
the CY 2010 OPPS/ASC proposed rule,
we will continue this process for the CY
2011 payment update. Under this
process, the hospitals must meet all of
the requirements specified in section
XVI.G. of this final rule with comment
period. We did not assign burden to the
aforementioned information collection
requirements in the CY 2010 OPPS/ASC
proposed rule because we believed the
associated information collection
requirements were exempt under 5 CFR
1320.4 (that is, information collected
subsequent to an administrative action
is not subject to the PRA). However,
upon further review, in this final rule
with comment period, we are assigning
burden to the reconsideration and
appeals procedures. The burden
associated with the reconsideration and
appeals procedures is the time and
effort necessary to gather the required
information and submit it to CMS. The
required information, as specified in
section XVI.G. of this final rule with
comment period, involves the
submission of a completed
reconsideration request form that is
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signed by the hospital’s chief financial
officer. We estimate that 25 hospitals
will avail themselves of the
reconsideration and appeals procedures
on an annual basis. We estimate that it
will take each hospital approximately
40 minutes to gather the required
information, complete the required
reconsideration request form, obtain the
signiture of the chief financial officer,
and forward the documentation to CMS.
The total annual estimated burden
associated with these requirements is
1,000 minutes.
We did not receive any public
comments on these information
collection requirements.
5. Additional Topics
While we are seeking OMB approval
for the information collection
requirements associated with the HOP
QDRP and the data validation processes,
in the CY 2010 OPPS/ASC proposed
rule (74 FR 35232), we also sought
public comment on several issues that
have the potential to ultimately affect
the burden associated with HOP QDRP
and the data validation processes.
Specifically, that proposed rule listed
the possible quality measures under
consideration for CY 2012 and
subsequent years. We also solicited
public comments to explore the use of
registries to comply with the HOP QDRP
submission requirements, the use of
EHRs as a data submission tool, the use
of a standardized process for the
retirement of HOP QDRP quality
measures, the use of an extraordinary
circumstance extension or waiver for
reporting quality data, and the
implementation of additional data
validation conditions. We discussed the
comments we received on these issues
in section XVI. of the preamble of this
final rule with comment period.
XX. Response to Comments
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Because of the large number of public
comments we normally receive on
Federal Register documents, we are not
able to acknowledge or respond to them
individually. We will consider all
comments we receive by the date and
time specified in the DATES section of
this final rule with comment period,
and, when we proceed with a
subsequent document(s), we will
respond to those comments in the
preamble to that document(s).
XXI. Regulatory Impact Analysis
A. Overall Impact
We have examined the impacts of this
final rule with comment period as
required by Executive Order 12866
(September 1993, Regulatory Planning
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and Review), the Regulatory Flexibility
Act (RFA) (September 19, 1980, Pub. L.
96–354), section 1102(b) of the Social
Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104–4),
Executive Order 13132 on Federalism,
and the Congressional Review Act (5
U.S.C. 804(2)).
1. Executive Order 12866
Executive Order 12866 directs
agencies to assess all costs and benefits
of available regulatory alternatives and,
if regulation is necessary, to select
regulatory approaches that maximize
net benefits (including potential
economic, environmental, public health
and safety effects, distributive impacts,
and equity). A regulatory impact
analysis (RIA) must be prepared for
major rules that have economically
significant effects ($100 million or more
in any 1 year) or adversely affect in a
material way the economy, a sector of
the economy, productivity, competition,
jobs, the environment, public health or
safety, or State, local, or tribal
government or communities (58 FR
51741).
We estimate that the effects of the
OPPS provisions that are being
implemented in this final rule with
comment period will result in
expenditures exceeding $100 million in
any 1 year. We estimate the total
increase (from changes in this final rule
with comment period as well as
enrollment, utilization, and case-mix
changes) in expenditures under the
OPPS for CY 2010 compared to CY 2009
to be approximately $1.9 billion.
Because this final rule with comment
period for the OPPS is ‘‘economically
significant’’ as measured by the $100
million threshold and also a major rule
under the Congressional Review Act, we
have prepared a regulatory impact
analysis that, to the best of our ability,
presents the costs and benefits of this
rulemaking. Table 73 of this final rule
with comment period displays the
redistributional impact of the CY 2010
changes on OPPS payment to various
groups of hospitals.
We estimate that the effects of the
ASC provisions that are being
implemented in this final rule with
comment period for the ASC payment
system will not exceed $100 million in
any 1 year and, therefore, are not
economically significant. We estimate
the total increase (from changes in this
final rule with comment period as well
as enrollment, utilization, and case-mix
changes) in expenditures under the ASC
payment system for CY 2010 compared
to CY 2009 to be approximately $80
million. However, because this final
rule with comment period for the ASC
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payment system substantially affects
ASCs, we have prepared a regulatory
impact analysis of changes to the ASC
payment system that, to the best of our
ability, presents the costs and benefits of
this rulemaking. Table 75 and Table 76
of this final rule with comment period
display the redistributional impact of
the CY 2010 changes on ASC payment,
grouped by specialty area and then by
procedures with the greatest ASC
expenditures, respectively.
2. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze
options for regulatory relief of small
businesses if a rule has a significant
impact on a substantial number of small
entities. For purposes of the RFA, small
entities include small businesses,
nonprofit organizations, and small
governmental jurisdictions. Many
hospitals, other providers, ASCs, and
other suppliers are considered to be
small entities, either by being nonprofit
organizations or by meeting the Small
Business Administration (SBA)
definition of a small business (hospitals
having revenues of $34.5 million or less
in any 1 year and ASCs having revenues
of $10 million or less in any 1 year).
(For details on the latest standards for
health care providers, we refer readers
the SBA’s Web site at: https://sba.gov/
idc/groups/public/documents/
sba_homepage/serv_sstd_tablepdf.pdf
(refer to the 620000 series).)
For purposes of the RFA, we have
determined that many hospitals and
most ASCs would be considered small
entities according to the SBA size
standards. Individuals and States are
not included in the definition of a small
entity. Therefore, the Secretary has
determined that this final rule with
comment period will have a significant
impact on a substantial number of small
entities. Because we acknowledge that
many of the affected entities are small
entities, the analyses presented
throughout this final rule with comment
period constitute our regulatory
flexibility analysis. Therefore, in the CY
2010 OPPS/ASC proposed rule (74 FR
35410), we solicited public comments
on our estimates and analyses of the
impact of the proposed rule on those
small entities.
3. Small Rural Hospitals
In addition, section 1102(b) of the Act
requires us to prepare a regulatory
impact analysis if a rule may have a
significant impact on the operations of
a substantial number of small rural
hospitals. This analysis must conform to
the provisions of section 603 of the
RFA. With the exception of hospitals
located in certain New England
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counties, for purposes of section 1102(b)
of the Act, we now define a small rural
hospital as a hospital that is located
outside an urban area and has fewer
than 100 beds. Section 601(g) of the
Social Security Amendments of 1983
(Pub. L. 98–21) designated hospitals in
certain New England counties as
belonging to the adjacent urban areas.
Thus, for OPPS purposes, we continue
to classify these hospitals as urban
hospitals. We believe that the changes to
the OPPS in this final rule with
comment period will affect both a
substantial number of rural hospitals as
well as other classes of hospitals and
that the effects on some may be
significant. Also, the changes to the ASC
payment system in this final rule with
comment period will affect rural ASCs.
Therefore, the Secretary has determined
that this final rule with comment period
will have a significant impact on the
operations of a substantial number of
small rural hospitals.
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4. Unfunded Mandates
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
also requires that agencies assess
anticipated costs and benefits before
issuing any rule whose mandates
require spending in any 1 year of $100
million in 1995 dollars, updated
annually for inflation. That threshold
level is currently approximately $133
million. This final rule with comment
period will not mandate any
requirements for State, local, or tribal
governments, nor will it affect private
sector costs.
5. Federalism
Executive Order 13132 establishes
certain requirements that an agency
must meet when it promulgates a
proposed rule (and subsequent final
rule) that imposes substantial direct
costs on State and local governments,
preempts State law, or otherwise has
Federalism implications.
We have examined the OPPS and ASC
provisions included in this final rule
with comment period in accordance
with Executive Order 13132,
Federalism, and have determined that
they will not have a substantial direct
effect on State, local or tribal
governments, preempt State law, or
otherwise have a Federalism
implication. As reflected in Table 73
below, we estimate that OPPS payments
to governmental hospitals (including
State and local governmental hospitals)
will increase by 1.8 percent under this
final rule with comment period. While
we do not know the number of ASCs
with government ownership, we
anticipate that it is small. We believe
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that the provisions related to payments
to ASCs in CY 2010 will not affect
payments to any ASCs owned by
government entities.
The following analysis, in
conjunction with the remainder of this
document, demonstrates that this final
rule with comment period is consistent
with the regulatory philosophy and
principles identified in Executive Order
12866, the RFA, and section 1102(b) of
the Act.
This final rule with comment period
will affect payments to a substantial
number of small rural hospitals and a
small number of rural ASCs, as well as
other classes of hospitals and ASCs, and
some effects may be significant.
B. Effects of OPPS Changes in This Final
Rule With Comment Period
We are making several changes to the
OPPS that are required by the statute.
We are required under section
1833(t)(3)(C)(ii) of the Act to update
annually the conversion factor used to
determine the APC payment rates. We
also are required under section
1833(t)(9)(A) of the Act to revise, not
less often than annually, the wage index
and other adjustments, including passthrough payments and outlier payments.
In addition, we must review the clinical
integrity of payment groups and weights
at least annually. Accordingly, in this
final rule with comment period, we are
updating the conversion factor and the
wage index adjustment for hospital
outpatient services furnished beginning
January 1, 2010, as we discuss in
sections II.B. and II.C., respectively, of
this final rule with comment period. We
also are revising the relative APC
payment weights using claims data for
services furnished from January 1, 2008,
through December 31, 2008, and
updated cost report information. We are
continuing the current payment
adjustment for rural SCHs, including
EACHs. Finally, we list the 6 drugs and
biologicals in Table 30 of this final rule
with comment period that we are
removing from pass-through payment
status for CY 2010.
Under this final rule with comment
period, we estimate that the update
change to the conversion factor and
other adjustments as provided by the
statute will increase total OPPS
payments by 2.1 percent in CY 2010.
The changes to the APC weights, the
changes to the wage indices, and the
continuation of a payment adjustment
for rural SCHs, including EACHs, will
not increase OPPS payments because
these changes to the OPPS are budget
neutral. However, these updates do
change the distribution of payments
within the budget neutral system as
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60663
shown in Table 73 below and described
in more detail in this section. We also
estimate that the total change in
payments between CY 2010 and CY
2009, considering all payments,
including changes in estimated total
outlier payments and expiration of
additional money for specified wages
indices outside of budget neutrality,
will increase total OPPS payments by
1.9 percent.
1. Alternatives Considered
Alternatives to the changes we are
making and the reasons that we have
chosen the options are discussed
throughout this final rule with comment
period. Some of the major issues
discussed in this final rule with
comment period and the options
considered are discussed below.
a. Alternatives Considered for PassThrough Payment for Implantable
Biologicals
We are finalizing our proposal to
change the way we evaluate transitional
pass-through applications for
implantable biologicals and the way we
pay for implantable biologicals newly
eligible for transitional pass-through
status beginning in CY 2010. As
discussed in detail in section V.A.4. of
this final rule with comment period, we
are finalizing a policy that the passthrough evaluation process and passthrough payment methodology for
implantable biologicals that are
surgically inserted or implanted
(through a surgical incision or a natural
orifice) and that are newly approved for
pass-through payment beginning on or
after January 1, 2010, be the device passthrough process and payment
methodology only. As a result,
implantable biologicals that are
surgically inserted or implanted
(through a surgical incision or a natural
orifice) will no longer be eligible to
submit biological pass-through
applications and to receive biological
pass-through payment at ASP+6
percent. Rather, implantable biologicals
that are eligible for device pass-through
payment will be paid based on the
charges-adjusted-to-cost methodology
used for all pass-through device
categories.
We considered three alternatives for
the pass-through evaluation process and
payment methodology for implantable
biologicals that are surgically inserted or
implanted (through a surgical incision
or a natural orifice), as indicated in the
CY 2010 OPPS/ASC proposed rule (74
FR 35411). The first alternative we
considered was to make no change to
the current pass-through evaluation
process and payment methodology for
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implantable biologicals that are
surgically inserted or implanted. We did
not select this alternative because this
approach would continue the separate
pass-through evaluation processes and
payment methodologies for implantable
biologicals and implantable
nonbiological devices that are
sometimes used for the same clinical
indications, and where the implantable
biologicals are often FDA-approved as
devices. Moreover, under our current
policy, implantable biologicals could
potentially have two periods of passthrough payment, one as a biological
and one as a device. We believe that it
is most appropriate for a product to be
eligible for a single period of OPPS passthrough payment, rather than a period
of device pass-through payment and a
period of drug or biological passthrough payment.
The second alternative we considered
was to add a criterion requiring the
demonstration of substantial clinical
improvement to the biological passthrough evaluation process in order for
a biological to be approved for passthrough payment. This alternative
would provide pass-through payment
only for those biologicals that
demonstrate clinical superiority,
consistent with the pass-through
evaluation process for devices, and
ensure that a product could receive only
one period of pass-through payment. We
did not choose this alternative because
this approach would continue the
different pass-through payment methods
for implantable biological and
nonbiological devices. Pass-through
payment for biologicals is made at
ASP+6 percent as required for drug and
biological pass-through payment, while
pass-through devices are paid at charges
adjusted to cost. Therefore, this second
alternative would result in continued
inconsistent pass-through payment
methodologies for biological and
nonbiological devices that may
substitute for one another.
The third alternative we considered
and the one we are adopting for CY
2010 is to provide that, beginning in CY
2010, the pass-through evaluation
process and pass-through payment
methodology for implantable biologicals
that are surgically inserted or implanted
(through a surgical incision or a natural
orifice) be the device pass-through
process and payment methodology only.
As we discuss in section V.A.4. of this
final rule with comment period, after
consideration of the public comments
we received on the proposed rule, we
are adopting this alternative because we
believe that a consistent pass-through
payment policy is to evaluate all such
devices, both biological and
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nonbiological, under the device passthrough process. We believe that
implantable biologicals that function as
and may be substitutes for implantable
devices are most similar to devices
because of their required surgical
insertion or implantation, and that it
would be appropriate to evaluate them
as devices because they share significant
clinical similarity with implantable
nonbiological devices.
b. Alternatives Considered for Payment
of the Acquisition and Pharmacy
Overhead Costs of Drugs and Biologicals
That Do Not Have Pass-Through Status
For CY 2010, we are finalizing a
transition payment for separately
payable drugs and biologicals at ASP+4
percent, which will continue to
represent combined payment for both
the acquisition and pharmacy overhead
costs of separately payable drugs and
biologicals. As discussed in detail in
section V.B.3. of this final rule with
comment period, we are redistributing
$200 million total of packaged drug cost
($150 million of the pharmacy overhead
cost currently attributed to coded
packaged drugs and biologicals with an
ASP and $50 million of the estimated
pharmacy overhead cost currently
attributed to uncoded packaged drugs
and biologicals) to separately payable
drugs and biologicals to provide an
adjustment for the pharmacy overhead
costs of these separately payable
products. As a result, we are
proportionally reducing the cost of
packaged drugs and biologicals that is
included in the separate payment for
procedural APCs to offset the $200
million adjustment to provide payment
for separately payable drugs and
biologicals at ASP+4 percent. We
received favorable public comments on
our proposal to redistribute cost within
drugs and biologicals to adjust payment
for separately payable drugs and
biologicals. The public commenters also
agreed that our estimated total cost for
all drugs and biologicals in our claims
data is accurate. Therefore, we are
redistributing a portion of pharmacy
overhead cost in the CY 2010 final rule
claims data from some packaged drugs
and biologicals to separately payable
drugs and biologicals. A redistribution
within drug cost maintains the
estimated total cost of drugs and
biologicals under the OPPS.
We considered three alternatives for
payment of the acquisition and
pharmacy overhead costs of drugs and
biologicals that do not have passthrough status for CY 2010. The first
alternative we considered was to
continue our standard policy of
comparing the estimated aggregate cost
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of separately payable drugs and
biologicals in our claims data to the
estimated aggregate ASP dollars for
separately payable drugs and
biologicals, using the ASP as a proxy for
average acquisition cost, to calculate the
estimated percent of ASP that would
serve as the proxy for the combined
acquisition and pharmacy overhead
costs of separately payable drugs and
biologicals (70 FR 68642). Under this
standard methodology, using July 2009
ASP information and updated final rule
costs derived from CY 2008 OPPS
claims data, we estimated the combined
acquisition and pharmacy overhead
costs of separately payable drugs and
biologicals to be ASP–3 percent. We
also determined the combined
acquisition and pharmacy overhead
costs of coded packaged drugs and
biologicals with an ASP to be 258
percent of ASP. As discussed in section
V.B.3. of this final rule with comment
period, we did not choose this
alternative because we believe that this
analysis indicates that our standard
drug payment methodology has the
potential to ‘‘compress’’ the calculated
costs of separately payable drugs and
biologicals and inflate the calculated
costs of packaged drugs and biologicals
to some degree. Further, we recognize
that the attribution of pharmacy
overhead costs to packaged or separately
payable drugs and biologicals through
our standard drug payment
methodology of a combined payment for
acquisition and pharmacy overhead
costs also depends on the determination
of separate or packaged payment for all
drugs and biologicals each year based
on our annual drug packaging threshold.
Changes to the packaging threshold and
the packaged status of drugs or
biologicals may result in changes to the
estimated combined acquisition and
pharmacy overhead costs of drugs and
biologicals that do not reflect actual
changes in hospital pharmacy overhead
cost for those products.
The second alternative we considered
was to adopt the February 2009 APC
Panel recommendation to accept the
pharmacy stakeholders’ recommended
methodology for payment of drugs and
biologicals that do not have passthrough status. This recommended
methodology would establish ASP+6
percent as the cost of packaged drugs
and biologicals, including all pharmacy
overhead costs; establish ASP+6 percent
as the acquisition cost of separately
payable drugs and biologicals with some
overhead cost included; and reallocate
the residual cost of packaged drugs and
biologicals currently reflected in the
claims data across three categories of
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pharmacy overhead cost that would
then be paid separately for each
administration of separately payable
drugs and biologicals in CY 2010. The
pharmacy stakeholders recommended
that we pay the pharmacy overhead
amount specific to the overhead
category to which a drug or biological is
assigned, in addition to the ASP+6
percent payment for the separately
payable drug or biological, each time a
separately payable drug or biological is
administered. We refer readers to
section V.B.3. of this final rule with
comment period for a more detailed
discussion of the pharmacy
stakeholders’ recommended
methodology. We did not choose this
alternative because we do not believe
that ASP+6 percent would pay
appropriately for the acquisition and
pharmacy overhead costs of packaged
drugs. We believe the amount of
redistribution of pharmacy overhead
costs from packaged to separately
payable drugs and biologicals
incorporated in the recommendation of
the pharmacy stakeholders would be too
great. In addition, we do not believe that
it would be appropriate to establish
separate payment for pharmacy
overhead costs, thereby unbundling
payment for the acquisition and
overhead costs of separately payable
drugs and biologicals when hospitals
report a single charge for these products
that represents both types of costs. For
these reasons, we are not accepting the
APC Panel recommendation to adopt
the pharmacy stakeholders’
recommended methodology.
The third alternative we considered
and the one we selected for CY 2010 is
to make a transition payment for
nonpass-through separately payable
drugs and biologicals at ASP+4 percent,
which will continue to represent a
combined payment for both the
acquisition costs of separately payable
drugs and biologicals and the pharmacy
overhead costs applicable to these
products. We also are reducing the cost
of packaged drugs and biologicals that is
included in the payment for procedural
APCs to offset the $200 million
adjustment to payment for separately
payable drugs and biologicals. The $200
million consists of $150 million (onethird of the pharmacy overhead cost)
from the cost of coded packaged drugs
and biologicals with an ASP and $50
million from the uncoded packaged
drug and biological cost. To model this
policy for the CY 2010 final rule with
comment period, we reduced the cost of
coded packaged drugs and biologicals
with an ASP by 24 percent (based on
final rule data; the reduction was 27
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percent based on proposed rule data)
and the cost of uncoded packaged drugs
and biologicals by 8 percent when we
calculated the median costs of the CY
2010 procedural APCs. We chose this
transition alternative because we believe
that it provides an appropriate
redistribution of pharmacy overhead
costs associated with drugs and
biologicals and is consistent with the
principles of a prospective payment
system.
c. Alternatives Considered for the
Physician Supervision of Hospital
Outpatient Services
We are revising or further defining
several policies related to the physician
supervision of services in the HOPD for
CY 2010. We refer readers to section
XII.D. of this final rule with comment
period for the full discussion of these
policies. Specifically, for the CY 2010
OPPS, we are revising our existing
policy that requires direct supervision
to be provided by a physician to allow,
when statutorily permitted under the
Social Security Act, specified
nonphysician practitioners to supervise
the hospital outpatient therapeutic
services that they are able to personally
perform within their State scope of
practice and hospital-granted privileges.
We note that section 144(a)(1) of Public
Law 100–275 imposes strict
requirements for the direct physician
supervision of PR, CR, and ICR services
and gives us no flexibility to modify the
requirement beyond direct physician
supervision by a doctor of medicine or
a doctor of osteopathy. We also are
establishing a policy for hospital
outpatient therapeutic services
furnished in the main hospital buildings
or in on-campus provider-based
departments (PBDs) that ‘‘direct
supervision’’ means that the supervisory
practitioner must be on the same
campus and immediately available to
furnish assistance and direction
throughout the performance of the
procedure. In addition, we are
establishing in regulations a policy that
applies the MPFS physician supervision
requirements for diagnostic tests to all
hospital outpatient diagnostic tests
performed directly by the hospital or
under arrangement.
We considered three alternatives for
the physician supervision of hospital
outpatient services for CY 2010 in the
CY 2010 OPPS/ASC proposed rule (74
FR 35412 through 35413). The first
alternative we considered was to make
no changes to the existing supervision
policies for hospital outpatient
therapeutic and diagnostic services and
to provide no new policy guidance in
this area. This approach would require
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60665
hospitals to ensure that only physicians
supervise services that may currently be
ordered or performed by nonphysician
practitioners within their State scope of
practice and hospital-granted privileges.
Hospitals would not receive payment
for outpatient services for which they
were unable to provide supervision by
a physician. In addition, there could
continue to be confusion regarding what
‘‘direct supervision’’ means for services
provided in an area of the hospital that
may not be a PBD of the hospital. Lastly,
there would be potential for
misunderstanding regarding the
appropriate level of physician
supervision required for hospital
outpatient diagnostic services without a
clearly stated policy, codified in
regulations, that would apply the same
level of physician supervision to all
hospital outpatient diagnostic services,
whether provided directly or under
arrangement, as applies to those services
currently furnished in physicians’
offices and independent diagnostic
testing facilities. We did not choose this
alternative because we believe that it is
important to address the issues outlined
above, including areas of potential
confusion or limited current policy
guidance, to ensure that hospitals are
able to comply with the hospital
outpatient supervision requirements
while providing access to care for
Medicare beneficiaries.
The second alternative we considered
was to permit specified nonphysician
practitioners to supervise the hospital
outpatient therapeutic services that they
are able to personally perform within
their State scope of practice and
hospital-granted privileges, but to make
no changes that would provide clearer
statements of policy regarding other
concerns raised by hospitals regarding
physician supervision for hospital
outpatient therapeutic and diagnostic
services. We did not choose this
alternative because we believe it is
important to clearly specify the policies
that apply to the supervision of both
therapeutic and diagnostic services in
all hospital outpatient settings in order
to ensure the safety and effectiveness of
hospital outpatient services furnished to
Medicare beneficiaries.
The third alternative we considered
and the one we selected for CY 2010
was to revise our existing policy to
permit specified nonphysician
practitioners, when statutorily
permitted in the Social Security Act, to
supervise the services that they are able
to personally perform within their State
scope of practice and hospital-granted
privileges; to establish a specific
definition of ‘‘direct supervision’’ for
hospital outpatient therapeutic services
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furnished in the hospital or in oncampus PBDs that was consistent for
services furnished by the hospital oncampus; and to apply the MPFS
supervision requirements for diagnostic
tests to all hospital outpatient diagnostic
tests provided directly by the hospital or
under arrangement. We selected this
alternative because we believe that it is
appropriate that, unless the Act imposes
strict requirements for the direct
supervision of certain services, such as
PR, CR, and ICR services, a licensed
nonphysician practitioner who may bill
and be paid by Medicare for the
practitioner’s professional services
should be able to supervise the
therapeutic services that he or she may
personally perform within his or her
State scope of practice and hospitalgranted privileges. Furthermore, we
believe that it is necessary and
appropriate to establish consistent and
operationally feasible policies regarding
the supervision requirements for
hospital outpatient therapeutic and
diagnostic services in order to ensure
safe and effective health care services
for Medicare beneficiaries. We refer
readers to section XII.D. of this final rule
with comment period for a complete
discussion of the final physician
supervision policies.
2. Limitations of Our Analysis
The distributional impacts presented
here are the projected effects of the CY
2010 policy changes on various hospital
groups. We post on the CMS Web site
our hospital-specific estimated
payments for CY 2010 with the other
supporting documentation for this final
rule with comment period. To view the
hospital-specific estimates, we refer
readers to the CMS Web site at: https://
www.cms.hhs.gov/
HospitalOutpatientPPS/. Select
‘‘regulations and notices’’ from the left
side of the page and then select ‘‘CMS–
1414–P’’ from the list of regulations and
notices. The hospital-specific file layout
and the hospital-specific file are listed
with the other supporting
documentation for this final rule with
comment period. We show hospitalspecific data only for hospitals whose
claims were used for modeling the
impacts shown in Table 73 below. We
do not show hospital-specific impacts
for hospitals whose claims we were
unable to use. We refer readers to
section II.A.2. of this final rule with
comment period for a discussion of the
hospitals whose claims we do not use
for ratesetting and impact purposes.
We estimate the effects of the
individual policy changes by estimating
payments per service, while holding all
other payment policies constant. We use
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the best data available, but do not
attempt to predict behavioral responses
to our policy changes. In addition, we
do not make adjustments for future
changes in variables such as service
volume, service mix, or number of
encounters. As we have done in
previous rules, in the CY 2010 OPPS/
ASC proposed rule (74 FR 35413), we
solicited public comment and
information about the anticipated effects
of our proposed changes on providers
and our methodology for estimating
them.
We received many public comments
on the proposed changes to payment
policies and to proposed payment rates
for the CY 2010 OPPS. We have
summarized these public comments and
provided our responses to them in other
sections of this final rule with comment
period as part of our discussions of the
specific topics to which the comments
pertained. We did not receive any
public comments on our methodology
for estimating the anticipated effects of
our proposed changes on providers or
other parties.
3. Estimated Effects of This Final Rule
With Comment Period on Hospitals
Table 73 below shows the estimated
impact of this final rule with comment
period on hospitals. Historically, the
first line of the impact table, which
estimates the change in payments to all
hospitals, has always included cancer
and children’s hospitals, which are held
harmless to their pre-BBA payment-tocost ratio. We also are including CMHCs
in the first line that includes all
providers because we included CMHCs
in our weight scaler estimate.
We present separate impacts for
CMHCs in Table 73 because CMHCs are
paid under only two APCs for services
under the OPPS: APC 0172 (Level 1
Partial Hospitalization (3 services)) and
APC 0173 (Level II Partial
Hospitalization (4 or more services)).
We note that CMHS are also a different
provider type. We discuss the impact on
CMHCs in section XXI.B.4. of this final
rule with comment period.
The estimated increase in the total
payments made under the OPPS is
limited by the increase to the
conversion factor set under the
methodology in the statute. The
distributional impacts presented do not
include assumptions about changes in
volume and service mix. The enactment
of Public Law 108–173 on December 8,
2003, provided for the additional
payment outside of the budget
neutrality requirement for wage indices
for specific hospitals reclassified under
section 508. Public Law 108–173
extended section 508 reclassifications
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through September 30, 2008. Section
124 of Public Law 110–275 further
extended section 508 reclassifications
through September 30, 2009. The
amounts attributable to these
reclassifications are incorporated into
the CY 2009 estimates in Table 73.
Table 73 shows the estimated
redistribution of hospital and CMHC
payments among providers as a result of
APC reconfiguration and recalibration;
wage indices; the combined impact of
the APC recalibration, wage effects, and
the market basket update to the
conversion factor; and, finally,
estimated redistribution considering all
payments for CY 2010 relative to all
payments for CY 2009, including the
impact of changes in the outlier
threshold, expiring section 508 wage
indices, and changes to the pass-through
payment estimate. We did not model an
explicit budget neutrality adjustment for
the rural adjustment for SCHs because
we are not making any changes to the
policy for CY 2010. Because the updates
to the conversion factor, including the
update of the market basket and the
subtraction of additional money
dedicated to pass-through payment for
CY 2010, are applied uniformly across
services, observed redistributions of
payments in the impact table for
hospitals largely depend on the mix of
services furnished by a hospital (for
example, how the APCs for the
hospital’s most frequently furnished
services will change), and the impact of
the wage index changes on the hospital.
However, total payments made under
this system and the extent to which this
final rule with comment period will
redistribute money during
implementation also will depend on
changes in volume, practice patterns,
and the mix of services billed between
CY 2009 and CY 2010 by various groups
of hospitals, which CMS cannot
forecast.
Overall, the final OPPS rates for CY
2010 will have a positive effect for
providers paid under the OPPS,
resulting in a 1.9 percent estimated
increase in Medicare payments.
Removing cancer and children’s
hospitals, because their payments are
held harmless to the pre-BBA ratio
between payment and cost, and CMHCs
suggests that these changes also will
result in a 1.9 percent estimated
increase in Medicare payments to all
other hospitals.
To illustrate the impact of the final
CY 2010 changes, our analysis begins
with a baseline simulation model that
uses the final CY 2009 weights, the FY
2009 final post-reclassification IPPS
wage indices, and the final CY 2009
conversion factor. Column 2 in Table 73
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shows the independent effect of the
changes resulting from the
reclassification of services among APC
groups and the recalibration of APC
weights, based on 12 months of CY 2008
OPPS hospital claims data and the most
recent cost report data. We modeled the
effect of the APC recalibration changes
for CY 2010 by varying only the weights
(the final CY 2009 weights versus the
final CY 2010 weights calculated using
the service mix and volume in the CY
2008 claims used for this final rule with
comment period) and calculating the
percent difference in weight. Column 2
also reflects the effect of the changes
resulting from the APC reclassification
and recalibration changes and any
changes in multiple procedure discount
patterns or conditional packaging that
occur as a result of the changes in the
relative magnitude of payment weights.
Column 3 reflects the independent
effects of the updated wage indices,
including the application of budget
neutrality for the rural floor policy on a
statewide basis. We did not model a
budget neutrality adjustment for the
rural adjustment for SCHs because we
are making no changes to the policy for
CY 2010. We modeled the independent
effect of updating the wage indices by
varying only the wage indices, holding
APC relative weights, service mix, and
the rural adjustment constant and using
the CY 2010 scaled weights and a CY
2009 conversion factor that included a
budget neutrality adjustment for the
effect of changing the wage indices
between CY 2009 and CY 2010.
Column 4 demonstrates the combined
‘‘budget neutral’’ impact of APC
recalibration (that is, Column 2), the
wage index update (that is, Column 3),
as well as the impact of updating the
conversion factor with the market basket
update. We modeled the independent
effect of the budget neutrality
adjustments and the market basket
update by using the weights and wage
indices for each year, and using a CY
2009 conversion factor that included the
market basket update and a budget
neutrality adjustment for differences in
wage indices.
Finally, Column 5 depicts the full
impact of the CY 2010 policies on each
hospital group by including the effect of
all the changes for CY 2010 (including
the APC reconfiguration and
recalibration shown in Column 2) and
comparing them to all estimated
payments in CY 2009 (these CY 2009
estimated payments include the
payments resulting from the non-budget
neutral increases to wage indices under
section 508 of Pub. L. 108–173 as
extended by Pub. L. 110–275). Column
5 shows the combined budget neutral
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effects of Columns 2 through 4, plus the
impact of the change to the fixed-dollar
outlier threshold from $1,800 to $2,175;
the impact of the expiration of section
508 reclassifications; the change in the
HOP QDRP payment reduction for the
small number of hospitals in our impact
model that failed to meet the reporting
requirements; and the impact of
increasing the estimate of the percentage
of total OPPS payments dedicated to
transitional pass-through payments. We
discuss our CY 2010 change to the
outlier threshold in section II.F. of this
final rule with comment period. Of the
85 hospitals that failed to meet the HOP
QDRP reporting requirements for the
full CY 2009 update (and assumed, for
modeling purposes, to be the same
number for CY 2010), we included 28 in
our model because they had both CY
2008 claims data and recent cost report
data. We estimate that the cumulative
effect of all changes for CY 2010 will
increase payments to all providers by
1.9 percent for CY 2010. We modeled
the independent effect of all changes in
Column 5 using the final weights for CY
2009 and the final weights for CY 2010.
We used the final conversion factor for
CY 2009 of $66.059 and the final CY
2010 conversion factor of $67.406.
Column 5 also contains simulated
outlier payments for each year. We used
the charge inflation factor used in the
FY 2010 IPPS/RY 2010 LTCH PPS final
rule of 6.86 percent (1.0686) to increase
individual costs on the CY 2008 claims,
and we used the most recent overall
CCR in the July 2009 Outpatient
Provider-Specific File (OPSF) (74 FR
44010). Using the CY 2008 claims and
a 6.86 percent charge inflation factor,
we currently estimate that outlier
payments for CY 2009, using a multiple
threshold of 1.75 and a fixed-dollar
threshold of $1,800, will be
approximately 1.03 percent of total
payments. Outlier payments of 1.03
percent are incorporated in the CY 2009
comparison in Column 5. We used the
same set of claims and a charge inflation
factor of 14.18 percent (1.1418) and the
CCRs in the July 2009 OPSF, with an
adjustment of 0.9880 to reflect relative
changes in cost and charge inflation
between CY 2008 and CY 2010, to
model the CY 2010 outliers at 1.0
percent of total payments using a
multiple threshold of 1.75 and a fixeddollar threshold of $2,175.
Column 1: Total Number of Hospitals
The first line in Column 1 in Table 73
shows the total number of providers
(4,222), including cancer and children’s
hospitals and CMHCs for which we
were able to use CY 2008 hospital
outpatient claims to model CY 2009 and
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CY 2010 payments, by classes of
hospitals. We excluded all hospitals for
which we could not accurately estimate
CY 2009 or CY 2010 payment and
entities that are not paid under the
OPPS. The latter entities include CAHs,
all-inclusive hospitals, and hospitals
located in Guam, the U.S. Virgin
Islands, Northern Mariana Islands,
American Samoa, and the State of
Maryland. This process is discussed in
greater detail in section II.A. of this final
rule with comment period. At this time,
we are unable to calculate a
disproportionate share (DSH) variable
for hospitals not participating in the
IPPS. Hospitals for which we do not
have a DSH variable are grouped
separately and generally include
freestanding psychiatric hospitals,
rehabilitation hospitals, and long-term
care hospitals. We show the total
number (3,942) of OPPS hospitals,
excluding the hold-harmless cancer and
children’s hospitals and CMHCs, on the
second line of the table. We excluded
cancer and children’s hospitals because
section 1833(t)(7)(D) of the Act
permanently holds harmless cancer
hospitals and children’s hospitals to a
proportion of their pre-BBA payment
relative to their pre-BBA costs and,
therefore, we removed them from our
impact analyses. We show the isolated
impact on 221 CMHCs in the last row
of the impact table and discuss that
impact separately below.
Column 2: APC Changes Due to
Reassignment and Recalibration
This column shows the combined
effects of the reconfiguration,
recalibration, and other policies (such as
setting payment for separately payable
drugs and biologicals at ASP+4 percent
with an accompanying reduction in the
amount of cost associated with
packaged drugs and biologicals,
payment for brachytherapy sources
based on median unit cost, and changes
in payment for PHP services. Overall,
we estimate that changes in APC
reassignment and recalibration across
all services paid under the OPPS will
increase payments to urban hospitals by
0.1 percent. We estimate that both large
and other urban hospitals will see an
increase of 0.1 percent, all attributable
to recalibration. We estimate that urban
hospitals billing fewer than 11,000 lines
for OPPS services will experience
decreases of 0.2 to 1.0 percent, while
urban hospitals billing 11,000 or more
lines for OPPS services will see no
change or an increase of 0.1 percent.
Overall, we estimate that rural
hospitals will experience a decrease of
0.1 percent as a result of changes to the
APC structure. We estimate that rural
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hospitals of all bed sizes will experience
no change or decreases of up to 0.2
percent as a result of APC recalibration.
We estimate that rural hospitals that
report fewer than 5,000 lines for OPPS
services will experience a decrease of
0.8 percent, while rural hospitals that
report more than 5,000 lines for OPPS
services will see decreases of 0.1
percent to 0.4 percent.
Among teaching hospitals, we
estimate that the largest observed
impact resulting from APC recalibration
will include an increase of 0.2 percent
for major teaching hospitals and a
increase of 0.1 percent for minor
teaching hospitals.
Classifying hospitals by type of
ownership suggests that proprietary and
governmental hospitals will see no
change, and voluntary hospitals will see
an estimated increase of 0.1 percent.
Finally, we estimate that hospitals for
which DSH payments are not available
will experience decreases of 2.5 to 2.7
percent that are largely attributable to
the reduction in PHP payment for APC
0172. We estimate that most other
classes of hospitals will not experience
any change from CY 2009 to CY 2010 or
will experience a modest increase.
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Column 3: New Wage Indices and the
Effect of the Rural Adjustment
This column estimates the impact of
applying the FY 2010 IPPS wage indices
for the CY 2010 OPPS. We are not
changing the rural payment adjustment
for CY 2010. We estimate that the
combination of updated wage data and
statewide application of rural floor
budget neutrality will redistribute
payment among regions. We also
updated the list of counties qualifying
for the section 505 out-migration
adjustment. Overall, we estimate that
urban hospitals will not experience any
change from CY 2009 to CY 2010, and
that rural hospitals will experience a
decrease of 0.1 percent as a result of the
updated wage indices. However, we
estimate that hospitals in rural New
England States and rural West South
Central States will experience decreases
of 0.9 and 0.7 percent, respectively. We
estimate that urban and rural Mountain
States will experience increases of 0.6
percent.
Column 4: All Budget Neutrality
Changes and Market Basket Update
We estimate that the addition of the
market basket update of 2.1 percent will
mitigate any negative impacts on
hospital payments for CY 2010 created
by the budget neutrality adjustments
made in Columns 2 and 3, with the
exception of hospitals not paid under
the IPPS, including freestanding
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psychiatric, rehabilitation, and longterm care hospitals, that we estimate
will continue to experience decreases of
between -0.6 and -0.7 percent. In
general, Column 4 shows that all
hospitals will experience an estimated
increase of 2.1 percent, attributable to
the 2.1 percent market basket increase.
Overall, we estimate that these
changes will increase payments to urban
hospitals by 2.2 percent. We estimate
that large urban hospitals will
experience an increase of 2.3 percent,
and ‘‘other’’ urban hospitals will
experience a 2.1 percent increase.
Overall, we estimate that rural
hospitals will experience a 1.9 percent
increase as a result of the market basket
update and other budget neutrality
adjustments. We estimate that rural
hospitals that bill less than 5,000 lines
of OPPS services will experience an
increase of 1.5 percent and that rural
hospitals that bill more than 5,000 lines
of OPPS services will experience
increases of 1.8 to 1.9 percent.
Among teaching hospitals, we
estimate that the observed impacts
resulting from the market basket update
and other budget neutrality adjustments
will include an increase of 2.4 and 2.2
percent, respectively, for major and
minor teaching hospitals.
Classifying hospitals by type of
ownership suggests that voluntary,
proprietary, and governmental hospitals
will experience estimated increases of
2.2 percent, 2.1 percent, and 2.0
percent, respectively.
Column 5: All Changes for CY 2010
Column 5 compares all estimated
changes for CY 2010 to estimated final
payment for CY 2009, including the
expiration of the reclassifications under
section 508, the change in the outlier
threshold, payment reductions for
hospitals that failed to meet the HOP
QDRP reporting requirements, and the
difference in pass-through estimates that
are not included in the combined
percentages shown in Column 4. This
column includes estimated payment for
a handful of hospitals receiving reduced
payment because they did not meet
their hospital outpatient quality
measure reporting requirements;
however, we estimate that the
anticipated change in payment between
CY 2009 and CY 2010 for these
hospitals will be negligible. Overall, we
estimate that providers will experience
an increase of 1.9 percent under this
final rule with comment period in CY
2010 relative to total spending in CY
2009. The projected 1.9 percent increase
for all providers in Column 5 of Table
73 reflects the 2.1 percent market basket
increase, less 0.03 percent for the
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change in the pass-through estimate
between CY 2009 and CY 2010, less 0.03
percent for the difference in estimated
outlier payments between CY 2009 (1.03
percent) and CY 2010 (1.0 percent), and
less 0.14 percent due to the expiration
of the special, non-budget neutral wage
index payments made under section
508. We estimate that when we exclude
cancer and children’s hospitals (which
are held harmless to their pre-OPPS
costs) and CMHCs, the increase remains
at 1.9 percent.
We estimate that the combined effect
of all changes for CY 2010 will increase
payments to urban hospitals by 2.0
percent. We estimate that large urban
hospitals will experience a 2.1 percent
increase, while ‘‘other’’ urban hospitals
will experience an increase of 1.9
percent. We estimate that urban
hospitals that bill less than 5,000 lines
of OPPS services will experience an
increase of 1.2 percent, and we estimate
that all urban hospitals that bill more
than 5,000 lines of OPPS services will
experience increases between 1.9
percent and 2.0 percent.
Overall, we estimate that rural
hospitals will experience a 1.6 percent
increase as a result of the combined
effects of all changes for CY 2010. We
estimate that rural hospitals that bill
less than 5,000 lines of OPPS services
will experience an increase of 1.3
percent and rural hospitals that bill
greater than 5,000 lines of OPPS
services will experience increases
ranging from 1.4 percent to 1.8 percent.
Among teaching hospitals, we
estimate that the impacts resulting from
the combined effects of all changes will
include an increase of 2.0 percent for
major teaching hospitals and an increase
of 1.9 percent for minor teaching
hospitals.
Classifying hospitals by type of
ownership, we estimate that proprietary
hospitals will gain 2.0 percent,
governmental hospitals will experience
an increase of 1.8 percent, and
voluntary hospitals will experience an
increase of 1.9 percent.
4. Estimated Effects of This Final Rule
With Comment Period on CMHCs
The last row of the impact analysis in
Table 73 demonstrates the impact on
CMHCs. We modeled this impact
assuming that CMHCs will continue to
provide the same number of days of
PHP care, with each day having either
three services or four or more services,
as seen in the CY 2008 claims data. We
excluded days with one or two services.
Using these assumptions, we estimate
that there would be a 5.0 percent
decrease in payments to CMHCs due to
these APC policy changes (shown in
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Column 2). The relative weight for low
intensity partial hospitalization APC
0172 (Level 1 Partial Hospitalization (3
services)) declines between CY 2009
and CY 2010 under this final rule with
comment period. CMHCs perform a
greater proportion of low intensity
partial hospitalization days than
freestanding psychiatric hospitals. Table
73 demonstrates our estimate that
hospitals not paid under the IPPS for
which a disproportionate patient
percentage is not available (DSH Not
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Available), consisting largely of
freestanding psychiatric hospitals, will
experience a more moderate decline in
payments of 2.7 percent. Psychiatric
hospitals provide a greater proportion of
APC 0173 (Level II Partial
Hospitalization (4 or more services)) for
which the relative weight increases
between CY 2009 and CY 2010 under
this final rule with comment period.
Column 3 shows that the estimated
impact of adopting the CY 2010 wage
index values will be no change in
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60669
payments to CMHCs. We note that all
providers paid under the OPPS,
including CMHCs, will receive a 2.1
percent market basket increase.
Combining this market basket increase,
along with changes in APC policy for
CY 2010 and the CY 2010 wage index
updates, and changes in outlier
payments, we estimate that the
combined impact on CMHCs for CY
2010 will be a 3.0 percent decrease.
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5. Estimated Effect of This Final Rule
With Comment Period Rule on
Beneficiaries
For services for which the beneficiary
pays a copayment of 20 percent of the
payment rate, the beneficiary share of
payment will increase for services for
which the OPPS payments will rise and
will decrease for services for which the
OPPS payments will fall. For example,
for a service assigned to Level IV Needle
Biopsy/Aspiration Except Bone Marrow
(APC 0037) in the CY 2009 OPPS, the
national unadjusted copayment is
$228.76, and the minimum unadjusted
copayment is $178.60. For CY 2010, the
national unadjusted copayment for APC
0037 will be $228.76, the same rate in
effect for CY 2009. The minimum
unadjusted copayment for APC 0037
will be $208.97 or 20 percent of the CY
2010 national unadjusted payment rate
for APC 0037 of $1,044.81. The
minimum unadjusted copayment will
rise because the payment rate for APC
0037 will rise for CY 2010. In all cases,
the statute limits beneficiary liability for
copayment for a procedure to the
hospital inpatient deductible for the
applicable year. The CY 2009 hospital
inpatient deductible is $1,068. The CY
2010 hospital inpatient deductible is
$1,100.
In order to better understand the
impact of changes in copayment on
beneficiaries, we modeled the percent
change in total copayment liability
using CY 2008 claims. We estimate,
using the claims of the 4,222 hospitals
and CMHCs on which our modeling is
based, that total beneficiary liability for
copayments will decline as an overall
percentage of total payments, from 23.0
percent in CY 2009 based on updated
claims data for this final rule with
comment period to 22.6 percent in CY
2010.
6. Conclusion
The changes in this final rule with
comment period will affect all classes of
hospitals and CMHCs. We estimated
that some classes of hospitals will
experience significant gains and others
less significant gains, but all classes of
hospitals will experience positive
updates in OPPS payments in CY 2010
with one exception. We estimate that
hospitals not paid under the IPPS will
see an overall decrease in payment of
0.6 to 0.8 percent because they are
largely freestanding psychiatric
hospitals that bill mostly PHP services.
As we discuss in substantial detail in
section X. of this final rule with
comment period, payment for APC 0172
will decline for CY 2010 and, therefore,
we estimate that payments to CMHCs
and hospitals that furnish mostly PHP
services will also decline. In general, we
60673
estimate that CMHCs will experience an
overall decline of 3.0 percent in total
payment due to the recalibration of the
payment rates.
Table 73 demonstrates the estimated
distributional impact of the OPPS
budget neutrality requirements that will
result in a 1.9 percent increase in
payments for all services paid under the
OPPS in CY 2010, after considering all
changes to APC reconfiguration and
recalibration, as well as the market
basket increase, wage index changes,
estimated payment for outliers, and
changes to the pass-through payment
estimate. The accompanying discussion,
in combination with the rest of this final
rule with comment period, constitutes a
regulatory impact analysis.
7. Accounting Statement
As required by OMB Circular A–4
(available at https://
www.whitehouse.gov/omb/circulars/
a004/a-4.pdf), in Table 74, we have
prepared an accounting statement
showing the CY 2010 estimated hospital
OPPS incurred benefit impact
associated with the CY 2010 hospital
outpatient market basket update shown
in this final rule with comment period
based on the baseline for the 2009
Trustees Report. All estimated impacts
are classified as transfers.
TABLE 74—ACCOUNTING STATEMENT: CY 2010 ESTIMATED HOSPITAL OPPS INCURRED BENEFIT IMPACT ASSOCIATED
WITH THE CY 2010 HOSPITAL OUTPATIENT MARKET BASKET UPDATE
Category
Transfers
Annualized Monetized Transfers ...........................
From Whom to Whom ...........................................
$0.5 billion.
Federal Government to outpatient hospitals and other providers who received payment
under the hospital OPPS.
$0.5 billion.
Total ................................................................
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C. Effects of ASC Payment System
Changes in This Final Rule With
Comment Period Rule
On August 2, 2007, we published in
the Federal Register the final rule for
the revised ASC payment system,
effective January 1, 2008 (72 FR 42470).
In that final rule, we adopted the
methodologies to set payment rates for
covered ASC services to implement the
revised payment system so that it would
be designed to result in budget
neutrality as required by section 626 of
Public Law 108–173; established that
the OPPS relative payment weights
would be the basis for payment and that
we would update the system annually
as part of the OPPS rulemaking cycle;
and provided that the revised ASC
payment rates would be phased-in over
4 years. During the 4-year transition to
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full implementation of the ASC
payment rates, payments for surgical
procedures paid in ASCs in CY 2007 are
made using a blend of the CY 2007 ASC
payment rate and the ASC payment rate
calculated according to the ASC
standard ratesetting methodology for the
applicable transitional year. In CY 2009,
we are paying ASCs using a 50/50
blend, in which payment is calculated
by adding 50 percent of the CY 2007
ASC rate for a surgical procedure on the
CY 2007 ASC list of covered surgical
procedures and 50 percent of the CY
2009 ASC rate calculated according to
the ASC standard ratesetting
methodology for the same procedure.
For CY 2010, we are transitioning the
blend to a 25/75 blend of the CY 2007
ASC rate and the ASC payment rate
calculated according to the ASC
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standard ratesetting methodology.
Beginning in CY 2011, we will pay
ASCs for all covered surgical
procedures, including those on the CY
2007 ASC list, at the ASC payment rates
calculated according to the ASC
standard ratesetting methodology.
Payment for procedures that were not
included on the ASC list of covered
surgical procedures in CY 2007 is not
subject to the transitional payment
methodology.
ASC payment rates are calculated by
multiplying the ASC conversion factor
by the ASC relative payment weight. As
discussed fully in section XV. of this
final rule with comment period, we set
the CY 2010 ASC relative payment
weights by scaling CY 2010 ASC relative
payment weights by the ASC scaler of
0.9567. These weights take into
consideration the 25/75 blend for the
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third year of transitional payment for
certain services. If there were no
transition, the scaler for the CY 2010
relative payment weights would be
0.9338. The estimated effects of the
updated relative payment weights on
payment rates during this transitional
period are varied and are reflected in
the estimated payments displayed in
Tables 75 and 78 below.
The CY 2010 ASC conversion factor
was calculated by adjusting the CY 2009
ASC conversion factor to account for
changes in the pre-floor and prereclassified hospital wage indices
between CY 2009 and CY 2010 and by
applying the CY 2010 CPI–U of a 1.2
percent increase. The CY 2010 ASC
conversion factor is $41.873.
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1. Alternatives Considered
Alternatives to the changes we are
making and the reasons that we have
chosen the options are discussed
throughout this final rule with comment
period. Some of the major ASC issues
discussed in this final rule with
comment period and the options
considered are discussed below.
a. Alternatives Considered for OfficeBased Procedures
According to our final policy for the
revised ASC payment system, we
designate as office-based those
procedures that are added to the ASC
list of covered surgical procedures in CY
2008 or later years and that we
determine are predominantly performed
in physicians’ offices based on
consideration of the most recent
available volume and utilization data for
each individual procedure HCPCS code
and/or, if appropriate, the clinical
characteristics, utilization, and volume
of related HCPCS codes. We establish
payment for procedures designated as
office-based at the lesser of the MPFS
nonfacility PE RVU amount or the ASC
rate developed according to the
standard methodology of the revised
ASC payment system.
In developing this final rule with
comment period, we reviewed the full
CY 2008 utilization data for all surgical
procedures added to the ASC list of
covered surgical procedures in CY 2008
or later years and for those procedures
for which the office-based designation is
temporary in the CY 2009 OPPS/ASC
final rule with comment period (73 FR
68730 through 68733). Based on that
review, and as discussed in section
XV.C.1.b. of this final rule with
comment period, we are newly
designating six existing surgical
procedures as office-based and making
permanent the office-based designations
of four existing surgical procedures that
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14:52 Nov 19, 2009
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have temporary office-based
designations in CY 2009. We also are
providing temporary office-based
designations for 16 CY 2010 procedures
reported with new or substantially
revised CPT codes and continuing the
temporary office-based designations for
6 procedures that were temporarily
office-based in CY 2009. We considered
two alternatives in developing this
policy.
The first alternative we considered
was to make no change to the procedure
payment designations. This would mean
that we would pay for the 6 procedures
we are designating as permanently
office-based and the 16 procedures we
are newly designating as temporarily
office-based at an ASC payment rate
calculated according to the standard
ratesetting methodology of the revised
ASC payment system and for the 10
procedures with temporary office-based
designations for 2009 according to the
office-based methodology. We did not
select this alternative because our
analysis of the data and our clinical
review indicated that all 10 procedures
we are designating permanently officebased as well as the 22 procedures that
we are designating temporarily officebased could be considered to be
predominantly performed in physicians’
offices. Consistent with our final policy
adopted in the August 2, 2007 final rule
(72 FR 42509), we were concerned that
making payments at the standard ASC
payment rate for the 6 procedures newly
designated as office-based and 16 new
procedures designated as temporarily
office-based could create financial
incentives for the procedures to shift
from physicians’ offices to ASCs for
reasons unrelated to clinical decisions
regarding the most appropriate setting
for surgical care. Further, consistent
with our policy, we believe that when
adequate data become available to make
permanent determinations about
procedures with temporary office-based
designations, maintaining the temporary
designation is no longer appropriate.
The second alternative we considered
and the one we selected for CY 2010 is
to designate six additional procedures
as office-based for CY 2010 and to make
permanent the office-based designations
of four of the procedures with
temporary office-based designations in
CY 2009. We also are designating 16
new procedures described by new or
substantially revised CPT codes for CY
2010 as temporarily office-based and
continuing to designate 6 procedures as
temporarily office-based in CY 2010. We
chose this alternative because our
claims data and clinical review indicate
that these procedures could be
considered to be predominantly
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C:\20NOR2.SGM
performed in physicians’ offices. We
believe that designating these
procedures as office-based, which
results in the CY 2010 ASC payment
rate for these procedures potentially
being capped at the CY 2010 physicians’
office rate (that is, the MPFS nonfacility
PE RVU amount), if applicable, is an
appropriate step to ensure that Medicare
payment policy does not create financial
incentives for such procedures to shift
unnecessarily from physicians’ offices
to ASCs, consistent with our final policy
adopted in the August 2, 2007 final rule.
b. Alternatives Considered for Covered
Surgical Procedures
According to our final policy for the
revised ASC payment system, we
designate as covered all surgical
procedures that we determine would
not be expected to pose a significant risk
to beneficiary safety or would not be
expected to require an overnight stay
when performed on Medicare
beneficiaries in an ASC.
In developing this final rule with
comment period, we reviewed the
clinical characteristics and full CY 2008
utilization data, if applicable, for all
procedures reported by Category III CPT
codes implemented July 1, 2009, and
surgical procedures that were excluded
from ASC payment for CY 2009. In
response to public comments received
on the CY 2009 OPPS/ASC proposed
rule, we stated in the CY 2009 OPPS/
ASC final rule with comment period (73
FR 68724) that, as we developed the CY
2010 OPPS/ASC proposed rule and final
rule with comment period, we would
perform a comprehensive review of the
APCs in order to identify potentially
inconsistent ASC treatment of
procedures assigned to a single APC
under the OPPS. Thus, for this final rule
with comment period, we examined
surgical procedures that were excluded
from the CY 2009 ASC list of covered
surgical procedures and the APCs to
which they were assigned under the
OPPS. Based on this review, we
identified 26 surgical procedures that
meet the criteria for inclusion on the
ASC list of covered surgical procedures,
and we are adding those procedures to
the list for CY 2010 payment, in
addition to the 2 new surgical
procedures described by Category III
CPT codes that were new for July 2009,
and that we determined were
appropriate for addition to the ASC list.
We considered two alternatives in
developing this policy.
The first alternative we considered
was to make no change to the ASC list
of covered surgical procedures for CY
2010. We did not choose this alternative
because our analysis of data and clinical
20NOR2
Federal Register / Vol. 74, No. 223 / Friday, November 20, 2009 / Rules and Regulations
review indicated that the 28 procedures
we are designating as covered surgical
procedures for CY 2010 would not be
expected to pose a significant risk to
beneficiary safety in ASCs and would
not be expected to require an overnight
stay. Consistent with our final policy,
we were concerned that by continuing
to exclude them from the list of ASC
covered surgical procedures, we may
unnecessarily limit beneficiaries’ access
to the services in the most clinically
appropriate settings.
The second alternative we considered
and the one we selected for CY 2010
was to designate 28 additional
procedures as ASC covered surgical
procedures for CY 2010. We chose this
alternative because our claims data and
clinical review indicate that these
procedures would not be expected to
pose a significant risk to beneficiary
safety and would not be expected to
require an overnight stay, and thus they
meet the criteria for inclusion on the list
of ASC covered surgical procedures. We
believe that adding these procedures to
the list of covered surgical procedures is
an appropriate step to ensure that
beneficiary access to services is not
limited unnecessarily.
dcolon on DSK2BSOYB1PROD with RULES2
2. Limitations of Our Analysis
Presented here are the projected
effects of the changes for CY 2010 on
Medicare payment to ASCs. A key
limitation of our analysis is our inability
to predict changes in ASC service mix
between CY 2008 and CY 2010 with
precision. We believe that the net effect
on Medicare expenditures resulting
from the CY 2010 changes will be small
in the aggregate for all ASCs. However,
such changes may have differential
effects across surgical specialty groups
as ASCs continue to adjust to the
payment rates based on the policies of
the revised ASC payment system. We
are unable to accurately project such
changes at a disaggregated level. Clearly,
individual ASCs will experience
changes in payment that differ from the
aggregated estimated impacts presented
below.
3. Estimated Effects of This Final Rule
With Comment Period on Payments to
ASCs
Some ASCs are multispecialty
facilities that perform the gamut of
surgical procedures, from excision of
lesions to hernia repair to cataract
extraction; others focus on a single
specialty and perform only a limited
range of surgical procedures, such as
eye, digestive system, or orthopedic
procedures. The combined effect on an
individual ASC of the update to the CY
2010 payments will depend on a
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14:52 Nov 19, 2009
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number of factors, including, but not
limited to, the mix of services the ASC
provides, the volume of specific services
provided by the ASC, the percentage of
its patients who are Medicare
beneficiaries, and the extent to which an
ASC provides different services in the
coming year. The following discussion
presents tables that display estimates of
the impact of the CY 2010 update to the
revised ASC payment system on
Medicare payments to ASCs, assuming
the same mix of services as reflected in
our CY 2008 claims data. Table 75
depicts the estimated aggregate percent
change in payment by surgical specialty
or ancillary items and services group by
comparing estimated CY 2009 payments
to estimated CY 2010 payments, and
Table 76 shows a comparison of
estimated CY 2009 payments to
estimated CY 2010 payments for
procedures that we estimate will receive
the most Medicare payment in CY 2010.
Table 75 shows the estimated effects
on aggregate Medicare payments under
the revised ASC payment system by
surgical specialty or ancillary items and
services group. We have aggregated the
surgical HCPCS codes by specialty
group, grouped all HCPCS codes for
covered ancillary items and services
into a single group, and then estimated
the effect on aggregated payment for
surgical specialty and ancillary items
and services groups, considering
separately the CY 2010 transitional rates
and the ASC payment rates calculated
according to the ASC standard
ratesetting methodology that would
apply in CY 2010 if there were no
transition. The groups are sorted for
display in descending order by
estimated Medicare program payment to
ASCs. The following is an explanation
of the information presented in Table
75.
• Column 1—Surgical Specialty or
Ancillary Items and Services Group
indicates the surgical specialty into
which ASC procedures are grouped or
the ancillary items and services group
which includes all HCPCS codes for
covered ancillary items and services. To
group surgical procedures by surgical
specialty, we used the CPT code range
definitions and Level II HCPCS codes
and Category III CPT codes, as
appropriate, to account for all surgical
procedures to which the Medicare
program payments are attributed.
• Column 2—Estimated ASC
Payments were calculated using CY
2008 ASC utilization (the most recent
full year of ASC utilization) and CY
2009 ASC payment rates. The surgical
specialty and ancillary items and
services groups are displayed in
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C:\20NOR2.SGM
60675
descending order based on estimated CY
2009 ASC payments.
• Column 3—Estimated CY 2010
Percent Change With Transition (25/75
Blend) is the aggregate percentage
increase or decrease, compared to CY
2009, in Medicare program payment to
ASCs for each surgical specialty or
ancillary items and services group that
is attributable to updates to the ASC
payment rates for CY 2010 under the
scaled, 25/75 blend of the CY 2007 ASC
payment rates and the CY 2010 ASC
payment rates calculated according to
the ASC standard ratesetting
methodology.
• Column 4—Estimated CY 2010
Percent Change Without Transition
(Fully Implemented) is the aggregate
percentage increase or decrease in
Medicare program payment to ASCs for
each surgical specialty or ancillary
items and services group that would be
attributable to updates to ASC payment
rates for CY 2010 compared to CY 2009
if there were no transition period to the
fully implemented payment rates. The
percentages appearing in Column 4 are
presented only as illustrative
comparisons to the percentage changes
under the transition policy in Column 3.
We are not eliminating or modifying the
policy for a 4-year transition that was
finalized in the August 2, 2007 final rule
(72 FR 42519).
As seen in Table 75, we estimate that
the update to ASC rates for CY 2010 will
result in no change in aggregate
payment amounts for eye and ocular
adnexa procedures and in aggregate
decreases of 4 percent in payment
amounts for both digestive system and
nervous system procedures. As shown
in Column 4 in the table, we estimate
that if there were no transitional
payment for these three surgical
specialty groups in CY 2010, aggregate
payments would decrease by 1 percent
for eye and ocular adnexa procedures
and by 10 and 6 percent for digestive
and nervous system procedures,
respectively.
Generally, for the surgical specialty
groups that account for less ASC
utilization and spending, we estimate
that the payment effects of the CY 2010
update are positive. We estimate that
ASC payments for procedures in those
surgical specialties will increase in CY
2010 with the 25/75 transitional
payment rates and, in the absence of the
transition, will increase even more. For
instance, we estimate that, in the
aggregate, payment for integumentary
system procedures will increase by 13
percent under the CY 2010 rates and by
20 percent if there were no transition.
We estimate similar effects for
genitourinary, cardiovascular,
20NOR2
60676
Federal Register / Vol. 74, No. 223 / Friday, November 20, 2009 / Rules and Regulations
musculoskeletal, respiratory,
hematologic and lymphatic systems,
and auditory system procedures as well.
An estimated increase in aggregate
payment for the specialty group does
not mean that all procedures in the
group will experience increased
payment rates. For example, the
substantial estimated increase for CY
2010 for integumentary procedures is
likely due to the significant median cost
increase for APC 0137 (Level V Skin
Repair) under the OPPS. The highest
volume procedure in the integumentary
surgical specialty group, described by
CPT code 15823 (Blepharoplasty, upper
eyelid; with excessive skin weighting
down lid), is assigned to that APC under
the OPPS. In contrast, the estimated
increased payments at the surgical
specialty group level may be due to
decreased payments for some of the
most frequently provided procedures in
the group and the moderating effect of
the sometimes substantial payment
increases for the less frequently
performed procedures within the
surgical specialty group.
Also displayed in Table 75 is a
separate estimate of Medicare ASC
payments for the group of separately
payable covered ancillary items and
services. We estimate that aggregate
payments for these items and services
will remain the same for CY 2010. The
payment estimates for the covered
surgical procedures include the costs of
packaged ancillary items and services.
In prior years’ rules, we did not have
ASC payment data for covered ancillary
items and services because prior to CY
2008, they were paid under other fee
schedules or packaged into payment for
the covered surgical procedures.
Beginning with the CY 2010 proposed
rule and this final rule with comment
period, we have utilization data for
those services as well as for all of the
covered surgical procedures provided in
ASCs under the revised payment
system.
TABLE 75—ESTIMATED IMPACT OF THE FINAL CY 2010 ASC PAYMENT SYSTEM ON AGGREGATE CY 2010 MEDICARE
PROGRAM PAYMENTS UNDER THE 25/75 TRANSITION BLEND AND WITHOUT A TRANSITION, BY SURGICAL SPECIALTY
OR ANCILLARY ITEMS AND SERVICES GROUP
Surgical specialty group
Estimated
CY 2009
ASC payments
(in millions)
Estimated CY
2010 percent
change with
transition
(25/75 blend)
Estimated CY
2010 percent
change without transition
(fully implemented)
(1)
(2)
(3)
(4)
dcolon on DSK2BSOYB1PROD with RULES2
Total .............................................................................................................................................
Eye and ocular adnexa ................................................................................................................
Digestive system ..........................................................................................................................
Nervous system ...........................................................................................................................
Musculoskeletal system ...............................................................................................................
Genitourinary system ...................................................................................................................
Integumentary system .................................................................................................................
Respiratory system ......................................................................................................................
Cardiovascular system ................................................................................................................
Ancillary items and services ........................................................................................................
Auditory system ...........................................................................................................................
Hematologic & lymphatic systems ...............................................................................................
Table 76 below shows the estimated
impact of the updates to the revised
ASC payment system on aggregate ASC
payments for selected surgical
procedures during CY 2010 with and
without the transitional blended rate.
The table displays 30 of the procedures
receiving the greatest estimated CY 2009
aggregate Medicare payments to ASCs.
The HCPCS codes are sorted in
descending order by estimated CY 2009
program payment.
• Column 1—HCPCS code.
• Column 2—Short Descriptor of the
HCPCS code.
• Column 3—Estimated CY 2009
Allowed Charges were calculated using
CY 2008 ASC utilization (the most
recent full year of ASC utilization) and
the CY 2009 ASC payment rates. The
estimated CY 2009 allowed charges are
expressed in millions of dollars.
• Column 4—Estimated CY 2010
Percent Change with Transition (25/75
Blend) reflects the percent differences
between the estimated ASC payment for
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Jkt 220001
CY 2009 and the estimated payment for
CY 2010 based on the update,
incorporating a 25/75 blend of the CY
2007 ASC payment rate and the CY
2010 ASC payment rate calculated
according to the ASC standard
ratesetting methodology.
• Column 5—Estimated CY 2010
Percent Change without Transition
(Fully Implemented) reflects the percent
differences between the estimated ASC
payment for CY 2009 and the estimated
payment for CY 2010 based on the
update if there were no transition period
to the fully implemented payment rates.
The percentages appearing in Column 5
are presented as a comparison to the
percentage changes under the transition
policy in Column 4 for informational
purposes only. We are not eliminating
or modifying the policy for the 4-year
transition that was finalized in the
August 2, 2007 final rule (72 FR 42519).
As displayed in Table 76, 24 of the 30
procedures with the greatest estimated
aggregate CY 2009 Medicare payment
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C:\20NOR2.SGM
3,077
1,405
731
365
285
112
106
27
20
15
8
3
1
0
¥4
¥4
15
10
13
24
17
0
9
22
1
¥1
¥10
¥5
29
17
20
37
27
¥1
17
40
are included in the 3 surgical specialty
groups that are estimated to account for
the most Medicare payment to ASCs in
CY 2009, specifically eye and ocular
adnexa, digestive system, and nervous
system surgical groups. Consistent with
the estimated payment effects on the
surgical specialty groups displayed in
Table 75, the estimated effects of the CY
2010 update on ASC payment for
individual procedures in year 3 of the
transition shown in Table 76 are varied.
Aggregate ASC payments for many of
the most frequently furnished ASC
procedures will decrease as the
transitional rates more closely align the
individual procedure relative ASC
payment weights with the relativity of
payments under the OPPS.
The ASC procedure for which the
most Medicare payment is estimated to
be made in CY 2009 is the cataract
removal procedure reported with CPT
code 66984 (Extracapsular cataract
removal with insertion of intraocular
lens prosthesis (one stage procedure),
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manual or mechanical technique (e.g.,
irrigation and aspiration or
phacoemulsification)). We estimate that
the update to the ASC rates will result
in a negligible payment decrease for this
procedure in CY 2010. The estimated
payment effects on the three other eye
and ocular adnexa procedures included
in Table 76 will be slightly positive or
negative, but for CPT code 66821
(Discission of secondary membranous
cataract (opacified posterior lens
capsule and/or anterior hyaloid); laser
surgery (e.g., YAG laser) (one or more
stages)), the estimated CY 2010 payment
decrease will be 10 percent,
significantly greater than the decreases
estimated for any of the other eye and
ocular adnexa procedures shown.
We estimate that the transitional
payment rates for all but 1 of the 9
digestive system procedures included in
Table 76 will decrease by 5 to 8 percent
in CY 2010. Those estimated decreases
are consistent with decreases in the
previous 2 years under the revised ASC
payment system and are expected
because, under the previous ASC
payment system, the payment rates for
many high volume endoscopy
60677
epidural); CPT code 64721 (Neuroplasty
and/or transposition; median nerve at
carpal tunnel); and CPT code 64622
(Destruction by neurolytic agent,
paravertebral facet joint nerve; lumbar
or sacral, single level), are estimated to
have substantial payment increases of
10, 13, and 6 percent, respectively.
The estimated payment effects for
most of the remaining procedures listed
in Table 76 will be positive. For
example, the CY 2010 transitional
payment rates for musculoskeletal CPT
codes 29880 (Arthroscopy, knee,
surgical; with meniscectomy (medial
AND lateral, including any meniscal
shaving)) and 29881 (Arthroscopy, knee,
surgical; with meniscectomy (medial OR
lateral, including any meniscal
shaving)) are estimated to increase 17
percent over the CY 2009 transitional
payment rates. We estimate that
musculoskeletal procedures will
account for a greater percentage of CY
2010 Medicare ASC spending as we
estimate that payment for procedures in
that surgical specialty group will
increase under the revised payment
system in CY 2010.
procedures were almost the same as the
payments for the procedures under the
OPPS.
The estimated effects of the CY 2010
update on the 9 nervous system
procedures for which the most Medicare
ASC payment is estimated to be made
in CY 2009 will be variable. Our
estimates indicate that the CY 2010
update will result in payment decreases
of 4 percent or less for 4 of the 9
procedures and in more substantial
decreases for 2 others. We estimate that
the greatest decreases will be for the
add-on procedure described by CPT
code 64484 (Injection, anesthetic agent
and/or steroid, transforaminal epidural;
lumbar or sacral, each additional level)
and for the procedure described by CPT
code 63685 (Insertion or replacement of
spinal neurostimulator pulse generator
or receiver, direct or inductive
coupling), which we estimate to have 19
and 9 percent payment decreases,
respectively, in CY 2010. In contrast, the
three nervous system procedures for
which we estimate positive effects on
CY 2010 payments, CPT code 63650
(Percutaneous implantation of
neurostimulator electrode array,
TABLE 76—ESTIMATED IMPACT OF THE FINAL CY 2010 ASC PAYMENT SYSTEM ON AGGREGATE PAYMENTS FOR
SELECTED PROCEDURES
dcolon on DSK2BSOYB1PROD with RULES2
(1)
66984
43239
45380
45378
45385
66821
62311
66982
64483
15823
45384
G0105
G0121
29881
63650
43235
64721
52000
29880
63685
29826
62310
67904
28285
29827
64622
64484
43248
64623
Short descriptor
(2)
(3)
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
.............................................................
.............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
..............................................................
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Cataract surg w/iol, 1 stage ...........................
Upper gi endoscopy, biopsy ..........................
Colonoscopy and biopsy ................................
Diagnostic colonoscopy .................................
Lesion removal colonoscopy ..........................
After cataract laser surgery ............................
Inject spine l/s (cd) .........................................
Cataract surgery, complex .............................
Inj foramen epidural l/s ..................................
Revision of upper eyelid ................................
Lesion remove colonoscopy ..........................
Colorectal scrn; hi risk ind .............................
Colon ca scrn not hi rsk ind ...........................
Knee arthroscopy/surgery ..............................
Implant neuroelectrodes .................................
Uppr gi endoscopy, diagnosis ........................
Carpal tunnel surgery .....................................
Cystoscopy .....................................................
Knee arthroscopy/surgery ..............................
Insrt/redo spine n generator ...........................
Shoulder arthroscopy/surgery ........................
Inject spine c/t ................................................
Repair eyelid defect .......................................
Repair hammertoe .........................................
Arthroscop rotator cuff repr ............................
Destr paravertebrl nerve l/s ...........................
Inj foramen epidural add-on ...........................
Uppr gi endoscopy/guide wire .......................
Destr paravertebral n add-on .........................
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1,064
164
133
124
96
71
69
62
57
35
33
33
32
25
25
24
23
22
20
18
17
15
15
15
14
14
13
12
12
20NOR2
Estimated CY
2010 percent
change with
transition
(25/75 blend)
Estimated
CY 2010 percent change
without
transition
(fully implemented)
(4)
HCPCS code *
Estimated CY
2009 allowed
charges
(in mil)
(5)
0
¥6
¥5
¥5
¥5
¥10
¥4
0
¥4
15
¥5
¥8
¥8
16
10
2
13
¥5
17
¥9
28
¥4
0
14
22
6
¥19
¥6
¥4
¥2
¥13
¥11
¥11
¥11
¥20
¥8
¥2
¥8
21
¥11
¥17
¥16
30
14
1
24
¥9
30
¥8
54
¥8
2
25
42
14
¥38
¥13
¥8
60678
Federal Register / Vol. 74, No. 223 / Friday, November 20, 2009 / Rules and Regulations
TABLE 76—ESTIMATED IMPACT OF THE FINAL CY 2010 ASC PAYMENT SYSTEM ON AGGREGATE PAYMENTS FOR
SELECTED PROCEDURES—Continued
Short descriptor
(1)
(2)
(3)
26055 ..............................................................
Incise finger tendon sheath ............................
12
Estimated CY
2010 percent
change with
transition
(25/75 blend)
Estimated
CY 2010 percent change
without
transition
(fully implemented)
(4)
HCPCS code *
Estimated CY
2009 allowed
charges
(in mil)
(5)
12
21
* Note that HCPCS codes deleted for CY 2010 are not displayed in this table.
dcolon on DSK2BSOYB1PROD with RULES2
The previous ASC payment system
served as an incentive to ASCs to focus
on providing procedures for which they
determined Medicare payments would
support their continued operation. We
note that, historically, the ASC payment
rates for many of the most frequently
performed procedures in ASCs were
similar to the OPPS payment rates for
the same procedures. Conversely,
procedures with ASC payment rates that
were substantially lower than the OPPS
rates have historically been performed
least often in ASCs. We believed that
the revised ASC payment system will
encourage greater efficiency in ASCs
and will promote significant increases
in the breadth of surgical procedures
performed in ASCs because it
distributes payments across the entire
spectrum of covered surgical procedures
based on a coherent system of relative
weights that are related to the clinical
and facility resource requirements of
those procedures.
The CY 2008 claims data that we used
to develop the CY 2010 ASC payment
system relative weights and rates reflect
the first year of utilization under the
revised payment system. Although the
changes in the claims data are not large,
the data reflect increased Medicare ASC
spending for procedures that were
newly added to the ASC list in CY 2008.
Our estimates based on CY 2008 data
indicate that for CY 2010 there would be
especially noticeable increases in
spending for genitourinary and
cardiovascular procedures, compared to
the previous ASC payment system.
4. Estimated Effects of This Final Rule
With Comment Period on Beneficiaries
We estimate that the CY 2010 update
to the ASC payment system will be
generally positive for beneficiaries with
respect to the new procedures that we
are adding to the ASC list of covered
surgical procedures and for those that
we are designating as office-based for
CY 2010. First, except for screening
colonoscopy and flexible sigmoidoscopy
procedures, the ASC coinsurance rate
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for all procedures is 20 percent. This
contrasts with procedures performed in
HOPDs, where the beneficiary is
responsible for copayments that range
from 20 percent to 40 percent of the
procedure payment. Second, ASC
payment rates under the revised
payment system are lower than payment
rates for the same procedures under the
OPPS; therefore, the beneficiary
coinsurance amount under the ASC
payment system almost always will be
less than the OPPS copayment amount
for the same services. (The only
exceptions will be if the ASC
coinsurance amount exceeds the
inpatient deductible. The statute
requires that copayment amounts under
the OPPS not exceed the inpatient
deductible.) For new procedures that we
are adding to the ASC list of covered
surgical procedures in CY 2010, as well
as for procedures already included on
the list, and that are furnished in an
ASC rather than the HOPD setting, the
beneficiary coinsurance amount will be
less than the OPPS copayment amount.
Furthermore, the additions to the ASC
list of covered surgical procedures will
provide beneficiaries access to more
surgical procedures in ASCs.
Beneficiary coinsurance for services
migrating from physicians’ offices to
ASCs may decrease or increase under
the revised ASC payment system,
depending on the particular service and
the relative payment amounts for that
service in the physician’s office
compared to the ASC. However, for
those additional procedures that we are
designating as office-based in CY 2010,
the beneficiary coinsurance amount will
be no greater than the beneficiary
coinsurance in the physician’s office.
In addition, as finalized in the August
2, 2007 final rule (72 FR 42520), in CY
2010, the third year of the 4-year
transition to the ASC payment rates
calculated according to the ASC
standard ratesetting methodology of the
revised ASC payment system, ASC
payment rates for a number of
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commonly furnished ASC procedures
will continue to be reduced, resulting in
lower beneficiary coinsurance amounts
for these ASC services in CY 2010.
5. Conclusion
The updates to the ASC payment
system for CY 2010 will affect each of
the approximately 5,000 ASCs currently
approved for participation in the
Medicare program. The effect on an
individual ASC will depend on its mix
of patients, the proportion of the ASC’s
patients that are Medicare beneficiaries,
the degree to which the payments for
the procedures offered by the ASC are
changed under the revised payment
system, and the extent to which the ASC
provides a different set of procedures in
the coming year.
The CY 2010 update to the revised
ASC payment system includes a
payment update of 1.2 percent that we
estimate will result in a greater amount
of Medicare expenditures in CY 2010
than was estimated to be made in CY
2009. We estimate that the update to the
revised ASC payment system, including
the addition of surgical procedures to
the list of covered surgical procedures,
will have a modest effect on Medicare
expenditures compared to the estimated
level of Medicare expenditures in CY
2009.
6. Accounting Statement
As required by OMB Circular A–4
(available at https://www.whitehousegov/
omb/circulars/a004/a-4.pdf), in Table
77 below, we have prepared an
accounting statement showing the
classification of the expenditures
associated with the statutorily
authorized 1.2 percent update to the CY
2010 revised ASC payment system,
based on the provisions of this final rule
with comment period and the baseline
spending estimates for ASCs in the 2009
Medicare Trustees Report. This table
provides our best estimate of Medicare
payments to suppliers as a result of the
final update to the CY 2010 ASC
payment system, as presented in this
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hospitals approximately 12 cents per
page for copying and approximately
$4.00 per chart for postage. We have
TABLE 77—ACCOUNTING STATEMENT: found, based on experience, that an
CLASSIFICATION OF ESTIMATED EX- average sized outpatient medical chart
PENDITURES FROM CY 2009 TO CY is approximately 30 pages. We estimate
2010 AS A RESULT OF THE CY 2010 that the total cost to the impacted
UPDATE TO THE REVISED ASC PAY- hospitals will be approximately
$55,480, with a maximum expected cost
MENT SYSTEM
of $152 for an individual hospital based
upon an expected maximum of 20
Category
Transfers
selected records; the expected minimum
will be $0.00 if no records were selected
Annualized
$33 Million.
from a hospital. We believe that this
Monetized
Transfers.
cost is minimal, compared with the 2.0
From Whom to Federal Government to
percentage point HOP QDRP component
Whom.
Medicare Providers and
of the annual payment update at risk.
Suppliers.
CMS does not plan to reimburse
hospitals for copying and mailing costs.
Total ........ $33 Million.
This validation requirement is necessary
so that CMS has all the information it
D. Effects of Requirements for Hospital
needs to validate the accuracy of
Reporting of Quality Data for Annual
hospital submitted data abstracted from
Hospital Payment Update
paper medical records.
In section XVI. of the CY 2009 OPPS/
In section XVI.E.3.b. of this final rule
ASC final rule with comment period (73 with comment period, we did not, at
FR 68758), we discussed our
this time, adopt our proposal in the CY
requirements for subsection (d)
2010 OPPS/ASC proposed rule (74 FR
hospitals to report quality data under
35403) to expand the CY 2011
the HOP QDRP in order to receive the
validation requirement for the CY 2012
full payment update for CY 2010. In
payment update. Instead, we will
section XVI. of this final rule with
consider the public comments we
comment period, we established
received on that proposal, as well as any
additional policies affecting the CY
analyses we conduct of the CY 2011
2010 and CY 2011 HOP QDRP. We
validation process, and propose a CY
estimate that about 83 hospitals may not 2012 validation process as a part of the
receive the full payment update in CY
CY 2011 OPPS/ASC rulemaking. We
2010. Most of these hospitals are either
believe that this approach will give HOP
small rural or small urban hospitals.
QDRP hospitals additional experience
However, at this time, information is not with the validation process and allow
available to determine the precise
these hospitals sufficient time to
number of hospitals that do not meet the prepare for the CY 2012 validation.
requirements for the full hospital market
However, we noted in the CY 2010
basket increase for CY 2010. We also
OPPS/ASC proposed rule (74 FR 35424)
estimate that 83 hospitals may not
that we expected our proposal to
receive the full payment update in CY
validate data submitted by 800 hospitals
2011.
for purposes of the CY 2012 HOP QDRP
In section XVI.E.3.a. of this final rule
payment determination would not have
with comment period, for the CY 2011
changed the number of hospitals that
payment update, as part of the
fail the validation requirement from CY
validation process, we are requiring
2011. For CY 2011, and under our
hospitals to submit paper copies of
proposal for CY 2012 in the CY 2010
requested medical records to a
OPPS/ASC proposed rule, we stated that
designated contractor within the
we would calculate the validation
required timeframe. Failure to submit
matches for CY 2011 (we note, however,
requested documentation can result in a that the validation results will not affect
2 percentage point reduction in a
the CY 2011 payment update) and CY
hospital’s update, but the failure to pass 2012 by assessing whether the overall
the validation itself would not. Of the
measure data submitted by the hospital
83 hospitals that we estimate will not
matches the independently reabstracted
receive the full payment update for CY
measure data. We believe that this
2011, we estimate that no more than 20
methodology will make it easier for
hospitals would fail the validation
hospitals to satisfy the validation
documentation submission requirement requirement than if we calculate the
percent agreement between what the
for the CY 2011 payment update.
For the CY 2011 payment update, our hospital submitted and what the CMSvalidation sample size is estimated to be designated contractor independently
about 7,300 medical records. We
reabstracted for each individual data
estimate that this requirement will cost
element that was submitted. In addition,
dcolon on DSK2BSOYB1PROD with RULES2
final rule with comment period. All
expenditures are classified as transfers.
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60679
for the CY 2012 payment update, in the
CY 2010 OPPS/ASC proposed rule, we
proposed to validate data for only 800
hospitals out of the approximately 3,400
HOP QDRP participating hospitals. As a
result, we believe that the effect of our
proposed validation process for CY 2012
would have been minimal in terms of
the number of hospitals that would not
meet all program requirements. In the
CY 2010 OPPS/ASC proposed rule (74
FR 35424), we stated that of the 83
hospitals that we estimated would not
have received the full payment update
for CY 2012, we estimated that
approximately 20 hospitals would have
failed to meet our proposed CY 2012
validation requirements.
E. Executive Order 12866
In accordance with the provisions of
Executive Order 12866, this final rule
with comment period rule was reviewed
by the OMB.
List of Subjects
42 CFR Part 410
Health facilities, Health professions,
Laboratories, Medicare, Rural areas, Xrays.
42 CFR Part 416
Health facilities, Health professions,
Medicare, Reporting and recordkeeping
requirements.
42 CFR Part 419
Hospitals, Medicare, Reporting and
recordkeeping requirements.
■ For reasons stated in the preamble of
this document, the Centers for Medicare
& Medicaid Services is amending 42
CFR chapter IV as set forth below:
PART 410—SUPPLEMENTARY
MEDICAL INSURANCE (SMI)
BENEFITS
1. The authority citation for part 410
continues to read as follows:
■
Authority: Secs. 1102 and 1871 of the
Social Security Act (42 U.S.C. 1302 and
1395hh).
2. Section 410.27 is amended by—
a. Revising the section heading.
b. Revising the introductory text of
paragraph (a) and paragraph (a)(1).
■ c. Revising paragraph (e).
■ d. Revising paragraph (f).
■ e. Adding new paragraph (g).
■ The revisions and additions read as
follows:
■
■
■
§ 410.27 Outpatient hospital or CAH
services and supplies incident to a
physician or nonphysician practitioner
service: Conditions.
(a) Medicare Part B pays for hospital
or CAH services and supplies furnished
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incident to a physician or nonphysician
practitioner service to outpatients,
including drugs and biologicals that
cannot be self-administered, if—
(1) They are furnished—
(i) By or under arrangements made by
the participating hospital or CAH,
except in the case of a SNF resident as
provided in § 411.15(p) of this chapter;
(ii) As an integral though incidental
part of a physician’s or nonphysician
practitioner’s services;
(iii) In the hospital or CAH or in a
department of the hospital or CAH, as
defined in § 413.65 of this subchapter;
and
(iv) Under the direct supervision of a
physician or a nonphysician
practitioner as specified in paragraph (f)
of this section. Nonphysician
practitioners may directly supervise
services that they may personally
furnish in accordance with State law
and all additional requirements,
including those specified in §§ 410.71,
410.73, 410.74, 410.75, 410.76, and
410.77.
(A) For services furnished in the
hospital or CAH or in an on-campus
outpatient department of the hospital or
CAH, as defined in § 413.65 of this
subchapter, ‘‘direct supervision’’ means
that the physician or nonphysician
practitioner must be present on the
same campus and immediately available
to furnish assistance and direction
throughout the performance of the
procedure. It does not mean that the
physician or nonphysician practitioner
must be present in the room when the
procedure is performed. For pulmonary
rehabilitation, cardiac rehabilitation,
and intensive cardiac rehabilitation
services, direct supervision must be
furnished by a doctor of medicine or
osteopathy, as specified in §§ 410.47
and 410.49, respectively.
(B) For services furnished in an offcampus outpatient department of the
hospital or CAH, as defined in § 413.65
of this subchapter, ‘‘direct supervision’’
means the physician or nonphysician
practitioner must be present in the offcampus provider-based department of
the hospital or CAH and immediately
available to furnish assistance and
direction throughout the performance of
the procedure. It does not mean that the
physician or nonphysician practitioner
must be present in the room when the
procedure is performed. For pulmonary
rehabilitation, cardiac rehabilitation,
and intensive cardiac rehabilitation
services, direct supervision must be
furnished by a doctor of medicine or
osteopathy, as specified in §§ 410.47
and 410.49, respectively.
*
*
*
*
*
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(e) Services furnished by an entity
other than the hospital or CAH are
subject to the limitations specified in
§ 410.42(a).
(f) For purposes of this section,
‘‘nonphysician practitioner’’ means a
clinical psychologist, licensed clinical
social worker, physician assistant, nurse
practitioner, clinical nurse specialist, or
certified nurse-midwife.
(g) For purposes of this section, ‘‘in
the hospital or CAH’’ means areas in the
main building(s) of the hospital or CAH
that are under the ownership, financial,
and administrative control of the
hospital or CAH; that are operated as
part of the hospital or CAH; and for
which the hospital or CAH bills the
services furnished under the hospital’s
or CAH’s CMS Certification Number.
■ 3. Section 410.28 is amended by
revising paragraph (e) to read as follows:
§ 410.28 Hospital or CAH diagnostic
services furnished to outpatients:
Conditions.
*
*
*
*
*
(e) Medicare Part B makes payment
under section 1833(t) of the Act for
diagnostic services furnished by or
under arrangements made by the
participating hospital, only when the
diagnostic services are furnished under
the appropriate level of physician
supervision specified by CMS in
accordance with the definitions in
§ 410.32(b)(3)(i), (b)(3)(ii), and (b)(3)(iii).
Under general supervision, the training
of the nonphysician personnel who
actually perform the diagnostic
procedure and the maintenance of the
necessary equipment and supplies are
the continuing responsibility of the
facility. In addition—
(1) For services furnished directly or
under arrangement in the hospital or in
an on-campus outpatient department of
the hospital, as defined in § 413.65 of
this subchapter, ‘‘direct supervision’’
means that the physician must be
present on the same campus and
immediately available to furnish
assistance and direction throughout the
performance of the procedure. It does
not mean that the physician must be
present in the room when the procedure
is performed. For this purpose, the
definition of ‘‘in the hospital’’ is as
specified in § 410.27(g).
(2) For services furnished directly or
under arrangement in an off-campus
outpatient department of the hospital, as
defined in § 413.65 of this subchapter,
‘‘direct supervision’’ means the
physician must be present in the offcampus provider-based department of
the hospital and immediately available
to furnish assistance and direction
throughout the performance of the
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procedure. It does not mean that the
physician must be present in the room
when the procedure is performed.
(3) For services furnished under
arrangement in nonhospital locations,
‘‘direct supervision’’ means the
definition specified in § 410.32(b)(3)(ii).
*
*
*
*
*
PART 416—AMBULATORY SURGICAL
SERVICES
4. The authority citation for Part 416
continues to read as follows:
■
Authority: Secs. 1102 and 1871 of the
Social Security Act (42 U.S.C. 1302 and
1395hh).
5. Section 416.30 is amended by
revising paragraph (f)(2) to read as
follows:
■
§ 416.30
CMS.
Terms of the agreement with
*
*
*
*
*
(f) * * *
(2) The ASC participates and is paid
only as an ASC.
*
*
*
*
*
PART 419—PROSPECTIVE PAYMENT
SYSTEM FOR HOSPITAL OUTPATIENT
DEPARTMENT SERVICES
6. The authority citation for part 419
continues to read as follows:
■
Authority: Secs. 1102, 1833(t), and 1871
of the Social Security Act (42 U.S.C. 1302,
1395(t), and 1395(hh).
7. Section 419.64 is amended by
adding new paragraphs (a)(4)(iii) and
(a)(4)(iv), to read as follows:
■
§ 419.64 Transitional pass-through
payments: Drugs and biologicals.
(a) * * *
(4) * * *
(iii) A biological that is not surgically
implanted or inserted into the body.
(iv) A biological that is surgically
implanted or inserted into the body, for
which pass-through payment as a
biological is made on or before
December 31, 2009.
*
*
*
*
*
■ 8. Section 419.66 is amended by
revising paragraph (b)(4)(iii) to read as
follows:
§ 419.66 Transitional pass-through
payments: Medical devices.
*
*
*
*
*
(b) * * *
(4) * * *
(iii) A material that may be used to
replace human skin (for example, a
biological skin replacement material or
synthetic skin replacement material).
*
*
*
*
*
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■
9. Section 419.70 is amended by
revising the heading of paragraph (d)(5)
to read as follows:
January 1, 2009 and through December
31, 2009. * * *
*
*
*
*
*
§ 419.70 Transitional adjustments to limit
decline in payments.
(Catalog of Federal Domestic Assistance
Program No. 93.773, Medicare—Hospital
Insurance; and Program No. 93.774,
Medicare—Supplementary Medical
Insurance Program)
*
*
*
*
(d) * * *
(5) Temporary treatment for small
sole community hospitals on or after
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*
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Dated: October 26, 2009.
Charlene Frizzera,
Acting Administrator, Centers for Medicare
& Medicaid Services.
Dated: October 29, 2009.
Kathleen Sebelius,
Secretary.
BILLING CODE 4120–01–P
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Federal Register / Vol. 74, No. 223 / Friday, November 20, 2009 / Rules and Regulations
]]>Agencies
[Federal Register Volume 74, Number 223 (Friday, November 20, 2009)]
[Rules and Regulations]
[Pages 60316-60983]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-26499]
[[Page 60315]]
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Part II
Book 2 of 2 Books
Pages 60315-61012
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 410, 416, and 419
Medicare Program: Changes to the Hospital Outpatient Prospective
Payment System and CY 2010 Payment Rates; Changes to the Ambulatory
Surgical Center Payment System and CY 2010 Payment Rates; Final Rule
Federal Register / Vol. 74, No. 223 / Friday, November 20, 2009 /
Rules and Regulations
[[Page 60316]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 410, 416, and 419
[CMS-1414-FC]
RIN 0938-AP41
Medicare Program: Changes to the Hospital Outpatient Prospective
Payment System and CY 2010 Payment Rates; Changes to the Ambulatory
Surgical Center Payment System and CY 2010 Payment Rates
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule with comment period.
-----------------------------------------------------------------------
SUMMARY: This final rule with comment period revises the Medicare
hospital outpatient prospective payment system (OPPS) to implement
applicable statutory requirements and changes arising from our
continuing experience with this system. 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, 2010.
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 will apply, and other pertinent ratesetting
information for the CY 2010 ASC payment system. These changes are
applicable to services furnished on or after January 1, 2010.
DATES: Effective Date: The provisions of this rule are effective
January 1, 2010.
Comment Period: We will consider comments on the subject areas
listed in the SUPPLEMENTARY INFORMATION section of this rule that are
received at one of the addresses provided in the ADDRESSES section of
this rule no later than 5 p.m. EST on December 29, 2009.
Application Deadline for 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
8, 2010.
ADDRESSES: In commenting, please refer to file code CMS-1414-FC.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (no duplicates,
please):
1. Electronically. You may submit electronic comments on this
regulation to https://www.regulations.gov. Follow the instructions for
``Comment or Submission'' and enter the file code to find the document
accepting comments.
2. By regular mail. You may mail written comments (one original and
two copies) to the following address ONLY: Centers for Medicare &
Medicaid Services, Department of Health and Human Services, Attention:
CMS-1414-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.
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-1414-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/NTOL, 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.
Michele Franklin, (410) 786-4533, and Jana Lindquist, (410) 786-4533,
Partial hospitalization and community mental health center issues.
James Poyer, (410) 786-2261, Reporting of quality data issues.
SUPPLEMENTARY INFORMATION:
Comment Subject Areas: We will consider comments on the following
subject areas discussed in this final rule with comment period that are
received by the date and time indicated in the DATES section of this
final rule with comment period:
(1) 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;
(2) Recognition of plasma protein fraction as a blood product or a
biological for OPPS payment, as discussed in section II.A.1.d.(2) of
this final rule with comment period;
(3) Potential alternative coding schemes for reporting hospital
clinic visits for new and established patients, as discussed in section
IX.B.1. of this final rule with comment period;
(4) The possibility of extending the direct supervision
requirements for hospital-based partial hospitalization program
services to those same services in community mental health centers, as
discussed in section XII.D.3. of this final rule with comment period;
and
(5) The possibility of establishing direct physician supervision
requirements for ASC services, as discussed in section XV.A.3. of this
final rule with comment period.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: https://www.regulations.gov. Follow the search
[[Page 60317]]
instructions on that Web site to view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, MD 21244, on Monday through Friday of each week from 8:30
a.m. to 4 p.m. EST. To schedule an appointment to view public comments,
phone 1-800-743-3951.
Electronic Access
This Federal Register document is also available from the Federal
Register online database through GPO Access, a service of the U.S.
Government Printing Office. Free public access is available on a Wide
Area Information Server (WAIS) through the Internet and via
asynchronous dial-in. Internet users can access the database by using
the World Wide Web; the Superintendent of Documents' home page address
is https://www.gpoaccess.gov/, by using local WAIS client
software, or by telnet to swais.access.gpo.gov, then login as guest (no
password required). Dial-in users should use communications software
and modem to call (202) 512-1661; type swais, then login as guest (no
password required).
Alphabetical List of Acronyms Appearing in This Final Rule
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
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
CKD Chronic kidney disease
CMHC Community mental health center
CMS Centers for Medicare & Medicaid Services
CORF Comprehensive outpatient rehabilitation facility
CPT [Physicians'] Current Procedural Terminology, Fourth Edition,
2009, copyrighted by the American Medical Association
CR Cardiac rehabilitation
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
HOPQDRP Hospital Outpatient Quality Data Reporting Program
ICD-9-CM International Classification of Diseases, Ninth Edition,
Clinical Modification
ICR Intensive cardiac rehabilitation
IDE Investigational device exemption
IME Indirect medical education
I/OCE Integrated Outpatient Code Editor
IOL Intraocular lens
IPPS [Hospital] Inpatient prospective payment system
IVIG Intravenous immune globulin
KDE Kidney disease education
MAC Medicare Administrative Contractor
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
PBD Provider-based department
PHP Partial hospitalization program
PM Program memorandum
PPI Producer Price Index
PPS Prospective payment system
PR Pulmonary rehabilitation
PRA Paperwork Reduction Act
QAPI Quality Assessment and Performance Improvement
QIO Quality Improvement Organization
RAC Recovery Audit Contractor
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., and XVI. through XXI. 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 XVIII.A. 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., XVI., and XVIII. through XXI. of this final rule with
comment period and in Addenda AA, BB, DD1, DD2, and EE to this final
rule with comment period. (Addendum EE is available on the Internet
only; we refer readers to section XVIII.B. of this final rule with
comment period.)
Table of Contents
I. Background and Summary of the CY 2010 OPPS/ASC Final Rule With
Comment Period
A. Legislative and Regulatory Authority for the Hospital
Outpatient Prospective Payment System
B. Excluded OPPS Services and Hospitals
C. Prior Rulemaking
D. Advisory Panel on Ambulatory Payment Classification (APC)
Groups
1. Authority of the APC Panel
2. Establishment of the APC Panel
3. APC Panel Meetings and Organizational Structure
E. Background and Summary of the CY 2010 OPPS/ASC Proposed Rule
1. Updates Affecting OPPS Payments
[[Page 60318]]
2. OPPS Ambulatory Payment Classification (APC) Group Policies
3. OPPS Payment for Devices
4. OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
5. Estimate of OPPS Transitional Pass-Through Spending for
Drugs, Biologicals, Radiopharmaceuticals, and Devices
6. OPPS Payment for Brachytherapy Sources
7. OPPS Payment for Drug Administration Services
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 Changes and
Clarifications
12. OPPS Payment Status and Comment Indicators
13. OPPS Policy and Payment Recommendations
14. Updates to the Ambulatory Surgical Center (ASC) Payment
System
15. Reporting Quality Data for Annual Payment Rate Updates
16. Healthcare-Associated Conditions
17. Regulatory Impact Analysis
F. Public Comments Received in Response to the CY 2010 OPPS/ASC
Proposed Rule
G. Public Comments Received in Response to the November 18, 2008
OPPS/ASC Final Rule With Comment Period
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. Data Development Process and Calculation of Median Costs
a. Claims Preparation
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 Criteria-Based Median Costs
(1) Extended Assessment and Management Composite APCs (APCs 8002
and 8003)
(2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC
(APC 8001)
(3) Cardiac Electrophysiologic Evaluation and Ablation Composite
APC (APC 8000)
(4) Mental Health Services Composite APC (APC 0034)
(5) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006,
8007, and 8008)
3. Calculation of OPPS Scaled Payment Weights
4. Changes to Packaged Services
a. Background
b. Packaging Issues
(1) Packaged Services Addressed by the February 2009 APC Panel
Recommendations
(2) Packaged Services Addressed by the August 2009 APC Panel
Recommendations
(3) Other Service-Specific Packaging Issues
B. Conversion Factor Update
C. Wage Index Changes
D. Statewide Average Default CCRs
E. OPPS Payment 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
Pub. L. 108-173 (MMA)
F. Hospital Outpatient Outlier Payments
1. Background
2. Outlier Calculation
3. Final Outlier Calculation
4. 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 CPT and Level II HCPCS Codes
1. Treatment of New Level II HCPCS Codes and Category I CPT
Vaccine Codes and Category III CPT Codes
2. Process for New Level II HCPCS Codes and Category I and
Category III CPT Codes for Which We Are Soliciting Public Comments
on the CY 2010 OPPS/ASC Final Rule With Comment Period
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. Cardiovascular Services
a. Cardiovascular Telemetry (APC 0209)
b. Implantable Loop Recorder Monitoring (APC 0689)
c. Transluminal Balloon Angioplasty (APC 0279)
2. Gastrointestinal Services
a. Change of Gastrostomy Tube (APC 0676)
b. Laparoscopic Liver Cryoablation (APC 0131)
c. Cholangioscopy (APC 0151)
d. Laparoscopic Hernia Repair (APC 0131)
3. Genitourinary Services
a. Percutaneous Renal Cryoablation (APC 0423)
b. Hemodialysis (APC 0170)
c. Radiofrequency Remodeling of Bladder Neck (APC 0165)
d. Change of Bladder Tube (APC 0121)
4. Nervous System Services
a. Pain-Related Procedures (APCs 0203, 0204, 0206, 0207, 0221,
0224, and 0388)
b. Magnetoencephalography (APCs 0065 and 0067)
5. Ocular Services
a. Insertion of Anterior Segment Aqueous Drainage Device (APC
0234)
b. Backbench Preparation of Corneal Allograft
6. Orthopedic and Musculoskeletal Services
a. Arthroscopic Procedures (APCs 0041 and 0042)
b. Knee Arthroscopy (APCs 0041 and 0042)
c. Shoulder Arthroscopy (APC 0042)
d. Fasciotomy Procedures (APC 0049)
e. Fibula Repair (APC 0062)
f. Forearm Orthopedic Procedures (APCs 0050, 0051, and 0052)
g. Low Energy Extracorporeal Shock Wave Therapy (Low Energy
ESWT)
h. Insertion of Posterior Spinous Process Distraction Device
(APC 0052)
7. Radiation Therapy Services
a. Proton Beam Therapy (APCs 0664 and 0667)
b. Stereotactic Radiosurgery (SRS) Treatment Delivery Services
(APCs 0065, 0066, 0067, and 0127)
c. Clinical Brachytherapy (APCs 0312 and 0651)
8. Other Services
a. Low Frequency, Non-Contact, Non-Thermal Ultrasound (APC 0013)
b. Skin Repair (APCs 0134 and 0135)
c. Group Psychotherapy (APC 0325)
d. Portable X-Ray Services
e. Home Sleep Study Tests (APC 0213)
IV. OPPS Payment for Devices
A. Pass-Through Payments for Devices
1. Expiration of Transitional Pass-Through Payments for Certain
Devices
2. Provisions for Reducing Transitional Pass-Through Payments To
Offset Costs Packaged Into APC Groups
a. Background
b. Final Policy
B. Adjustment to OPPS Payment 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
2009
3. Drugs, Biologicals, and Radiopharmaceuticals With New or
Continuing Pass-Through Status in CY 2010
4. Pass-Through Payments for Implantable Biologicals
a. Background
b. Policy for CY 2010
5. Definition of Pass-Through Payment Eligibility Period for New
Drugs and Biologicals
6. Provision for Reducing Transitional Pass-Through Payments for
Diagnostic
[[Page 60319]]
Radiopharmaceuticals and Contrast Agents To Offset Costs Packaged
Into APC Groups
a. Background
b. Payment Offset Policy for Diagnostic Radiopharmaceuticals
c. Payment Offset Policy for Contrast Agents
B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals
Without Pass-Through Status
1. Background
2. Criteria for Packaging Payment for Drugs, Biologicals, and
Radiopharmaceuticals
a. Background
b. Cost Threshold for Packaging of Payment for HCPCS Codes That
Describe Certain Drugs, Nonimplantable Biologicals, and Therapeutic
Radiopharmaceuticals (``Threshold-Packaged Drugs'')
c. Packaging Determination for HCPCS Codes That Describe the
Same Drug or Biological But Different Dosages
d. Packaging of Payment for Diagnostic Radiopharmaceuticals,
Contrast Agents, and Implantable Biologicals (``Policy-Packaged''
Drugs and Devices)
3. Payment for Drugs and Biologicals Without Pass-Through Status
That Are Not Packaged
a. Payment for Specified Covered Outpatient Drugs (SCODs) and
Other Separately Payable and Packaged Drugs and Biologicals
b. Payment Policy
4. Payment for Blood Clotting Factors
5. Payment for Therapeutic Radiopharmaceuticals
a. Background
b. Payment Policy
6. Payment for Nonpass-Through Drugs, Biologicals, and
Radiopharmaceuticals With HCPCS Codes, But Without OPPS Hospital
Claims Data
VI. Estimate of OPPS Transitional Pass-Through 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 for CY 2010
C. 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. Kidney Disease Education Services
1. Background
2. Payment for Services Furnished by Providers of Services
Located in a Rural Area
B. Pulmonary Rehabilitation, Cardiac Rehabilitation, and
Intensive Cardiac Rehabilitation Services
1. Legislative Changes
2. Payment for Services Furnished to Hospital Outpatients in a
Pulmonary Rehabilitation Program
3. Payment for Services Furnished to Hospital Outpatients Under
a Cardiac Rehabilitation or an Intensive Cardiac Rehabilitation
Program
4. Physician Supervision for Pulmonary Rehabilitation, Cardiac
Rehabilitation, and Intensive Cardiac Rehabilitation Services
C. Stem Cell Transplants
D. Physician Supervision
1. Background
2. Issues Regarding the Physician Supervision of Hospital
Outpatient Services Raised by Hospitals and Other Stakeholders
3. Policies for Direct Supervision of Hospital and CAH
Outpatient Therapeutic Services
4. Policies for Direct Supervision of Hospital and CAH
Outpatient Diagnostic Services
5. Summary of CY 2010 Physician Supervision Final Policies
E. Direct Referral for Observation Services
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
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. MedPAC Recommendations
B. APC Panel Recommendations
C. OIG Recommendations
XV. Updates to the Ambulatory Surgical Center (ASC) Payment System
A. Background
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
B. 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 2009
C. 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 2010
c. ASC Covered Surgical Procedures Designated as Device-
Intensive
(1) Background
(2) Changes to List of Covered Surgical Procedures Designated as
Device-Intensive for CY 2010
d. ASC Treatment of Surgical Procedures Removed From the OPPS
Inpatient List for CY 2010
2. Covered Ancillary Services
D. 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
2010
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 2010
E. New Technology Intraocular Lenses (NTIOLs)
1. Background
2. NTIOL Application Process for Payment Adjustment
3. Classes of NTIOLs Approved and New Requests for Payment
Adjustment
a. Background
b. Request To Establish New NTIOL Class for CY 2010 and Deadline
for Public Comment
4. Payment Adjustment
5. ASC Payment for Insertion of IOLs
6. Announcement of CY 2010 Deadline for Submitting Requests for
CMS Review of Appropriateness of ASC Payment for Insertion of an
NTIOL Following Cataract Surgery
F. ASC Payment and Comment Indicators
1. Background
2. ASC Payment and Comment Indicators
G. ASC Policy and Payment Recommendations
H. Revision to Terms of Agreements for Hospital-Operated ASCs
1. Background
2. Changes to the Terms of Agreements for ASCs Operated by
Hospitals
I. Calculation of the ASC Conversion Factor and ASC Payment
Rates
1. Background
2. Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2010 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. Overview
[[Page 60320]]
2. Hospital Outpatient Quality Data Reporting Under Section
109(a) of Public Law 109-432
3. Reporting ASC Quality Data for Annual Payment Update
4. HOPQDRP Quality Measures for the CY 2009 Payment
Determination
5. HOP QDRP Quality Measures for the CY 2010 Payment
Determination
a. Background
b. Maintenance of Technical Specifications for Quality Measures
c. Publication of HOP QDRP Data
B. Quality Measures for the CY 2011 Payment Determination
1. Considerations in Expanding and Updating Quality Measures
Under the HOP QDRP Program
2. Retirement of HOP QDRP Quality Measures
3. HOP QDRP Quality Measures for the CY 2011 Payment
Determination
C. Possible Quality Measures Under Consideration for CY 2012 and
Subsequent Years
D. Payment Reduction for Hospitals That Fail To Meet the HOP
QDRP Requirements for the CY 2010 Payment Update
1. Background
2. Reporting Ratio Application and Associated Adjustment Policy
for CY 2010
E. Requirements for HOPD Quality Data Reporting for CY 2011 and
Subsequent Years
1. Administrative Requirements
2. Data Collection and Submission Requirements
a. General Data Collection and Submission Requirements
b. Extraordinary Circumstance Extension or Waiver for Reporting
Quality Data
3. HOP QDRP Validation Requirements
a. Data Validation Requirements for CY 2011
b. Data Validation Approach for CY 2012 and Subsequent Years
c. Additional Data Validation Conditions Under Consideration for
CY 2012 and Subsequent Years
F. 2010 Publication of HOP QDRP Data
G. HOP QDRP Reconsideration and Appeals Procedures
H. Reporting of ASC Quality Data
I. Electronic Health Records
XVII. Healthcare-Associated Conditions
A. Background
1. Preventable Medical Errors and Hospital-Acquired Conditions
(HACs) Under the IPPS
2. Expanding the Principles of the IPPS HACs Payment Provision
to the OPPS
3. Discussion in the CY 2009 OPPS/ASC Final Rule With Comment
Period
B. Public Comments and Recommendations on Issues Regarding
Healthcare-Associated Conditions From the Joint IPPS/OPPS Listening
Session
C. CY 2010 Approach to Healthcare-Associated Conditions Under
the OPPS
XVIII. Files Available to the Public via the Internet
A. Information in Addenda Related to the CY 2010 Hospital OPPS
B. Information in Addenda Related to the CY 2010 ASC Payment
System
XIX. Collection of Information Requirements
A. Legislative Requirements for Solicitation of Comments
B. Associated Information Collections Not Specified in
Regulatory Text
1. Hospital Outpatient Quality Data Reporting Program (HOP QDRP)
2. HOP QDRP Quality Measures for the CY 2010 and CY 2011 Payment
Determinations
3. HOP QDRP Validation Requirements
4. HOP QDRP Reconsideration and Appeals Procedures
5. Additional Topics
XX. Response to Comments
XXI. Regulatory Impact Analysis
A. Overall Impact
1. Executive Order 12866
2. Regulatory Flexibility Act (RFA)
3. Small Rural Hospitals
4. Unfunded Mandates
5. Federalism
B. Effects of OPPS Changes in This Final Rule With Comment
Period
1. Alternatives Considered
2. Limitations 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
2. Limitations of Our Analysis
3. Estimated Effects of This Final Rule With Comment Period on
Payments to ASCs
4. Estimated Effects of This Final Rule With Comment Period on
Beneficiaries
5. Conclusion
6. Accounting Statement
D. Effects of Requirements for Reporting of Quality Data for
Annual Hospital Payment Update
E. Executive Order 12866
Regulation Text
Addenda
Addendum A--Final OPPS APCs for CY 2010
Addendum AA--Final ASC Covered Surgical Procedures for CY 2010
(Including Surgical Procedures for Which Payment Is Packaged)
Addendum B--Final OPPS Payment by HCPCS Code for CY 2010
Addendum BB--Final ASC Covered Ancillary Services Integral to
Covered Surgical Procedures for CY 2010 (Including Ancillary
Services for Which Payment Is Packaged)
Addendum D1--Final OPPS Payment Status Indicators for CY 2010
Addendum DD1--Final ASC Payment Indicators for CY 2010
Addendum D2--Final OPPS Comment Indicators for CY 2010
Addendum DD2--Final ASC Comment Indicators for CY 2010
Addendum E-- HCPCS Codes That Are Paid as Inpatient Procedures for
CY 2010
Addendum L-CY 2010 OPPS Out-Migration Adjustment
Addendum M--HCPCS Codes for Assignment to Composite APCs for CY 2010
I. Background and Summary of the CY 2010 OPPS/ASC Final Rule With
Comment Period
A. Legislative and Regulatory Authority for the Hospital Outpatient
Prospective Payment System
When Title XVIII of the Social Security Act (the Act) was enacted,
Medicare payment for hospital outpatient services was based on
hospital-specific costs. In an effort to ensure that Medicare and its
beneficiaries pay appropriately for services and to encourage more
efficient delivery of care, the Congress mandated replacement of the
reasonable cost-based payment methodology with a prospective payment
system (PPS). The Balanced Budget Act (BBA) of 1997 (Pub. L. 105-33)
added section 1833(t) to the Act authorizing implementation of a PPS
for hospital outpatient services. 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.
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 following Acts made
additional changes to the OPPS: the Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act (BIPA) of 2000 (Pub. L. 106-
554); the Medicare Prescription Drug, Improvement, and Modernization
Act (MMA) of 2003 (Pub. L. 108-173); the Deficit Reduction Act (DRA) of
2005 (Pub. L. 109-171), enacted on February 8, 2006; 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; the Medicare, Medicaid, and SCHIP
Extension Act (MMSEA) of 2007 (Pub. L. 110-173), enacted on December
29, 2007; and the Medicare Improvements for Patients and Providers Act
(MIPPA) of 2008 (Pub. L. 110-275), enacted on July 15, 2008.
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
[[Page 60321]]
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 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 labor-related amount is adjusted for area wage differences using
the hospital inpatient wage index value for the locality in which the
hospital or CMHC is located.
All services and items within an APC group are comparable
clinically and with respect to resource use (section 1833(t)(2)(B) of
the Act). In accordance with section 1833(t)(2) of the Act, subject to
certain exceptions, services and items within an APC group cannot be
considered comparable with respect to the use of resources if the
highest median (or mean cost, if elected by the Secretary) for an item
or service in the APC group is more than 2 times greater than the
lowest median cost for an item or service within the same APC group
(referred to as the ``2 times rule''). In implementing this provision,
we generally use the median cost of the item or service assigned to an
APC group.
For new technology items and services, special payments under the
OPPS may be made in one of two ways. Section 1833(t)(6) of the Act
provides for temporary additional payments, which we refer to as
``transitional pass-through payments,'' for at least 2 but not more
than 3 years for certain drugs, biological agents, brachytherapy
devices used for the treatment of cancer, and categories of other
medical devices. For new technology services that are not eligible for
transitional pass-through payments, and for which we lack sufficient
data to appropriately assign them to a clinical APC group, we have
established special APC groups based on costs, which we refer to as New
Technology APCs. These New Technology APCs are designated by cost bands
which allow us to provide appropriate and consistent payment for
designated new procedures that are not yet reflected in our claims
data. Similar to pass-through payments, an assignment to a New
Technology APC is temporary; that is, we retain a service within a New
Technology APC until we acquire sufficient data to assign it to a
clinically appropriate APC group.
B. Excluded OPPS Services and Hospitals
Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to
designate the hospital outpatient services that are paid under the
OPPS. While most hospital outpatient services are payable under the
OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for
ambulance, physical and occupational therapy, and speech-language
pathology services, for which payment is made under a fee schedule.
Section 614 of 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
Sec. 419.22 of the regulations.
Under Sec. 419.20(b) of the regulations, we specify the types of
hospitals and entities that are excluded from payment under the OPPS.
These excluded entities include: Maryland hospitals, but only for
services that are paid under a cost containment waiver in accordance
with section 1814(b)(3) of the Act; critical access hospitals (CAHs);
hospitals located outside of the 50 States, the District of Columbia,
and Puerto Rico; and Indian Health Service hospitals.
C. Prior Rulemaking
On April 7, 2000, we published in the Federal Register a final rule
with comment period (65 FR 18434) to implement a prospective payment
system for hospital outpatient services. The hospital OPPS was first
implemented for services furnished on or after August 1, 2000. Section
1833(t)(9) of the Act requires the Secretary to review certain
components of the OPPS, not less often than annually, and to revise the
groups, relative payment weights, and other adjustments that take into
account changes in medical practices, changes in technologies, and the
addition of new services, new cost data, and other relevant information
and factors.
Since initially implementing the OPPS, we have published final
rules in the Federal Register annually to implement statutory
requirements and changes arising from our continuing experience with
this system. These rules can be viewed on the CMS Web site at: https://www.cms.hhs.gov/HospitalOutpatientPPS/. We published in the Federal
Register on November 18, 2008 the CY 2009 OPPS/ASC final rule with
comment period (73 FR 68502). 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 2009 OPPS on the basis of claims data
from January 1, 2007, through December 31, 2007, and to implement
certain provisions of Public Law 110-173 and Public Law 110-275. In
addition, we responded to public comments received on the provisions of
the November 27, 2007 final rule with comment period (72 FR 66580)
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 July 18, 2008 OPPS/ASC proposed rule
for CY 2009 (73 FR 41416).
Subsequent to publication of the CY 2009 OPPS/ASC final rule with
comment period, we published in the Federal Register on January 26,
2009, a correction notice (74 FR 4343 through 4344) to correct certain
technical errors in the CY 2009 OPPS/ASC final rule with comment
period.
On July 20, 2009, we issued in the Federal Register (74 FR 35232) a
proposed rule for the CY 2010 OPPS/ASC payment system to implement
statutory requirements and changes arising from our continuing
experience with both systems.
[[Page 60322]]
D. Advisory Panel on Ambulatory Payment Classification (APC) Groups
1. Authority of the APC Panel
Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of
Public Law 106-113, and redesignated by section 202(a)(2) of Public Law
106-113, 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 four times: on
November 1, 2002; on November 1, 2004; on November 21, 2006; and on
November 2, 2008. The current charter specifies, among other
requirements, that: the APC Panel continues to be technical in nature;
is governed by the provisions of the FACA; may convene up to three
meetings per year; has a Designated Federal Officer (DFO); and is
chaired by a Federal official designated by the Secretary.
The current APC Panel membership and other information pertaining
to the APC Panel, including its charter, Federal Register notices,
membership, meeting dates, agenda topics, and meeting reports, can be
viewed on the CMS Web site at: https://www.cms.hhs.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp#TopOfPage.
3. APC Panel Meetings and Organizational Structure
The APC Panel first met on February 27 through March 1, 2001. Since
the initial meeting, the APC Panel has held 16 meetings, with the last
meeting taking place on August 5 and 6, 2009. 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. 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 2009 APC Panel meeting. At that meeting, the APC Panel
recommended that the work of these three subcommittees continue, and we
accept those recommendations of the APC Panel. All subcommittee
recommendations are discussed and voted upon by the full APC Panel.
Discussions of the other recommendations made by the APC Panel at
the August 2009 meeting are included in the sections of this final rule
with comment period that are specific to each recommendation. For
discussions of earlier APC Panel meetings and recommendations, we refer
readers to previously published hospital OPPS/ASC proposed and final
rules, the CMS Web site mentioned earlier in this section, and the FACA
database at: https://fido.gov/facadatabase/public.asp.
Comment: Several commenters requested that CMS include ASC
representation on the APC Panel. Because the revised ASC payment system
is based upon the same APC groups and relative payment weights as the
OPPS, the commenters believed that ASC representation on the APC Panel
would ensure input from representatives of all care settings that
provide surgical services whose payment groups and payment weights are
affected by the OPPS. Further, the commenters urged CMS to revise the
APC Panel's charter to reflect the current alignment of the OPPS and
the revised ASC payment system by including representation from the ASC
industry on the APC Panel, as the commenters believed is permitted by
the statute.
Response: We acknowledge that the revised ASC payment system
provides Medicare payments to ASCs for surgical procedures that are
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. 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 Sec. 400.202 of our regulations for
specific requirements and definitions. ASCs are suppliers, not
providers. The charter must comply with the statute, which does not
include representatives of suppliers on the APC Panel. Therefore,
although we understand the concerns of the commenters regarding ASC
input on the APC Panel now that the ASC payment system is based on the
OPPS relative payment weights, we cannot revise the charter to include
ASC representation.
E. Background and Summary of the CY 2010 OPPS/ASC Proposed Rule
A proposed rule appeared in the July 20, 2009 Federal Register (74
FR 35232) that set forth proposed changes to the Medicare hospital OPPS
for CY 2010 to implement statutory requirements and changes arising
from our continuing experience with the system. In addition, we set
forth proposed changes to the revised Medicare ASC payment system for
CY 2010, including updated payment weights, covered surgical
procedures, and covered ancillary items and 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 reporting quality data for annual payment rate updates for CY 2011
and subsequent calendar years, the requirements for data collection and
submission for the annual payment
[[Page 60323]]
update, and a proposed reduction in the OPPS payment for hospitals that
fail to meet the HOP QDRP requirements for the CY 2010 payment update,
in accordance with the statutory requirement. The following is a
summary of the major proposed changes included in the CY 2010 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 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
proposed 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 HCPCS codes to APCs.
The proposed establishment of a number of new APCs.
Our analyses of Medicare claims data and certain
recommendations of the APC Panel.
The application of the 2 times rule and proposed
exceptions to it.
The proposed changes to specific APCs.
The proposed movement of procedures from New Technology
APCs to clinical APCs.
3. OPPS Payment for Devices
In section IV. of the proposed rule, we discussed the 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 the proposed CY
2010 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 Pass-Through Spending for Drugs,
Biologicals, Radiopharmaceuticals, and Devices
In section VI. of the proposed rule, we discussed the estimate of
CY 2010 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 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 coding and payment 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 data.
9. Payment for Partial Hospitalization Services
In section X. of the proposed rule, we set forth the 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
for payment under the OPPS.
11. OPPS Nonrecurring Technical and Policy Changes and Clarifications
In section XII. of the proposed rule, we discussed nonrecurring
technical issues, proposed policy changes, and provided 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 March
2009 report to Congress, by the Office of Inspector General (OIG), and
by the APC Panel regarding the OPPS for CY 2010.
14. Updates to the Ambulatory Surgical Center (ASC) Payment System
In section XV. of the proposed rule, we discussed the proposed
updates of the revised ASC payment system and payment rates for CY
2010.
15. Reporting Quality Data for Annual Payment Rate Updates
In section XVI. of the proposed rule, we discussed the proposed
quality measures for reporting hospital outpatient (HOP) quality data
for the annual payment update factor for CY 2011 and subsequent
calendar years; set forth the requirements for data collection and
submission for the annual payment update; and discussed the reduction
in the OPPS payment for hospitals that fail to meet the HOP Quality
Data Reporting Program (QDRP) requirements for CY 2010.
16. Healthcare-Associated Conditions
In section XVII. of the proposed rule, we discussed public
responses to a December 2008 CMS public listening session addressing
the potential extension of the principle of Medicare not paying more
under the IPPS for the care of preventable hospital-acquired conditions
experienced by a Medicare beneficiary during a hospital inpatient stay
to medical care in other settings that are paid under other Medicare
payment systems, including the OPPS, for those healthcare-associated
conditions that occur or result from care in those 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.
[[Page 60324]]
F. Public Comments Received in Response to the CY 2010 OPPS/ASC
Proposed Rule
We received approximately 1,527 timely pieces of correspondence
containing multiple comments on the CY 2010 OPPS/ASC proposed rule. We
note that we received some public comments that were outside of the
scope of the CY 2010 OPPS/ASC proposed rule. These out-of-scope public
comments are not addressed in this final rule with comment period.
New (and substantially revised) CY 2010 HCPCS codes are designated
with comment indicator ``NI'' in Addenda B, AA, and BB of this final
rule with comment period to signify that their CY 2010 interim OPPS
and/or ASC treatment are open to public comment on this final rule with
comment period. Summaries of the public comments that are within the
scope of the CY 2010 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.
G. Public Comments Received in Response to the November 18, 2008 OPPS/
ASC Final Rule With Comment Period
We received approximately 41 timely pieces of correspondence on the
CY 2009 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 of that final rule with comment period. Summaries
of those public comments on topics open to comment in the CY 2009 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.
II. Updates Affecting OPPS Payments
A. Recalibration of APC Relative Weights
1. Database Construction
a. Database Source and Methodology
Section 1833(t)(9)(A) of the Act requires that the Secretary review
and revise the relative payment weights for APCs at least annually. In
the April 7, 2000 OPPS final rule with comment period (65 FR 18482), we
explained in detail how we calculated the relative payment weights that
were implemented on August 1, 2000 for each APC group.
For CY 2010, 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, 2010, and before January 1, 2011 (CY 2010). That
is, we proposed to recalibrate the relative payment weights for each
APC based on claims and cost report data for hospital outpatient
department (HOPD) 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 APC relative
payment weights for CY 2010, we used approximately 141 million final
action claims for hospital outpatient department services furnished on
or after January 1, 2008, and before January 1, 2009. (For exact counts
of claims used, we refer readers to the claims accounting narrative
under supporting documentation for this final rule with comment period
on the CMS Web site at: https://www.cms.hhs.gov/HospitalOutpatientPPS/HORD/.)
Of the 141 million final action claims for services provided in
hospital outpatient settings used to calculate the CY 2010 OPPS payment
rates for this final rule with comment period, approximately 107
million claims were 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 50 million claims 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 68
million were ``pseudo'' single or ``single session'' claims (created
from 26 million multiple procedure claims using the process we discuss
later in this section). Approximately 657,000 claims were 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. As described in section II.A.2. of this final rule with
comment period, our data development process is designed with the goal
of using appropriate cost information in setting the APC relative
weights. The bypass process is described in section II.A.1.b. of this
final rule with comment period. This section discusses how we develop
``pseudo'' single claims, with the intention of using more appropriate
data from the available claims. In some cases, the bypass process
allows us to use some portion of the submitted claim for cost
estimation purposes, while the remaining information on the claim
continues to be unusable. Consistent with the goal of using appropriate
information in our data development process, we only use claims (or
portions of each claim) that are appropriate for ratesetting purposes.
Ultimately, we were able to use for CY 2010 ratesetting some portion of
95 percent of the CY 2008 claims containing services payable under the
OPPS.
As proposed, the APC relative weights and payments for CY 2010 in
Addenda A and B to this final rule with comment period were calculated
using claims from CY 2008 that were processed before January 1, 2009
and continue to be based on the median hospital costs for services in
the APC groups. We selected claims for services paid under the OPPS and
matched these claims to the most recent cost report filed by the
individual hospitals represented in our claims data. We continue to
believe that it is appropriate to use the most current full calendar
year claims data and the most recently submitted cost reports to
calculate the median costs underpinning the APC relative payment
weights and the CY 2010 payment rates.
We did not receive any public comments on our proposal to base the
CY 2010 APC relative weights on the most currently available cost
reports and on claims for services furnished in CY 2008. Therefore, for
the reasons noted above in this section, we are finalizing our data
source for the recalibration of the CY 2010 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 2010, 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 in this
section. 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 derived from the costs of
furnishing one procedure and because, in many circumstances, we are
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
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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
