Medicare Program; FY 2017 Inpatient Psychiatric Facilities Prospective Payment System-Rate Update, 50502-50520 [2016-17982]
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[FR Doc. 2016–18099 Filed 7–29–16; 8:45 am]
BILLING CODE 6210–01–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
[CMS–1650–N]
RIN 0938–AS76
Medicare Program; FY 2017 Inpatient
Psychiatric Facilities Prospective
Payment System—Rate Update
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Notice.
AGENCY:
This notice updates the
prospective payment rates for Medicare
inpatient hospital services provided by
inpatient psychiatric facilities (IPFs)
(which include freestanding IPFs and
psychiatric units of an acute care
hospital or critical access hospital).
These changes are applicable to IPF
discharges occurring during the fiscal
year (FY) beginning October 1, 2016
through September 30, 2017 (FY 2017).
DATES: Effective: The updated IPF
prospective payment rates are effective
for discharges occurring on or after
October 1, 2016 through September 30,
2017.
SUMMARY:
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FOR FURTHER INFORMATION CONTACT:
Katherine Lucas (410) 786–7723 or Jana
Lindquist (410) 786–9374 for general
information.
Theresa Bean (410) 786–2287 or James
Hardesty (410) 786–2629 for
information regarding the regulatory
impact analysis.
SUPPLEMENTARY INFORMATION:
Availability of Certain Tables
Exclusively Through the Internet on the
CMS Web Site
In the past, tables setting forth the
Wage Index for Urban Areas Based on
Core-Based Statistical Area (CBSA)
Labor Market Areas and the Wage Index
Based on CBSA Labor Market Areas for
Rural Areas were published in the
Federal Register as an Addendum to the
annual IPF Prospective Payment System
(PPS) rulemaking (that is, the IPF PPS
proposed and final rules or notice).
However, since FY 2015, these wage
index tables are no longer published in
the Federal Register. Instead, these
tables are available exclusively through
the Internet, on the CMS Web site at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
IPFPPS/WageIndex.html.
To assist readers in referencing
sections contained in this document, we
are providing the following table of
contents.
Table of Contents
I. Executive Summary
A. Purpose
B. Summary of the Major Provisions
C. Summary of Impacts
II. Background
A. Overview of the Legislative
Requirements of the IPF PPS
B. Overview of the IPF PPS
C. Annual Requirements for Updating the
IPF PPS
III. Provisions of the Notice
A. Updated FY 2017 Market Basket for the
IPF PPS
1. Background
2. FY 2017 IPF Market Basket Update
3. IPF Labor-Related Share
B. Updates to the IPF PPS Rates for FY
Beginning October 1, 2016
1. Determining the Standardized BudgetNeutral Federal Per Diem Base Rate
2. Update of the Federal Per Diem Base
Rate and Electroconvulsive Therapy
Payment per Treatment
C. Updates to the IPF PPS Patient-Level
Adjustment Factors
1. Overview of the IPF PPS Adjustment
Factors
2. IPF–PPS Patient-Level Adjustments
a. MS–DRG Assignment
i. Code First
b. Payment for Comorbid Conditions
3. Patient Age Adjustments
4. Variable Per Diem Adjustments
D. Updates to the IPF PPS Facility-Level
Adjustments
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ICD–10–CM International Classification of
Diseases, 10th Revision, Clinical
Modification
ICD–10–PCS International Classification of
Diseases, 10th Revision, Procedure Coding
System
IGI IHS Global Insight, Inc.
IPF Inpatient Psychiatric Facility
IPFQR Inpatient Psychiatric Facilities
Quality Reporting
IPPS Inpatient Prospective Payment System
IRFs Inpatient Rehabilitation Facilities
LOS Length of Stay
LRS Labor-related Share
LTCHs Long-Term Care Hospitals
MAC Medicare Administrative Contractor
MedPAR Medicare Provider Analysis and
Review File
MFP Multifactor Productivity
MMA Medicare Prescription Drug,
Improvement, and Modernization Act of
2003
MSA Metropolitan Statistical Area
NDAA National Defense Authorization Act
NQF National Quality Forum
OMB Office of Management and Budget
OPPS Outpatient Prospective Payment
System
POS Provider of Services
PPS Prospective Payment System
RFA Regulatory Flexibility Act
RPL Rehabilitation, Psychiatric, and LongTerm Care
RY Rate Year (July 1 through June 30)
SBA Small Business Administration
SCHIP State Children’s Health Insurance
Program
SNF Skilled Nursing Facility
TEFRA Tax Equity and Fiscal
Responsibility Act of 1982 (Pub. L. 97–248)
Acronyms
Because of the many terms to which
we refer by acronym in this notice, we
are listing the acronyms used and their
corresponding meanings in alphabetical
order below:
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1. Wage Index Adjustment
a. Background
b. Updated Wage Index for FY 2017
c. OMB Bulletins
d. Adjustment for Rural Location and
Continuing Phase Out the Rural
Adjustment for IPFs That Lost Their
Rural Adjustment Due to CBSA Changes
Implemented in FY 2016
e. Budget Neutrality Adjustment
2. Teaching Adjustment
3. Cost of Living Adjustment for IPFs
Located in Alaska and Hawaii
4. Adjustment for IPFs With a Qualifying
Emergency Department (ED)
E. Other Payment Adjustments and
Policies
1. Outlier Payment Overview
2. Update to the Outlier Fixed Dollar Loss
Threshold Amount
3. Update to IPF Cost-to-Charge Ratio
Ceilings
IV. Update on IPF PPS Refinements
V. Waiver of Notice and Comment
VI. Collection of Information Requirements
VII. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Anticipated Effects
1. Budgetary Impact
2. Impact on Providers
3. Results
4. Effect on Beneficiaries
D. Alternatives Considered
E. Accounting Statement
Addendum A—IPF PPS FY 2017 Rates and
Adjustment Factors
Addendum B—Changes to the FY 2017 ICD–
10–CM/PCS Code Sets Which Affect the
FY 2017 IPF PPS Comorbidity
Adjustments
A. Purpose
This notice updates the prospective
payment rates for Medicare inpatient
hospital services provided by inpatient
psychiatric facilities (IPFs) for
discharges occurring during the fiscal
year (FY) beginning October 1, 2016
through September 30, 2017.
ADC Average Daily Census
BBRA Medicare, Medicaid and SCHIP
[State Children’s Health Insurance
Program] Balanced Budget Refinement Act
of 1999 (Pub. L. 106–113)
BLS Bureau of Labor Statistics
CAH Critical Access Hospital
CBSA Core-Based Statistical Area
CCR Cost-to-Charge Ratio
CPI Consumer Price Index
CPI–U Consumer Price Index for all Urban
Consumers
CY Calendar Year
DRGs Diagnosis-Related Groups
ECT Electroconvulsive Therapy
ESRD End State Renal Disease
FR Federal Register
FTE Full-time equivalent
FY Federal Fiscal Year (October 1 through
September 30)
GDP Gross Domestic Product
GME Graduate Medical Education
HCRIS Healthcare Cost Report Information
System
ICD–9–CM International Classification of
Diseases, 9th Revision, Clinical
Modification
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I. Executive Summary
B. Summary of the Major Provisions
In this notice, we are updating the IPF
Prospective Payment System (PPS), as
specified in 42 CFR 412.428. The
updates include the following:
• Effective for the FY 2016 IPF PPS
update, we adopted a 2012-based IPF
market basket. For FY 2017, we adjusted
the 2012-based IPF market basket
update (2.8 percent) by a reduction for
economy-wide productivity (0.3
percentage point) as required by section
1886(s)(2)(A)(i) of the Social Security
Act (the Act). We further reduced the
2012-based IPF market basket update by
0.2 percentage point as required by
section 1886(s)(2)(A)(ii) of the Act,
resulting in an estimated IPF payment
rate update of 2.3 percent for FY 2017.
• The 2012-based IPF market basket
resulted in a labor-related share of 75.1
percent for FY 2017.
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• We updated the IPF PPS per diem
rate from $743.73 to $761.37. Providers
that failed to report quality data for FY
2017 payment will receive a FY 2017
per diem rate of $746.48.
• We updated the electroconvulsive
therapy (ECT) payment per treatment
from $320.19 to $327.78. Providers that
failed to report quality data for FY 2017
payment will receive a FY 2017 ECT
payment per treatment of $321.38.
• We used the updated labor-related
share of 75.1 percent (based on the
2012-based IPF market basket) and
CBSA rural and urban wage indices for
FY 2017, and established a wage index
budget-neutrality adjustment of 1.0007.
• We updated the fixed dollar loss
threshold amount from $9,580 to
$10,120 in order to maintain estimated
outlier payments at 2 percent of total
estimated aggregate IPF PPS payments.
C. Summary of Impacts
Provision
description
Total transfers
FY 2017 IPF
The overall economic impact
PPS payof this notice is an estiment update.
mated $100 million in increased payments to IPFs
during FY 2017.
II. Background
A. Overview of the Legislative
Requirements for the IPF PPS
Section 124 of the Medicare,
Medicaid, and SCHIP (State Children’s
Health Insurance Program) Balanced
Budget Refinement Act of 1999 (BBRA)
(Pub. L. 106–113) required the
establishment and implementation of an
IPF PPS. Specifically, section 124 of the
BBRA mandated that the Secretary of
the Department of Health and Human
Services (the Secretary) develop a per
diem PPS for inpatient hospital services
furnished in psychiatric hospitals and
psychiatric units including an adequate
patient classification system that reflects
the differences in patient resource use
and costs among psychiatric hospitals
and psychiatric units.
Section 405(g)(2) of the Medicare
Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub.
L. 108–173) extended the IPF PPS to
distinct part psychiatric units of critical
access hospitals (CAHs).
Section 3401(f) and section 10322 of
the Patient Protection and Affordable
Care Act (Pub. L. 111–148) as amended
by section 10319(e) of that Act and by
section 1105(d) of the Health Care and
Education Reconciliation Act of 2010
(Pub. L. 111–152) (hereafter referred to
jointly as ‘‘the Affordable Care Act’’)
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added subsection (s) to section 1886 of
the Act.
Section 1886(s)(1) of the Act titled
‘‘Reference to Establishment and
Implementation of System’’, refers to
section 124 of the BBRA, which relates
to the establishment of the IPF PPS.
Section 1886(s)(2)(A)(i) of the Act
requires the application of the
productivity adjustment described in
section 1886(b)(3)(B)(xi)(II) of the Act to
the IPF PPS for the Rate Year (RY)
beginning in 2012 (that is, a RY that
coincides with a FY) and each
subsequent RY. As noted in our
previous IPF PPS final rule (the FY 2016
IPF PPS final rule), for the RY beginning
in 2015 (that is, FY 2016), the current
estimate of the productivity adjustment
is equal to 0.5 percent.
Section 1886(s)(2)(A)(ii) of the Act
requires the application of an ‘‘other
adjustment’’ that reduces any update to
an IPF PPS base rate by percentages
specified in section 1886(s)(3) of the Act
for the RY beginning in 2010 through
the RY beginning in 2019. As noted in
our FY 2016 IPF PPS final rule, for the
RY beginning in 2015 (that is, FY 2016),
section 1886(s)(3)(D) of the Act requires
the reduction to be 0.2 percentage point.
Sections 1886(s)(4)(A) and
1886(s)(4)(B) of the Act require that for
RY 2014 and every subsequent year,
IPFs that fail to report required quality
data shall have their annual payment
rate update reduced by 2.0 percentage
points. This may result in an annual
update being less than 0.0 for a rate
year, and may result in payment rates
for the upcoming rate year being less
than such payment rates for the
preceding rate year. Any reduction for
failure to report required quality data
shall apply only with respect to the rate
year involved and the Secretary shall
not take into account such reduction in
computing the payment amount for a
subsequent rate year. More information
about the IPF Quality Reporting
Program is available in the April 27,
2016 FY 2017 Hospital Inpatient
Prospective Payment Systems for Acute
Care Hospitals and the Long-Term Care
Hospital Prospective Payment System
Proposed Rule (81 FR 25238 through
25244).
To implement and periodically
update these provisions, we have
published various proposed and final
rules and notices in the Federal
Register. For more information
regarding these documents, see the CMS
Web site at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/InpatientPsychFacilPPS/
index.html?redirect=/
InpatientPsychFacilPPS/.
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B. Overview of the IPF PPS
The November 2004 IPF PPS final
rule (69 FR 66922) established the IPF
PPS, as required by section 124 of the
BBRA and codified at subpart N of part
412 of the Medicare regulations. The
November 2004 IPF PPS final rule set
forth the per diem federal rates for the
implementation year (the 18-month
period from January 1, 2005 through
June 30, 2006), and provided payment
for the inpatient operating and capital
costs to IPFs for covered psychiatric
services they furnish (that is, routine,
ancillary, and capital costs, but not costs
of approved educational activities, bad
debts, and other services or items that
are outside the scope of the IPF PPS).
Covered psychiatric services include
services for which benefits are provided
under the fee-for-service Part A
(Hospital Insurance Program) of the
Medicare program.
The IPF PPS established the federal
per diem base rate for each patient day
in an IPF derived from the national
average daily routine operating,
ancillary, and capital costs in IPFs in FY
2002. The average per diem cost was
updated to the midpoint of the first year
under the IPF PPS, standardized to
account for the overall positive effects of
the IPF PPS payment adjustments, and
adjusted for budget-neutrality.
The federal per diem payment under
the IPF PPS is comprised of the federal
per diem base rate described above and
certain patient- and facility-level
payment adjustments that were found in
the regression analysis to be associated
with statistically significant per diem
cost differences.
The patient-level adjustments include
age, Diagnosis-Related Group (DRG)
assignment, comorbidities; additionally,
there are variable per diem adjustments
to reflect higher per diem costs at the
beginning of a patient’s IPF stay.
Facility-level adjustments include
adjustments for the IPF’s wage index,
rural location, teaching status, a cost-ofliving adjustment for IPFs located in
Alaska and Hawaii, and an adjustment
for the presence of a qualifying
Emergency Department (ED).
The IPF PPS provides additional
payment policies for: Outlier cases;
interrupted stays; and a per treatment
adjustment for patients who undergo
ECT. During the IPF PPS mandatory 3year transition period, stop-loss
payments were also provided; however,
since the transition ended in 2008, these
payments are no longer available.
A complete discussion of the
regression analysis that established the
IPF PPS adjustment factors appears in
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the November 2004 IPF PPS final rule
(69 FR 66933 through 66936).
Section 124 of the BBRA did not
specify an annual rate update strategy
for the IPF PPS and was broadly written
to give the Secretary discretion in
establishing an update methodology.
Therefore, in the November 2004 IPF
PPS final rule, we implemented the IPF
PPS using the following update strategy:
• Calculate the final federal per diem
base rate to be budget-neutral for the 18month period of January 1, 2005
through June 30, 2006.
• Use a July 1 through June 30 annual
update cycle.
• Allow the IPF PPS first update to be
effective for discharges on or after July
1, 2006 through June 30, 2007.
In RY 2012, we proposed and
finalized switching the IPF PPS
payment rate update from a rate year
that begins on July 1 and ends on June
30 to one that coincides with the federal
fiscal year that begins October 1 and
ends on September 30. In order to
transition from one timeframe to
another, the RY 2012 IPF PPS covered
a 15-month period from July 1, 2011
through September 30, 2012. Therefore,
the update cycle for FY 2016 was
October 1, 2015 through September 30,
2016. For further discussion of the 15month market basket update for RY
2012 and changing the payment rate
update period to coincide with a FY
period, we refer readers to the RY 2012
IPF PPS proposed rule (76 FR 4998) and
the RY 2012 IPF PPS final rule (76 FR
26432).
C. Annual Requirements for Updating
the IPF PPS
In November 2004, we implemented
the IPF PPS in a final rule that appeared
in the November 15, 2004 Federal
Register (69 FR 66922). In developing
the IPF PPS, to ensure that the IPF PPS
is able to account adequately for each
IPF’s case-mix, we performed an
extensive regression analysis of the
relationship between the per diem costs
and certain patient and facility
characteristics to determine those
characteristics associated with
statistically significant cost differences
on a per diem basis. For characteristics
with statistically significant cost
differences, we used the regression
coefficients of those variables to
determine the size of the corresponding
payment adjustments.
In that final rule, we explained the
reasons for delaying an update to the
adjustment factors, derived from the
regression analysis, until we have IPF
PPS data that include as much
information as possible regarding the
patient-level characteristics of the
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population that each IPF serves. We
indicated that we did not intend to
update the regression analysis and the
patient-level and facility-level
adjustments until we complete that
analysis. Until that analysis is complete,
we stated our intention to publish a
notice in the Federal Register each
spring to update the IPF PPS (71 FR
27041). We have been performing the
necessary analysis to make refinements
to the IPF PPS using more current data
to set the adjustment factors. We expect
we will be ready to propose potential
refinements in future rulemaking.
In the May 6, 2011 IPF PPS final rule
(76 FR 26432), we changed the payment
rate update period to a RY that
coincides with a FY update. Therefore,
update notices are now published in the
Federal Register in the summer to be
effective on October 1. When proposing
changes in IPF payment policy, a
proposed rule would be issued in the
spring and the final rule in the summer
in order to be effective on October 1. For
further discussion on changing the IPF
PPS payment rate update period to a RY
that coincides with a FY, see the IPF
PPS final rule published in the Federal
Register on May 6, 2011 (76 FR 26434
through 26435). For a detailed list of
updates to the IPF PPS, see 42 CFR
412.428.
Our most recent IPF PPS annual
update occurred in an August 5, 2015,
Federal Register final rule (80 FR
46652) (hereinafter referred to as the
August 2015 IPF PPS final rule), which
updated the IPF PPS payment rates for
FY 2016. That rule updated the IPF PPS
per diem payment rates that were
published in the August 2014 IPF PPS
final rule (79 FR 45938) in accordance
with our established policies.
III. Provisions of the Notice
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A. Updated FY 2017 Market Basket for
the IPF PPS
1. Background
The input price index that was used
to develop the IPF PPS was the
‘‘Excluded Hospital with Capital’’
market basket. This market basket was
based on 1997 Medicare cost reports for
Medicare participating inpatient
rehabilitation facilities (IRFs), inpatient
psychiatric facilities (IPFs), long-term
care hospitals (LTCHs), cancer
hospitals, and children’s hospitals.
Although ‘‘market basket’’ technically
describes the mix of goods and services
used in providing health care at a given
point in time, this term is also
commonly used to denote the input
price index (that is, cost category
weights and price proxies) derived from
that market basket. Accordingly, the
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term ‘‘market basket,’’ as used in this
document, refers to an input price
index.
Beginning with the May 2006 IPF PPS
final rule (71 FR 27046 through 27054),
IPF PPS payments were updated using
a 2002-based rehabilitation, psychiatric,
and long-term care (RPL) market basket
reflecting the operating and capital cost
structures for freestanding IRFs,
freestanding IPFs, and LTCHs. Cancer
and children’s hospitals were excluded
from the RPL market basket because
their payments are based entirely on
reasonable costs subject to rate-ofincrease limits established under the
authority of section 1886(b) of the Act
and not through a PPS. Also, the 2002
cost structures for cancer and children’s
hospitals are noticeably different than
the cost structures of freestanding IRFs,
freestanding IPFs, and LTCHs. See the
May 2006 IPF PPS final rule (71 FR
27046 through 27054) for a complete
discussion of the 2002-based RPL
market basket.
In the May 1, 2009 IPF PPS notice (74
FR 20376), we expressed our interest in
exploring the possibility of creating a
stand-alone IPF market basket that
reflects the cost structures of only IPF
providers. One available option was to
combine the Medicare cost report data
from freestanding IPF providers with
Medicare cost report data from hospitalbased IPF providers. We indicated that
an examination of the Medicare cost
report data comparing freestanding IPFs
and hospital-based IPFs showed
differences between cost levels and cost
structures. At that time, we were unable
to fully understand these differences
even after reviewing explanatory
variables such as geographic variation,
case mix (including DRG, comorbidity,
and age), urban or rural status, teaching
status, and presence of a qualifying
emergency department. As a result, we
continued to research ways to reconcile
the differences and solicited public
comment for additional information that
might help us to better understand the
reasons for the variations in costs and
cost structures, as indicated by the
Medicare cost report data (74 FR 20376).
We summarized the public comments
received and our responses in the April
2010 IPF PPS notice (75 FR 23111
through 23113). Despite receiving
comments from the public on this issue,
we were still unable to sufficiently
reconcile the observed differences in
costs and cost structures between
hospital-based and freestanding IPFs;
and therefore, at that time we did not
believe it to be appropriate to
incorporate data from hospital-based
IPFs with those of freestanding IPFs to
create a stand-alone IPF market basket.
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50505
Beginning with the RY 2012 IPF PPS
final rule (76 FR 26432), IPF PPS
payments were updated using a 2008based RPL market basket reflecting the
operating and capital cost structures for
freestanding IRFs, freestanding IPFs,
and LTCHs. The major changes for RY
2012 included: Updating the base year
from FY 2002 to FY 2008; using a more
specific composite chemical price
proxy; breaking the professional fees
cost category into two separate
categories (Labor-related and Non-laborrelated); and adding two additional cost
categories (Administrative and Facilities
Support Services and Financial
Services), which were previously
included in the residual All Other
Services cost categories. The RY 2012
IPF PPS proposed rule (76 FR 4998) and
RY 2012 final rule (76 FR 26432)
contain a complete discussion of the
development of the 2008-based RPL
market basket.
In the FY 2016 IPF PPS proposed rule,
we proposed to create a 2012-based IPF
market basket, using Medicare cost
report data for both freestanding and
hospital-based IPFs. After consideration
of the public comments, we finalized
the creation and adoption of a 2012based IPF market basket with a
modification to the Wages and Salaries
and Employee Benefits cost
methodologies based on public
comments. We believe that the use of
the 2012-based IPF market basket to
update IPF PPS payments is a technical
improvement as it is based on Medicare
Cost Report data from both freestanding
and hospital-based IPFs. Furthermore,
the 2012-based IPF market basket does
not include costs from either IRF or
LTCH providers, which were included
in the 2008-based RPL market basket.
We refer readers to the FY 2016 IPF PPS
final rule for a detailed discussion of the
2012-based IPF PPS Market Basket and
its development (80 FR 46656 through
46679).
2. FY 2017 IPF Market Basket Update
For FY 2017 (beginning October 1,
2016 and ending September 30, 2017),
we use an estimate of the 2012-based
IPF market basket increase factor to
update the IPF PPS base payment rate.
Consistent with historical practice, we
estimate the market basket update for
the IPF PPS based on IHS Global
Insight’s forecast. IHS Global Insight,
Inc. (IGI) is a nationally recognized
economic and financial forecasting firm
that contracts with the Centers for
Medicare & Medicaid Services (CMS) to
forecast the components of the market
baskets and multifactor productivity
(MFP). Based on IGI’s second quarter
2016 forecast with historical data
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through the first quarter of 2016, the
2012-based IPF market basket increase
factor for FY 2017 is 2.8 percent.
Section 1886(s)(2)(A)(i) of the Act
requires the application of the
productivity adjustment described in
section 1886(b)(3)(B)(xi)(II) of the Act to
the IPF PPS for the RY beginning in
2012 (a RY that coincides with a FY)
and each subsequent RY. For this FY
2017 IPF PPS Notice, based on IGI’s
second quarter 2016 forecast, the MFP
adjustment for FY 2017 (the 10-year
moving average of MFP for the period
ending FY 2017) is projected to be 0.3
percent. We reduced the IPF market
basket estimate by this 0.3 percentage
point productivity adjustment, as
mandated by the Act. For more
information on the productivity
adjustment, please see the discussion in
the FY 2016 IPF PPS final rule (80 FR
46675).
In addition, for FY 2017 the 2012based IPF PPS market basket update is
further reduced by 0.2 percentage point
as required by sections 1886(s)(2)(A)(ii)
and 1886(s)(3)(D) of the Act. This results
in an estimated FY 2017 IPF PPS
payment rate update of 2.3 percent (2.8
¥ 0.3 ¥ 0.2 = 2.3).
3. IPF Labor-Related Share
Due to variations in geographic wage
levels and other labor-related costs, we
believe that payment rates under the IPF
PPS should continue to be adjusted by
a geographic wage index, which would
apply to the labor-related portion of the
Federal per diem base rate (hereafter
referred to as the labor-related share).
The labor-related share is determined
by identifying the national average
proportion of total costs that are related
to, influenced by, or vary with the local
labor market. We continue to classify a
cost category as labor-related if the costs
are labor-intensive and vary with the
local labor market.
Based on our definition of the laborrelated share and the cost categories in
the 2012-based IPF market basket, we
are continuing to include in the laborrelated share the sum of the relative
importance of Wages and Salaries,
Employee Benefits, Professional Fees:
Labor-Related, Administrative and
Facilities Support Services, Installation,
Maintenance, and Repair, All Other:
Labor-related Services, and a portion (46
percent) of the Capital-Related cost
weight from the proposed 2012-based
IPF market basket. The relative
importance reflects the different rates of
price change for these cost categories
between the base year (FY 2012) and FY
2017. Using IGI’s second quarter 2016
forecast for the final 2012-based IPF
market basket, the IPF labor-related
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share for FY 2017 is the sum of the FY
2017 relative importance of each laborrelated cost category.
Please see the FY 2016 IPF PPS final
rule for more information on the laborrelated share and its calculation (80 FR
46675 through 46679). For FY 2017, the
updated labor-related share based on
IGI’s second quarter 2016 forecast of the
2012-based IPF PPS market basket is
75.1 percent.
B. Updates to the IPF PPS Rates for FY
Beginning October 1, 2016
The IPF PPS is based on a
standardized Federal per diem base rate
calculated from the IPF average per
diem costs and adjusted for budgetneutrality in the implementation year.
The Federal per diem base rate is used
as the standard payment per day under
the IPF PPS and is adjusted by the
patient-level and facility-level
adjustments that are applicable to the
IPF stay. A detailed explanation of how
we calculated the average per diem cost
appears in the November 2004 IPF PPS
final rule (69 FR 66926).
1. Determining the Standardized
Budget-Neutral Federal Per Diem Base
Rate
Section 124(a)(1) of the BBRA
required that we implement the IPF PPS
in a budget-neutral manner. In other
words, the amount of total payments
under the IPF PPS, including any
payment adjustments, must be projected
to be equal to the amount of total
payments that would have been made if
the IPF PPS were not implemented.
Therefore, we calculated the budgetneutrality factor by setting the total
estimated IPF PPS payments to be equal
to the total estimated payments that
would have been made under the Tax
Equity and Fiscal Responsibility Act of
1982 (TEFRA) (Pub. L. 97–248)
methodology had the IPF PPS not been
implemented. A step-by-step
description of the methodology used to
estimate payments under the TEFRA
payment system appears in the
November 2004 IPF PPS final rule (69
FR 66926).
Under the IPF PPS methodology, we
calculated the final Federal per diem
base rate to be budget-neutral during the
IPF PPS implementation period (that is,
the 18-month period from January 1,
2005 through June 30, 2006) using a July
1 update cycle. We updated the average
cost per day to the midpoint of the IPF
PPS implementation period (October 1,
2005), and this amount was used in the
payment model to establish the budgetneutrality adjustment.
Next, we standardized the IPF PPS
Federal per diem base rate to account
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for the overall positive effects of the IPF
PPS payment adjustment factors by
dividing total estimated payments under
the TEFRA payment system by
estimated payments under the IPF PPS.
Additional information concerning this
standardization can be found in the
November 2004 IPF PPS final rule (69
FR 66932) and the RY 2006 IPF PPS
final rule (71 FR 27045). We then
reduced the standardized Federal per
diem base rate to account for the outlier
policy, the stop loss provision, and
anticipated behavioral changes. A
complete discussion of how we
calculated each component of the
budget-neutrality adjustment appears in
the November 2004 IPF PPS final rule
(69 FR 66932 through 66933) and in the
May 2006 IPF PPS final rule (71 FR
27044 through 27046). The final
standardized budget-neutral Federal per
diem base rate established for cost
reporting periods beginning on or after
January 1, 2005 was calculated to be
$575.95.
The Federal per diem base rate has
been updated in accordance with
applicable statutory requirements and
§ 412.428 through publication of annual
notices or proposed and final rules. A
detailed discussion on the standardized
budget-neutral Federal per diem base
rate and the electroconvulsive therapy
(ECT) payment per treatment appears in
the August 2013 IPF PPS update notice
(78 FR 46738 through 46739). These
documents are available on the CMS
Web site at https://www.cms.gov/
Medicare/Medicare-Fee-for-ServicePayment/InpatientPsychFacilPPS/
index.html.
IPFs must include a valid procedure
code for ECT services provided to IPF
beneficiaries in order to bill for ECT
services, as described in our Medicare
claims processing manual, chapter 3,
section 190.7.3 (available at https://
www.cms.gov/Regulations-andGuidance/Guidance/Manuals/
Downloads/clm104c03.pdf.) There were
no changes to the ECT procedure codes
used on IPF claims as a result of the
update to the ICD–10–PCS code set for
FY 2017.
2. Update of the Federal Per Diem Base
Rate and Electroconvulsive Therapy
Payment Per Treatment
The current (FY 2016) Federal per
diem base rate is $743.73 and the ECT
payment per treatment is $320.19. For
FY 2017, we applied a payment rate
update of 2.3 percent (that is, the 2012based IPF market basket increase for FY
2017 of 2.8 percent less the productivity
adjustment of 0.3 percentage point, and
further reduced by the 0.2 percentage
point required under section
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1886(s)(3)(D) of the Act), and the wage
index budget-neutrality factor of 1.0007
(as discussed in section III.D.1.e of this
notice) to the FY 2016 Federal per diem
base rate of $743.73, yielding a Federal
per diem base rate of $761.37 for FY
2017. Similarly, we applied the 2.3
percent payment rate update and the
1.0007 wage index budget-neutrality
factor to the FY 2016 ECT payment per
treatment, yielding an ECT payment per
treatment of $327.78 for FY 2017.
Section 1886(s)(4)(A)(i) of the Act
requires that, for RY 2014 and each
subsequent RY, the Secretary shall
reduce any annual update to a standard
Federal rate for discharges occurring
during the RY by 2.0 percentage points
for any IPF that did not comply with the
quality data submission requirements
with respect to an applicable year.
Therefore, we are applying a 2.0
percentage point reduction to the
Federal per diem base rate and the ECT
payment per treatment as follows: For
IPFs that failed to submit quality
reporting data under the Inpatient
Psychiatric Facilities Quality Reporting
(IPFQR) program, we are applying a 0.3
percent payment rate update (that is, 2.3
percent reduced by 2 percentage points
in accordance with section
1886(s)(4)(A)(ii) of the Act) and the
wage index budget-neutrality factor of
1.0007 to the FY 2016 Federal per diem
base rate of $743.73, yielding a Federal
per diem base rate of $746.48 for FY
2017. Similarly, for IPFs that failed to
submit quality reporting data under the
IPFQR program, we are applying the 0.3
percent annual payment rate update and
the 1.0007 wage index budget-neutrality
factor to the FY 2016 ECT payment per
treatment of $320.19, yielding an ECT
payment per treatment of $321.38 for FY
2017.
C. Updates to the IPF PPS Patient-Level
Adjustment Factors
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1. Overview of the IPF PPS Adjustment
Factors
The IPF PPS payment adjustments
were derived from a regression analysis
of 100 percent of the FY 2002 MedPAR
data file, which contained 483,038
cases. For a more detailed description of
the data file used for the regression
analysis, see the November 2004 IPF
PPS final rule (69 FR 66935 through
66936). We continue to use the existing
regression-derived adjustment factors
established in 2005 for FY 2017.
However, we have used more recent
claims data to simulate payments to set
the outlier fixed dollar loss threshold
amount and to assess the impact of the
IPF PPS updates.
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2. IPF–PPS Patient-Level Adjustments
The IPF PPS includes payment
adjustments for the following patientlevel characteristics: Medicare Severity
Diagnosis Related Groups (MS–DRGs)
assignment of the patient’s principal
diagnosis, selected comorbidities,
patient age, and the variable per diem
adjustments.
a. MS–DRG Assignment
We believe it is important to maintain
the same diagnostic coding and DRG
classification for IPFs that are used
under the Inpatient Prospective
Payment System (IPPS) for providing
psychiatric care. For this reason, when
the IPF PPS was implemented for cost
reporting periods beginning on or after
January 1, 2005, we adopted the same
diagnostic code set (ICD–9–CM) and
DRG patient classification system (CMS
DRGs) that were utilized at the time
under the IPPS. In the May 2008 IPF
PPS notice (73 FR 25709), we discussed
CMS’ effort to better recognize resource
use and the severity of illness among
patients. CMS adopted the new MS–
DRGs for the IPPS in the FY 2008 IPPS
final rule with comment period (72 FR
47130). In the 2008 IPF PPS notice (73
FR 25716), we provided a crosswalk to
reflect changes that were made under
the IPF PPS to adopt the new MS–DRGs.
For a detailed description of the
mapping changes from the original DRG
adjustment categories to the current
MS–DRG adjustment categories, we
refer readers to the May 2008 IPF PPS
notice (73 FR 25714).
The IPF PPS includes payment
adjustments for designated psychiatric
DRGs assigned to the claim based on the
patient’s principal diagnosis. The DRG
adjustment factors were expressed
relative to the most frequently reported
psychiatric DRG in FY 2002, that is,
DRG 430 (psychoses). The coefficient
values and adjustment factors were
derived from the regression analysis.
Mapping the DRGs to the MS–DRGs
resulted in the current 17 IPF MS–
DRGs, instead of the original 15 DRGs,
for which the IPF PPS provides an
adjustment. For the FY 2017 update, we
are not making any changes to the IPF
MS–DRG adjustment factors.
In FY 2015 rulemaking (79 FR 45945
through 45947), we proposed and
finalized conversions of the ICD–9–CMbased MS–DRGs to ICD–10–CM/PCSbased MS–DRGs, which were
implemented on October 1, 2015.
Further information on the ICD–10–CM/
PCS MS–DRG conversion project can be
found on the CMS ICD–10–CM Web site
at https://www.cms.gov/Medicare/
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50507
Coding/ICD10/ICD-10-MS-DRGConversion-Project.html.
For FY 2017, we will continue to
make a payment adjustment for
psychiatric diagnoses that group to one
of the existing 17 IPF MS–DRGs listed
in Addendum A. Psychiatric principal
diagnoses that do not group to one of
the 17 designated DRGs will still receive
the Federal per diem base rate and all
other applicable adjustments, but the
payment would not include a DRG
adjustment.
The diagnoses for each IPF MS–DRG
will be updated as of October 1, 2016,
using the final FY 2017 ICD–10–CM/
PCS code sets. The FY 2017 IPPS Final
Rule with comment period includes
tables of the changes to the ICD–10–CM/
PCS code sets which underlie the FY
2017 IPF MS–DRGs. Both the FY 2017
IPPS final rule and the tables of changes
to the ICD–10–CM/PCS code sets which
underlie the FY 2017 MS–DRGs are
available on the IPPS Web site at
https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/.
i. Code First
As discussed in the ICD–10–CM
Official Guidelines for Coding and
Reporting, certain conditions have both
an underlying etiology and multiple
body system manifestations due to the
underlying etiology. For such
conditions, the ICD–10–CM has a
coding convention that requires the
underlying condition be sequenced first
followed by the manifestation.
Wherever such a combination exists,
there is a ‘‘use additional code’’ note at
the etiology code, and a ‘‘code first’’
note at the manifestation code. These
instructional notes indicate the proper
sequencing order of the codes (etiology
followed by manifestation). In
accordance with the ICD–10–CM
Official Guidelines for Coding and
Reporting, when a primary (psychiatric)
diagnosis code has a ‘‘code first’’ note,
the provider would follow the
instructions in the ICD–10–CM text. The
submitted claim goes through the CMS
processing system, which will identify
the primary diagnosis code as nonpsychiatric and search the secondary
codes for a psychiatric code to assign a
DRG code for adjustment. The system
will continue to search the secondary
codes for those that are appropriate for
comorbidity adjustment.
For more information on ‘‘code first’’
policy, please see the November 2004
IPF PPS Final Rule (69 FR 66945). In the
FY 2015 IPF PPS final rule, we provided
a ‘‘code first’’ table for reference that
highlights the same or similar
manifestation codes where the ‘‘code
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first’’ instructions apply in ICD–10–CM
that were present in ICD–9–CM (79 FR
46009). There were no changes to the
IPF Code First list as a result of the FY
2017 updates to the ICD–10–CM/PCS
code sets.
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b. Payment for Comorbid Conditions
The intent of the comorbidity
adjustments is to recognize the
increased costs associated with
comorbid conditions by providing
additional payments for certain existing
medical or psychiatric conditions that
are expensive to treat. In the May 2011
IPF PPS final rule (76 FR 26451 through
26452), we explained that the IPF PPS
includes 17 comorbidity categories and
identified the new, revised, and deleted
ICD–9–CM diagnosis codes that generate
a comorbid condition payment
adjustment under the IPF PPS for RY
2012 (76 FR 26451).
Comorbidities are specific patient
conditions that are secondary to the
patient’s principal diagnosis and that
require treatment during the stay.
Diagnoses that relate to an earlier
episode of care and have no bearing on
the current hospital stay are excluded
and must not be reported on IPF claims.
Comorbid conditions must exist at the
time of admission or develop
subsequently, and affect the treatment
received, length of stay (LOS), or both
treatment and LOS.
For each claim, an IPF may receive
only one comorbidity adjustment within
a comorbidity category, but it may
receive an adjustment for more than one
comorbidity category. Current billing
instructions for discharge claims, on or
after October 1, 2015, require IPFs to
enter the complete ICD–10–CM codes
for up to 24 additional diagnoses if they
co-exist at the time of admission, or
develop subsequently and impact the
treatment provided.
The comorbidity adjustments were
determined based on the regression
analysis using the diagnoses reported by
IPFs in FY 2002. The principal
diagnoses were used to establish the
DRG adjustments and were not
accounted for in establishing the
comorbidity category adjustments,
except where ICD–9–CM ‘‘code first’’
instructions apply. In a ‘‘code first’’
situation, the submitted claim goes
through the CMS processing system,
which will identify the primary
diagnosis code as non-psychiatric and
search the secondary codes for a
psychiatric code to assign a DRG code
for adjustment. The system will
continue to search the secondary codes
for those that are appropriate for
comorbidity adjustment.
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As noted previously, it is our policy
to maintain the same diagnostic coding
set for IPFs that is used under the IPPS
for providing the same psychiatric care.
The 17 comorbidity categories formerly
defined using ICD–9–CM codes were
converted to ICD–10–CM/PCS in the FY
2015 IPF PPS final rule (79 FR 45947 to
45955). The goal for converting the
comorbidity categories is referred to as
replication, meaning that the payment
adjustment for a given patient encounter
is the same after ICD–10–CM
implementation as it would be if the
same record had been coded in ICD–9–
CM and submitted prior to ICD–10–CM/
PCS implementation on October 1,
2015. All conversion efforts were made
with the intent of achieving this goal.
For FY 2017, we will use the
comorbidity adjustments in effect in FY
2016, which are found in Addendum A
to this notice. We have also updated the
ICD–10–CM/PCS codes which are
associated with the existing IPF PPS
comorbidity categories, based upon the
FY 2017 update to the ICD–10–CM/PCS
code set. In accordance with the policy
established in the FY 2015 IPF PPS
Final Rule (79 FR 45949 through 45952),
we reviewed all new FY 2017 ICD–10–
CM codes to remove site unspecified
codes from the new FY 2017 ICD–10–
CM/PCS codes in instances where more
specific codes are available. Based on
our review, we are excluding new FY
2017 ICD–10–CM code D49519
(‘‘Neoplasm of unspecified behavior of
unspecified kidney’’) in the Oncology
Treatment comorbidity category. Please
see Addendum B to this notice for a
table of changes to the ICD–10–CM/PCS
codes which affect FY 2017 IPF PPS
comorbidity categories.
3. Patient Age Adjustments
As explained in the November 2004
IPF PPS final rule (69 FR 66922), we
analyzed the impact of age on per diem
cost by examining the age variable
(range of ages) for payment adjustments.
In general, we found that the cost per
day increases with age. The older age
groups are more costly than the under
45 age group, the differences in per
diem cost increase for each successive
age group, and the differences are
statistically significant. For FY 2017, we
will use the patient age adjustments
currently in effect in FY 2016, as shown
in Addendum A to this notice.
4. Variable Per Diem Adjustments
We explained in the November 2004
IPF PPS final rule (69 FR 66946) that the
regression analysis indicated that per
diem cost declines as the LOS increases.
The variable per diem adjustments to
the Federal per diem base rate account
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for ancillary and administrative costs
that occur disproportionately in the first
days after admission to an IPF. We used
a regression analysis to estimate the
average differences in per diem cost
among stays of different lengths. As a
result of this analysis, we established
variable per diem adjustments that
begin on day 1 and decline gradually
until day 21 of a patient’s stay. For day
22 and thereafter, the variable per diem
adjustment remains the same each day
for the remainder of the stay. However,
the adjustment applied to day 1
depends upon whether the IPF has a
qualifying ED. If an IPF has a qualifying
ED, it receives a 1.31 adjustment factor
for day 1 of each stay. If an IPF does not
have a qualifying ED, it receives a 1.19
adjustment factor for day 1 of the stay.
The ED adjustment is explained in more
detail in section III.D.4 of this notice.
For FY 2017, we will use the variable
per diem adjustment factors currently in
effect as shown in Addendum A to this
notice. A complete discussion of the
variable per diem adjustments appears
in the November 2004 IPF PPS final rule
(69 FR 66946).
D. Updates to the IPF PPS Facility-Level
Adjustments
The IPF PPS includes facility-level
adjustments for the wage index, IPFs
located in rural areas, teaching IPFs,
cost of living adjustments for IPFs
located in Alaska and Hawaii, and IPFs
with a qualifying ED.
1. Wage Index Adjustment
a. Background
As discussed in the May 2006 IPF PPS
final rule (71 FR 27061) and in the May
2008 (73 FR 25719) and May 2009 (74
FR 20373) IPF PPS notices, in order to
provide an adjustment for geographic
wage levels, the labor-related portion of
an IPF’s payment is adjusted using an
appropriate wage index. Currently, an
IPF’s geographic wage index value is
determined based on the actual location
of the IPF in an urban or rural area as
defined in § 412.64(b)(1)(ii)(A) and (C).
b. Updated Wage Index for FY 2017
Since the inception of the IPF PPS, we
have used the pre-floor, pre-reclassified
acute care hospital wage index in
developing a wage index to be applied
to IPFs because there is not an IPFspecific wage index available. We
believe that IPFs compete in the same
labor markets as acute care hospitals, so
the pre-floor, pre-reclassified hospital
wage index should reflect IPF labor
costs. As discussed in the May 2006 IPF
PPS final rule for FY 2007 (71 FR 27061
through 27067), under the IPF PPS, the
wage index is calculated using the IPPS
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wage index for the labor market area in
which the IPF is located, without taking
into account geographic
reclassifications, floors, and other
adjustments made to the wage index
under the IPPS. For a complete
description of these IPPS wage index
adjustments, please see the CY 2013
IPPS/LTCH PPS final rule (77 FR 53365
through 53374). For FY 2017, we will
continue to apply the most recent
hospital wage index (the FY 2016 prefloor, pre-reclassified hospital wage
index, which is the most appropriate
index as it best reflects the variation in
local labor costs of IPFs in the various
geographic areas) using the most recent
hospital wage data (data from hospital
cost reports for the cost reporting period
beginning during FY 2012) without any
geographic reclassifications, floors, or
other adjustments. We apply the FY
2017 IPF PPS wage index to payments
beginning October 1, 2016.
We apply the wage index adjustment
to the labor-related portion of the
federal rate, which changed from 75.2
percent in FY 2016 to 75.1 percent in
FY 2017. This percentage reflects the
labor-related share of the 2012-based
IPF market basket for FY 2017 (see
section III.A.3 of this notice).
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c. OMB Bulletins
OMB publishes bulletins regarding
Core-Based Statistical Area (CBSA)
changes, including changes to CBSA
numbers and titles. In the May 2006 IPF
PPS final rule for RY 2007 (71 FR 27061
through 27067), we adopted the changes
discussed in the Office of Management
and Budget (OMB) Bulletin No. 03–04
(June 6, 2003), which announced
revised definitions for Metropolitan
Statistical Areas (MSAs), and the
creation of Micropolitan Statistical
Areas and Combined Statistical Areas.
In adopting the OMB CBSA geographic
designations in RY 2007, we did not
provide a separate transition for the
CBSA-based wage index since the IPF
PPS was already in a transition period
from TEFRA payments to PPS
payments.
In the May 2008 IPF PPS notice, we
incorporated the CBSA nomenclature
changes published in the most recent
OMB bulletin that applies to the
hospital wage index used to determine
the current IPF PPS wage index and
stated that we expect to continue to do
the same for all the OMB CBSA
nomenclature changes in future IPF PPS
rules and notices, as necessary (73 FR
25721). The OMB bulletins may be
accessed online at https://
www.whitehouse.gov/omb/bulletins_
default/.
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In accordance with our established
methodology, we have historically
adopted any CBSA changes that are
published in the OMB bulletin that
corresponds with the hospital wage
index used to determine the IPF PPS
wage index. For the FY 2015 IPF wage
index, we used the FY 2014 pre-floor,
pre-reclassified hospital wage index to
adjust the IPF PPS payments. On
February 28, 2013, OMB issued OMB
Bulletin No. 13–01, which established
revised delineations for MSAs,
Micropolitan Statistical Areas, and
Combined Statistical Areas, and
provided guidance on the use of the
delineations of these statistical areas. A
copy of this bulletin may be obtained at
https://www.whitehouse.gov/omb/
bulletins_default/. Because the FY 2014
pre-floor, pre-reclassified hospital wage
index was finalized prior to the issuance
of this Bulletin, the FY 2015 IPF PPS
wage index, which was based on the FY
2014 pre-floor, pre-reclassified hospital
wage index, did not reflect OMB’s new
area delineations based on the 2010
Census. According to OMB, ‘‘[t]his
bulletin provides the delineations of all
Metropolitan Statistical Areas,
Metropolitan Divisions, Micropolitan
Statistical Areas, Combined Statistical
Areas, and New England City and Town
Areas in the United States and Puerto
Rico based on the standards published
on June 28, 2010, in the Federal
Register (75 FR 37246 through 37252)
and Census Bureau data.’’ These OMB
Bulletin changes are reflected in the FY
2015 pre-floor, pre-reclassified hospital
wage index, upon which the FY 2016
IPPS PPS wage index was based. We
adopted these new OMB CBSA
delineations in the FY 2016 IPF PPS
wage index; therefore, they are also
included in the FY 2017 IPF PPS wage
index.
While we believe that the CBSA
delineations implemented in the FY
2016 IPF PPS final rule resulted in wage
index values that are more
representative of the actual costs of
labor in a given area, we also recognize
that use of the new CBSA delineations
resulted in reduced payments to some
IPFs and increased payments to other
IPFs, due to changes in wage index
values. Therefore, in our FY 2016 IPF
PPS final rule, we provided for a
transition period to mitigate any
negative impacts on facilities that
experience reduced payments as a result
of our adopting the new OMB CBSA
delineations. We implemented these
CBSA changes using a 1-year transition
with a blended wage index for all
providers (80 FR 46682 through 46689).
The FY 2017 IPF PPS wage index and
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50509
subsequent IPF PPS wage indices will
be based solely on the new OMB CBSA
delineations. The final FY 2017 IPF PPS
wage index is located on the CMS Web
site at https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
InpatientPsychFacilPPS/
WageIndex.html.
d. Adjustment for Rural Location and
Continuing Phase-Out of the Rural
Adjustment for IPFs That Lost Their
Rural Adjustment Due to CBSA Changes
Implemented in FY 2016
In the November 2004 IPF PPS final
rule, we provided a 17 percent payment
adjustment for IPFs located in a rural
area. This adjustment was based on the
regression analysis, which indicated
that the per diem cost of rural facilities
was 17 percent higher than that of urban
facilities after accounting for the
influence of the other variables included
in the regression. For FY 2017, we will
continue to apply a 17 percent payment
adjustment for IPFs located in a rural
area as defined at § 412.64(b)(1)(ii)(C). A
complete discussion of the adjustment
for rural locations appears in the
November 2004 IPF PPS final rule (69
FR 66954).
As noted in section III.D.1.c of this
notice, we adopted OMB updates to
CBSA delineations in the FY 2016 IPF
PPS transitional wage index. Adoption
of the updated CBSAs changed the
status of 37 IPF providers designated as
‘‘rural’’ in FY 2015 to ‘‘urban’’ for FY
2016 and subsequent fiscal years. As
such, these 37 newly urban providers no
longer receive the 17 percent rural
adjustment.
In the FY 2016 IPF PPS final rule, we
implemented a budget-neutral 3-year
phase-out of the rural adjustment for the
existing FY 2015 rural IPFs that became
urban in FY 2016 and that experienced
a loss in payments due to changes from
the new CBSA delineations (80 FR
46689 to 46690). This policy allowed
rural IPFs that were classified as urban
in FY 2016 to receive two-thirds of the
IPF PPS rural adjustment for FY 2016.
For FY 2017, these IPFs will receive
one-third of the IPF PPS rural
adjustment. For FY 2018 and
subsequent years, these IPFs will not
receive any rural adjustment. We are
now in the second year of the 3-year
rural adjustment phase-out; therefore,
these IPFs that were classified as rural
in FY 2015, but were changed to urban
in FY 2016 as a result of the OMB CBSA
changes, will receive one-third of the 17
percent rural adjustment in FY 2017.
e. Budget Neutrality Adjustment
Changes to the wage index are made
in a budget-neutral manner so that
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updates do not increase expenditures.
Therefore, for FY 2017, we will
continue to apply a budget-neutrality
adjustment in accordance with our
existing budget-neutrality policy. This
policy requires us to update the wage
index in such a way that total estimated
payments to IPFs for FY 2017 are the
same with or without the changes (that
is, in a budget-neutral manner) by
applying a budget neutrality factor to
the IPF PPS rates. We use the following
steps to ensure that the rates reflect the
update to the wage indexes (based on
the FY 2012 hospital cost report data)
and the labor-related share in a budgetneutral manner:
Step 1. Simulate estimated IPF PPS
payments, using the FY 2016 wage
index values and labor-related share (as
published in the FY 2016 IPF PPS final
rule (80 FR 46675 to 46679 and 46681
to 46690)).
Step 2. Simulate estimated IPF PPS
payments using the FY 2017 wage index
values (available on the CMS Web site)
and labor-related share (based on the
latest available data as discussed
previously).
Step 3. Divide the amount calculated
in step 1 by the amount calculated in
step 2. The resulting quotient is the FY
2017 budget-neutral wage adjustment
factor of 1.0007.
Step 4. Apply the FY 2017 budgetneutral wage adjustment factor from
step 3 to the Federal per diem base rate
for FY 2017, in addition to the market
basket described in section III.A2 of this
notice.
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2. Teaching Adjustment
In the November 2004 IPF PPS final
rule, we implemented regulations at
§ 412.424(d)(1)(iii) to establish a facilitylevel adjustment for IPFs that are, or are
part of, teaching hospitals. The teaching
adjustment accounts for the higher
indirect operating costs experienced by
hospitals that participate in graduate
medical education (GME) programs. The
payment adjustments are made based on
the ratio of the number of full-time
equivalent (FTE) interns and residents
training in the IPF and the IPF’s average
daily census (ADC).
Medicare makes direct GME payments
(for direct costs such as resident and
teaching physician salaries, and other
direct teaching costs) to all teaching
hospitals including those paid under a
PPS, and those paid under the TEFRA
rate-of-increase limits. These direct
GME payments are made separately
from payments for hospital operating
costs and are not part of the IPF PPS.
The direct GME payments do not
address the estimated higher indirect
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operating costs teaching hospitals may
face.
The results of the regression analysis
of FY 2002 IPF data established the
basis for the payment adjustments
included in the November 2004 IPF PPS
final rule. The results showed that the
indirect teaching cost variable is
significant in explaining the higher
costs of IPFs that have teaching
programs. We calculated the teaching
adjustment based on the IPF’s ‘‘teaching
variable,’’ which is one plus the ratio of
the number of FTE residents training in
the IPF (subject to limitations described
below) to the IPF’s ADC.
We established the teaching
adjustment in a manner that limited the
incentives for IPFs to add FTE residents
for the purpose of increasing their
teaching adjustment. We imposed a cap
on the number of FTE residents that
may be counted for purposes of
calculating the teaching adjustment. The
cap limits the number of FTE residents
that teaching IPFs may count for the
purpose of calculating the IPF PPS
teaching adjustment, not the number of
residents teaching institutions can hire
or train. We calculated the number of
FTE residents that trained in the IPF
during a ‘‘base year’’ and used that FTE
resident number as the cap. An IPF’s
FTE resident cap is ultimately
determined based on the final
settlement of the IPF’s most recent cost
report filed before November 15, 2004
(publication date of the IPF PPS final
rule). A complete discussion of the
temporary adjustment to the FTE cap to
reflect residents added due to hospital
closure and by residency program
appears in the January 27, 2011 IPF PPS
proposed rule (76 FR 5018 through
5020) and the May 6, 2011 IPF PPS final
rule (76 FR 26453 through 26456).
In the regression analysis, the
logarithm of the teaching variable had a
coefficient value of 0.5150. We
converted this cost effect to a teaching
payment adjustment by treating the
regression coefficient as an exponent
and raising the teaching variable to a
power equal to the coefficient value. We
note that the coefficient value of 0.5150
was based on the regression analysis
holding all other components of the
payment system constant. A complete
discussion of how the teaching
adjustment was calculated appears in
the November 2004 IPF PPS final rule
(69 FR 66954 through 66957) and the
May 2008 IPF PPS notice (73 FR 25721).
As with other adjustment factors
derived through the regression analysis,
we do not plan to rerun the teaching
adjustment factors in the regression
analysis until we more fully analyze IPF
PPS data. Therefore, in this FY 2017
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notice, we will continue to retain the
coefficient value of 0.5150 for the
teaching adjustment to the Federal per
diem base rate.
3. Cost of Living Adjustment for IPFs
Located in Alaska and Hawaii
The IPF PPS includes a payment
adjustment for IPFs located in Alaska
and Hawaii based upon the county in
which the IPF is located. As we
explained in the November 2004 IPF
PPS final rule, the FY 2002 data
demonstrated that IPFs in Alaska and
Hawaii had per diem costs that were
disproportionately higher than other
IPFs. Other Medicare PPSs (for example:
The IPPS and LTCH PPS) adopted a cost
of living adjustment (COLA) to account
for the cost differential of care furnished
in Alaska and Hawaii.
We analyzed the effect of applying a
COLA to payments for IPFs located in
Alaska and Hawaii. The results of our
analysis demonstrated that a COLA for
IPFs located in Alaska and Hawaii
would improve payment equity for
these facilities. As a result of this
analysis, we provided a COLA in the
November 2004 IPF PPS final rule.
A COLA for IPFs located in Alaska
and Hawaii is made by multiplying the
non-labor-related portion of the Federal
per diem base rate by the applicable
COLA factor based on the COLA area in
which the IPF is located.
The COLA factors are published on
the Office of Personnel Management
(OPM) Web site (https://www.opm.gov/
oca/cola/rates.asp).
We note that the COLA areas for
Alaska are not defined by county as are
the COLA areas for Hawaii. In 5 CFR
591.207, the OPM established the
following COLA areas:
• City of Anchorage, and 80-kilometer
(50-mile) radius by road, as measured
from the federal courthouse.
• City of Fairbanks, and 80-kilometer
(50-mile) radius by road, as measured
from the federal courthouse.
• City of Juneau, and 80-kilometer
(50-mile) radius by road, as measured
from the federal courthouse.
• Rest of the State of Alaska.
As stated in the November 2004 IPF
PPS final rule, we update the COLA
factors according to updates established
by the OPM. However, sections 1911
through 1919 of the Nonforeign Area
Retirement Equity Assurance Act, as
contained in subtitle B of title XIX of the
National Defense Authorization Act
(NDAA) for Fiscal Year 2010 (Pub. L.
111–84, October 28, 2009), transitions
the Alaska and Hawaii COLAs to
locality pay. Under section 1914 of
NDAA, locality pay is being phased in
over a 3-year period beginning in
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January 2010, with COLA rates frozen as
of the date of enactment, October 28,
2009, and then proportionately reduced
to reflect the phase-in of locality pay.
When we published the proposed
COLA factors in the January 2011 IPF
PPS proposed rule (76 FR 4998), we
inadvertently selected the FY 2010
COLA rates, which had been reduced to
account for the phase-in of locality pay.
We did not intend to propose the
reduced COLA rates because that would
have understated the adjustment. Since
the 2009 COLA rates did not reflect the
phase-in of locality pay, we finalized
the FY 2009 COLA rates for RY 2010
through RY 2014.
In the FY 2013 IPPS/LTCH final rule
(77 FR 53700 through 53701), we
established a methodology for FY 2014
to update the COLA factors for Alaska
and Hawaii. Under that methodology,
we use a comparison of the growth in
the Consumer Price Indices (CPIs) in
Anchorage, Alaska and Honolulu,
Hawaii relative to the growth in the
overall CPI as published by the Bureau
of Labor Statistics (BLS) to update the
COLA factors for all areas in Alaska and
Hawaii, respectively. As discussed in
the FY 2013 IPPS/LTCH proposed rule
(77 FR 28145), because BLS publishes
CPI data for only Anchorage, Alaska and
Honolulu, Hawaii, our methodology for
updating the COLA factors uses a
comparison of the growth in the CPIs for
those cities relative to the growth in the
overall CPI to update the COLA factors
for all areas in Alaska and Hawaii,
respectively. We believe that the relative
price differences between these cities
and the United States (as measured by
the CPIs mentioned above) are generally
appropriate proxies for the relative price
differences between the ‘‘other areas’’ of
Alaska and Hawaii and the United
States.
The CPIs for ‘‘All Items’’ that BLS
publishes for Anchorage, Alaska,
Honolulu, Hawaii, and for the average
U.S. city are based on a different mix of
commodities and services than is
reflected in the non-labor-related share
of the IPPS market basket. As such,
under the methodology we established
to update the COLA factors, we
calculated a ‘‘reweighted CPI’’ using the
CPI for commodities and the CPI for
services for each of the geographic areas
to mirror the composition of the IPPS
market basket non-labor-related share.
The current composition of BLS’ CPI for
‘‘All Items’’ for all of the respective
areas is approximately 40 percent
commodities and 60 percent services.
However, the non-labor-related share of
the IPPS market basket is comprised of
60 percent commodities and 40 percent
services. Therefore, under the
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methodology established for FY 2014 in
the FY 2013 IPPS/LTCH PPS final rule,
we created reweighted indexes for
Anchorage, Alaska, Honolulu, Hawaii,
and the average U.S. city using the
respective CPI commodities index and
CPI services index and applying the
approximate 60/40 weights from the
IPPS market basket. This approach is
appropriate because we would continue
to make a COLA for hospitals located in
Alaska and Hawaii by multiplying the
non-labor-related portion of the
standardized amount by a COLA factor.
Under the COLA factor update
methodology established in the FY 2014
IPPS/LTCH final rule, we adjusted
payments made to hospitals located in
Alaska and Hawaii by incorporating a
25 percent cap on the CPI-updated
COLA factors. We note that OPM’s
COLA factors were calculated with a
statutorily mandated cap of 25 percent,
and since at least 1984, we have
exercised our discretionary authority to
adjust Alaska and Hawaii payments by
incorporating this cap. In keeping with
this historical policy, we continue to
use such a cap because our CPI-updated
COLA factors use the 2009 OPM COLA
factors as a basis.
In FY 2015 IPF PPS rulemaking, we
adopted the same methodology for the
COLA factors applied under the IPPS
because IPFs are hospitals with a similar
mix of commodities and services. We
think it is appropriate to have a
consistent policy approach with that of
other hospitals in Alaska and Hawaii.
Therefore, in the FY 2015 IPF PPS final
rule, we adopted the cost of living
adjustment factors shown in Addendum
A for IPFs located in Alaska and Hawaii.
Under IPPS COLA policy, the COLA
updates are determined every four
years, when the IPPS market basket is
rebased. Since the IPPS COLA factors
were last updated in FY 2014, they are
not scheduled to be updated again until
FY 2018. As such, we will continue
using the existing IPF PPS COLA factors
in effect in FY 2016 for FY 2017. The
IPF PPS COLA factors for FY 2017 are
shown in Addendum A to this notice.
4. Adjustment for IPFs With a
Qualifying Emergency Department (ED)
The IPF PPS includes a facility-level
adjustment for IPFs with qualifying EDs.
We provide an adjustment to the
Federal per diem base rate to account
for the costs associated with
maintaining a full-service ED. The
adjustment is intended to account for
ED costs incurred by a freestanding
psychiatric hospital with a qualifying
ED or a distinct part psychiatric unit of
an acute care hospital or a CAH, for
preadmission services otherwise
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50511
payable under the Medicare Outpatient
Prospective Payment System (OPPS),
furnished to a beneficiary on the date of
the beneficiary’s admission to the
hospital and during the day
immediately preceding the date of
admission to the IPF (see § 413.40(c)(2)),
and the overhead cost of maintaining
the ED. This payment is a facility-level
adjustment that applies to all IPF
admissions (with one exception
described below), regardless of whether
a particular patient receives
preadmission services in the hospital’s
ED.
The ED adjustment is incorporated
into the variable per diem adjustment
for the first day of each stay for IPFs
with a qualifying ED. Those IPFs with
a qualifying ED receive an adjustment
factor of 1.31 as the variable per diem
adjustment for day 1 of each patient
stay. If an IPF does not have a qualifying
ED, it receives an adjustment factor of
1.19 as the variable per diem adjustment
for day 1 of each patient stay.
The ED adjustment is made on every
qualifying claim except as described
below. As specified in
§ 412.424(d)(1)(v)(B), the ED adjustment
is not made when a patient is
discharged from an acute care hospital
or CAH and admitted to the same
hospital’s or CAH’s psychiatric unit. We
clarified in the November 2004 IPF PPS
final rule (69 FR 66960) that an ED
adjustment is not made in this case
because the costs associated with ED
services are reflected in the DRG
payment to the acute care hospital or
through the reasonable cost payment
made to the CAH.
Therefore, when patients are
discharged from an acute care hospital
or CAH and admitted to the same
hospital or CAH’s psychiatric unit, the
IPF receives the 1.19 adjustment factor
as the variable per diem adjustment for
the first day of the patient’s stay in the
IPF. For FY 2017, we will continue to
retain the 1.31 adjustment factor for
IPFs with qualifying EDs. A complete
discussion of the steps involved in the
calculation of the ED adjustment factor
appears in the November 2004 IPF PPS
final rule (69 FR 66959 through 66960)
and the May 2006 IPF PPS final rule (71
FR 27070 through 27072).
E. Other Payment Adjustments and
Policies
1. Outlier Payment Overview
The IPF PPS includes an outlier
adjustment to promote access to IPF
care for those patients who require
expensive care and to limit the financial
risk of IPFs treating unusually costly
patients. In the November 2004 IPF PPS
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final rule, we implemented regulations
at § 412.424(d)(3)(i) to provide a percase payment for IPF stays that are
extraordinarily costly. Providing
additional payments to IPFs for
extremely costly cases strongly
improves the accuracy of the IPF PPS in
determining resource costs at the patient
and facility level. These additional
payments reduce the financial losses
that would otherwise be incurred in
treating patients who require more
costly care and, therefore, reduce the
incentives for IPFs to under-serve these
patients.
We make outlier payments for
discharges in which an IPF’s estimated
total cost for a case exceeds a fixed
dollar loss threshold amount
(multiplied by the IPF’s facility-level
adjustments) plus the Federal per diem
payment amount for the case.
In instances when the case qualifies
for an outlier payment, we pay 80
percent of the difference between the
estimated cost for the case and the
adjusted threshold amount for days 1
through 9 of the stay (consistent with
the median LOS for IPFs in FY 2002),
and 60 percent of the difference for day
10 and thereafter. We established the 80
percent and 60 percent loss sharing
ratios because we were concerned that
a single ratio established at 80 percent
(like other Medicare PPSs) might
provide an incentive under the IPF per
diem payment system to increase LOS
in order to receive additional payments.
After establishing the loss sharing
ratios, we determined the current fixed
dollar loss threshold amount through
payment simulations designed to
compute a dollar loss beyond which
payments are estimated to meet the 2
percent outlier spending target. Each
year when we update the IPF PPS, we
simulate payments using the latest
available data to compute the fixed
dollar loss threshold so that outlier
payments represent 2 percent of total
projected IPF PPS payments.
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2. Update to the Outlier Fixed Dollar
Loss Threshold Amount
In accordance with the update
methodology described in § 412.428(d),
we are updating the fixed dollar loss
threshold amount used under the IPF
PPS outlier policy. Based on the
regression analysis and payment
simulations used to develop the IPF
PPS, we established a 2 percent outlier
policy, which strikes an appropriate
balance between protecting IPFs from
extraordinarily costly cases while
ensuring the adequacy of the Federal
per diem base rate for all other cases
that are not outlier cases.
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Based on an analysis of the latest
available data (the March 2016 update
of FY 2015 IPF claims) and rate
increases, we believe it is necessary to
update the fixed dollar loss threshold
amount in order to maintain an outlier
percentage that equals 2 percent of total
estimated IPF PPS payments. To update
the IPF outlier threshold amount for FY
2017, we used FY 2015 claims data and
the same methodology that we used to
set the initial outlier threshold amount
in the May 2006 IPF PPS final rule (71
FR 27072 and 27073), which is also the
same methodology that we used to
update the outlier threshold amounts for
years 2008 through 2016. Based on an
analysis of these updated data, we
estimate that IPF outlier payments as a
percentage of total estimated payments
are approximately 2.1 percent in FY
2016. Therefore, we will update the
outlier threshold amount to $10,120 to
maintain estimated outlier payments at
2 percent of total estimated aggregate
IPF payments for FY 2017.
3. Update to IPF Cost-to-Charge Ratio
Ceilings
Under the IPF PPS, an outlier
payment is made if an IPF’s cost for a
stay exceeds a fixed dollar loss
threshold amount plus the IPF PPS
amount. In order to establish an IPF’s
cost for a particular case, we multiply
the IPF’s reported charges on the
discharge bill by its overall cost-tocharge ratio (CCR). This approach to
determining an IPF’s cost is consistent
with the approach used under the IPPS
and other PPSs. In the June 2003 IPPS
final rule (68 FR 34494), we
implemented changes to the IPPS policy
used to determine CCRs for acute care
hospitals because we became aware that
payment vulnerabilities resulted in
inappropriate outlier payments. Under
the IPPS, we established a statistical
measure of accuracy for CCRs in order
to ensure that aberrant CCR data did not
result in inappropriate outlier
payments.
As we indicated in the November
2004 IPF PPS final rule (69 FR 66961),
because we believe that the IPF outlier
policy is susceptible to the same
payment vulnerabilities as the IPPS, we
adopted a method to ensure the
statistical accuracy of CCRs under the
IPF PPS. Specifically, we adopted the
following procedure in the November
2004 IPF PPS final rule: We calculated
2 national ceilings, one for IPFs located
in rural areas and one for IPFs located
in urban areas. We computed the
ceilings by first calculating the national
average and the standard deviation of
the CCR for both urban and rural IPFs
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using the most recent CCRs entered in
the CY 2016 Provider Specific File.
To determine the rural and urban
ceilings, we multiplied each of the
standard deviations by 3 and added the
result to the appropriate national CCR
average (either rural or urban). The
upper threshold CCR for IPFs in FY
2017 is 1.9315 for rural IPFs, and 1.6374
for urban IPFs, based on CBSA-based
geographic designations. If an IPF’s CCR
is above the applicable ceiling, the ratio
is considered statistically inaccurate,
and we assign the appropriate national
(either rural or urban) median CCR to
the IPF.
We apply the national CCRs to the
following situations:
• New IPFs that have not yet
submitted their first Medicare cost
report. We continue to use these
national CCRs until the facility’s actual
CCR can be computed using the first
tentatively or final settled cost report.
• IPFs whose overall CCR is in excess
of three standard deviations above the
corresponding national geometric mean
(that is, above the ceiling).
• Other IPFs for which the Medicare
Administrative Contractor (MAC)
obtains inaccurate or incomplete data
with which to calculate a CCR.
We are updating the FY 2017 national
median and ceiling CCRs for urban and
rural IPFs based on the CCRs entered in
the latest available IPF PPS Provider
Specific File. Specifically, for FY 2017,
to be used in each of the three situations
listed above, using the most recent CCRs
entered in the CY 2016 Provider
Specific File, we estimate a national
median CCR of 0.5960 for rural IPFs and
a national median CCR of 0.4455 for
urban IPFs. These calculations are based
on the IPF’s location (either urban or
rural) using the CBSA-based geographic
designations.
A complete discussion regarding the
national median CCRs appears in the
November 2004 IPF PPS final rule (69
FR 66961 through 66964).
IV. Update on IPF PPS Refinements
For RY 2012, we identified several
areas of concern for future refinement,
and we invited comments on these
issues in our RY 2012 proposed and
final rules. For further discussion of
these issues and to review the public
comments, we refer readers to the RY
2012 IPF PPS proposed rule (76 FR
4998) and final rule (76 FR 26432).
We have delayed making refinements
to the IPF PPS until we have completed
a thorough analysis of IPF PPS data on
which to base those refinements.
Specifically, we will delay updating the
adjustment factors derived from the
regression analysis until we have IPF
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PPS data that include as much
information as possible regarding the
patient-level characteristics of the
population that each IPF serves. We
have begun and will continue the
necessary analysis to better understand
IPF industry practices so that we may
refine the IPF PPS in the future, as
appropriate.
As we noted in the FY 2016 IPF PPS
final rule (80 FR 46693 to 46694), our
preliminary analysis of 2012 to 2013 IPF
data found that over 20 percent of IPF
stays reported no ancillary costs, such
as laboratory and drug costs, in their
cost reports, or laboratory or drug
charges on their claims. Because we
expect that most patients requiring
hospitalization for active psychiatric
treatment will need drugs and
laboratory services, we again remind
providers that the IPF PPS per diem
payment rate includes the cost of all
ancillary services, including drugs and
laboratory services. We pay only the IPF
for services furnished to a Medicare
beneficiary who is an inpatient of that
IPF, except for certain professional
services, and payments are considered
to be payments in full for all inpatient
hospital services provided directly or
under arrangement (see 42 CFR
412.404(d)), as specified in 42 CFR
409.10.
We are continuing to analyze data
from claims and cost report that do not
include ancillary charges or costs, and
will be sharing our findings with the
Center for Program Integrity and the
Office of Financial Management for
further investigation, as the results
warrant. Our refinement analysis is
dependent on recent precise data for
costs, including ancillary costs. We will
continue to collect these data and
analyze them for both timeliness and
accuracy with the expectation that these
data will be used in a future refinement.
Since we are not making refinements for
FY 2017, we will continue to use the
existing adjustment factors.
V. Waiver of Notice and Comment
We ordinarily publish a notice of
proposed rulemaking in the Federal
Register to provide a period for public
comment before the provisions of a rule
take effect. We can waive this
procedure, however, if we find good
cause that notice and comment
procedures are impracticable,
unnecessary, or contrary to the public
interest and we incorporate a statement
of finding and its reasons in the notice.
We find it is unnecessary to undertake
notice and comment rulemaking for this
action because the updates in this notice
do not reflect any substantive changes
in policy, but merely reflect the
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application of previously established
methodologies. Therefore, under 5
U.S.C. 553(b)(3)(B), for good cause, we
waive notice and comment procedures.
VI. Collection of Information
Requirements
This document does not impose
information collection requirements,
that is, reporting, recordkeeping or
third-party disclosure requirements.
Consequently, there is no need for
review by the Office of Management and
Budget under the authority of the
Paperwork Reduction Act of 1995 (44
U.S.C. 3501 et seq.).
VII. Regulatory Impact Analysis
A. Statement of Need
This notice updates the prospective
payment rates for Medicare inpatient
hospital services provided by IPFs for
discharges occurring during FY 2017
(October 1, 2016 through September 30,
2017). We are applying the 2012-based
IPF market basket increase of 2.8
percent, less the productivity
adjustment of 0.3 percentage point as
required by 1886(s)(2)(A)(i) of the Act,
and further reduced by 0.2 percentage
point as required by sections
1886(s)(2)(A)(ii) and 1886(s)(3)(D) of the
Act, for a total FY 2017 payment rate
update of 2.3 percent. In this notice, we
are also updating the IPF labor-related
share; updating the IPF Wage Index for
FY 2017; and continuing with the
second year of the rural adjustment
phase-out for rural providers which
became urban providers in FY 2016 as
a result of FY 2016 changes to CBSA
delineations.
B. Overall Impact
We have examined the impact of this
notice as required by Executive Order
12866 on Regulatory Planning and
Review (September 30, 1993), Executive
Order 13563 on Improving Regulation
and Regulatory Review (January 18,
2011), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96–
354), section 1102(b) of the Social
Security Act, section 202 of the
Unfunded Mandates Reform Act of 1995
(March 22, 1995; Pub. L. 104–4),
Executive Order 13132 on Federalism
(August 4, 1999) and the Congressional
Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563
direct 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
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50513
equity). A regulatory impact analysis
(RIA) must be prepared for a major rules
with economically significant effects
($100 million or more in any 1 year).
This notice is designated as
economically ‘‘significant’’ under
section 3(f)(1) of Executive Order 12866.
We estimate that the total impact of
these changes for FY 2017 payments
compared to FY 2016 payments will be
a net increase of approximately $100
million. This reflects a $105 million
increase from the update to the payment
rates (+$130 million from the
unadjusted 2nd quarter 2016 IGI
forecast of the 2012-based IPF market
basket of 2.8 percent, ¥$15 million for
the productivity adjustment of 0.3
percentage point, and ¥$10 million for
the other adjustment of 0.2 percentage
point), as well as a $5 million decrease
as a result of the update to the outlier
threshold amount. Outlier payments are
estimated to decrease from 2.1 percent
in FY 2016 to 2.0 percent of total
estimated IPF payments in FY 2017.
The RFA requires agencies to analyze
options for regulatory relief of small
entities 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. Most IPFs
and most other providers and suppliers
are small entities, either by nonprofit
status or having revenues of $7.5
million to $38.5 million or less in any
1 year, depending on industry
classification (for details, refer to the
SBA Small Business Size Standards
found at https://www.sba.gov/sites/
default/files/files/Size_Standards_
Table.pdf).
Because we lack data on individual
hospital receipts, we cannot determine
the number of small proprietary IPFs or
the proportion of IPFs’ revenue derived
from Medicare payments. Therefore, we
assume that all IPFs are considered
small entities. The Department of Health
and Human Services generally uses a
revenue impact of 3 to 5 percent as a
significance threshold under the RFA.
As shown in Table 1, we estimate that
the overall revenue impact of this notice
on all IPFs is to increase Medicare
payments by approximately 2.2 percent.
As a result, since the estimated impact
of this notice is a net increase in
revenue across almost all categories of
IPFs, the Secretary has determined that
this notice will have a positive revenue
impact on a substantial number of small
entities. MACs are not considered to be
small entities. Individuals and states are
not included in the definition of a small
entity.
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In addition, section 1102(b) of the
Social Security Act requires us to
prepare a regulatory impact analysis if
a rule may have a significant impact on
the operations of a substantial number
of small rural hospitals. This analysis
must conform to the provisions of
section 604 of the RFA. For purposes of
section 1102(b) of the Act, we define a
small rural hospital as a hospital that is
located outside of a metropolitan
statistical area and has fewer than 100
beds. As discussed in detail below, the
rates and policies set forth in this notice
would not have an adverse impact on
the rural hospitals based on the data of
the 279 rural units and 64 rural
hospitals in our database of 1,626 IPFs
for which data were available.
Therefore, the Secretary has determined
that this notice will not have a
significant impact on the operations of
a substantial number of small rural
hospitals.
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. In 2016, that
threshold is approximately $146
million. This notice will not impose
spending costs on state, local, or tribal
governments in the aggregate, or by the
private sector of $146 million or more.
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
requirement costs on state and local
governments, preempts state law, or
otherwise has Federalism implications.
As stated above, this notice would not
have a substantial effect on state and
local governments.
sradovich on DSK3GMQ082PROD with NOTICES
C. Anticipated Effects
In this section, we discuss the
historical background of the IPF PPS
and the impact of this notice on the
Federal Medicare budget and on IPFs.
1. Budgetary Impact
As discussed in the November 2004
and May 2006 IPF PPS final rules, we
applied a budget neutrality factor to the
Federal per diem base rate and ECT
payment per treatment to ensure that
total estimated payments under the IPF
PPS in the implementation period
would equal the amount that would
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have been paid if the IPF PPS had not
been implemented. The budget
neutrality factor includes the following
components: Outlier adjustment, stoploss adjustment, and the behavioral
offset. As discussed in the May 2008 IPF
PPS notice (73 FR 25711), the stop-loss
adjustment is no longer applicable
under the IPF PPS.
As discussed in section III.D.1 of this
notice, we are using the wage index and
labor-related share in a budget neutral
manner by applying a wage index
budget neutrality factor to the Federal
per diem base rate and ECT payment per
treatment. Therefore, the budgetary
impact to the Medicare program of this
notice will be due to the market basket
update for FY 2017 of 2.8 percent (see
section III.A.2 of this notice) less the
productivity adjustment of 0.3
percentage point required by section
1886(s)(2)(A)(i) of the Act; further
reduced by the ‘‘other adjustment’’ of
0.2 percentage point under sections
1886(s)(2)(A)(ii) and 1886(s)(3)(D) of the
Act; and the update to the outlier fixed
dollar loss threshold amount.
We estimate that the FY 2017 impact
will be a net increase of $100 million in
payments to IPF providers. This reflects
an estimated $105 million increase from
the update to the payment rates and a
$5 million decrease due to the update to
the outlier threshold amount to set total
estimated outlier payments at 2 percent
of total estimated payments in FY 2017.
This estimate does not include the
implementation of the required 2
percentage point reduction of the
market basket increase factor for any IPF
that fails to meet the IPF quality
reporting requirements (as discussed in
section III.B.2).
2. Impact on Providers
To show the impact on providers of
the changes to the IPF PPS discussed in
this notice, we compare estimated
payments under the IPF PPS rates and
factors for FY 2017 versus those under
FY 2016. We determined the percent
change of estimated FY 2017 IPF PPS
payments compared to FY 2016 IPF PPS
payments for each category of IPFs. In
addition, for each category of IPFs, we
have included the estimated percent
change in payments resulting from the
update to the outlier fixed dollar loss
threshold amount; the updated wage
index data; the changes to rural
adjustment payments resulting from the
second year of the rural adjustment
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phase-out, due to changes in rural or
urban status resulting from FY 2016
CBSA changes; the final labor-related
share; and the final market basket
update for FY 2017, as adjusted by the
productivity adjustment according to
section 1886(s)(2)(A)(i) of the Act, and
the ‘‘other adjustment’’ according to
sections 1886(s)(2)(A)(ii) and
1886(s)(3)(D) of the Act.
To illustrate the impacts of the FY
2017 changes in this notice, our analysis
begins with a FY 2016 baseline
simulation model based on FY 2015 IPF
payments inflated to the midpoint of FY
2016 using IHS Global Insight Inc.’s
most recent forecast of the market basket
update (see section III.A.2. of this
notice); the estimated outlier payments
in FY 2016; the CBSA delineations for
IPFs based on revised OMB delineations
issued on February 28, 2013, in OMB
Bulletin No. 13–01 (which were
implemented in the FY 2016 IPF
transitional wage index as described in
section III.D.1); the FY 2015 pre-floor,
pre-reclassified hospital wage index; the
FY 2016 labor-related share; and the FY
2016 percentage amount of the rural
adjustment. During the simulation, total
outlier payments are maintained at 2
percent of total estimated IPF PPS
payments.
Each of the following changes is
added incrementally to this baseline
model in order for us to isolate the
effects of each change:
• The update to the outlier fixed
dollar loss threshold amount;
• the FY 2016 pre-floor, prereclassified hospital wage index with
the updated CBSA delineations, based
on OMB’s February 28, 2013 Bulletin
No. 13–01, which are applied in full in
the FY 2017 IPF PPS wage index;
• the FY 2017 labor-related share;
• the market basket update for FY
2017 of 2.8 percent less the productivity
adjustment of 0.3 percentage point in
accordance with section 1886(s)(2)(A)(i)
of the Act and further reduced by the
‘‘other adjustment’’ of 0.2 percentage
point in accordance with sections
1886(s)(2)(A)(ii) and 1886(s)(3)(D) of the
Act, for a payment rate update of 2.3
percent.
Our final comparison illustrates the
percent change in payments from FY
2016 (that is, October 1, 2015, to
September 30, 2016) to FY 2017 (that is,
October 1, 2016, to September 30, 2017)
including all the changes in this notice.
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TABLE 1—IPF IMPACTS FOR FY 2017
[Percent change in columns 3 through 6]
Facility by type
Number of
facilities
Outlier
CBSA wage
index & labor
share 1
Payment rate
update 2
Total percent
change 3
(1)
(2)
(3)
(4)
(5)
(6)
sradovich on DSK3GMQ082PROD with NOTICES
All Facilities ..........................................................................
Total Urban ...................................................................
Total Rural ....................................................................
Urban unit .....................................................................
Urban hospital ...............................................................
Rural unit ......................................................................
Rural hospital ................................................................
By Type of Ownership:
Freestanding IPFs:
Urban Psychiatric Hospitals:
Government ...........................................................
Non-Profit ...............................................................
For-Profit ................................................................
Rural Psychiatric Hospitals:
Government ...........................................................
Non-Profit ...............................................................
For-Profit ................................................................
IPF Units:
Urban:
Government ...........................................................
Non-Profit ...............................................................
For-Profit ................................................................
Rural:
Government ...........................................................
Non-Profit ...............................................................
For-Profit ................................................................
By Teaching Status:
Non-teaching .................................................................
Less than 10% interns and residents to beds ..............
10% to 30% interns and residents to beds ..................
More than 30% interns and residents to beds .............
By Region:
New England ................................................................
Mid-Atlantic ...................................................................
South Atlantic ................................................................
East North Central ........................................................
East South Central .......................................................
West North Central .......................................................
West South Central ......................................................
Mountain .......................................................................
Pacific ...........................................................................
By Bed Size:
Psychiatric Hospitals;
Beds: 0–24 ............................................................
Beds: 25–49 ..........................................................
Beds: 50–75 ..........................................................
Beds: 76 + .............................................................
Psychiatric Units:
Beds: 0–24 ............................................................
Beds: 25–49 ..........................................................
Beds: 50–75 ..........................................................
Beds: 76 + .............................................................
1,626
1,283
343
834
449
279
64
¥0.1
¥0.1
¥0.1
¥0.1
0.0
¥0.1
0.0
0.0
0.1
¥0.6
0.0
0.2
¥0.6
¥0.8
2.3
2.3
2.3
2.3
2.3
2.3
2.3
2.2
2.3
1.6
2.2
2.5
1.6
1.4
123
103
223
¥0.1
0.0
0.0
0.0
0.0
0.3
2.3
2.3
2.3
2.2
2.3
2.6
35
11
18
0.0
0.0
0.0
¥0.6
0.2
¥1.2
2.3
2.3
2.3
1.7
2.5
1.1
122
536
176
¥0.2
¥0.1
¥0.1
0.0
0.1
0.0
2.3
2.3
2.3
2.1
2.3
2.2
71
141
67
¥0.1
¥0.1
¥0.1
¥0.7
¥0.5
¥0.6
2.3
2.3
2.3
1.4
1.7
1.6
1,438
100
60
28
¥0.1
¥0.1
¥0.2
¥0.2
0.0
0.1
0.1
0.1
2.3
2.3
2.3
2.3
2.2
2.3
2.2
2.1
109
237
242
267
158
135
250
105
123
¥0.1
¥0.1
¥0.1
¥0.1
¥0.1
¥0.1
¥0.1
¥0.1
¥0.1
0.5
0.1
¥0.1
0.1
¥0.5
¥0.4
¥0.4
¥0.2
0.8
2.3
2.3
2.3
2.3
2.3
2.3
2.3
2.3
2.3
2.7
2.3
2.2
2.3
1.7
1.8
1.8
2.0
3.0
83
82
84
264
0.0
0.0
0.0
0.0
¥0.6
0.2
0.0
0.2
2.3
2.3
2.3
2.3
1.7
2.4
2.3
2.5
653
298
105
57
¥0.1
¥0.1
¥0.1
¥0.1
¥0.2
0.0
0.1
0.1
2.3
2.3
2.3
2.3
2.0
2.2
2.2
2.3
1 Includes a FY 2017 IPF wage index, a labor-related share of 0.751, and a rural adjustment. Providers which changed from rural to urban status in FY 2016 will receive 1⁄3 of the 17 percent rural adjustment in FY 2017.
2 This column reflects the payment rate update impact of the IPF market basket update for FY 2017 of 2.8 percent, a 0.3 percentage point reduction for the productivity adjustment as required by section 1886(s)(2)(A)(i) of the Act, and a 0.2 percentage point reduction in accordance with
sections 1886(s)(2)(A)(ii) and 1886(s)(3)(D) of the Act.
3 Percent changes in estimated payments from FY 2016 to FY 2017 include all of the changes presented in this notice. Note, the products of
these impacts may be different from the percentage changes shown here due to rounding effects.
3. Results
Table 1 displays the results of our
analysis. The table groups IPFs into the
categories listed below based on
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characteristics provided in the Provider
of Services (POS) file, the IPF provider
specific file, and cost report data from
the Healthcare Cost Report Information
System:
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•
•
•
•
•
Facility Type
Location
Teaching Status Adjustment
Census Region
Size
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The top row of the table shows the
overall impact on the 1,626 IPFs
included in this analysis. In column 3,
we present the effects of the update to
the outlier fixed dollar loss threshold
amount. We estimate that IPF outlier
payments as a percentage of total IPF
payments are 2.1 percent in FY 2016.
Thus, we are adjusting the outlier
threshold amount in this notice to set
total estimated outlier payments equal
to 2 percent of total payments in FY
2017. The estimated change in total IPF
payments for FY 2017, therefore,
includes an approximate 0.1 percent
decrease in payments because the
outlier portion of total payments is
expected to decrease from
approximately 2.1 percent to 2.0
percent.
The overall impact of this outlier
adjustment update (as shown in column
3 of Table 1), across all hospital groups,
is to decrease total estimated payments
to IPFs by 0.1 percent. The largest
decrease in payments is estimated to be
a 0.2 percent decrease in payments for
urban government IPF units and IPFs
with 10 percent or greater interns and
residents to beds.
In column 4, we present the effects of
the budget-neutral update to the IPF
wage index and the Labor Related Share
(LRS). This represents the effect of using
the most recent wage data available and
taking into account the updated OMB
delineations. That is, the impact
represented in this column reflects the
update from the FY 2016 IPF
transitional wage index to the FY 2017
IPF wage index, which includes the full
effect of FY 2016 changes to the OMB
delineations, and the LRS update from
75.2 percent in FY 2016 to 75.1 percent
in FY 2017. We note that there is no
projected change in aggregate payments
to IPFs, as indicated in the first row of
column 4, however, there will be
distributional effects among different
categories of IPFs. For example, we
estimate the largest increase in
payments to be 0.8 percent for IPFs in
the Pacific region, and the largest
decrease in payments to be 1.2 percent
for rural for-profit freestanding IPFs.
In column 5, we present the estimated
effects of the update to the IPF PPS
payment rates of 2.3 percent, which are
based on the 2012-based IPF market
basket update of 2.8 percent, less the
productivity adjustment of 0.3
percentage point in accordance with
section 1886(s)(2)(A)(i) of the Act, and
further reduced by 0.2 percentage point
in accordance with sections
1886(s)(2)(A)(ii) and 1886(s)(3)(D) of the
Act.
Finally, column 6 compares our
estimates of the total changes reflected
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in this notice for FY 2017 to the
estimates for FY 2016 (without these
changes). The average estimated
increase for all IPFs is approximately
2.2 percent. This estimated net increase
includes the effects of the 2.8 percent
market basket update reduced by the
productivity adjustment of 0.3
percentage point, as required by section
1886(s)(2)(A)(i) of the Act and further
reduced by the ‘‘other adjustment’’ of
0.2 percentage point, as required by
sections 1886(s)(2)(A)(ii) and
1886(s)(3)(D) of the Act. It also includes
the overall estimated 0.1 percent
decrease in estimated IPF outlier
payments as a percent of total payments
from the update to the outlier fixed
dollar loss threshold amount.
IPF payments are estimated to
increase by 2.3 percent in urban areas
and 1.6 percent in rural areas. Overall,
IPFs are estimated to experience a net
increase in payments as a result of the
updates in this notice. The largest
payment increase is estimated at 3.0
percent for IPFs in the Pacific region.
4. Effect on Beneficiaries
Under the IPF PPS, IPFs will receive
payment based on the average resources
consumed by patients for each day. We
do not expect changes in the quality of
care or access to services for Medicare
beneficiaries under the FY 2017 IPF
PPS, but we continue to expect that
paying prospectively for IPF services
will enhance the efficiency of the
Medicare program.
D. Alternatives Considered
The statute does not specify an update
strategy for the IPF PPS and is broadly
written to give the Secretary discretion
in establishing an update methodology.
Therefore, we are updating the IPF PPS
using the methodology published in the
November 2004 IPF PPS final rule;
applying the FY 2017 2012-based IPF
PPS market basket update of 2.8
percent, reduced by the statutorily
required multifactor productivity
adjustment of 0.3 percentage point and
the other adjustment of 0.2 percentage
point, along with the wage index budget
neutrality adjustment to update the
payment rates; finalizing a FY 2017 IPF
PPS wage index which is fully based
upon the OMB CBSA designations
which were adopted in the FY 2016 IPF
PPS wage index; and continuing with
the second year of the 3-year phase-out
of the rural adjustment for IPF providers
which changed from rural to urban
status in FY 2016 as a result of adopting
the updated OMB CBSA delineations
used in the FY 2016 IPF PPS
transitional wage index.
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E. Accounting Statement
As required by OMB Circular A–4
(available at https://
www.whitehouse.gov/omb/circulars_
a004_a-4), in Table 2 below, we have
prepared an accounting statement
showing the classification of the
expenditures associated with the
updates to the IPF PPS wage index and
payment rates in this notice. This table
provides our best estimate of the
increase in Medicare payments under
the IPF PPS as a result of the changes
presented in this notice and based on
the data for 1,626 IPFs in our database.
TABLE 2—ACCOUNTING STATEMENT:
CLASSIFICATION OF ESTIMATED EXPENDITURES
Change in Estimated Transfers from FY 2016
IPF PPS to FY 2017 IPF PPS
Category
Annualized Monetized
Transfers.
From Whom to
Whom?
Transfers
$100 million.
Federal Government
to IPF Medicare
Providers.
In accordance with the provisions of
Executive Order 12866, this notice was
reviewed by the Office of Management
and Budget.
Dated: July 18, 2016.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare
& Medicaid Services.
Dated: July 19, 2016.
Sylvia M. Burwell,
Secretary, Department of Health and Human
Services.
Note: The following addenda will not
publish in the Code of Federal
Regulations.
Addendum A—IPF PPS FY 2017 Final
Rates and Adjustment Factors
PER DIEM RATE
Federal Per Diem Base Rate
Labor Share (0.751) .............
Non-Labor Share (0.249) .....
$761.37
$571.79
$189.58
PER DIEM RATE APPLYING THE 2
PERCENTAGE POINT REDUCTION
Federal Per Diem Base Rate
Labor Share (0.751) .............
Non-Labor Share (0.249) .....
$746.48
$560.61
$185.87
Fixed Dollar Loss Threshold Amount:
$10,120.
Wage Index Budget-Neutrality Factor:
1.0007.
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FACILITY ADJUSTMENTS
Rural Adjustment Factor ....................................................................................................
Teaching Adjustment Factor ..............................................................................................
Wage Index ........................................................................................................................
COST OF LIVING ADJUSTMENTS
(COLAS)
PATIENT ADJUSTMENTS—Continued
Cost of living
adjustment
factor
Area
ECT—Per Treatment Applying the 2 Percentage Point
Reduction ..........................
Adjustment
factor
1.23
1.23
1.23
1.25
1.25
1.19
1.25
1.25
PATIENT ADJUSTMENTS
$327.78
VARIABLE PER DIEM ADJUSTMENTS—
Continued
Adjustment
factor
$321.38
VARIABLE PER DIEM ADJUSTMENTS
Alaska:
City of Anchorage and 80kilometer (50-mile) radius by road ...................
City of Fairbanks and 80kilometer (50-mile) radius by road ...................
City of Juneau and 80-kilometer (50-mile) radius
by road ..........................
Rest of Alaska ...................
Hawaii:
City and County of Honolulu .................................
County of Hawaii ...............
County of Kauai ................
County of Maui and County of Kalawao .................
ECT—Per Treatment ............
1.17.
0.5150.
Pre-reclass Hospital Wage Index (FY 2016).
Day 1—Facility Without a
Qualifying Emergency Department ............................
Day 1—Facility With a Qualifying Emergency Department ..................................
Day 2 ....................................
Day 3 ....................................
Day 4 ....................................
Day 5 ....................................
Day 6 ....................................
Day 7 ....................................
Day 8 ....................................
Day 9 ....................................
Day 10 ..................................
Day 11 ..................................
Day 12 ..................................
Day 13 ..................................
Day 14 ..................................
1.19
1.31
1.12
1.08
1.05
1.04
1.02
1.01
1.01
1.00
1.00
0.99
0.99
0.99
0.99
Day 15 ..................................
Day 16 ..................................
Day 17 ..................................
Day 18 ..................................
Day 19 ..................................
Day 20 ..................................
Day 21 ..................................
After Day 21 .........................
0.98
0.97
0.97
0.96
0.95
0.95
0.95
0.92
AGE ADJUSTMENTS
Age (in years)
Adjustment
factor
Under 45 ...............................
45 and under 50 ...................
50 and under 55 ...................
55 and under 60 ...................
60 and under 65 ...................
65 and under 70 ...................
70 and under 75 ...................
75 and under 80 ...................
80 and over ..........................
1.00
1.01
1.02
1.04
1.07
1.10
1.13
1.15
1.17
DRG ADJUSTMENTS
MS–DRG
056
057
080
081
876
880
881
882
883
884
885
886
887
894
895
896
897
.................
.................
.................
.................
.................
.................
.................
.................
.................
.................
.................
.................
.................
.................
.................
.................
.................
Degenerative nervous system disorders w MCC ...................................................................................................
Degenerative nervous system disorders w/o MCC ................................................................................................
Nontraumatic stupor & coma w MCC .....................................................................................................................
Nontraumatic stupor & coma w/o MCC ..................................................................................................................
O.R. procedure w principal diagnoses of mental illness ........................................................................................
Acute adjustment reaction & psychosocial dysfunction ..........................................................................................
Depressive neuroses ...............................................................................................................................................
Neuroses except depressive ...................................................................................................................................
Disorders of personality & impulse control .............................................................................................................
Organic disturbances & mental retardation ............................................................................................................
Psychoses ...............................................................................................................................................................
Behavioral & developmental disorders ...................................................................................................................
Other mental disorder diagnoses ............................................................................................................................
Alcohol/drug abuse or dependence, left AMA ........................................................................................................
Alcohol/drug abuse or dependence w rehabilitation therapy ..................................................................................
Alcohol/drug abuse or dependence w/o rehabilitation therapy w MCC .................................................................
Alcohol/drug abuse or dependence w/o rehabilitation therapy w/o MCC ..............................................................
COMORBIDITY ADJUSTMENTS
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COMORBIDITY ADJUSTMENTS—
Continued
Adjustment
factor
Developmental Disabilities ...
Coagulation Factor Deficit ....
Tracheostomy .......................
Eating and Conduct Disorders ................................
Infectious Diseases ..............
Renal Failure, Acute .............
Renal Failure, Chronic ..........
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MS–DRG Descriptions
1.04
1.13
1.06
1.12
1.07
1.11
1.11
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Oncology Treatment .............
Uncontrolled Diabetes
Mellitus ..............................
Severe Protein Malnutrition ..
Drug/Alcohol Induced Mental
Disorders ...........................
Cardiac Conditions ...............
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COMORBIDITY ADJUSTMENTS—
Continued
Adjustment
factor
Comorbidity
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1.05
1.05
1.07
1.07
1.22
1.05
0.99
1.02
1.02
1.03
1.00
0.99
0.92
0.97
1.02
0.88
0.88
1.07
1.05
1.13
Comorbidity
Gangrene ..............................
Chronic Obstructive Pulmonary Disease ................
Artificial Openings—Digestive & Urinary ....................
1.03
1.11
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1.10
1.12
1.08
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COMORBIDITY ADJUSTMENTS—
Continued
COMORBIDITY ADJUSTMENTS—
Continued
Adjustment
factor
Comorbidity
Severe Musculoskeletal &
Connective Tissue Diseases .................................
Adjustment
factor
Comorbidity
Poisoning ..............................
1.11
1.09
NATIONAL MEDIAN AND CEILING COST-TO-CHARGE RATIOS (CCRS)
Rural
National Median CCRs ............................................................................................................................................
National Ceiling CCRs .............................................................................................................................................
Addendum B—Changes to the FY 2017
ICD–10–CM/PCS Code Sets Which
Affect FY the FY 2017 IPF PPS
Comorbidity Adjustments
0.5960
1.9315
Urban
0.4455
1.6374
Add the following codes to the
Oncology Treatment code list:
Four IPF PPS Comorbidity Categories
Were Affected
(1) Oncology Treatment
DX
Long description
C49A0 ........................
C49A1 ........................
C49A2 ........................
C49A3 ........................
C49A4 ........................
C49A5 ........................
C49A9 ........................
D49511 .......................
D49512 .......................
D4959 .........................
Gastrointestinal stromal tumor, unspecified site.
Gastrointestinal stromal tumor of esophagus.
Gastrointestinal stromal tumor of stomach.
Gastrointestinal stromal tumor of small intestine.
Gastrointestinal stromal tumor of large intestine.
Gastrointestinal stromal tumor of rectum.
Gastrointestinal stromal tumor of other sites.
Neoplasm of unspecified behavior of right kidney.
Neoplasm of unspecified behavior of left kidney.
Neoplasm unspecified behavior of other genitourinary organ.
Delete the following code from the
Oncology Treatment code list:
DX
Long description
D495 ...........................
Neoplasm of unspecified behavior of other genitourinary organs.
The following codes from the
Oncology Treatment code list have long
description changes:
DX
Old long description
C7A094 .......................
C7A095 .......................
C7A096 .......................
C8110 ..........................
Malignant carcinoid tumor of the foregut NOS ....................
Malignant carcinoid tumor of the midgut NOS ....................
Malignant carcinoid tumor of the hindgut NOS ...................
Nodular sclerosis classical Hodgkin lymphoma, unspecified site.
Nodular sclerosis classical Hodgkin lymphoma, lymph
nodes of head, face, and neck.
Nodular sclerosis classical Hodgkin lymphoma, intrathoracic lymph nodes.
Nodular sclerosis classical Hodgkin lymphoma, intra-abdominal lymph nodes.
Nodular sclerosis classical Hodgkin lymphoma, lymph
nodes of axilla and upper limb.
Nodular sclerosis classical Hodgkin lymphoma, lymph
nodes of inguinal region and lower limb.
Nodular sclerosis classical Hodgkin lymphoma, intrapelvic
lymph nodes.
C8111 ..........................
sradovich on DSK3GMQ082PROD with NOTICES
C8112 ..........................
C8113 ..........................
C8114 ..........................
C8115 ..........................
C8116 ..........................
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Malignant carcinoid tumor of the foregut, unspecified.
Malignant carcinoid tumor of the midgut, unspecified.
Malignant carcinoid tumor of the hindgut, unspecified.
Nodular sclerosis Hodgkin lymphoma, unspecified site.
Nodular sclerosis Hodgkin lymphoma, lymph nodes of
head, face, and neck.
Nodular sclerosis Hodgkin lymphoma, intrathoracic lymph
nodes.
Nodular sclerosis Hodgkin lymphoma, intra-abdominal
lymph nodes.
Nodular sclerosis Hodgkin lymphoma, lymph nodes of
axilla and upper limb.
Nodular sclerosis Hodgkin lymphoma, lymph nodes of inguinal region and lower limb.
Nodular sclerosis Hodgkin lymphoma, intrapelvic lymph
nodes.
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50519
DX
Old long description
New long description
C8117 ..........................
C8118 ..........................
Nodular sclerosis classical Hodgkin lymphoma, spleen .....
Nodular sclerosis classical Hodgkin lymphoma, lymph
nodes of multiple sites.
Nodular sclerosis classical Hodgkin lymphoma, extranodal
and solid organ sites.
Mixed cellularity classical Hodgkin lymphoma, unspecified
site.
Mixed cellularity classical Hodgkin lymphoma, lymph
nodes of head, face, and neck.
Mixed cellularity classical Hodgkin lymphoma, intrathoracic
lymph nodes.
Mixed cellularity classical Hodgkin lymphoma, intra-abdominal lymph nodes.
Mixed cellularity classical Hodgkin lymphoma, lymph
nodes of axilla and upper limb.
Mixed cellularity classical Hodgkin lymphoma, lymph
nodes of inguinal region and lower limb.
Mixed cellularity classical Hodgkin lymphoma, intrapelvic
lymph nodes.
Mixed cellularity classical Hodgkin lymphoma, spleen .......
Mixed cellularity classical Hodgkin lymphoma, lymph
nodes of multiple sites.
Mixed cellularity classical Hodgkin lymphoma, extranodal
and solid organ sites.
Lymphocyte depleted classical Hodgkin lymphoma, unspecified site.
Lymphocyte depleted classical Hodgkin lymphoma, lymph
nodes of head, face, and neck.
Lymphocyte depleted classical Hodgkin lymphoma, intrathoracic lymph nodes.
Lymphocyte depleted classical Hodgkin lymphoma, intraabdominal lymph nodes.
Lymphocyte depleted classical Hodgkin lymphoma, lymph
nodes of axilla and upper limb.
Lymphocyte depleted classical Hodgkin lymphoma, lymph
nodes of inguinal region and lower limb.
Lymphocyte depleted classical Hodgkin lymphoma,
intrapelvic lymph nodes.
Lymphocyte depleted classical Hodgkin lymphoma, spleen
Lymphocyte depleted classical Hodgkin lymphoma, lymph
nodes of multiple sites.
Lymphocyte depleted classical Hodgkin lymphoma,
extranodal and solid organ sites.
Lymphocyte-rich classical Hodgkin lymphoma, unspecified
site.
Lymphocyte-rich classical Hodgkin lymphoma, lymph
nodes of head, face, and neck.
Lymphocyte-rich classical Hodgkin lymphoma, intrathoracic lymph nodes.
Lymphocyte-rich classical Hodgkin lymphoma, intra-abdominal lymph nodes.
Lymphocyte-rich classical Hodgkin lymphoma, lymph
nodes of axilla and upper limb.
Lymphocyte-rich classical Hodgkin lymphoma, lymph
nodes of inguinal region and lower limb.
Lymphocyte-rich classical Hodgkin lymphoma, intrapelvic
lymph nodes.
Lymphocyte-rich classical Hodgkin lymphoma, spleen .......
Lymphocyte-rich classical Hodgkin lymphoma, lymph
nodes of multiple sites.
Lymphocyte-rich classical Hodgkin lymphoma, extranodal
and solid organ sites.
Other classical Hodgkin lymphoma, unspecified site ..........
Other classical Hodgkin lymphoma, lymph nodes of head,
face, and neck.
Other classical Hodgkin lymphoma, intrathoracic lymph
nodes.
Other classical Hodgkin lymphoma, intra-abdominal lymph
nodes.
Other classical Hodgkin lymphoma, lymph nodes of axilla
and upper limb.
Other classical Hodgkin lymphoma, lymph nodes of inguinal region and lower limb.
Nodular sclerosis Hodgkin lymphoma, spleen.
Nodular sclerosis Hodgkin lymphoma, lymph nodes of
multiple sites.
Nodular sclerosis Hodgkin lymphoma, extranodal and
solid organ sites.
Mixed cellularity Hodgkin lymphoma, unspecified site.
C8119 ..........................
C8120 ..........................
C8121 ..........................
C8122 ..........................
C8123 ..........................
C8124 ..........................
C8125 ..........................
C8126 ..........................
C8127 ..........................
C8128 ..........................
C8129 ..........................
C8130 ..........................
C8131 ..........................
C8132 ..........................
C8133 ..........................
C8134 ..........................
C8135 ..........................
C8136 ..........................
C8137 ..........................
C8138 ..........................
C8139 ..........................
C8140 ..........................
C8141 ..........................
C8142 ..........................
C8143 ..........................
C8144 ..........................
C8145 ..........................
C8146 ..........................
C8147 ..........................
C8148 ..........................
C8149 ..........................
sradovich on DSK3GMQ082PROD with NOTICES
C8170 ..........................
C8171 ..........................
C8172 ..........................
C8173 ..........................
C8174 ..........................
C8175 ..........................
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Mixed cellularity Hodgkin lymphoma, lymph nodes of
head, face, and neck.
Mixed cellularity Hodgkin lymphoma, intrathoracic lymph
nodes.
Mixed cellularity Hodgkin lymphoma, intra-abdominal
lymph nodes.
Mixed cellularity Hodgkin lymphoma, lymph nodes of axilla
and upper limb.
Mixed cellularity Hodgkin lymphoma, lymph nodes of inguinal region and lower limb.
Mixed cellularity Hodgkin lymphoma, intrapelvic lymph
nodes.
Mixed cellularity Hodgkin lymphoma, spleen.
Mixed cellularity Hodgkin lymphoma, lymph nodes of multiple sites.
Mixed cellularity Hodgkin lymphoma, extranodal and solid
organ sites.
Lymphocyte depleted Hodgkin lymphoma, unspecified
site.
Lymphocyte depleted Hodgkin lymphoma, lymph nodes of
head, face, and neck.
Lymphocyte depleted Hodgkin lymphoma, intrathoracic
lymph nodes.
Lymphocyte depleted Hodgkin lymphoma, intra-abdominal
lymph nodes.
Lymphocyte depleted Hodgkin lymphoma, lymph nodes of
axilla and upper limb.
Lymphocyte depleted Hodgkin lymphoma, lymph nodes of
inguinal region and lower limb.
Lymphocyte depleted Hodgkin lymphoma, intrapelvic
lymph nodes.
Lymphocyte depleted Hodgkin lymphoma, spleen.
Lymphocyte depleted Hodgkin lymphoma, lymph nodes of
multiple sites.
Lymphocyte depleted Hodgkin lymphoma, extranodal and
solid organ sites.
Lymphocyte-rich Hodgkin lymphoma, unspecified site.
Lymphocyte-rich Hodgkin lymphoma, lymph nodes of
head, face, and neck.
Lymphocyte-rich Hodgkin lymphoma, intrathoracic lymph
nodes.
Lymphocyte-rich Hodgkin lymphoma, intra-abdominal
lymph nodes.
Lymphocyte-rich Hodgkin lymphoma, lymph nodes of
axilla and upper limb.
Lymphocyte-rich Hodgkin lymphoma, lymph nodes of inguinal region and lower limb.
Lymphocyte-rich Hodgkin lymphoma, intrapelvic lymph
nodes.
Lymphocyte-rich Hodgkin lymphoma, spleen.
Lymphocyte-rich Hodgkin lymphoma, lymph nodes of multiple sites.
Lymphocyte-rich Hodgkin lymphoma, extranodal and solid
organ sites.
Other Hodgkin lymphoma, unspecified site.
Other Hodgkin lymphoma, lymph nodes of head, face, and
neck.
Other Hodgkin lymphoma, intrathoracic lymph nodes.
Other Hodgkin lymphoma, intra-abdominal lymph nodes.
Other Hodgkin lymphoma, lymph nodes of axilla and
upper limb.
Other Hodgkin lymphoma, lymph nodes of inguinal region
and lower limb.
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DX
Old long description
C8176 ..........................
Other classical Hodgkin lymphoma, intrapelvic lymph
nodes.
Other classical Hodgkin lymphoma, spleen ........................
Other classical Hodgkin lymphoma, lymph nodes of multiple sites.
Other classical Hodgkin lymphoma, extranodal and solid
organ sites.
Benign carcinoid tumor of the foregut NOS ........................
Benign carcinoid tumor of the midgut NOS ........................
Benign carcinoid tumor of the hindgut NOS .......................
C8177 ..........................
C8178 ..........................
C8179 ..........................
D3A094 .......................
D3A095 .......................
D3A096 .......................
2) Oncology Treatment Procedure
New long description
Other Hodgkin lymphoma, spleen.
Other Hodgkin lymphoma, lymph nodes of multiple sites.
Other Hodgkin lymphoma, extranodal and solid organ
sites.
Benign carcinoid tumor of the foregut, unspecified.
Benign carcinoid tumor of the midgut, unspecified.
Benign carcinoid tumor of the hindgut, unspecified.
Add the following code to the
Oncology Treatment procedure code
list:
DX
Long description
3E0Q005 ....................................
Introduction of Other Antineoplastic into Cranial Cavity and Brain, Open Approach.
3) Infectious Disease
Add the following code to the
Infectious Disease code list:
DX
Long description
A925 ...........................................
Zika virus disease.
4) Artificial Openings Digestive and
Urinary
Add the following codes to the
Artificial Openings, Digestive and
Urinary code list:
DX
N99523
N99524
N99533
N99534
Other Hodgkin lymphoma, intrapelvic lymph nodes.
Long description
......................................
......................................
......................................
......................................
Herniation of incontinent stoma of urinary tract.
Stenosis of incontinent stoma of urinary tract.
Herniation of continent stoma of urinary tract.
Stenosis of continent stoma of urinary tract.
The following codes from the
Artificial Openings Digestive and
Urinary code list have long description
changes:
DX
Old long description
New long description
N99520 .................................
Hemorrhage of other external stoma of urinary tract .....
N99521 .................................
N99522 .................................
Infection of other external stoma of urinary tract ............
Malfunction of other external stoma of urinary tract .......
N99528 .................................
Other complication of other external stoma of urinary
tract.
Hemorrhage of other stoma of urinary tract ...................
Infection of other stoma of urinary tract ..........................
Malfunction of other stoma of urinary tract .....................
Other complication of other stoma of urinary tract .........
Hemorrhage of incontinent external stoma of urinary
tract.
Infection of incontinent external stoma of urinary tract.
Malfunction of incontinent external stoma of urinary
tract.
Other complication of incontinent external stoma of urinary tract.
Hemorrhage of continent stoma of urinary tract.
Infection of continent stoma of urinary tract.
Malfunction of continent stoma of urinary tract.
Other complication of continent stoma of urinary tract.
sradovich on DSK3GMQ082PROD with NOTICES
N99530
N99531
N99532
N99538
.................................
.................................
.................................
.................................
Tables showing the complete listing
of ICD–10–CM/PCS codes underlying
the IPF PPS comorbidity adjustment and
the IPF PPS Code First adjustment, and
associated with the IPF PPS ECT per
treatment payment, are available online
at: https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/
InpatientPsychFacilPPS/tools.html.
[FR Doc. 2016–17982 Filed 7–28–16; 4:15 pm]
BILLING CODE 4120–01–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Administration for Children and
Families
Proposed Information Collection
Activity; Comment Request
Proposed Projects:
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Agencies
[Federal Register Volume 81, Number 147 (Monday, August 1, 2016)]
[Notices]
[Pages 50502-50520]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-17982]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
[CMS-1650-N]
RIN 0938-AS76
Medicare Program; FY 2017 Inpatient Psychiatric Facilities
Prospective Payment System--Rate Update
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: This notice updates the prospective payment rates for Medicare
inpatient hospital services provided by inpatient psychiatric
facilities (IPFs) (which include freestanding IPFs and psychiatric
units of an acute care hospital or critical access hospital). These
changes are applicable to IPF discharges occurring during the fiscal
year (FY) beginning October 1, 2016 through September 30, 2017 (FY
2017).
DATES: Effective: The updated IPF prospective payment rates are
effective for discharges occurring on or after October 1, 2016 through
September 30, 2017.
FOR FURTHER INFORMATION CONTACT: Katherine Lucas (410) 786-7723 or Jana
Lindquist (410) 786-9374 for general information.
Theresa Bean (410) 786-2287 or James Hardesty (410) 786-2629 for
information regarding the regulatory impact analysis.
SUPPLEMENTARY INFORMATION:
Availability of Certain Tables Exclusively Through the Internet on the
CMS Web Site
In the past, tables setting forth the Wage Index for Urban Areas
Based on Core-Based Statistical Area (CBSA) Labor Market Areas and the
Wage Index Based on CBSA Labor Market Areas for Rural Areas were
published in the Federal Register as an Addendum to the annual IPF
Prospective Payment System (PPS) rulemaking (that is, the IPF PPS
proposed and final rules or notice). However, since FY 2015, these wage
index tables are no longer published in the Federal Register. Instead,
these tables are available exclusively through the Internet, on the CMS
Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/IPFPPS/WageIndex.html.
To assist readers in referencing sections contained in this
document, we are providing the following table of contents.
Table of Contents
I. Executive Summary
A. Purpose
B. Summary of the Major Provisions
C. Summary of Impacts
II. Background
A. Overview of the Legislative Requirements of the IPF PPS
B. Overview of the IPF PPS
C. Annual Requirements for Updating the IPF PPS
III. Provisions of the Notice
A. Updated FY 2017 Market Basket for the IPF PPS
1. Background
2. FY 2017 IPF Market Basket Update
3. IPF Labor-Related Share
B. Updates to the IPF PPS Rates for FY Beginning October 1, 2016
1. Determining the Standardized Budget-Neutral Federal Per Diem
Base Rate
2. Update of the Federal Per Diem Base Rate and
Electroconvulsive Therapy Payment per Treatment
C. Updates to the IPF PPS Patient-Level Adjustment Factors
1. Overview of the IPF PPS Adjustment Factors
2. IPF-PPS Patient-Level Adjustments
a. MS-DRG Assignment
i. Code First
b. Payment for Comorbid Conditions
3. Patient Age Adjustments
4. Variable Per Diem Adjustments
D. Updates to the IPF PPS Facility-Level Adjustments
[[Page 50503]]
1. Wage Index Adjustment
a. Background
b. Updated Wage Index for FY 2017
c. OMB Bulletins
d. Adjustment for Rural Location and Continuing Phase Out the
Rural Adjustment for IPFs That Lost Their Rural Adjustment Due to
CBSA Changes Implemented in FY 2016
e. Budget Neutrality Adjustment
2. Teaching Adjustment
3. Cost of Living Adjustment for IPFs Located in Alaska and
Hawaii
4. Adjustment for IPFs With a Qualifying Emergency Department
(ED)
E. Other Payment Adjustments and Policies
1. Outlier Payment Overview
2. Update to the Outlier Fixed Dollar Loss Threshold Amount
3. Update to IPF Cost-to-Charge Ratio Ceilings
IV. Update on IPF PPS Refinements
V. Waiver of Notice and Comment
VI. Collection of Information Requirements
VII. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Anticipated Effects
1. Budgetary Impact
2. Impact on Providers
3. Results
4. Effect on Beneficiaries
D. Alternatives Considered
E. Accounting Statement
Addendum A--IPF PPS FY 2017 Rates and Adjustment Factors
Addendum B--Changes to the FY 2017 ICD-10-CM/PCS Code Sets Which
Affect the FY 2017 IPF PPS Comorbidity Adjustments
Acronyms
Because of the many terms to which we refer by acronym in this
notice, we are listing the acronyms used and their corresponding
meanings in alphabetical order below:
ADC Average Daily Census
BBRA Medicare, Medicaid and SCHIP [State Children's Health Insurance
Program] Balanced Budget Refinement Act of 1999 (Pub. L. 106-113)
BLS Bureau of Labor Statistics
CAH Critical Access Hospital
CBSA Core-Based Statistical Area
CCR Cost-to-Charge Ratio
CPI Consumer Price Index
CPI-U Consumer Price Index for all Urban Consumers
CY Calendar Year
DRGs Diagnosis-Related Groups
ECT Electroconvulsive Therapy
ESRD End State Renal Disease
FR Federal Register
FTE Full-time equivalent
FY Federal Fiscal Year (October 1 through September 30)
GDP Gross Domestic Product
GME Graduate Medical Education
HCRIS Healthcare Cost Report Information System
ICD-9-CM International Classification of Diseases, 9th Revision,
Clinical Modification
ICD-10-CM International Classification of Diseases, 10th Revision,
Clinical Modification
ICD-10-PCS International Classification of Diseases, 10th Revision,
Procedure Coding System
IGI IHS Global Insight, Inc.
IPF Inpatient Psychiatric Facility
IPFQR Inpatient Psychiatric Facilities Quality Reporting
IPPS Inpatient Prospective Payment System
IRFs Inpatient Rehabilitation Facilities
LOS Length of Stay
LRS Labor-related Share
LTCHs Long-Term Care Hospitals
MAC Medicare Administrative Contractor
MedPAR Medicare Provider Analysis and Review File
MFP Multifactor Productivity
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003
MSA Metropolitan Statistical Area
NDAA National Defense Authorization Act
NQF National Quality Forum
OMB Office of Management and Budget
OPPS Outpatient Prospective Payment System
POS Provider of Services
PPS Prospective Payment System
RFA Regulatory Flexibility Act
RPL Rehabilitation, Psychiatric, and Long-Term Care
RY Rate Year (July 1 through June 30)
SBA Small Business Administration
SCHIP State Children's Health Insurance Program
SNF Skilled Nursing Facility
TEFRA Tax Equity and Fiscal Responsibility Act of 1982 (Pub. L. 97-
248)
I. Executive Summary
A. Purpose
This notice updates the prospective payment rates for Medicare
inpatient hospital services provided by inpatient psychiatric
facilities (IPFs) for discharges occurring during the fiscal year (FY)
beginning October 1, 2016 through September 30, 2017.
B. Summary of the Major Provisions
In this notice, we are updating the IPF Prospective Payment System
(PPS), as specified in 42 CFR 412.428. The updates include the
following:
Effective for the FY 2016 IPF PPS update, we adopted a
2012-based IPF market basket. For FY 2017, we adjusted the 2012-based
IPF market basket update (2.8 percent) by a reduction for economy-wide
productivity (0.3 percentage point) as required by section
1886(s)(2)(A)(i) of the Social Security Act (the Act). We further
reduced the 2012-based IPF market basket update by 0.2 percentage point
as required by section 1886(s)(2)(A)(ii) of the Act, resulting in an
estimated IPF payment rate update of 2.3 percent for FY 2017.
The 2012-based IPF market basket resulted in a labor-
related share of 75.1 percent for FY 2017.
We updated the IPF PPS per diem rate from $743.73 to
$761.37. Providers that failed to report quality data for FY 2017
payment will receive a FY 2017 per diem rate of $746.48.
We updated the electroconvulsive therapy (ECT) payment per
treatment from $320.19 to $327.78. Providers that failed to report
quality data for FY 2017 payment will receive a FY 2017 ECT payment per
treatment of $321.38.
We used the updated labor-related share of 75.1 percent
(based on the 2012-based IPF market basket) and CBSA rural and urban
wage indices for FY 2017, and established a wage index budget-
neutrality adjustment of 1.0007.
We updated the fixed dollar loss threshold amount from
$9,580 to $10,120 in order to maintain estimated outlier payments at 2
percent of total estimated aggregate IPF PPS payments.
C. Summary of Impacts
------------------------------------------------------------------------
Provision description Total transfers
------------------------------------------------------------------------
FY 2017 IPF PPS payment update............ The overall economic impact
of this notice is an
estimated $100 million in
increased payments to IPFs
during FY 2017.
------------------------------------------------------------------------
II. Background
A. Overview of the Legislative Requirements for the IPF PPS
Section 124 of the Medicare, Medicaid, and SCHIP (State Children's
Health Insurance Program) Balanced Budget Refinement Act of 1999 (BBRA)
(Pub. L. 106-113) required the establishment and implementation of an
IPF PPS. Specifically, section 124 of the BBRA mandated that the
Secretary of the Department of Health and Human Services (the
Secretary) develop a per diem PPS for inpatient hospital services
furnished in psychiatric hospitals and psychiatric units including an
adequate patient classification system that reflects the differences in
patient resource use and costs among psychiatric hospitals and
psychiatric units.
Section 405(g)(2) of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA) (Pub. L. 108-173) extended the IPF
PPS to distinct part psychiatric units of critical access hospitals
(CAHs).
Section 3401(f) and section 10322 of the Patient Protection and
Affordable Care Act (Pub. L. 111-148) as amended by section 10319(e) of
that Act and by section 1105(d) of the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152) (hereafter referred to
jointly as ``the Affordable Care Act'')
[[Page 50504]]
added subsection (s) to section 1886 of the Act.
Section 1886(s)(1) of the Act titled ``Reference to Establishment
and Implementation of System'', refers to section 124 of the BBRA,
which relates to the establishment of the IPF PPS.
Section 1886(s)(2)(A)(i) of the Act requires the application of the
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of
the Act to the IPF PPS for the Rate Year (RY) beginning in 2012 (that
is, a RY that coincides with a FY) and each subsequent RY. As noted in
our previous IPF PPS final rule (the FY 2016 IPF PPS final rule), for
the RY beginning in 2015 (that is, FY 2016), the current estimate of
the productivity adjustment is equal to 0.5 percent.
Section 1886(s)(2)(A)(ii) of the Act requires the application of an
``other adjustment'' that reduces any update to an IPF PPS base rate by
percentages specified in section 1886(s)(3) of the Act for the RY
beginning in 2010 through the RY beginning in 2019. As noted in our FY
2016 IPF PPS final rule, for the RY beginning in 2015 (that is, FY
2016), section 1886(s)(3)(D) of the Act requires the reduction to be
0.2 percentage point.
Sections 1886(s)(4)(A) and 1886(s)(4)(B) of the Act require that
for RY 2014 and every subsequent year, IPFs that fail to report
required quality data shall have their annual payment rate update
reduced by 2.0 percentage points. This may result in an annual update
being less than 0.0 for a rate year, and may result in payment rates
for the upcoming rate year being less than such payment rates for the
preceding rate year. Any reduction for failure to report required
quality data shall apply only with respect to the rate year involved
and the Secretary shall not take into account such reduction in
computing the payment amount for a subsequent rate year. More
information about the IPF Quality Reporting Program is available in the
April 27, 2016 FY 2017 Hospital Inpatient Prospective Payment Systems
for Acute Care Hospitals and the Long-Term Care Hospital Prospective
Payment System Proposed Rule (81 FR 25238 through 25244).
To implement and periodically update these provisions, we have
published various proposed and final rules and notices in the Federal
Register. For more information regarding these documents, see the CMS
Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/?redirect=/
InpatientPsychFacilPPS/.
B. Overview of the IPF PPS
The November 2004 IPF PPS final rule (69 FR 66922) established the
IPF PPS, as required by section 124 of the BBRA and codified at subpart
N of part 412 of the Medicare regulations. The November 2004 IPF PPS
final rule set forth the per diem federal rates for the implementation
year (the 18-month period from January 1, 2005 through June 30, 2006),
and provided payment for the inpatient operating and capital costs to
IPFs for covered psychiatric services they furnish (that is, routine,
ancillary, and capital costs, but not costs of approved educational
activities, bad debts, and other services or items that are outside the
scope of the IPF PPS). Covered psychiatric services include services
for which benefits are provided under the fee-for-service Part A
(Hospital Insurance Program) of the Medicare program.
The IPF PPS established the federal per diem base rate for each
patient day in an IPF derived from the national average daily routine
operating, ancillary, and capital costs in IPFs in FY 2002. The average
per diem cost was updated to the midpoint of the first year under the
IPF PPS, standardized to account for the overall positive effects of
the IPF PPS payment adjustments, and adjusted for budget-neutrality.
The federal per diem payment under the IPF PPS is comprised of the
federal per diem base rate described above and certain patient- and
facility-level payment adjustments that were found in the regression
analysis to be associated with statistically significant per diem cost
differences.
The patient-level adjustments include age, Diagnosis-Related Group
(DRG) assignment, comorbidities; additionally, there are variable per
diem adjustments to reflect higher per diem costs at the beginning of a
patient's IPF stay. Facility-level adjustments include adjustments for
the IPF's wage index, rural location, teaching status, a cost-of-living
adjustment for IPFs located in Alaska and Hawaii, and an adjustment for
the presence of a qualifying Emergency Department (ED).
The IPF PPS provides additional payment policies for: Outlier
cases; interrupted stays; and a per treatment adjustment for patients
who undergo ECT. During the IPF PPS mandatory 3-year transition period,
stop-loss payments were also provided; however, since the transition
ended in 2008, these payments are no longer available.
A complete discussion of the regression analysis that established
the IPF PPS adjustment factors appears in the November 2004 IPF PPS
final rule (69 FR 66933 through 66936).
Section 124 of the BBRA did not specify an annual rate update
strategy for the IPF PPS and was broadly written to give the Secretary
discretion in establishing an update methodology. Therefore, in the
November 2004 IPF PPS final rule, we implemented the IPF PPS using the
following update strategy:
Calculate the final federal per diem base rate to be
budget-neutral for the 18-month period of January 1, 2005 through June
30, 2006.
Use a July 1 through June 30 annual update cycle.
Allow the IPF PPS first update to be effective for
discharges on or after July 1, 2006 through June 30, 2007.
In RY 2012, we proposed and finalized switching the IPF PPS payment
rate update from a rate year that begins on July 1 and ends on June 30
to one that coincides with the federal fiscal year that begins October
1 and ends on September 30. In order to transition from one timeframe
to another, the RY 2012 IPF PPS covered a 15-month period from July 1,
2011 through September 30, 2012. Therefore, the update cycle for FY
2016 was October 1, 2015 through September 30, 2016. For further
discussion of the 15-month market basket update for RY 2012 and
changing the payment rate update period to coincide with a FY period,
we refer readers to the RY 2012 IPF PPS proposed rule (76 FR 4998) and
the RY 2012 IPF PPS final rule (76 FR 26432).
C. Annual Requirements for Updating the IPF PPS
In November 2004, we implemented the IPF PPS in a final rule that
appeared in the November 15, 2004 Federal Register (69 FR 66922). In
developing the IPF PPS, to ensure that the IPF PPS is able to account
adequately for each IPF's case-mix, we performed an extensive
regression analysis of the relationship between the per diem costs and
certain patient and facility characteristics to determine those
characteristics associated with statistically significant cost
differences on a per diem basis. For characteristics with statistically
significant cost differences, we used the regression coefficients of
those variables to determine the size of the corresponding payment
adjustments.
In that final rule, we explained the reasons for delaying an update
to the adjustment factors, derived from the regression analysis, until
we have IPF PPS data that include as much information as possible
regarding the patient-level characteristics of the
[[Page 50505]]
population that each IPF serves. We indicated that we did not intend to
update the regression analysis and the patient-level and facility-level
adjustments until we complete that analysis. Until that analysis is
complete, we stated our intention to publish a notice in the Federal
Register each spring to update the IPF PPS (71 FR 27041). We have been
performing the necessary analysis to make refinements to the IPF PPS
using more current data to set the adjustment factors. We expect we
will be ready to propose potential refinements in future rulemaking.
In the May 6, 2011 IPF PPS final rule (76 FR 26432), we changed the
payment rate update period to a RY that coincides with a FY update.
Therefore, update notices are now published in the Federal Register in
the summer to be effective on October 1. When proposing changes in IPF
payment policy, a proposed rule would be issued in the spring and the
final rule in the summer in order to be effective on October 1. For
further discussion on changing the IPF PPS payment rate update period
to a RY that coincides with a FY, see the IPF PPS final rule published
in the Federal Register on May 6, 2011 (76 FR 26434 through 26435). For
a detailed list of updates to the IPF PPS, see 42 CFR 412.428.
Our most recent IPF PPS annual update occurred in an August 5,
2015, Federal Register final rule (80 FR 46652) (hereinafter referred
to as the August 2015 IPF PPS final rule), which updated the IPF PPS
payment rates for FY 2016. That rule updated the IPF PPS per diem
payment rates that were published in the August 2014 IPF PPS final rule
(79 FR 45938) in accordance with our established policies.
III. Provisions of the Notice
A. Updated FY 2017 Market Basket for the IPF PPS
1. Background
The input price index that was used to develop the IPF PPS was the
``Excluded Hospital with Capital'' market basket. This market basket
was based on 1997 Medicare cost reports for Medicare participating
inpatient rehabilitation facilities (IRFs), inpatient psychiatric
facilities (IPFs), long-term care hospitals (LTCHs), cancer hospitals,
and children's hospitals. Although ``market basket'' technically
describes the mix of goods and services used in providing health care
at a given point in time, this term is also commonly used to denote the
input price index (that is, cost category weights and price proxies)
derived from that market basket. Accordingly, the term ``market
basket,'' as used in this document, refers to an input price index.
Beginning with the May 2006 IPF PPS final rule (71 FR 27046 through
27054), IPF PPS payments were updated using a 2002-based
rehabilitation, psychiatric, and long-term care (RPL) market basket
reflecting the operating and capital cost structures for freestanding
IRFs, freestanding IPFs, and LTCHs. Cancer and children's hospitals
were excluded from the RPL market basket because their payments are
based entirely on reasonable costs subject to rate-of-increase limits
established under the authority of section 1886(b) of the Act and not
through a PPS. Also, the 2002 cost structures for cancer and children's
hospitals are noticeably different than the cost structures of
freestanding IRFs, freestanding IPFs, and LTCHs. See the May 2006 IPF
PPS final rule (71 FR 27046 through 27054) for a complete discussion of
the 2002-based RPL market basket.
In the May 1, 2009 IPF PPS notice (74 FR 20376), we expressed our
interest in exploring the possibility of creating a stand-alone IPF
market basket that reflects the cost structures of only IPF providers.
One available option was to combine the Medicare cost report data from
freestanding IPF providers with Medicare cost report data from
hospital-based IPF providers. We indicated that an examination of the
Medicare cost report data comparing freestanding IPFs and hospital-
based IPFs showed differences between cost levels and cost structures.
At that time, we were unable to fully understand these differences even
after reviewing explanatory variables such as geographic variation,
case mix (including DRG, comorbidity, and age), urban or rural status,
teaching status, and presence of a qualifying emergency department. As
a result, we continued to research ways to reconcile the differences
and solicited public comment for additional information that might help
us to better understand the reasons for the variations in costs and
cost structures, as indicated by the Medicare cost report data (74 FR
20376). We summarized the public comments received and our responses in
the April 2010 IPF PPS notice (75 FR 23111 through 23113). Despite
receiving comments from the public on this issue, we were still unable
to sufficiently reconcile the observed differences in costs and cost
structures between hospital-based and freestanding IPFs; and therefore,
at that time we did not believe it to be appropriate to incorporate
data from hospital-based IPFs with those of freestanding IPFs to create
a stand-alone IPF market basket.
Beginning with the RY 2012 IPF PPS final rule (76 FR 26432), IPF
PPS payments were updated using a 2008-based RPL market basket
reflecting the operating and capital cost structures for freestanding
IRFs, freestanding IPFs, and LTCHs. The major changes for RY 2012
included: Updating the base year from FY 2002 to FY 2008; using a more
specific composite chemical price proxy; breaking the professional fees
cost category into two separate categories (Labor-related and Non-
labor-related); and adding two additional cost categories
(Administrative and Facilities Support Services and Financial
Services), which were previously included in the residual All Other
Services cost categories. The RY 2012 IPF PPS proposed rule (76 FR
4998) and RY 2012 final rule (76 FR 26432) contain a complete
discussion of the development of the 2008-based RPL market basket.
In the FY 2016 IPF PPS proposed rule, we proposed to create a 2012-
based IPF market basket, using Medicare cost report data for both
freestanding and hospital-based IPFs. After consideration of the public
comments, we finalized the creation and adoption of a 2012-based IPF
market basket with a modification to the Wages and Salaries and
Employee Benefits cost methodologies based on public comments. We
believe that the use of the 2012-based IPF market basket to update IPF
PPS payments is a technical improvement as it is based on Medicare Cost
Report data from both freestanding and hospital-based IPFs.
Furthermore, the 2012-based IPF market basket does not include costs
from either IRF or LTCH providers, which were included in the 2008-
based RPL market basket. We refer readers to the FY 2016 IPF PPS final
rule for a detailed discussion of the 2012-based IPF PPS Market Basket
and its development (80 FR 46656 through 46679).
2. FY 2017 IPF Market Basket Update
For FY 2017 (beginning October 1, 2016 and ending September 30,
2017), we use an estimate of the 2012-based IPF market basket increase
factor to update the IPF PPS base payment rate. Consistent with
historical practice, we estimate the market basket update for the IPF
PPS based on IHS Global Insight's forecast. IHS Global Insight, Inc.
(IGI) is a nationally recognized economic and financial forecasting
firm that contracts with the Centers for Medicare & Medicaid Services
(CMS) to forecast the components of the market baskets and multifactor
productivity (MFP). Based on IGI's second quarter 2016 forecast with
historical data
[[Page 50506]]
through the first quarter of 2016, the 2012-based IPF market basket
increase factor for FY 2017 is 2.8 percent.
Section 1886(s)(2)(A)(i) of the Act requires the application of the
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of
the Act to the IPF PPS for the RY beginning in 2012 (a RY that
coincides with a FY) and each subsequent RY. For this FY 2017 IPF PPS
Notice, based on IGI's second quarter 2016 forecast, the MFP adjustment
for FY 2017 (the 10-year moving average of MFP for the period ending FY
2017) is projected to be 0.3 percent. We reduced the IPF market basket
estimate by this 0.3 percentage point productivity adjustment, as
mandated by the Act. For more information on the productivity
adjustment, please see the discussion in the FY 2016 IPF PPS final rule
(80 FR 46675).
In addition, for FY 2017 the 2012-based IPF PPS market basket
update is further reduced by 0.2 percentage point as required by
sections 1886(s)(2)(A)(ii) and 1886(s)(3)(D) of the Act. This results
in an estimated FY 2017 IPF PPS payment rate update of 2.3 percent (2.8
- 0.3 - 0.2 = 2.3).
3. IPF Labor-Related Share
Due to variations in geographic wage levels and other labor-related
costs, we believe that payment rates under the IPF PPS should continue
to be adjusted by a geographic wage index, which would apply to the
labor-related portion of the Federal per diem base rate (hereafter
referred to as the labor-related share).
The labor-related share is determined by identifying the national
average proportion of total costs that are related to, influenced by,
or vary with the local labor market. We continue to classify a cost
category as labor-related if the costs are labor-intensive and vary
with the local labor market.
Based on our definition of the labor-related share and the cost
categories in the 2012-based IPF market basket, we are continuing to
include in the labor-related share the sum of the relative importance
of Wages and Salaries, Employee Benefits, Professional Fees: Labor-
Related, Administrative and Facilities Support Services, Installation,
Maintenance, and Repair, All Other: Labor-related Services, and a
portion (46 percent) of the Capital-Related cost weight from the
proposed 2012-based IPF market basket. The relative importance reflects
the different rates of price change for these cost categories between
the base year (FY 2012) and FY 2017. Using IGI's second quarter 2016
forecast for the final 2012-based IPF market basket, the IPF labor-
related share for FY 2017 is the sum of the FY 2017 relative importance
of each labor-related cost category.
Please see the FY 2016 IPF PPS final rule for more information on
the labor-related share and its calculation (80 FR 46675 through
46679). For FY 2017, the updated labor-related share based on IGI's
second quarter 2016 forecast of the 2012-based IPF PPS market basket is
75.1 percent.
B. Updates to the IPF PPS Rates for FY Beginning October 1, 2016
The IPF PPS is based on a standardized Federal per diem base rate
calculated from the IPF average per diem costs and adjusted for budget-
neutrality in the implementation year. The Federal per diem base rate
is used as the standard payment per day under the IPF PPS and is
adjusted by the patient-level and facility-level adjustments that are
applicable to the IPF stay. A detailed explanation of how we calculated
the average per diem cost appears in the November 2004 IPF PPS final
rule (69 FR 66926).
1. Determining the Standardized Budget-Neutral Federal Per Diem Base
Rate
Section 124(a)(1) of the BBRA required that we implement the IPF
PPS in a budget-neutral manner. In other words, the amount of total
payments under the IPF PPS, including any payment adjustments, must be
projected to be equal to the amount of total payments that would have
been made if the IPF PPS were not implemented. Therefore, we calculated
the budget-neutrality factor by setting the total estimated IPF PPS
payments to be equal to the total estimated payments that would have
been made under the Tax Equity and Fiscal Responsibility Act of 1982
(TEFRA) (Pub. L. 97-248) methodology had the IPF PPS not been
implemented. A step-by-step description of the methodology used to
estimate payments under the TEFRA payment system appears in the
November 2004 IPF PPS final rule (69 FR 66926).
Under the IPF PPS methodology, we calculated the final Federal per
diem base rate to be budget-neutral during the IPF PPS implementation
period (that is, the 18-month period from January 1, 2005 through June
30, 2006) using a July 1 update cycle. We updated the average cost per
day to the midpoint of the IPF PPS implementation period (October 1,
2005), and this amount was used in the payment model to establish the
budget-neutrality adjustment.
Next, we standardized the IPF PPS Federal per diem base rate to
account for the overall positive effects of the IPF PPS payment
adjustment factors by dividing total estimated payments under the TEFRA
payment system by estimated payments under the IPF PPS. Additional
information concerning this standardization can be found in the
November 2004 IPF PPS final rule (69 FR 66932) and the RY 2006 IPF PPS
final rule (71 FR 27045). We then reduced the standardized Federal per
diem base rate to account for the outlier policy, the stop loss
provision, and anticipated behavioral changes. A complete discussion of
how we calculated each component of the budget-neutrality adjustment
appears in the November 2004 IPF PPS final rule (69 FR 66932 through
66933) and in the May 2006 IPF PPS final rule (71 FR 27044 through
27046). The final standardized budget-neutral Federal per diem base
rate established for cost reporting periods beginning on or after
January 1, 2005 was calculated to be $575.95.
The Federal per diem base rate has been updated in accordance with
applicable statutory requirements and Sec. 412.428 through publication
of annual notices or proposed and final rules. A detailed discussion on
the standardized budget-neutral Federal per diem base rate and the
electroconvulsive therapy (ECT) payment per treatment appears in the
August 2013 IPF PPS update notice (78 FR 46738 through 46739). These
documents are available on the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/.
IPFs must include a valid procedure code for ECT services provided
to IPF beneficiaries in order to bill for ECT services, as described in
our Medicare claims processing manual, chapter 3, section 190.7.3
(available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c03.pdf.) There were no changes to the ECT
procedure codes used on IPF claims as a result of the update to the
ICD-10-PCS code set for FY 2017.
2. Update of the Federal Per Diem Base Rate and Electroconvulsive
Therapy Payment Per Treatment
The current (FY 2016) Federal per diem base rate is $743.73 and the
ECT payment per treatment is $320.19. For FY 2017, we applied a payment
rate update of 2.3 percent (that is, the 2012-based IPF market basket
increase for FY 2017 of 2.8 percent less the productivity adjustment of
0.3 percentage point, and further reduced by the 0.2 percentage point
required under section
[[Page 50507]]
1886(s)(3)(D) of the Act), and the wage index budget-neutrality factor
of 1.0007 (as discussed in section III.D.1.e of this notice) to the FY
2016 Federal per diem base rate of $743.73, yielding a Federal per diem
base rate of $761.37 for FY 2017. Similarly, we applied the 2.3 percent
payment rate update and the 1.0007 wage index budget-neutrality factor
to the FY 2016 ECT payment per treatment, yielding an ECT payment per
treatment of $327.78 for FY 2017.
Section 1886(s)(4)(A)(i) of the Act requires that, for RY 2014 and
each subsequent RY, the Secretary shall reduce any annual update to a
standard Federal rate for discharges occurring during the RY by 2.0
percentage points for any IPF that did not comply with the quality data
submission requirements with respect to an applicable year. Therefore,
we are applying a 2.0 percentage point reduction to the Federal per
diem base rate and the ECT payment per treatment as follows: For IPFs
that failed to submit quality reporting data under the Inpatient
Psychiatric Facilities Quality Reporting (IPFQR) program, we are
applying a 0.3 percent payment rate update (that is, 2.3 percent
reduced by 2 percentage points in accordance with section
1886(s)(4)(A)(ii) of the Act) and the wage index budget-neutrality
factor of 1.0007 to the FY 2016 Federal per diem base rate of $743.73,
yielding a Federal per diem base rate of $746.48 for FY 2017.
Similarly, for IPFs that failed to submit quality reporting data under
the IPFQR program, we are applying the 0.3 percent annual payment rate
update and the 1.0007 wage index budget-neutrality factor to the FY
2016 ECT payment per treatment of $320.19, yielding an ECT payment per
treatment of $321.38 for FY 2017.
C. Updates to the IPF PPS Patient-Level Adjustment Factors
1. Overview of the IPF PPS Adjustment Factors
The IPF PPS payment adjustments were derived from a regression
analysis of 100 percent of the FY 2002 MedPAR data file, which
contained 483,038 cases. For a more detailed description of the data
file used for the regression analysis, see the November 2004 IPF PPS
final rule (69 FR 66935 through 66936). We continue to use the existing
regression-derived adjustment factors established in 2005 for FY 2017.
However, we have used more recent claims data to simulate payments to
set the outlier fixed dollar loss threshold amount and to assess the
impact of the IPF PPS updates.
2. IPF-PPS Patient-Level Adjustments
The IPF PPS includes payment adjustments for the following patient-
level characteristics: Medicare Severity Diagnosis Related Groups (MS-
DRGs) assignment of the patient's principal diagnosis, selected
comorbidities, patient age, and the variable per diem adjustments.
a. MS-DRG Assignment
We believe it is important to maintain the same diagnostic coding
and DRG classification for IPFs that are used under the Inpatient
Prospective Payment System (IPPS) for providing psychiatric care. For
this reason, when the IPF PPS was implemented for cost reporting
periods beginning on or after January 1, 2005, we adopted the same
diagnostic code set (ICD-9-CM) and DRG patient classification system
(CMS DRGs) that were utilized at the time under the IPPS. In the May
2008 IPF PPS notice (73 FR 25709), we discussed CMS' effort to better
recognize resource use and the severity of illness among patients. CMS
adopted the new MS-DRGs for the IPPS in the FY 2008 IPPS final rule
with comment period (72 FR 47130). In the 2008 IPF PPS notice (73 FR
25716), we provided a crosswalk to reflect changes that were made under
the IPF PPS to adopt the new MS-DRGs. For a detailed description of the
mapping changes from the original DRG adjustment categories to the
current MS-DRG adjustment categories, we refer readers to the May 2008
IPF PPS notice (73 FR 25714).
The IPF PPS includes payment adjustments for designated psychiatric
DRGs assigned to the claim based on the patient's principal diagnosis.
The DRG adjustment factors were expressed relative to the most
frequently reported psychiatric DRG in FY 2002, that is, DRG 430
(psychoses). The coefficient values and adjustment factors were derived
from the regression analysis. Mapping the DRGs to the MS-DRGs resulted
in the current 17 IPF MS-DRGs, instead of the original 15 DRGs, for
which the IPF PPS provides an adjustment. For the FY 2017 update, we
are not making any changes to the IPF MS-DRG adjustment factors.
In FY 2015 rulemaking (79 FR 45945 through 45947), we proposed and
finalized conversions of the ICD-9-CM-based MS-DRGs to ICD-10-CM/PCS-
based MS-DRGs, which were implemented on October 1, 2015. Further
information on the ICD-10-CM/PCS MS-DRG conversion project can be found
on the CMS ICD-10-CM Web site at https://www.cms.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html.
For FY 2017, we will continue to make a payment adjustment for
psychiatric diagnoses that group to one of the existing 17 IPF MS-DRGs
listed in Addendum A. Psychiatric principal diagnoses that do not group
to one of the 17 designated DRGs will still receive the Federal per
diem base rate and all other applicable adjustments, but the payment
would not include a DRG adjustment.
The diagnoses for each IPF MS-DRG will be updated as of October 1,
2016, using the final FY 2017 ICD-10-CM/PCS code sets. The FY 2017 IPPS
Final Rule with comment period includes tables of the changes to the
ICD-10-CM/PCS code sets which underlie the FY 2017 IPF MS-DRGs. Both
the FY 2017 IPPS final rule and the tables of changes to the ICD-10-CM/
PCS code sets which underlie the FY 2017 MS-DRGs are available on the
IPPS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/.
i. Code First
As discussed in the ICD-10-CM Official Guidelines for Coding and
Reporting, certain conditions have both an underlying etiology and
multiple body system manifestations due to the underlying etiology. For
such conditions, the ICD-10-CM has a coding convention that requires
the underlying condition be sequenced first followed by the
manifestation. Wherever such a combination exists, there is a ``use
additional code'' note at the etiology code, and a ``code first'' note
at the manifestation code. These instructional notes indicate the
proper sequencing order of the codes (etiology followed by
manifestation). In accordance with the ICD-10-CM Official Guidelines
for Coding and Reporting, when a primary (psychiatric) diagnosis code
has a ``code first'' note, the provider would follow the instructions
in the ICD-10-CM text. The submitted claim goes through the CMS
processing system, which will identify the primary diagnosis code as
non-psychiatric and search the secondary codes for a psychiatric code
to assign a DRG code for adjustment. The system will continue to search
the secondary codes for those that are appropriate for comorbidity
adjustment.
For more information on ``code first'' policy, please see the
November 2004 IPF PPS Final Rule (69 FR 66945). In the FY 2015 IPF PPS
final rule, we provided a ``code first'' table for reference that
highlights the same or similar manifestation codes where the ``code
[[Page 50508]]
first'' instructions apply in ICD-10-CM that were present in ICD-9-CM
(79 FR 46009). There were no changes to the IPF Code First list as a
result of the FY 2017 updates to the ICD-10-CM/PCS code sets.
b. Payment for Comorbid Conditions
The intent of the comorbidity adjustments is to recognize the
increased costs associated with comorbid conditions by providing
additional payments for certain existing medical or psychiatric
conditions that are expensive to treat. In the May 2011 IPF PPS final
rule (76 FR 26451 through 26452), we explained that the IPF PPS
includes 17 comorbidity categories and identified the new, revised, and
deleted ICD-9-CM diagnosis codes that generate a comorbid condition
payment adjustment under the IPF PPS for RY 2012 (76 FR 26451).
Comorbidities are specific patient conditions that are secondary to
the patient's principal diagnosis and that require treatment during the
stay. Diagnoses that relate to an earlier episode of care and have no
bearing on the current hospital stay are excluded and must not be
reported on IPF claims. Comorbid conditions must exist at the time of
admission or develop subsequently, and affect the treatment received,
length of stay (LOS), or both treatment and LOS.
For each claim, an IPF may receive only one comorbidity adjustment
within a comorbidity category, but it may receive an adjustment for
more than one comorbidity category. Current billing instructions for
discharge claims, on or after October 1, 2015, require IPFs to enter
the complete ICD-10-CM codes for up to 24 additional diagnoses if they
co-exist at the time of admission, or develop subsequently and impact
the treatment provided.
The comorbidity adjustments were determined based on the regression
analysis using the diagnoses reported by IPFs in FY 2002. The principal
diagnoses were used to establish the DRG adjustments and were not
accounted for in establishing the comorbidity category adjustments,
except where ICD-9-CM ``code first'' instructions apply. In a ``code
first'' situation, the submitted claim goes through the CMS processing
system, which will identify the primary diagnosis code as non-
psychiatric and search the secondary codes for a psychiatric code to
assign a DRG code for adjustment. The system will continue to search
the secondary codes for those that are appropriate for comorbidity
adjustment.
As noted previously, it is our policy to maintain the same
diagnostic coding set for IPFs that is used under the IPPS for
providing the same psychiatric care. The 17 comorbidity categories
formerly defined using ICD-9-CM codes were converted to ICD-10-CM/PCS
in the FY 2015 IPF PPS final rule (79 FR 45947 to 45955). The goal for
converting the comorbidity categories is referred to as replication,
meaning that the payment adjustment for a given patient encounter is
the same after ICD-10-CM implementation as it would be if the same
record had been coded in ICD-9-CM and submitted prior to ICD-10-CM/PCS
implementation on October 1, 2015. All conversion efforts were made
with the intent of achieving this goal. For FY 2017, we will use the
comorbidity adjustments in effect in FY 2016, which are found in
Addendum A to this notice. We have also updated the ICD-10-CM/PCS codes
which are associated with the existing IPF PPS comorbidity categories,
based upon the FY 2017 update to the ICD-10-CM/PCS code set. In
accordance with the policy established in the FY 2015 IPF PPS Final
Rule (79 FR 45949 through 45952), we reviewed all new FY 2017 ICD-10-CM
codes to remove site unspecified codes from the new FY 2017 ICD-10-CM/
PCS codes in instances where more specific codes are available. Based
on our review, we are excluding new FY 2017 ICD-10-CM code D49519
(``Neoplasm of unspecified behavior of unspecified kidney'') in the
Oncology Treatment comorbidity category. Please see Addendum B to this
notice for a table of changes to the ICD-10-CM/PCS codes which affect
FY 2017 IPF PPS comorbidity categories.
3. Patient Age Adjustments
As explained in the November 2004 IPF PPS final rule (69 FR 66922),
we analyzed the impact of age on per diem cost by examining the age
variable (range of ages) for payment adjustments. In general, we found
that the cost per day increases with age. The older age groups are more
costly than the under 45 age group, the differences in per diem cost
increase for each successive age group, and the differences are
statistically significant. For FY 2017, we will use the patient age
adjustments currently in effect in FY 2016, as shown in Addendum A to
this notice.
4. Variable Per Diem Adjustments
We explained in the November 2004 IPF PPS final rule (69 FR 66946)
that the regression analysis indicated that per diem cost declines as
the LOS increases. The variable per diem adjustments to the Federal per
diem base rate account for ancillary and administrative costs that
occur disproportionately in the first days after admission to an IPF.
We used a regression analysis to estimate the average differences in
per diem cost among stays of different lengths. As a result of this
analysis, we established variable per diem adjustments that begin on
day 1 and decline gradually until day 21 of a patient's stay. For day
22 and thereafter, the variable per diem adjustment remains the same
each day for the remainder of the stay. However, the adjustment applied
to day 1 depends upon whether the IPF has a qualifying ED. If an IPF
has a qualifying ED, it receives a 1.31 adjustment factor for day 1 of
each stay. If an IPF does not have a qualifying ED, it receives a 1.19
adjustment factor for day 1 of the stay. The ED adjustment is explained
in more detail in section III.D.4 of this notice.
For FY 2017, we will use the variable per diem adjustment factors
currently in effect as shown in Addendum A to this notice. A complete
discussion of the variable per diem adjustments appears in the November
2004 IPF PPS final rule (69 FR 66946).
D. Updates to the IPF PPS Facility-Level Adjustments
The IPF PPS includes facility-level adjustments for the wage index,
IPFs located in rural areas, teaching IPFs, cost of living adjustments
for IPFs located in Alaska and Hawaii, and IPFs with a qualifying ED.
1. Wage Index Adjustment
a. Background
As discussed in the May 2006 IPF PPS final rule (71 FR 27061) and
in the May 2008 (73 FR 25719) and May 2009 (74 FR 20373) IPF PPS
notices, in order to provide an adjustment for geographic wage levels,
the labor-related portion of an IPF's payment is adjusted using an
appropriate wage index. Currently, an IPF's geographic wage index value
is determined based on the actual location of the IPF in an urban or
rural area as defined in Sec. 412.64(b)(1)(ii)(A) and (C).
b. Updated Wage Index for FY 2017
Since the inception of the IPF PPS, we have used the pre-floor,
pre-reclassified acute care hospital wage index in developing a wage
index to be applied to IPFs because there is not an IPF-specific wage
index available. We believe that IPFs compete in the same labor markets
as acute care hospitals, so the pre-floor, pre-reclassified hospital
wage index should reflect IPF labor costs. As discussed in the May 2006
IPF PPS final rule for FY 2007 (71 FR 27061 through 27067), under the
IPF PPS, the wage index is calculated using the IPPS
[[Page 50509]]
wage index for the labor market area in which the IPF is located,
without taking into account geographic reclassifications, floors, and
other adjustments made to the wage index under the IPPS. For a complete
description of these IPPS wage index adjustments, please see the CY
2013 IPPS/LTCH PPS final rule (77 FR 53365 through 53374). For FY 2017,
we will continue to apply the most recent hospital wage index (the FY
2016 pre-floor, pre-reclassified hospital wage index, which is the most
appropriate index as it best reflects the variation in local labor
costs of IPFs in the various geographic areas) using the most recent
hospital wage data (data from hospital cost reports for the cost
reporting period beginning during FY 2012) without any geographic
reclassifications, floors, or other adjustments. We apply the FY 2017
IPF PPS wage index to payments beginning October 1, 2016.
We apply the wage index adjustment to the labor-related portion of
the federal rate, which changed from 75.2 percent in FY 2016 to 75.1
percent in FY 2017. This percentage reflects the labor-related share of
the 2012-based IPF market basket for FY 2017 (see section III.A.3 of
this notice).
c. OMB Bulletins
OMB publishes bulletins regarding Core-Based Statistical Area
(CBSA) changes, including changes to CBSA numbers and titles. In the
May 2006 IPF PPS final rule for RY 2007 (71 FR 27061 through 27067), we
adopted the changes discussed in the Office of Management and Budget
(OMB) Bulletin No. 03-04 (June 6, 2003), which announced revised
definitions for Metropolitan Statistical Areas (MSAs), and the creation
of Micropolitan Statistical Areas and Combined Statistical Areas. In
adopting the OMB CBSA geographic designations in RY 2007, we did not
provide a separate transition for the CBSA-based wage index since the
IPF PPS was already in a transition period from TEFRA payments to PPS
payments.
In the May 2008 IPF PPS notice, we incorporated the CBSA
nomenclature changes published in the most recent OMB bulletin that
applies to the hospital wage index used to determine the current IPF
PPS wage index and stated that we expect to continue to do the same for
all the OMB CBSA nomenclature changes in future IPF PPS rules and
notices, as necessary (73 FR 25721). The OMB bulletins may be accessed
online at https://www.whitehouse.gov/omb/bulletins_default/.
In accordance with our established methodology, we have
historically adopted any CBSA changes that are published in the OMB
bulletin that corresponds with the hospital wage index used to
determine the IPF PPS wage index. For the FY 2015 IPF wage index, we
used the FY 2014 pre-floor, pre-reclassified hospital wage index to
adjust the IPF PPS payments. On February 28, 2013, OMB issued OMB
Bulletin No. 13-01, which established revised delineations for MSAs,
Micropolitan Statistical Areas, and Combined Statistical Areas, and
provided guidance on the use of the delineations of these statistical
areas. A copy of this bulletin may be obtained at https://www.whitehouse.gov/omb/bulletins_default/. Because the FY 2014 pre-
floor, pre-reclassified hospital wage index was finalized prior to the
issuance of this Bulletin, the FY 2015 IPF PPS wage index, which was
based on the FY 2014 pre-floor, pre-reclassified hospital wage index,
did not reflect OMB's new area delineations based on the 2010 Census.
According to OMB, ``[t]his bulletin provides the delineations of all
Metropolitan Statistical Areas, Metropolitan Divisions, Micropolitan
Statistical Areas, Combined Statistical Areas, and New England City and
Town Areas in the United States and Puerto Rico based on the standards
published on June 28, 2010, in the Federal Register (75 FR 37246
through 37252) and Census Bureau data.'' These OMB Bulletin changes are
reflected in the FY 2015 pre-floor, pre-reclassified hospital wage
index, upon which the FY 2016 IPPS PPS wage index was based. We adopted
these new OMB CBSA delineations in the FY 2016 IPF PPS wage index;
therefore, they are also included in the FY 2017 IPF PPS wage index.
While we believe that the CBSA delineations implemented in the FY
2016 IPF PPS final rule resulted in wage index values that are more
representative of the actual costs of labor in a given area, we also
recognize that use of the new CBSA delineations resulted in reduced
payments to some IPFs and increased payments to other IPFs, due to
changes in wage index values. Therefore, in our FY 2016 IPF PPS final
rule, we provided for a transition period to mitigate any negative
impacts on facilities that experience reduced payments as a result of
our adopting the new OMB CBSA delineations. We implemented these CBSA
changes using a 1-year transition with a blended wage index for all
providers (80 FR 46682 through 46689). The FY 2017 IPF PPS wage index
and subsequent IPF PPS wage indices will be based solely on the new OMB
CBSA delineations. The final FY 2017 IPF PPS wage index is located on
the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/WageIndex.html.
d. Adjustment for Rural Location and Continuing Phase-Out of the Rural
Adjustment for IPFs That Lost Their Rural Adjustment Due to CBSA
Changes Implemented in FY 2016
In the November 2004 IPF PPS final rule, we provided a 17 percent
payment adjustment for IPFs located in a rural area. This adjustment
was based on the regression analysis, which indicated that the per diem
cost of rural facilities was 17 percent higher than that of urban
facilities after accounting for the influence of the other variables
included in the regression. For FY 2017, we will continue to apply a 17
percent payment adjustment for IPFs located in a rural area as defined
at Sec. 412.64(b)(1)(ii)(C). A complete discussion of the adjustment
for rural locations appears in the November 2004 IPF PPS final rule (69
FR 66954).
As noted in section III.D.1.c of this notice, we adopted OMB
updates to CBSA delineations in the FY 2016 IPF PPS transitional wage
index. Adoption of the updated CBSAs changed the status of 37 IPF
providers designated as ``rural'' in FY 2015 to ``urban'' for FY 2016
and subsequent fiscal years. As such, these 37 newly urban providers no
longer receive the 17 percent rural adjustment.
In the FY 2016 IPF PPS final rule, we implemented a budget-neutral
3-year phase-out of the rural adjustment for the existing FY 2015 rural
IPFs that became urban in FY 2016 and that experienced a loss in
payments due to changes from the new CBSA delineations (80 FR 46689 to
46690). This policy allowed rural IPFs that were classified as urban in
FY 2016 to receive two-thirds of the IPF PPS rural adjustment for FY
2016. For FY 2017, these IPFs will receive one-third of the IPF PPS
rural adjustment. For FY 2018 and subsequent years, these IPFs will not
receive any rural adjustment. We are now in the second year of the 3-
year rural adjustment phase-out; therefore, these IPFs that were
classified as rural in FY 2015, but were changed to urban in FY 2016 as
a result of the OMB CBSA changes, will receive one-third of the 17
percent rural adjustment in FY 2017.
e. Budget Neutrality Adjustment
Changes to the wage index are made in a budget-neutral manner so
that
[[Page 50510]]
updates do not increase expenditures. Therefore, for FY 2017, we will
continue to apply a budget-neutrality adjustment in accordance with our
existing budget-neutrality policy. This policy requires us to update
the wage index in such a way that total estimated payments to IPFs for
FY 2017 are the same with or without the changes (that is, in a budget-
neutral manner) by applying a budget neutrality factor to the IPF PPS
rates. We use the following steps to ensure that the rates reflect the
update to the wage indexes (based on the FY 2012 hospital cost report
data) and the labor-related share in a budget-neutral manner:
Step 1. Simulate estimated IPF PPS payments, using the FY 2016 wage
index values and labor-related share (as published in the FY 2016 IPF
PPS final rule (80 FR 46675 to 46679 and 46681 to 46690)).
Step 2. Simulate estimated IPF PPS payments using the FY 2017 wage
index values (available on the CMS Web site) and labor-related share
(based on the latest available data as discussed previously).
Step 3. Divide the amount calculated in step 1 by the amount
calculated in step 2. The resulting quotient is the FY 2017 budget-
neutral wage adjustment factor of 1.0007.
Step 4. Apply the FY 2017 budget-neutral wage adjustment factor
from step 3 to the Federal per diem base rate for FY 2017, in addition
to the market basket described in section III.A2 of this notice.
2. Teaching Adjustment
In the November 2004 IPF PPS final rule, we implemented regulations
at Sec. 412.424(d)(1)(iii) to establish a facility-level adjustment
for IPFs that are, or are part of, teaching hospitals. The teaching
adjustment accounts for the higher indirect operating costs experienced
by hospitals that participate in graduate medical education (GME)
programs. The payment adjustments are made based on the ratio of the
number of full-time equivalent (FTE) interns and residents training in
the IPF and the IPF's average daily census (ADC).
Medicare makes direct GME payments (for direct costs such as
resident and teaching physician salaries, and other direct teaching
costs) to all teaching hospitals including those paid under a PPS, and
those paid under the TEFRA rate-of-increase limits. These direct GME
payments are made separately from payments for hospital operating costs
and are not part of the IPF PPS. The direct GME payments do not address
the estimated higher indirect operating costs teaching hospitals may
face.
The results of the regression analysis of FY 2002 IPF data
established the basis for the payment adjustments included in the
November 2004 IPF PPS final rule. The results showed that the indirect
teaching cost variable is significant in explaining the higher costs of
IPFs that have teaching programs. We calculated the teaching adjustment
based on the IPF's ``teaching variable,'' which is one plus the ratio
of the number of FTE residents training in the IPF (subject to
limitations described below) to the IPF's ADC.
We established the teaching adjustment in a manner that limited the
incentives for IPFs to add FTE residents for the purpose of increasing
their teaching adjustment. We imposed a cap on the number of FTE
residents that may be counted for purposes of calculating the teaching
adjustment. The cap limits the number of FTE residents that teaching
IPFs may count for the purpose of calculating the IPF PPS teaching
adjustment, not the number of residents teaching institutions can hire
or train. We calculated the number of FTE residents that trained in the
IPF during a ``base year'' and used that FTE resident number as the
cap. An IPF's FTE resident cap is ultimately determined based on the
final settlement of the IPF's most recent cost report filed before
November 15, 2004 (publication date of the IPF PPS final rule). A
complete discussion of the temporary adjustment to the FTE cap to
reflect residents added due to hospital closure and by residency
program appears in the January 27, 2011 IPF PPS proposed rule (76 FR
5018 through 5020) and the May 6, 2011 IPF PPS final rule (76 FR 26453
through 26456).
In the regression analysis, the logarithm of the teaching variable
had a coefficient value of 0.5150. We converted this cost effect to a
teaching payment adjustment by treating the regression coefficient as
an exponent and raising the teaching variable to a power equal to the
coefficient value. We note that the coefficient value of 0.5150 was
based on the regression analysis holding all other components of the
payment system constant. A complete discussion of how the teaching
adjustment was calculated appears in the November 2004 IPF PPS final
rule (69 FR 66954 through 66957) and the May 2008 IPF PPS notice (73 FR
25721). As with other adjustment factors derived through the regression
analysis, we do not plan to rerun the teaching adjustment factors in
the regression analysis until we more fully analyze IPF PPS data.
Therefore, in this FY 2017 notice, we will continue to retain the
coefficient value of 0.5150 for the teaching adjustment to the Federal
per diem base rate.
3. Cost of Living Adjustment for IPFs Located in Alaska and Hawaii
The IPF PPS includes a payment adjustment for IPFs located in
Alaska and Hawaii based upon the county in which the IPF is located. As
we explained in the November 2004 IPF PPS final rule, the FY 2002 data
demonstrated that IPFs in Alaska and Hawaii had per diem costs that
were disproportionately higher than other IPFs. Other Medicare PPSs
(for example: The IPPS and LTCH PPS) adopted a cost of living
adjustment (COLA) to account for the cost differential of care
furnished in Alaska and Hawaii.
We analyzed the effect of applying a COLA to payments for IPFs
located in Alaska and Hawaii. The results of our analysis demonstrated
that a COLA for IPFs located in Alaska and Hawaii would improve payment
equity for these facilities. As a result of this analysis, we provided
a COLA in the November 2004 IPF PPS final rule.
A COLA for IPFs located in Alaska and Hawaii is made by multiplying
the non-labor-related portion of the Federal per diem base rate by the
applicable COLA factor based on the COLA area in which the IPF is
located.
The COLA factors are published on the Office of Personnel
Management (OPM) Web site (https://www.opm.gov/oca/cola/rates.asp).
We note that the COLA areas for Alaska are not defined by county as
are the COLA areas for Hawaii. In 5 CFR 591.207, the OPM established
the following COLA areas:
City of Anchorage, and 80-kilometer (50-mile) radius by
road, as measured from the federal courthouse.
City of Fairbanks, and 80-kilometer (50-mile) radius by
road, as measured from the federal courthouse.
City of Juneau, and 80-kilometer (50-mile) radius by road,
as measured from the federal courthouse.
Rest of the State of Alaska.
As stated in the November 2004 IPF PPS final rule, we update the
COLA factors according to updates established by the OPM. However,
sections 1911 through 1919 of the Nonforeign Area Retirement Equity
Assurance Act, as contained in subtitle B of title XIX of the National
Defense Authorization Act (NDAA) for Fiscal Year 2010 (Pub. L. 111-84,
October 28, 2009), transitions the Alaska and Hawaii COLAs to locality
pay. Under section 1914 of NDAA, locality pay is being phased in over a
3-year period beginning in
[[Page 50511]]
January 2010, with COLA rates frozen as of the date of enactment,
October 28, 2009, and then proportionately reduced to reflect the
phase-in of locality pay.
When we published the proposed COLA factors in the January 2011 IPF
PPS proposed rule (76 FR 4998), we inadvertently selected the FY 2010
COLA rates, which had been reduced to account for the phase-in of
locality pay. We did not intend to propose the reduced COLA rates
because that would have understated the adjustment. Since the 2009 COLA
rates did not reflect the phase-in of locality pay, we finalized the FY
2009 COLA rates for RY 2010 through RY 2014.
In the FY 2013 IPPS/LTCH final rule (77 FR 53700 through 53701), we
established a methodology for FY 2014 to update the COLA factors for
Alaska and Hawaii. Under that methodology, we use a comparison of the
growth in the Consumer Price Indices (CPIs) in Anchorage, Alaska and
Honolulu, Hawaii relative to the growth in the overall CPI as published
by the Bureau of Labor Statistics (BLS) to update the COLA factors for
all areas in Alaska and Hawaii, respectively. As discussed in the FY
2013 IPPS/LTCH proposed rule (77 FR 28145), because BLS publishes CPI
data for only Anchorage, Alaska and Honolulu, Hawaii, our methodology
for updating the COLA factors uses a comparison of the growth in the
CPIs for those cities relative to the growth in the overall CPI to
update the COLA factors for all areas in Alaska and Hawaii,
respectively. We believe that the relative price differences between
these cities and the United States (as measured by the CPIs mentioned
above) are generally appropriate proxies for the relative price
differences between the ``other areas'' of Alaska and Hawaii and the
United States.
The CPIs for ``All Items'' that BLS publishes for Anchorage,
Alaska, Honolulu, Hawaii, and for the average U.S. city are based on a
different mix of commodities and services than is reflected in the non-
labor-related share of the IPPS market basket. As such, under the
methodology we established to update the COLA factors, we calculated a
``reweighted CPI'' using the CPI for commodities and the CPI for
services for each of the geographic areas to mirror the composition of
the IPPS market basket non-labor-related share. The current composition
of BLS' CPI for ``All Items'' for all of the respective areas is
approximately 40 percent commodities and 60 percent services. However,
the non-labor-related share of the IPPS market basket is comprised of
60 percent commodities and 40 percent services. Therefore, under the
methodology established for FY 2014 in the FY 2013 IPPS/LTCH PPS final
rule, we created reweighted indexes for Anchorage, Alaska, Honolulu,
Hawaii, and the average U.S. city using the respective CPI commodities
index and CPI services index and applying the approximate 60/40 weights
from the IPPS market basket. This approach is appropriate because we
would continue to make a COLA for hospitals located in Alaska and
Hawaii by multiplying the non-labor-related portion of the standardized
amount by a COLA factor.
Under the COLA factor update methodology established in the FY 2014
IPPS/LTCH final rule, we adjusted payments made to hospitals located in
Alaska and Hawaii by incorporating a 25 percent cap on the CPI-updated
COLA factors. We note that OPM's COLA factors were calculated with a
statutorily mandated cap of 25 percent, and since at least 1984, we
have exercised our discretionary authority to adjust Alaska and Hawaii
payments by incorporating this cap. In keeping with this historical
policy, we continue to use such a cap because our CPI-updated COLA
factors use the 2009 OPM COLA factors as a basis.
In FY 2015 IPF PPS rulemaking, we adopted the same methodology for
the COLA factors applied under the IPPS because IPFs are hospitals with
a similar mix of commodities and services. We think it is appropriate
to have a consistent policy approach with that of other hospitals in
Alaska and Hawaii. Therefore, in the FY 2015 IPF PPS final rule, we
adopted the cost of living adjustment factors shown in Addendum A for
IPFs located in Alaska and Hawaii. Under IPPS COLA policy, the COLA
updates are determined every four years, when the IPPS market basket is
rebased. Since the IPPS COLA factors were last updated in FY 2014, they
are not scheduled to be updated again until FY 2018. As such, we will
continue using the existing IPF PPS COLA factors in effect in FY 2016
for FY 2017. The IPF PPS COLA factors for FY 2017 are shown in Addendum
A to this notice.
4. Adjustment for IPFs With a Qualifying Emergency Department (ED)
The IPF PPS includes a facility-level adjustment for IPFs with
qualifying EDs. We provide an adjustment to the Federal per diem base
rate to account for the costs associated with maintaining a full-
service ED. The adjustment is intended to account for ED costs incurred
by a freestanding psychiatric hospital with a qualifying ED or a
distinct part psychiatric unit of an acute care hospital or a CAH, for
preadmission services otherwise payable under the Medicare Outpatient
Prospective Payment System (OPPS), furnished to a beneficiary on the
date of the beneficiary's admission to the hospital and during the day
immediately preceding the date of admission to the IPF (see Sec.
413.40(c)(2)), and the overhead cost of maintaining the ED. This
payment is a facility-level adjustment that applies to all IPF
admissions (with one exception described below), regardless of whether
a particular patient receives preadmission services in the hospital's
ED.
The ED adjustment is incorporated into the variable per diem
adjustment for the first day of each stay for IPFs with a qualifying
ED. Those IPFs with a qualifying ED receive an adjustment factor of
1.31 as the variable per diem adjustment for day 1 of each patient
stay. If an IPF does not have a qualifying ED, it receives an
adjustment factor of 1.19 as the variable per diem adjustment for day 1
of each patient stay.
The ED adjustment is made on every qualifying claim except as
described below. As specified in Sec. 412.424(d)(1)(v)(B), the ED
adjustment is not made when a patient is discharged from an acute care
hospital or CAH and admitted to the same hospital's or CAH's
psychiatric unit. We clarified in the November 2004 IPF PPS final rule
(69 FR 66960) that an ED adjustment is not made in this case because
the costs associated with ED services are reflected in the DRG payment
to the acute care hospital or through the reasonable cost payment made
to the CAH.
Therefore, when patients are discharged from an acute care hospital
or CAH and admitted to the same hospital or CAH's psychiatric unit, the
IPF receives the 1.19 adjustment factor as the variable per diem
adjustment for the first day of the patient's stay in the IPF. For FY
2017, we will continue to retain the 1.31 adjustment factor for IPFs
with qualifying EDs. A complete discussion of the steps involved in the
calculation of the ED adjustment factor appears in the November 2004
IPF PPS final rule (69 FR 66959 through 66960) and the May 2006 IPF PPS
final rule (71 FR 27070 through 27072).
E. Other Payment Adjustments and Policies
1. Outlier Payment Overview
The IPF PPS includes an outlier adjustment to promote access to IPF
care for those patients who require expensive care and to limit the
financial risk of IPFs treating unusually costly patients. In the
November 2004 IPF PPS
[[Page 50512]]
final rule, we implemented regulations at Sec. 412.424(d)(3)(i) to
provide a per-case payment for IPF stays that are extraordinarily
costly. Providing additional payments to IPFs for extremely costly
cases strongly improves the accuracy of the IPF PPS in determining
resource costs at the patient and facility level. These additional
payments reduce the financial losses that would otherwise be incurred
in treating patients who require more costly care and, therefore,
reduce the incentives for IPFs to under-serve these patients.
We make outlier payments for discharges in which an IPF's estimated
total cost for a case exceeds a fixed dollar loss threshold amount
(multiplied by the IPF's facility-level adjustments) plus the Federal
per diem payment amount for the case.
In instances when the case qualifies for an outlier payment, we pay
80 percent of the difference between the estimated cost for the case
and the adjusted threshold amount for days 1 through 9 of the stay
(consistent with the median LOS for IPFs in FY 2002), and 60 percent of
the difference for day 10 and thereafter. We established the 80 percent
and 60 percent loss sharing ratios because we were concerned that a
single ratio established at 80 percent (like other Medicare PPSs) might
provide an incentive under the IPF per diem payment system to increase
LOS in order to receive additional payments.
After establishing the loss sharing ratios, we determined the
current fixed dollar loss threshold amount through payment simulations
designed to compute a dollar loss beyond which payments are estimated
to meet the 2 percent outlier spending target. Each year when we update
the IPF PPS, we simulate payments using the latest available data to
compute the fixed dollar loss threshold so that outlier payments
represent 2 percent of total projected IPF PPS payments.
2. Update to the Outlier Fixed Dollar Loss Threshold Amount
In accordance with the update methodology described in Sec.
412.428(d), we are updating the fixed dollar loss threshold amount used
under the IPF PPS outlier policy. Based on the regression analysis and
payment simulations used to develop the IPF PPS, we established a 2
percent outlier policy, which strikes an appropriate balance between
protecting IPFs from extraordinarily costly cases while ensuring the
adequacy of the Federal per diem base rate for all other cases that are
not outlier cases.
Based on an analysis of the latest available data (the March 2016
update of FY 2015 IPF claims) and rate increases, we believe it is
necessary to update the fixed dollar loss threshold amount in order to
maintain an outlier percentage that equals 2 percent of total estimated
IPF PPS payments. To update the IPF outlier threshold amount for FY
2017, we used FY 2015 claims data and the same methodology that we used
to set the initial outlier threshold amount in the May 2006 IPF PPS
final rule (71 FR 27072 and 27073), which is also the same methodology
that we used to update the outlier threshold amounts for years 2008
through 2016. Based on an analysis of these updated data, we estimate
that IPF outlier payments as a percentage of total estimated payments
are approximately 2.1 percent in FY 2016. Therefore, we will update the
outlier threshold amount to $10,120 to maintain estimated outlier
payments at 2 percent of total estimated aggregate IPF payments for FY
2017.
3. Update to IPF Cost-to-Charge Ratio Ceilings
Under the IPF PPS, an outlier payment is made if an IPF's cost for
a stay exceeds a fixed dollar loss threshold amount plus the IPF PPS
amount. In order to establish an IPF's cost for a particular case, we
multiply the IPF's reported charges on the discharge bill by its
overall cost-to-charge ratio (CCR). This approach to determining an
IPF's cost is consistent with the approach used under the IPPS and
other PPSs. In the June 2003 IPPS final rule (68 FR 34494), we
implemented changes to the IPPS policy used to determine CCRs for acute
care hospitals because we became aware that payment vulnerabilities
resulted in inappropriate outlier payments. Under the IPPS, we
established a statistical measure of accuracy for CCRs in order to
ensure that aberrant CCR data did not result in inappropriate outlier
payments.
As we indicated in the November 2004 IPF PPS final rule (69 FR
66961), because we believe that the IPF outlier policy is susceptible
to the same payment vulnerabilities as the IPPS, we adopted a method to
ensure the statistical accuracy of CCRs under the IPF PPS.
Specifically, we adopted the following procedure in the November 2004
IPF PPS final rule: We calculated 2 national ceilings, one for IPFs
located in rural areas and one for IPFs located in urban areas. We
computed the ceilings by first calculating the national average and the
standard deviation of the CCR for both urban and rural IPFs using the
most recent CCRs entered in the CY 2016 Provider Specific File.
To determine the rural and urban ceilings, we multiplied each of
the standard deviations by 3 and added the result to the appropriate
national CCR average (either rural or urban). The upper threshold CCR
for IPFs in FY 2017 is 1.9315 for rural IPFs, and 1.6374 for urban
IPFs, based on CBSA-based geographic designations. If an IPF's CCR is
above the applicable ceiling, the ratio is considered statistically
inaccurate, and we assign the appropriate national (either rural or
urban) median CCR to the IPF.
We apply the national CCRs to the following situations:
New IPFs that have not yet submitted their first Medicare
cost report. We continue to use these national CCRs until the
facility's actual CCR can be computed using the first tentatively or
final settled cost report.
IPFs whose overall CCR is in excess of three standard
deviations above the corresponding national geometric mean (that is,
above the ceiling).
Other IPFs for which the Medicare Administrative
Contractor (MAC) obtains inaccurate or incomplete data with which to
calculate a CCR.
We are updating the FY 2017 national median and ceiling CCRs for
urban and rural IPFs based on the CCRs entered in the latest available
IPF PPS Provider Specific File. Specifically, for FY 2017, to be used
in each of the three situations listed above, using the most recent
CCRs entered in the CY 2016 Provider Specific File, we estimate a
national median CCR of 0.5960 for rural IPFs and a national median CCR
of 0.4455 for urban IPFs. These calculations are based on the IPF's
location (either urban or rural) using the CBSA-based geographic
designations.
A complete discussion regarding the national median CCRs appears in
the November 2004 IPF PPS final rule (69 FR 66961 through 66964).
IV. Update on IPF PPS Refinements
For RY 2012, we identified several areas of concern for future
refinement, and we invited comments on these issues in our RY 2012
proposed and final rules. For further discussion of these issues and to
review the public comments, we refer readers to the RY 2012 IPF PPS
proposed rule (76 FR 4998) and final rule (76 FR 26432).
We have delayed making refinements to the IPF PPS until we have
completed a thorough analysis of IPF PPS data on which to base those
refinements. Specifically, we will delay updating the adjustment
factors derived from the regression analysis until we have IPF
[[Page 50513]]
PPS data that include as much information as possible regarding the
patient-level characteristics of the population that each IPF serves.
We have begun and will continue the necessary analysis to better
understand IPF industry practices so that we may refine the IPF PPS in
the future, as appropriate.
As we noted in the FY 2016 IPF PPS final rule (80 FR 46693 to
46694), our preliminary analysis of 2012 to 2013 IPF data found that
over 20 percent of IPF stays reported no ancillary costs, such as
laboratory and drug costs, in their cost reports, or laboratory or drug
charges on their claims. Because we expect that most patients requiring
hospitalization for active psychiatric treatment will need drugs and
laboratory services, we again remind providers that the IPF PPS per
diem payment rate includes the cost of all ancillary services,
including drugs and laboratory services. We pay only the IPF for
services furnished to a Medicare beneficiary who is an inpatient of
that IPF, except for certain professional services, and payments are
considered to be payments in full for all inpatient hospital services
provided directly or under arrangement (see 42 CFR 412.404(d)), as
specified in 42 CFR 409.10.
We are continuing to analyze data from claims and cost report that
do not include ancillary charges or costs, and will be sharing our
findings with the Center for Program Integrity and the Office of
Financial Management for further investigation, as the results warrant.
Our refinement analysis is dependent on recent precise data for costs,
including ancillary costs. We will continue to collect these data and
analyze them for both timeliness and accuracy with the expectation that
these data will be used in a future refinement. Since we are not making
refinements for FY 2017, we will continue to use the existing
adjustment factors.
V. Waiver of Notice and Comment
We ordinarily publish a notice of proposed rulemaking in the
Federal Register to provide a period for public comment before the
provisions of a rule take effect. We can waive this procedure, however,
if we find good cause that notice and comment procedures are
impracticable, unnecessary, or contrary to the public interest and we
incorporate a statement of finding and its reasons in the notice.
We find it is unnecessary to undertake notice and comment
rulemaking for this action because the updates in this notice do not
reflect any substantive changes in policy, but merely reflect the
application of previously established methodologies. Therefore, under 5
U.S.C. 553(b)(3)(B), for good cause, we waive notice and comment
procedures.
VI. Collection of Information Requirements
This document does not impose information collection requirements,
that is, reporting, recordkeeping or third-party disclosure
requirements. Consequently, there is no need for review by the Office
of Management and Budget under the authority of the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.).
VII. Regulatory Impact Analysis
A. Statement of Need
This notice updates the prospective payment rates for Medicare
inpatient hospital services provided by IPFs for discharges occurring
during FY 2017 (October 1, 2016 through September 30, 2017). We are
applying the 2012-based IPF market basket increase of 2.8 percent, less
the productivity adjustment of 0.3 percentage point as required by
1886(s)(2)(A)(i) of the Act, and further reduced by 0.2 percentage
point as required by sections 1886(s)(2)(A)(ii) and 1886(s)(3)(D) of
the Act, for a total FY 2017 payment rate update of 2.3 percent. In
this notice, we are also updating the IPF labor-related share; updating
the IPF Wage Index for FY 2017; and continuing with the second year of
the rural adjustment phase-out for rural providers which became urban
providers in FY 2016 as a result of FY 2016 changes to CBSA
delineations.
B. Overall Impact
We have examined the impact of this notice as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22,
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4,
1999) and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct 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 a major rules
with economically significant effects ($100 million or more in any 1
year). This notice is designated as economically ``significant'' under
section 3(f)(1) of Executive Order 12866.
We estimate that the total impact of these changes for FY 2017
payments compared to FY 2016 payments will be a net increase of
approximately $100 million. This reflects a $105 million increase from
the update to the payment rates (+$130 million from the unadjusted 2nd
quarter 2016 IGI forecast of the 2012-based IPF market basket of 2.8
percent, -$15 million for the productivity adjustment of 0.3 percentage
point, and -$10 million for the other adjustment of 0.2 percentage
point), as well as a $5 million decrease as a result of the update to
the outlier threshold amount. Outlier payments are estimated to
decrease from 2.1 percent in FY 2016 to 2.0 percent of total estimated
IPF payments in FY 2017.
The RFA requires agencies to analyze options for regulatory relief
of small entities 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. Most IPFs and most other providers and
suppliers are small entities, either by nonprofit status or having
revenues of $7.5 million to $38.5 million or less in any 1 year,
depending on industry classification (for details, refer to the SBA
Small Business Size Standards found at https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf).
Because we lack data on individual hospital receipts, we cannot
determine the number of small proprietary IPFs or the proportion of
IPFs' revenue derived from Medicare payments. Therefore, we assume that
all IPFs are considered small entities. The Department of Health and
Human Services generally uses a revenue impact of 3 to 5 percent as a
significance threshold under the RFA.
As shown in Table 1, we estimate that the overall revenue impact of
this notice on all IPFs is to increase Medicare payments by
approximately 2.2 percent. As a result, since the estimated impact of
this notice is a net increase in revenue across almost all categories
of IPFs, the Secretary has determined that this notice will have a
positive revenue impact on a substantial number of small entities. MACs
are not considered to be small entities. Individuals and states are not
included in the definition of a small entity.
[[Page 50514]]
In addition, section 1102(b) of the Social Security Act requires us
to prepare a regulatory impact analysis if a rule may have a
significant impact on the operations of a substantial number of small
rural hospitals. This analysis must conform to the provisions of
section 604 of the RFA. For purposes of section 1102(b) of the Act, we
define a small rural hospital as a hospital that is located outside of
a metropolitan statistical area and has fewer than 100 beds. As
discussed in detail below, the rates and policies set forth in this
notice would not have an adverse impact on the rural hospitals based on
the data of the 279 rural units and 64 rural hospitals in our database
of 1,626 IPFs for which data were available. Therefore, the Secretary
has determined that this notice will not have a significant impact on
the operations of a substantial number of small rural hospitals.
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. In 2016, that
threshold is approximately $146 million. This notice will not impose
spending costs on state, local, or tribal governments in the aggregate,
or by the private sector of $146 million or more.
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 requirement costs on state
and local governments, preempts state law, or otherwise has Federalism
implications. As stated above, this notice would not have a substantial
effect on state and local governments.
C. Anticipated Effects
In this section, we discuss the historical background of the IPF
PPS and the impact of this notice on the Federal Medicare budget and on
IPFs.
1. Budgetary Impact
As discussed in the November 2004 and May 2006 IPF PPS final rules,
we applied a budget neutrality factor to the Federal per diem base rate
and ECT payment per treatment to ensure that total estimated payments
under the IPF PPS in the implementation period would equal the amount
that would have been paid if the IPF PPS had not been implemented. The
budget neutrality factor includes the following components: Outlier
adjustment, stop-loss adjustment, and the behavioral offset. As
discussed in the May 2008 IPF PPS notice (73 FR 25711), the stop-loss
adjustment is no longer applicable under the IPF PPS.
As discussed in section III.D.1 of this notice, we are using the
wage index and labor-related share in a budget neutral manner by
applying a wage index budget neutrality factor to the Federal per diem
base rate and ECT payment per treatment. Therefore, the budgetary
impact to the Medicare program of this notice will be due to the market
basket update for FY 2017 of 2.8 percent (see section III.A.2 of this
notice) less the productivity adjustment of 0.3 percentage point
required by section 1886(s)(2)(A)(i) of the Act; further reduced by the
``other adjustment'' of 0.2 percentage point under sections
1886(s)(2)(A)(ii) and 1886(s)(3)(D) of the Act; and the update to the
outlier fixed dollar loss threshold amount.
We estimate that the FY 2017 impact will be a net increase of $100
million in payments to IPF providers. This reflects an estimated $105
million increase from the update to the payment rates and a $5 million
decrease due to the update to the outlier threshold amount to set total
estimated outlier payments at 2 percent of total estimated payments in
FY 2017. This estimate does not include the implementation of the
required 2 percentage point reduction of the market basket increase
factor for any IPF that fails to meet the IPF quality reporting
requirements (as discussed in section III.B.2).
2. Impact on Providers
To show the impact on providers of the changes to the IPF PPS
discussed in this notice, we compare estimated payments under the IPF
PPS rates and factors for FY 2017 versus those under FY 2016. We
determined the percent change of estimated FY 2017 IPF PPS payments
compared to FY 2016 IPF PPS payments for each category of IPFs. In
addition, for each category of IPFs, we have included the estimated
percent change in payments resulting from the update to the outlier
fixed dollar loss threshold amount; the updated wage index data; the
changes to rural adjustment payments resulting from the second year of
the rural adjustment phase-out, due to changes in rural or urban status
resulting from FY 2016 CBSA changes; the final labor-related share; and
the final market basket update for FY 2017, as adjusted by the
productivity adjustment according to section 1886(s)(2)(A)(i) of the
Act, and the ``other adjustment'' according to sections
1886(s)(2)(A)(ii) and 1886(s)(3)(D) of the Act.
To illustrate the impacts of the FY 2017 changes in this notice,
our analysis begins with a FY 2016 baseline simulation model based on
FY 2015 IPF payments inflated to the midpoint of FY 2016 using IHS
Global Insight Inc.'s most recent forecast of the market basket update
(see section III.A.2. of this notice); the estimated outlier payments
in FY 2016; the CBSA delineations for IPFs based on revised OMB
delineations issued on February 28, 2013, in OMB Bulletin No. 13-01
(which were implemented in the FY 2016 IPF transitional wage index as
described in section III.D.1); the FY 2015 pre-floor, pre-reclassified
hospital wage index; the FY 2016 labor-related share; and the FY 2016
percentage amount of the rural adjustment. During the simulation, total
outlier payments are maintained at 2 percent of total estimated IPF PPS
payments.
Each of the following changes is added incrementally to this
baseline model in order for us to isolate the effects of each change:
The update to the outlier fixed dollar loss threshold
amount;
the FY 2016 pre-floor, pre-reclassified hospital wage
index with the updated CBSA delineations, based on OMB's February 28,
2013 Bulletin No. 13-01, which are applied in full in the FY 2017 IPF
PPS wage index;
the FY 2017 labor-related share;
the market basket update for FY 2017 of 2.8 percent less
the productivity adjustment of 0.3 percentage point in accordance with
section 1886(s)(2)(A)(i) of the Act and further reduced by the ``other
adjustment'' of 0.2 percentage point in accordance with sections
1886(s)(2)(A)(ii) and 1886(s)(3)(D) of the Act, for a payment rate
update of 2.3 percent.
Our final comparison illustrates the percent change in payments
from FY 2016 (that is, October 1, 2015, to September 30, 2016) to FY
2017 (that is, October 1, 2016, to September 30, 2017) including all
the changes in this notice.
[[Page 50515]]
Table 1--IPF Impacts for FY 2017
[Percent change in columns 3 through 6]
----------------------------------------------------------------------------------------------------------------
CBSA wage
Facility by type Number of Outlier index & labor Payment rate Total percent
facilities share \1\ update \2\ change \3\
(1) (2) (3) (4) (5) (6)
----------------------------------------------------------------------------------------------------------------
All Facilities.................. 1,626 -0.1 0.0 2.3 2.2
Total Urban................. 1,283 -0.1 0.1 2.3 2.3
Total Rural................. 343 -0.1 -0.6 2.3 1.6
Urban unit.................. 834 -0.1 0.0 2.3 2.2
Urban hospital.............. 449 0.0 0.2 2.3 2.5
Rural unit.................. 279 -0.1 -0.6 2.3 1.6
Rural hospital.............. 64 0.0 -0.8 2.3 1.4
By Type of Ownership:
Freestanding IPFs:
Urban Psychiatric Hospitals:
Government.............. 123 -0.1 0.0 2.3 2.2
Non-Profit.............. 103 0.0 0.0 2.3 2.3
For-Profit.............. 223 0.0 0.3 2.3 2.6
Rural Psychiatric Hospitals:
Government.............. 35 0.0 -0.6 2.3 1.7
Non-Profit.............. 11 0.0 0.2 2.3 2.5
For-Profit.............. 18 0.0 -1.2 2.3 1.1
IPF Units:
Urban:
Government.............. 122 -0.2 0.0 2.3 2.1
Non-Profit.............. 536 -0.1 0.1 2.3 2.3
For-Profit.............. 176 -0.1 0.0 2.3 2.2
Rural:
Government.............. 71 -0.1 -0.7 2.3 1.4
Non-Profit.............. 141 -0.1 -0.5 2.3 1.7
For-Profit.............. 67 -0.1 -0.6 2.3 1.6
By Teaching Status:
Non-teaching................ 1,438 -0.1 0.0 2.3 2.2
Less than 10% interns and 100 -0.1 0.1 2.3 2.3
residents to beds..........
10% to 30% interns and 60 -0.2 0.1 2.3 2.2
residents to beds..........
More than 30% interns and 28 -0.2 0.1 2.3 2.1
residents to beds..........
By Region:
New England................. 109 -0.1 0.5 2.3 2.7
Mid-Atlantic................ 237 -0.1 0.1 2.3 2.3
South Atlantic.............. 242 -0.1 -0.1 2.3 2.2
East North Central.......... 267 -0.1 0.1 2.3 2.3
East South Central.......... 158 -0.1 -0.5 2.3 1.7
West North Central.......... 135 -0.1 -0.4 2.3 1.8
West South Central.......... 250 -0.1 -0.4 2.3 1.8
Mountain.................... 105 -0.1 -0.2 2.3 2.0
Pacific..................... 123 -0.1 0.8 2.3 3.0
By Bed Size:
Psychiatric Hospitals;
Beds: 0-24.............. 83 0.0 -0.6 2.3 1.7
Beds: 25-49............. 82 0.0 0.2 2.3 2.4
Beds: 50-75............. 84 0.0 0.0 2.3 2.3
Beds: 76 +.............. 264 0.0 0.2 2.3 2.5
Psychiatric Units:
Beds: 0-24.............. 653 -0.1 -0.2 2.3 2.0
Beds: 25-49............. 298 -0.1 0.0 2.3 2.2
Beds: 50-75............. 105 -0.1 0.1 2.3 2.2
Beds: 76 +.............. 57 -0.1 0.1 2.3 2.3
----------------------------------------------------------------------------------------------------------------
\1\ Includes a FY 2017 IPF wage index, a labor-related share of 0.751, and a rural adjustment. Providers which
changed from rural to urban status in FY 2016 will receive \1/3\ of the 17 percent rural adjustment in FY
2017.
\2\ This column reflects the payment rate update impact of the IPF market basket update for FY 2017 of 2.8
percent, a 0.3 percentage point reduction for the productivity adjustment as required by section
1886(s)(2)(A)(i) of the Act, and a 0.2 percentage point reduction in accordance with sections
1886(s)(2)(A)(ii) and 1886(s)(3)(D) of the Act.
\3\ Percent changes in estimated payments from FY 2016 to FY 2017 include all of the changes presented in this
notice. Note, the products of these impacts may be different from the percentage changes shown here due to
rounding effects.
3. Results
Table 1 displays the results of our analysis. The table groups IPFs
into the categories listed below based on characteristics provided in
the Provider of Services (POS) file, the IPF provider specific file,
and cost report data from the Healthcare Cost Report Information
System:
Facility Type
Location
Teaching Status Adjustment
Census Region
Size
[[Page 50516]]
The top row of the table shows the overall impact on the 1,626 IPFs
included in this analysis. In column 3, we present the effects of the
update to the outlier fixed dollar loss threshold amount. We estimate
that IPF outlier payments as a percentage of total IPF payments are 2.1
percent in FY 2016. Thus, we are adjusting the outlier threshold amount
in this notice to set total estimated outlier payments equal to 2
percent of total payments in FY 2017. The estimated change in total IPF
payments for FY 2017, therefore, includes an approximate 0.1 percent
decrease in payments because the outlier portion of total payments is
expected to decrease from approximately 2.1 percent to 2.0 percent.
The overall impact of this outlier adjustment update (as shown in
column 3 of Table 1), across all hospital groups, is to decrease total
estimated payments to IPFs by 0.1 percent. The largest decrease in
payments is estimated to be a 0.2 percent decrease in payments for
urban government IPF units and IPFs with 10 percent or greater interns
and residents to beds.
In column 4, we present the effects of the budget-neutral update to
the IPF wage index and the Labor Related Share (LRS). This represents
the effect of using the most recent wage data available and taking into
account the updated OMB delineations. That is, the impact represented
in this column reflects the update from the FY 2016 IPF transitional
wage index to the FY 2017 IPF wage index, which includes the full
effect of FY 2016 changes to the OMB delineations, and the LRS update
from 75.2 percent in FY 2016 to 75.1 percent in FY 2017. We note that
there is no projected change in aggregate payments to IPFs, as
indicated in the first row of column 4, however, there will be
distributional effects among different categories of IPFs. For example,
we estimate the largest increase in payments to be 0.8 percent for IPFs
in the Pacific region, and the largest decrease in payments to be 1.2
percent for rural for-profit freestanding IPFs.
In column 5, we present the estimated effects of the update to the
IPF PPS payment rates of 2.3 percent, which are based on the 2012-based
IPF market basket update of 2.8 percent, less the productivity
adjustment of 0.3 percentage point in accordance with section
1886(s)(2)(A)(i) of the Act, and further reduced by 0.2 percentage
point in accordance with sections 1886(s)(2)(A)(ii) and 1886(s)(3)(D)
of the Act.
Finally, column 6 compares our estimates of the total changes
reflected in this notice for FY 2017 to the estimates for FY 2016
(without these changes). The average estimated increase for all IPFs is
approximately 2.2 percent. This estimated net increase includes the
effects of the 2.8 percent market basket update reduced by the
productivity adjustment of 0.3 percentage point, as required by section
1886(s)(2)(A)(i) of the Act and further reduced by the ``other
adjustment'' of 0.2 percentage point, as required by sections
1886(s)(2)(A)(ii) and 1886(s)(3)(D) of the Act. It also includes the
overall estimated 0.1 percent decrease in estimated IPF outlier
payments as a percent of total payments from the update to the outlier
fixed dollar loss threshold amount.
IPF payments are estimated to increase by 2.3 percent in urban
areas and 1.6 percent in rural areas. Overall, IPFs are estimated to
experience a net increase in payments as a result of the updates in
this notice. The largest payment increase is estimated at 3.0 percent
for IPFs in the Pacific region.
4. Effect on Beneficiaries
Under the IPF PPS, IPFs will receive payment based on the average
resources consumed by patients for each day. We do not expect changes
in the quality of care or access to services for Medicare beneficiaries
under the FY 2017 IPF PPS, but we continue to expect that paying
prospectively for IPF services will enhance the efficiency of the
Medicare program.
D. Alternatives Considered
The statute does not specify an update strategy for the IPF PPS and
is broadly written to give the Secretary discretion in establishing an
update methodology. Therefore, we are updating the IPF PPS using the
methodology published in the November 2004 IPF PPS final rule; applying
the FY 2017 2012-based IPF PPS market basket update of 2.8 percent,
reduced by the statutorily required multifactor productivity adjustment
of 0.3 percentage point and the other adjustment of 0.2 percentage
point, along with the wage index budget neutrality adjustment to update
the payment rates; finalizing a FY 2017 IPF PPS wage index which is
fully based upon the OMB CBSA designations which were adopted in the FY
2016 IPF PPS wage index; and continuing with the second year of the 3-
year phase-out of the rural adjustment for IPF providers which changed
from rural to urban status in FY 2016 as a result of adopting the
updated OMB CBSA delineations used in the FY 2016 IPF PPS transitional
wage index.
E. Accounting Statement
As required by OMB Circular A-4 (available at https://www.whitehouse.gov/omb/circulars_a004_a-4), in Table 2 below, we have
prepared an accounting statement showing the classification of the
expenditures associated with the updates to the IPF PPS wage index and
payment rates in this notice. This table provides our best estimate of
the increase in Medicare payments under the IPF PPS as a result of the
changes presented in this notice and based on the data for 1,626 IPFs
in our database.
Table 2--Accounting Statement: Classification of Estimated Expenditures
------------------------------------------------------------------------
Change in Estimated Transfers from FY 2016 IPF PPS to FY 2017 IPF PPS
-------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............ $100 million.
From Whom to Whom? Federal Government to IPF
Medicare Providers.
------------------------------------------------------------------------
In accordance with the provisions of Executive Order 12866, this
notice was reviewed by the Office of Management and Budget.
Dated: July 18, 2016.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
Dated: July 19, 2016.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
Note: The following addenda will not publish in the Code of Federal
Regulations.
Addendum A--IPF PPS FY 2017 Final Rates and Adjustment Factors
Per Diem Rate
------------------------------------------------------------------------
------------------------------------------------------------------------
Federal Per Diem Base Rate.............................. $761.37
Labor Share (0.751)..................................... $571.79
Non-Labor Share (0.249)................................. $189.58
------------------------------------------------------------------------
Per Diem Rate Applying the 2 Percentage Point Reduction
------------------------------------------------------------------------
------------------------------------------------------------------------
Federal Per Diem Base Rate.............................. $746.48
Labor Share (0.751)..................................... $560.61
Non-Labor Share (0.249)................................. $185.87
------------------------------------------------------------------------
Fixed Dollar Loss Threshold Amount: $10,120.
Wage Index Budget-Neutrality Factor: 1.0007.
[[Page 50517]]
Facility Adjustments
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Rural Adjustment Factor............. 1.17.
Teaching Adjustment Factor.......... 0.5150.
Wage Index.......................... Pre-reclass Hospital Wage Index (FY 2016).
----------------------------------------------------------------------------------------------------------------
Cost of Living Adjustments (COLAs)
------------------------------------------------------------------------
Cost of living
Area adjustment
factor
------------------------------------------------------------------------
Alaska:
City of Anchorage and 80-kilometer (50-mile) radius by 1.23
road.................................................
City of Fairbanks and 80-kilometer (50-mile) radius by 1.23
road.................................................
City of Juneau and 80-kilometer (50-mile) radius by 1.23
road.................................................
Rest of Alaska........................................ 1.25
Hawaii:
City and County of Honolulu........................... 1.25
County of Hawaii...................................... 1.19
County of Kauai....................................... 1.25
County of Maui and County of Kalawao.................. 1.25
------------------------------------------------------------------------
Patient Adjustments
------------------------------------------------------------------------
------------------------------------------------------------------------
ECT--Per Treatment...................................... $327.78
ECT--Per Treatment Applying the 2 Percentage Point $321.38
Reduction..............................................
------------------------------------------------------------------------
Variable Per Diem Adjustments
------------------------------------------------------------------------
Adjustment
factor
------------------------------------------------------------------------
Day 1--Facility Without a Qualifying Emergency 1.19
Department.............................................
Day 1--Facility With a Qualifying Emergency Department.. 1.31
Day 2................................................... 1.12
Day 3................................................... 1.08
Day 4................................................... 1.05
Day 5................................................... 1.04
Day 6................................................... 1.02
Day 7................................................... 1.01
Day 8................................................... 1.01
Day 9................................................... 1.00
Day 10.................................................. 1.00
Day 11.................................................. 0.99
Day 12.................................................. 0.99
Day 13.................................................. 0.99
Day 14.................................................. 0.99
Day 15.................................................. 0.98
Day 16.................................................. 0.97
Day 17.................................................. 0.97
Day 18.................................................. 0.96
Day 19.................................................. 0.95
Day 20.................................................. 0.95
Day 21.................................................. 0.95
After Day 21............................................ 0.92
------------------------------------------------------------------------
Age Adjustments
------------------------------------------------------------------------
Adjustment
Age (in years) factor
------------------------------------------------------------------------
Under 45................................................ 1.00
45 and under 50......................................... 1.01
50 and under 55......................................... 1.02
55 and under 60......................................... 1.04
60 and under 65......................................... 1.07
65 and under 70......................................... 1.10
70 and under 75......................................... 1.13
75 and under 80......................................... 1.15
80 and over............................................. 1.17
------------------------------------------------------------------------
DRG Adjustments
----------------------------------------------------------------------------------------------------------------
Adjustment
MS-DRG MS-DRG Descriptions factor
----------------------------------------------------------------------------------------------------------------
056................................. Degenerative nervous system disorders w MCC............... 1.05
057................................. Degenerative nervous system disorders w/o MCC............. 1.05
080................................. Nontraumatic stupor & coma w MCC.......................... 1.07
081................................. Nontraumatic stupor & coma w/o MCC........................ 1.07
876................................. O.R. procedure w principal diagnoses of mental illness.... 1.22
880................................. Acute adjustment reaction & psychosocial dysfunction...... 1.05
881................................. Depressive neuroses....................................... 0.99
882................................. Neuroses except depressive................................ 1.02
883................................. Disorders of personality & impulse control................ 1.02
884................................. Organic disturbances & mental retardation................. 1.03
885................................. Psychoses................................................. 1.00
886................................. Behavioral & developmental disorders...................... 0.99
887................................. Other mental disorder diagnoses........................... 0.92
894................................. Alcohol/drug abuse or dependence, left AMA................ 0.97
895................................. Alcohol/drug abuse or dependence w rehabilitation therapy. 1.02
896................................. Alcohol/drug abuse or dependence w/o rehabilitation 0.88
therapy w MCC.
897................................. Alcohol/drug abuse or dependence w/o rehabilitation 0.88
therapy w/o MCC.
----------------------------------------------------------------------------------------------------------------
Comorbidity Adjustments
------------------------------------------------------------------------
Adjustment
Comorbidity factor
------------------------------------------------------------------------
Developmental Disabilities.............................. 1.04
Coagulation Factor Deficit.............................. 1.13
Tracheostomy............................................ 1.06
Eating and Conduct Disorders............................ 1.12
Infectious Diseases..................................... 1.07
Renal Failure, Acute.................................... 1.11
Renal Failure, Chronic.................................. 1.11
Oncology Treatment...................................... 1.07
Uncontrolled Diabetes Mellitus.......................... 1.05
Severe Protein Malnutrition............................. 1.13
Drug/Alcohol Induced Mental Disorders................... 1.03
Cardiac Conditions...................................... 1.11
Gangrene................................................ 1.10
Chronic Obstructive Pulmonary Disease................... 1.12
Artificial Openings--Digestive & Urinary................ 1.08
[[Page 50518]]
Severe Musculoskeletal & Connective Tissue Diseases..... 1.09
Poisoning............................................... 1.11
------------------------------------------------------------------------
National Median and Ceiling Cost-to-Charge Ratios (CCRs)
------------------------------------------------------------------------
Rural Urban
------------------------------------------------------------------------
National Median CCRs.................... 0.5960 0.4455
National Ceiling CCRs................... 1.9315 1.6374
------------------------------------------------------------------------
Addendum B--Changes to the FY 2017 ICD-10-CM/PCS Code Sets Which Affect
FY the FY 2017 IPF PPS Comorbidity Adjustments
Four IPF PPS Comorbidity Categories Were Affected
(1) Oncology Treatment
Add the following codes to the Oncology Treatment code list:
------------------------------------------------------------------------
DX Long description
------------------------------------------------------------------------
C49A0.......................... Gastrointestinal stromal tumor,
unspecified site.
C49A1.......................... Gastrointestinal stromal tumor of
esophagus.
C49A2.......................... Gastrointestinal stromal tumor of
stomach.
C49A3.......................... Gastrointestinal stromal tumor of small
intestine.
C49A4.......................... Gastrointestinal stromal tumor of large
intestine.
C49A5.......................... Gastrointestinal stromal tumor of
rectum.
C49A9.......................... Gastrointestinal stromal tumor of other
sites.
D49511......................... Neoplasm of unspecified behavior of
right kidney.
D49512......................... Neoplasm of unspecified behavior of
left kidney.
D4959.......................... Neoplasm unspecified behavior of other
genitourinary organ.
------------------------------------------------------------------------
Delete the following code from the Oncology Treatment code list:
------------------------------------------------------------------------
DX Long description
------------------------------------------------------------------------
D495........................... Neoplasm of unspecified behavior of
other genitourinary organs.
------------------------------------------------------------------------
The following codes from the Oncology Treatment code list have long
description changes:
------------------------------------------------------------------------
DX Old long description New long description
------------------------------------------------------------------------
C7A094..................... Malignant carcinoid Malignant carcinoid
tumor of the foregut tumor of the
NOS. foregut,
unspecified.
C7A095..................... Malignant carcinoid Malignant carcinoid
tumor of the midgut tumor of the
NOS. midgut,
unspecified.
C7A096..................... Malignant carcinoid Malignant carcinoid
tumor of the hindgut tumor of the
NOS. hindgut,
unspecified.
C8110...................... Nodular sclerosis Nodular sclerosis
classical Hodgkin Hodgkin lymphoma,
lymphoma, unspecified site.
unspecified site.
C8111...................... Nodular sclerosis Nodular sclerosis
classical Hodgkin Hodgkin lymphoma,
lymphoma, lymph lymph nodes of
nodes of head, face, head, face, and
and neck. neck.
C8112...................... Nodular sclerosis Nodular sclerosis
classical Hodgkin Hodgkin lymphoma,
lymphoma, intrathoracic lymph
intrathoracic lymph nodes.
nodes.
C8113...................... Nodular sclerosis Nodular sclerosis
classical Hodgkin Hodgkin lymphoma,
lymphoma, intra- intra-abdominal
abdominal lymph lymph nodes.
nodes.
C8114...................... Nodular sclerosis Nodular sclerosis
classical Hodgkin Hodgkin lymphoma,
lymphoma, lymph lymph nodes of
nodes of axilla and axilla and upper
upper limb. limb.
C8115...................... Nodular sclerosis Nodular sclerosis
classical Hodgkin Hodgkin lymphoma,
lymphoma, lymph lymph nodes of
nodes of inguinal inguinal region and
region and lower lower limb.
limb.
C8116...................... Nodular sclerosis Nodular sclerosis
classical Hodgkin Hodgkin lymphoma,
lymphoma, intrapelvic lymph
intrapelvic lymph nodes.
nodes.
[[Page 50519]]
C8117...................... Nodular sclerosis Nodular sclerosis
classical Hodgkin Hodgkin lymphoma,
lymphoma, spleen. spleen.
C8118...................... Nodular sclerosis Nodular sclerosis
classical Hodgkin Hodgkin lymphoma,
lymphoma, lymph lymph nodes of
nodes of multiple multiple sites.
sites.
C8119...................... Nodular sclerosis Nodular sclerosis
classical Hodgkin Hodgkin lymphoma,
lymphoma, extranodal extranodal and
and solid organ solid organ sites.
sites.
C8120...................... Mixed cellularity Mixed cellularity
classical Hodgkin Hodgkin lymphoma,
lymphoma, unspecified site.
unspecified site.
C8121...................... Mixed cellularity Mixed cellularity
classical Hodgkin Hodgkin lymphoma,
lymphoma, lymph lymph nodes of
nodes of head, face, head, face, and
and neck. neck.
C8122...................... Mixed cellularity Mixed cellularity
classical Hodgkin Hodgkin lymphoma,
lymphoma, intrathoracic lymph
intrathoracic lymph nodes.
nodes.
C8123...................... Mixed cellularity Mixed cellularity
classical Hodgkin Hodgkin lymphoma,
lymphoma, intra- intra-abdominal
abdominal lymph lymph nodes.
nodes.
C8124...................... Mixed cellularity Mixed cellularity
classical Hodgkin Hodgkin lymphoma,
lymphoma, lymph lymph nodes of
nodes of axilla and axilla and upper
upper limb. limb.
C8125...................... Mixed cellularity Mixed cellularity
classical Hodgkin Hodgkin lymphoma,
lymphoma, lymph lymph nodes of
nodes of inguinal inguinal region and
region and lower lower limb.
limb.
C8126...................... Mixed cellularity Mixed cellularity
classical Hodgkin Hodgkin lymphoma,
lymphoma, intrapelvic lymph
intrapelvic lymph nodes.
nodes.
C8127...................... Mixed cellularity Mixed cellularity
classical Hodgkin Hodgkin lymphoma,
lymphoma, spleen. spleen.
C8128...................... Mixed cellularity Mixed cellularity
classical Hodgkin Hodgkin lymphoma,
lymphoma, lymph lymph nodes of
nodes of multiple multiple sites.
sites.
C8129...................... Mixed cellularity Mixed cellularity
classical Hodgkin Hodgkin lymphoma,
lymphoma, extranodal extranodal and
and solid organ solid organ sites.
sites.
C8130...................... Lymphocyte depleted Lymphocyte depleted
classical Hodgkin Hodgkin lymphoma,
lymphoma, unspecified site.
unspecified site.
C8131...................... Lymphocyte depleted Lymphocyte depleted
classical Hodgkin Hodgkin lymphoma,
lymphoma, lymph lymph nodes of
nodes of head, face, head, face, and
and neck. neck.
C8132...................... Lymphocyte depleted Lymphocyte depleted
classical Hodgkin Hodgkin lymphoma,
lymphoma, intrathoracic lymph
intrathoracic lymph nodes.
nodes.
C8133...................... Lymphocyte depleted Lymphocyte depleted
classical Hodgkin Hodgkin lymphoma,
lymphoma, intra- intra-abdominal
abdominal lymph lymph nodes.
nodes.
C8134...................... Lymphocyte depleted Lymphocyte depleted
classical Hodgkin Hodgkin lymphoma,
lymphoma, lymph lymph nodes of
nodes of axilla and axilla and upper
upper limb. limb.
C8135...................... Lymphocyte depleted Lymphocyte depleted
classical Hodgkin Hodgkin lymphoma,
lymphoma, lymph lymph nodes of
nodes of inguinal inguinal region and
region and lower lower limb.
limb.
C8136...................... Lymphocyte depleted Lymphocyte depleted
classical Hodgkin Hodgkin lymphoma,
lymphoma, intrapelvic lymph
intrapelvic lymph nodes.
nodes.
C8137...................... Lymphocyte depleted Lymphocyte depleted
classical Hodgkin Hodgkin lymphoma,
lymphoma, spleen. spleen.
C8138...................... Lymphocyte depleted Lymphocyte depleted
classical Hodgkin Hodgkin lymphoma,
lymphoma, lymph lymph nodes of
nodes of multiple multiple sites.
sites.
C8139...................... Lymphocyte depleted Lymphocyte depleted
classical Hodgkin Hodgkin lymphoma,
lymphoma, extranodal extranodal and
and solid organ solid organ sites.
sites.
C8140...................... Lymphocyte-rich Lymphocyte-rich
classical Hodgkin Hodgkin lymphoma,
lymphoma, unspecified site.
unspecified site.
C8141...................... Lymphocyte-rich Lymphocyte-rich
classical Hodgkin Hodgkin lymphoma,
lymphoma, lymph lymph nodes of
nodes of head, face, head, face, and
and neck. neck.
C8142...................... Lymphocyte-rich Lymphocyte-rich
classical Hodgkin Hodgkin lymphoma,
lymphoma, intrathoracic lymph
intrathoracic lymph nodes.
nodes.
C8143...................... Lymphocyte-rich Lymphocyte-rich
classical Hodgkin Hodgkin lymphoma,
lymphoma, intra- intra-abdominal
abdominal lymph lymph nodes.
nodes.
C8144...................... Lymphocyte-rich Lymphocyte-rich
classical Hodgkin Hodgkin lymphoma,
lymphoma, lymph lymph nodes of
nodes of axilla and axilla and upper
upper limb. limb.
C8145...................... Lymphocyte-rich Lymphocyte-rich
classical Hodgkin Hodgkin lymphoma,
lymphoma, lymph lymph nodes of
nodes of inguinal inguinal region and
region and lower lower limb.
limb.
C8146...................... Lymphocyte-rich Lymphocyte-rich
classical Hodgkin Hodgkin lymphoma,
lymphoma, intrapelvic lymph
intrapelvic lymph nodes.
nodes.
C8147...................... Lymphocyte-rich Lymphocyte-rich
classical Hodgkin Hodgkin lymphoma,
lymphoma, spleen. spleen.
C8148...................... Lymphocyte-rich Lymphocyte-rich
classical Hodgkin Hodgkin lymphoma,
lymphoma, lymph lymph nodes of
nodes of multiple multiple sites.
sites.
C8149...................... Lymphocyte-rich Lymphocyte-rich
classical Hodgkin Hodgkin lymphoma,
lymphoma, extranodal extranodal and
and solid organ solid organ sites.
sites.
C8170...................... Other classical Other Hodgkin
Hodgkin lymphoma, lymphoma,
unspecified site. unspecified site.
C8171...................... Other classical Other Hodgkin
Hodgkin lymphoma, lymphoma, lymph
lymph nodes of head, nodes of head,
face, and neck. face, and neck.
C8172...................... Other classical Other Hodgkin
Hodgkin lymphoma, lymphoma,
intrathoracic lymph intrathoracic lymph
nodes. nodes.
C8173...................... Other classical Other Hodgkin
Hodgkin lymphoma, lymphoma, intra-
intra-abdominal abdominal lymph
lymph nodes. nodes.
C8174...................... Other classical Other Hodgkin
Hodgkin lymphoma, lymphoma, lymph
lymph nodes of nodes of axilla and
axilla and upper upper limb.
limb.
C8175...................... Other classical Other Hodgkin
Hodgkin lymphoma, lymphoma, lymph
lymph nodes of nodes of inguinal
inguinal region and region and lower
lower limb. limb.
[[Page 50520]]
C8176...................... Other classical Other Hodgkin
Hodgkin lymphoma, lymphoma,
intrapelvic lymph intrapelvic lymph
nodes. nodes.
C8177...................... Other classical Other Hodgkin
Hodgkin lymphoma, lymphoma, spleen.
spleen.
C8178...................... Other classical Other Hodgkin
Hodgkin lymphoma, lymphoma, lymph
lymph nodes of nodes of multiple
multiple sites. sites.
C8179...................... Other classical Other Hodgkin
Hodgkin lymphoma, lymphoma,
extranodal and solid extranodal and
organ sites. solid organ sites.
D3A094..................... Benign carcinoid Benign carcinoid
tumor of the foregut tumor of the
NOS. foregut,
unspecified.
D3A095..................... Benign carcinoid Benign carcinoid
tumor of the midgut tumor of the
NOS. midgut,
unspecified.
D3A096..................... Benign carcinoid Benign carcinoid
tumor of the hindgut tumor of the
NOS. hindgut,
unspecified.
------------------------------------------------------------------------
2) Oncology Treatment Procedure
Add the following code to the Oncology Treatment procedure code
list:
------------------------------------------------------------------------
DX Long description
------------------------------------------------------------------------
3E0Q005......................... Introduction of Other Antineoplastic
into Cranial Cavity and Brain, Open
Approach.
------------------------------------------------------------------------
3) Infectious Disease
Add the following code to the Infectious Disease code list:
------------------------------------------------------------------------
DX Long description
------------------------------------------------------------------------
A925............................ Zika virus disease.
------------------------------------------------------------------------
4) Artificial Openings Digestive and Urinary
Add the following codes to the Artificial Openings, Digestive and
Urinary code list:
------------------------------------------------------------------------
DX Long description
------------------------------------------------------------------------
N99523.......................... Herniation of incontinent stoma of
urinary tract.
N99524.......................... Stenosis of incontinent stoma of
urinary tract.
N99533.......................... Herniation of continent stoma of
urinary tract.
N99534.......................... Stenosis of continent stoma of urinary
tract.
------------------------------------------------------------------------
The following codes from the Artificial Openings Digestive and
Urinary code list have long description changes:
------------------------------------------------------------------------
DX Old long description New long description
------------------------------------------------------------------------
N99520...................... Hemorrhage of other Hemorrhage of
external stoma of incontinent
urinary tract. external stoma of
urinary tract.
N99521...................... Infection of other Infection of
external stoma of incontinent
urinary tract. external stoma of
urinary tract.
N99522...................... Malfunction of other Malfunction of
external stoma of incontinent
urinary tract. external stoma of
urinary tract.
N99528...................... Other complication Other complication
of other external of incontinent
stoma of urinary external stoma of
tract. urinary tract.
N99530...................... Hemorrhage of other Hemorrhage of
stoma of urinary continent stoma of
tract. urinary tract.
N99531...................... Infection of other Infection of
stoma of urinary continent stoma of
tract. urinary tract.
N99532...................... Malfunction of other Malfunction of
stoma of urinary continent stoma of
tract. urinary tract.
N99538...................... Other complication Other complication
of other stoma of of continent stoma
urinary tract. of urinary tract.
------------------------------------------------------------------------
Tables showing the complete listing of ICD-10-CM/PCS codes
underlying the IPF PPS comorbidity adjustment and the IPF PPS Code
First adjustment, and associated with the IPF PPS ECT per treatment
payment, are available online at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/tools.html.
[FR Doc. 2016-17982 Filed 7-28-16; 4:15 pm]
BILLING CODE 4120-01-P